Exhibit 10.5
LAND DEED OF TRUST
among
TREX COMPANY, INC.,
as Debtor,
GARY P. SNYDER,
as Trustee
and
JPMORGAN CHASE BANK, N.A.,
as Beneficiary
Dated as of
December 1, 2004
THIS DEED OF TRUST SECURES A CREDIT LINE TO BE USED FOR COMMERCIAL PURPOSES.
Prepared By: Record and Return to: ______________________________ ______________________________ Jacqueline P. Shanes Gary P. Snyder McCarter & English, LLP Watkins Ludlam Winter & Stennis, P.A. Four Gateway Center P.O. Box 1456 100 Mulberry Street Olive Branch, Mississippi 38654 Newark, New Jersey 07102 Phone: (662) 895-2996 Phone: (973) 622-4444 Indexing Instructions: Lot 1, Trex Subdivision Plat Book 86 Pages 46-48 SW Quarter, Section 14 and NW Quarter, Section 23, Township 1 South, Range 6 West, DeSoto County, Mississippi
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and is not a part of the Land Deed of Trust.)
Page
ARTICLE I DEFINITIONS Section 1.02. Definitions 3 Section 1.03. Interpretations 7 Section 1.04. References, etc. 7 Section 1.05. Incorporation of Certain Definitions by Reference 7 Section 1.06. Accounting Terms and Determinations; Incorporation of UCC Definitions 8 ARTICLE II RESERVED ARTICLE III REPRESENTATIONS AND WARRANTIES Section 3.01. Warranties of Title 10 Section 3.02. Lien of this Deed of Trust 10 Section 3.03. Financings 10 Section 3.04. Impositions and Other Payments 10 Section 3.05. Incorporation of Representations and Warranties by Reference 11 ARTICLE IV COVENANTS AND OBLIGATIONS OF THE DEBTOR Section 4.01. Defects in Title 12 Section 4.02. Maintenance and Repair 12 Section 4.03. Incorporation of Covenants and Obligations by Reference 12 ARTICLE V EVENTS OF DEFAULT; REMEDIES Section 5.01. Event of Default 13 Section 5.02. Remedies 15 Section 5.03. Application of Proceeds 18 Section 5.04. Delivery of Possession 18 Section 5.06. Remedies Cumulative, Concurrent and Non-Exclusive 19 Section 5.07. No Conditions Precedent to Exercise of Remedies 19 Section 5.08. Extension, Rearrangement or Renewal of the Obligations 20 Section 5.09. Waiver of Redemption, Notice and Marshalling of Assets 20 Section 5.10. Repayment of Expenses 21
- i - ARTICLE VI SECURITY AGREEMENT Section 6.01. Security Agreement 21 Section 6.02. Fixture Filing 21 Section 6.03. Security Agreement; Remedies 22 ARTICLE VII ASSIGNMENT OF RENTS Section 7.01. Assignment of Rents 24 Section 7.02. Rights of the Debtor' s Limited License 24 Section 7.03. Enforcement of Rents 24 Section 7.04. Suits and Attornment 25 Section 7.05. No Merger of Estates 25 Section 7.06. Conflict 25 Section 7.07. Assignment of Rents Remedies 26 ARTICLE VIII ENVIRONMENTAL MATTERS Section 8.01. Definitions 27 Section 8.02. Representations and Warranties 27 Section 8.03. Covenants 27 Section 8.04. Debtor' s Indemnification of Secured Party 26 Section 8.05. General 27 ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.01 Trustee Provisions 29 Section 9.02. No Obligation of the Secured Party 30 Section 9.03. Debtor' s Attorney in Fact 30 Section 9.04. Casualty Loss, Condemnation, Eminent Domain and Insurance 31 Section 9.05. No Waiver by the Secured Party 34 Section 9.06. Satisfaction 35 Section 9.07. Notices 35 Section 9.08. Amendment and Waiver 35 Section 9.09. Payment of Costs and Expenses of Secured Party 36 Section 9.10. Taxation of the Obligations and Deed of Trust 36 Section 9.11. No Credit for Taxes 36 Section 9.12. Due on Sale; Assignability 36 Section 9.13. Severability 37 Section 9.14. Governing Law 37 Section 9.15. Future Advances 37 Section 9.16. Headings 37 Section 9.17. Entire Agreement 37 Section 9.18. Time of the Essence 37 Section 9.19. Further Action By Debtor 38 Section 9.20. Advances by Secured Party 38 Section 9.21. Invalid Provision Disregarded 38 Section 9.22. Inspection and Repairs by the Secured Party 38 Section 9.23. No Liability of Secured Party 38 Signatures 39 Testimonium 40 EXHIBIT A - Site Description A-1
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Exhibit 10.5
LAND DEED OF TRUST
THIS LAND DEED OF TRUST (this " Deed of Trust" ) dated as of December 1, 2004, is entered into among TREX COMPANY, INC., a corporation organized and existing under the laws of the State of Delaware (" Debtor" ), and GARY P. SNYDER as Trustee (" Trustee" ), and JPMORGAN CHASE BANK, N.A. as Beneficiary, in its capacities as the Issuing Bank of the hereinafter defined Letter of Credit and as the Administrative Agent under the hereinafter defined Reimbursement Agreement (herein designated as " Secured Party" ).
W I T N E S S E T H :
WHEREAS, in order to finance all or a portion of (i) the costs of the acquisition, construction and equipping of solid waste disposal facilities in the City of Olive Branch, DeSoto County, Mississippi, to be used by the Debtor in connection with the manufacture of non-wood decking, railing and fencing products and (ii) certain costs of issuance of the Bonds (as hereafter defined), the Debtor has requested that the Mississippi Business Finance Corporation (" Issuer" ) issue its Variable Rate Demand Environmental Improvement Revenue Bonds (Trex Company, Inc. Project), Series 2004, in the aggregate principal amount of $25,000,000 (" Bonds" ) and loan the proceeds thereof to the Debtor (" Loan" ) pursuant to the terms and conditions set forth in a Loan Agreement, dated as of December 1, 2004 (" Loan Agreement" ); and
WHEREAS, in order to enhance the marketability of the Bonds, the Debtor has requested the Secured Party to issue to the Trustee the Secured Party' s direct pay irrevocable transferable Letter of Credit in the stated amount of $25,308,220.00 (" Letter of Credit" ) to provide payment for and secure the payment of the principal of and interest on, and the purchase price of, the Bonds; and
WHEREAS, the Secured Party will issue the Letter of Credit concurrently with the issuance and delivery of the Bonds pursuant to the Reimbursement and Credit Agreement dated as of December 1, 2004, between the Debtor and the Secured Party (" Reimbursement Agreement" ), under which the Debtor will be obligated, among other things, to reimburse the Secured Party, with interest, for all drawings under the Letter of Credit and the Loan and Reimbursement Agreement have a final maturity date of December 1, 2029; and
WHEREAS, as security for all of the Bank Payments Obligations (as defined herein), the Debtor has duly executed and delivered to the Secured Party, this Deed of Trust.
NOW, THEREFORE, in consideration of the existing and future Bank Payments Obligations herein recited, the Debtor hereby conveys, warrants, grants, bargains, sells, assigns, transfers and pledges unto the Trustee, in Trust, with Power of Sale, the land described in Exhibit A , situated in the City of Olive Branch, County of DeSoto, State of Mississippi, together with all improvements and appurtenances now or hereafter erected on, and all fixtures of any and every description now or hereafter attached to, said land. Notwithstanding any provision in this Deed of Trust or in any other agreement with the Secured Party, the Secured Party shall not have a nonpossessory security interest in, and its Collateral or Pledged Estate shall not include, any
household goods (as defined in Federal Reserve Board Regulation AA, Subpart B), unless the household goods are identified in a security agreement and are acquired as a result of a purchase money obligation. Such household goods shall only secure said purchase money obligation (including any refinancing thereof).
THIS CONVEYANCE TO TRUSTEE, HOWEVER, IS IN TRUST WITH POWER OF SALE to secure prompt payment of all existing and future Bank Payments Obligations due by the Debtor to the Secured Party under the provisions of the Reimbursement Agreement. If the Debtor shall pay said Bank Payments Obligations promptly when due and shall perform all covenants made by the Debtor herein, then this conveyance shall be void and of no effect. If the Debtor shall be in default as provided in Section 5.01, then, in that event, the entire Bank Payments Obligations, together with all interest accrued thereon, shall, at the option of the Secured Party, be and become at once due and payable without notice to the Debtor, and the Trustee shall, at the request of the Secured Party, sell the Pledged Estate conveyed, or a sufficiency thereof, to satisfy the Bank Payments Obligations at public outcry to the highest bidder for cash. Sale of the property shall be advertised for three consecutive weeks preceding the sale in a newspaper published in the county where the Pledged Estate is situated, or if none is so published, then in some newspaper having a general circulation therein, and by posting a notice for the same time at the courthouse of the same county. The notice and advertisement shall disclose the names of the original debtors in this Deed of Trust. The Debtor waives the provisions of Section 89-1-55 of the Mississippi Code of 1972 as amended, if any, as far as this section restricts the right of the Trustee to offer at sale more than 160 acres at a time, and the Trustee may offer the property herein conveyed as a whole, regardless of how it is described.
If the Pledged Estate is situated in two or more counties, or in two judicial districts of the same county, the Trustee shall have full power to select in which county or judicial district, the sale of the property is to be made and the Trustee' s selection shall be binding upon the Debtor and the Secured Party. Should the Secured Party be a corporation or an unincorporated association, then any officer thereof may declare the Debtor to be in default as provided in Section 5.01 and request the Trustee to sell the Pledged Estate. Secured Party shall have the same right to purchase the property at the foreclosure sale as would a purchaser who is not a party to this Deed of Trust.
From the proceeds of the sale the Trustee shall first pay all costs of the sale including reasonable compensation to the Trustee; then the Bank Payments Obligations due the Secured Party by the Debtor, including accrued interest and attorney' s fees due for collection of the debt; then any other debt secured by the Pledged Estate; and then, lastly, any balance remaining to the Debtor or the Debtor' s transferee.
IT IS AGREED that this conveyance is made subject to the covenants, stipulations and conditions set forth below which shall be binding upon all parties hereto.
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ARTICLE I
DEFINITIONS
Section 1.01. Terms Defined Above . As used in this Deed of Trust, the terms defined in the preamble and recitals hereof shall have the meanings indicated therein.
Section 1.02. Definitions . As used herein the following terms shall have the respective meanings set forth or referred to below.
" Bank Payments Obligations" means with respect to the Secured Party, any loans, advances, debts, liabilities, obligations, contingent obligations, covenants and duties owing by the Debtor to the Secured Party of any kind or nature, present or future arising under the Letter of Credit, the Reimbursement Agreement, the Pledge Agreement or under any Financing Document. The amount of the Bank Payments Obligations shall be established or calculated by the Secured Party from time to time and furnished to the Trustee in writing denominating the interest portion of such Bank Payments Obligations and the principal portion of such Bank Payments Obligations, such establishment or calculation being conclusive of the amount due, absent manifest error; and with respect to a provider of an Alternate Credit Facility other than the Secured Party, such obligations as are provided in any applicable financing document. The term includes, without limitation, all interest, charges, expenses, fees, attorneys' fees and any other sums chargeable to the Debtor by the Secured Party under the Reimbursement Agreement and any Financing Document.
" Bank Prime Rate" shall have the meaning set forth in the Reimbursement Agreement.
" Business Day" means a day other than a Saturday, Sunday or a legal holiday in the State of New York or any other day on which banking institutions chartered under the laws of the State of New York or the United States of America are authorized or required by law to close or a day on which the office of the Secured Party at which drafts are to be presented under the Letter of Credit or the corporate trust office of the Trustee is authorized to be closed, or the Federal Reserve System is closed.
" Collateral" is defined in Section 6.01 of this Deed of Trust.
" Debtor" is defined in the introduction to this Deed of Trust and shall include not only the original Debtor hereunder, but also the owner (or owners, if one or more, jointly and severally) of the Pledged Estate or any part thereof, at any time or from time to time, as the case requires.
" Default Rate" shall have the meaning set forth in the Reimbursement Agreement.
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" Environmental Indemnity Agreement" means the Environmental Compliance and Indemnity Agreement, dated December 16, 2004, by and between the Debtor and the Secured Party.
" Event of Default" is defined in Section 5.01 hereof.
" Facility" means the Site and all Improvements, Fixtures and Personalty now or hereafter located thereon which comprises the manufacturing facility owned and operated by the Debtor. The Facility is located on an approximately 101.80-acre site in the City of Olive Branch, County of DeSoto, State of Mississippi.
" Financing Documents" means this Deed of Trust, the Reimbursement Agreement, the Pledge Agreement, the Environmental Indemnity Agreement, the Trust Indenture, the Loan Agreement, the Note and each of the other documents, instruments and agreements referred to therein or contemplated thereby.
" Fixtures" means all goods, fixtures, furnishings, building materials, and equipment financed with proceeds of the Bonds and owned by the Debtor now or hereafter attached to or installed or placed in or about each and every Improvement on the Site for use as part thereof or in conjunction with the use and occupancy of such Improvements, including, but not limited to, all materials, supplies, equipment, apparatus, tracks, ramps, loading platforms, machinery, motors, elevators, escalators, fittings, doors, windows, signs, pylons, screening, awnings, shades, blinds, carpet, floor coverings, draperies, furnaces, boilers, gas and oil and electric burners and heaters, ducts, vents, hoods, flues and registers, hot water heaters, sinks, stoves, ovens, cabinets, countertops, refrigerators, heating, cooling and air conditioning equipment, fans, ventilators, wiring, panels, all lighting fixtures and globes and tubes, time clocks, computer systems and other electrical equipment, all television and radio antenna systems, including satellite dish antennas, and all plumbing and plumbing fixtures and equipment, sprinklers and sprinkler equipment, and all trees, plants, shrubs and other landscaping, all of which are and shall be deemed to be a permanent accession to the Site and Improvements thereon, and all recreational equipment and facilities of all kinds, and water, gas, electrical, storm and sanitary sewer facilities whether or not situated in easements, together with all accessions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof.
" Generally Accepted Accounting Principles" means generally accepted accounting principles consistently applied and maintained throughout the period indicated and consistent with the prior financial practice of the Debtor, as reflected in the financial statements required under the Reimbursement Agreement, except for changes permitted by the Financial Accounting Standards Board or any similar accounting authority of comparable standing.
" Governmental Authority" means any government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
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" Highest Lawful Rate" means the maximum legal rate of interest which the Trustee or the Secured Party is legally entitled to charge, contract for or receive under any law to which such interest is subject.
" Impositions" means (a) all real estate and personal property taxes, charges, assessments, excises and levies, and any interest, costs or penalties with respect thereto, general and special, ordinary or extraordinary, foreseen and unforeseen, of any kind and nature whatsoever which at any time prior to or after the execution hereof may be assessed, levied, charged or imposed upon or with respect to the Pledged Estate or the ownership, use, or occupancy or enjoyment thereof, or any portion thereof, or the sidewalks, streets or alleyways adjacent thereto, (b) any charges, fees, licenses, payments or other sums payable for any easement, license or agreement maintained for the benefit of the Pledged Estate, and (c) all water, gas, sewer, electricity, telephone, garbage collection and other utility charges, rents and fees appurtenant to or used in connection with the Pledged Estate which if unpaid, would become a lien on the Pledged Estate.
" Improvements" means all buildings and improvements of every kind and description now situated or hereafter placed or erected upon the Site including, without limitation, improvements constituting the Facility and all additions, alterations, betterments or appurtenances thereto and all reversions and remainders therein.
" Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, as well as the interest of a vendor or lessor under any conditional sales agreement, capital lease or other title retention agreement relating to such asset.
" Permitted Encumbrances" shall be defined as follows:
(a) the liens and security interests created by the Related Documents to secure the Bonds and the Bank Payments Obligations;
(b) liens for taxes, assessments and special assessments which are not then delinquent, or, if then delinquent, are Matters Contested in Good Faith (as defined in the Reimbursement Agreement);
(c) utility, access and other easements and rights-of-way, restrictions and exceptions which will not interfere with or impair the operation of any portion of the Pledged Estate;
(d) any mechanic' s, laborer' s, materialman' s, supplier' s or vendor' s lien or rights in respect thereof if payment is not yet due under the contract in question or if such lien is a Matter Contested in Good Faith;
(e) such minor defects and irregularities of title as normally exist with respect to properties similar in character to the Pledged Estate which do not materially adversely affect the value of the Pledged Estate or impair the property affected thereby for the purpose for which it was acquired or is held;
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(f) any lien, easement defect or irregularities of title which are described in the title policy furnished pursuant to Section 4.01(e)(iii) of the Reimbursement Agreement and accepted by the Secured Party;
(g) liens incurred in the ordinary course of business in connection with workers' compensation, unemployment insurance, other forms of governmental insurance or benefits, or to secure performance of statutory obligations; and
(h) liens approved in writing by the Secured Party.
" Person" means an individual, partnership, corporation (including a business trust), trust, unincorporated association, joint venture or other entity.
" Personalty" means all of the right, title and interest of the Debtor in and to all refundable, returnable or reimbursable fees, license fees, deposits or other funds or evidences of credit or indebtedness to the extent funded or financed with proceeds of the Bonds deposited by or on behalf of the Debtor with any Governmental Authority, boards, corporations, providers of utility services, public or private, including specifically, but without limitation, all refundable, returnable or reimbursable tap fees, utility deposits, commitment fees and development costs to the extent funded with proceeds of the Bonds, and all other personal property, including furniture, furnishings, equipment, machinery, building materials and goods (other than the Fixtures) of any kind or character as defined in and subject to the UCC and which are now or hereafter located or to be located upon, within or about the Site or the Improvements, or which are now being or may hereafter be used upon, within or about the Site or the Improvements or which are in any way related to the ownership, use, leasing, maintenance, repair, alteration, reconstruction or operation of the Project, together with all accessions, replacements and substitutions thereto or therefor and the proceeds thereof, to the extent any of the foregoing are purchased with proceeds of the Bonds.
" Phase I Environmental Assessment" means the Phase I Environmental Assessment prepared by Mostardi Platt Environmental, dated November 11, 2003.
" Pledge Agreement" means the Custody, Pledge and Security Agreement executed by and among the Debtor, the Trustee and the Secured Party dated as of December 1, 2004.
" Pledged Estate" means the Facility, Site, Improvements, Fixtures, Personalty and Rents, together with all betterments, improvements, additions, alterations and appurtenances, substitutions, replacements and reversions thereof and thereto and proceeds thereof and all reversions and remainders therein and any and all other security and collateral of every nature whatsoever, now or hereafter given for the performance and discharge of the Bank Payments Obligations. As used in this Deed of Trust, the term Pledged Estate is expressly defined as
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meaning all or, where the context permits or requires, any portion of or interest in the Facility, Site, Improvements, Fixtures, Personalty or Rents.
" Reimbursement Agreement" means the Letter of Credit and Reimbursement Agreement, dated as of December 1, 2004, by and between the Debtor and the Secured Party.
" Rents" means all leases, oil, gas or other mineral royalties, bonuses and rental income, rentals, including, without limitation, insurance pertaining to the Pledged Estate, and all of the Debtor' s right, title and interest in and to any awards, settlements or compensation heretofore made or hereafter to be made by any Governmental Authority for the Pledged Estate including through eminent domain or condemnation and those from any vacation of, or any change of grade in or to any streets affecting the Site or the Improvements or which may be received or receivable by the Debtor from any hiring, using, letting, leasing, subhiring, subletting or subleasing of or otherwise from the whole or any portion or portions of the Facility at any time while any portion of the Bank Payments Obligations secured hereby remains unpaid.
" Site" means the tract of land located in the City of Olive Branch, County of DeSoto, Mississippi, more particularly described by metes and bounds in Exhibit A , attached hereto and incorporated herein by this reference for all purposes, together with all the rights, rights of way, easements, profits, privileges, tenements, hereditaments and appurtenances, now or hereafter in any way appertaining or belonging thereto, and any part thereof, including any claim at law or in equity, and any after acquired title and reversion in or to each and every part of the Site and all streets, roads, highways, alleys, strips or gores of land adjacent to or adjoining the same.
" State" means the State of Mississippi.
" UCC" means the Uniform Commercial Code in effect in the State.
Section 1.03. Interpretations . The table of contents and article and section headings of this Deed of Trust are for reference purposes only and shall not affect its interpretation in any respect. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa.
Section 1.04. References, etc. Any reference in this Deed of Trust to a document or instrument shall mean such document or instrument and all exhibits thereto, as amended or supplemented from time to time. Any reference in this Deed of Trust to any Person as a party to any document or instrument shall include its successors and assigns to such status and in the case of the Debtor shall also include its subsidiaries, if any, which are permitted or required under Generally Accepted Accounting Principles to be consolidated with the Debtor in its financial statements.
Section 1.05. Incorporation of Certain Definitions by Reference . Each capitalized term used herein and not otherwise defined herein shall have the meaning provided therefor in the Reimbursement Agreement, or if not defined therein, in the Bond Indenture.
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Section 1.06. Accounting Terms and Determinations; Incorporation of UCC Definitions . Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with Generally Accepted Accounting Principles as in effect from time to time, applied on a consistent basis. Except as otherwise defined or indicated by the context herein, all terms which are defined in the UCC shall have their respective meanings as used in Article 9 of the UCC.
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ARTICLE II
[RESERVED]
9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Debtor hereby unconditionally warrants and represents to the Secured Party (which representations and warranties will survive the creation and performance of the Debtor' s obligations hereunder) as follows:
Section 3.01. Warranties of Title .
(a) The Debtor has good and marketable title to the Pledged Estate, free and clear of every Lien, other than the Permitted Encumbrances;
(b) The Debtor is lawfully and indefeasibly seized, in fee simple, of the real property comprising a part of the Pledged Estate hereby conveyed and has full right and power to grant, convey and pledge the Pledged Estate to the Trustee;
(c) The Debtor is the legal and equitable owner and holder of the Pledged Estate, free of any adverse claim or Lien except those provided for in the Permitted Encumbrances;
(d) The Debtor will forever warrant and defend the title to the Pledged Estate unto the Secured Party against the claims and demands of all Persons whomsoever except those claiming under the Permitted Encumbrances; and
(e) The Debtor has not entered into any sales agreement, option, assignment, sublease, pledge, mortgage, deed of trust, financing statement, security agreement or any other arrangement regarding the Pledged Estate apart from the Financing Documents.
Section 3.02. Lien of this Deed of Trust . This Deed of Trust constitutes a valid and subsisting first lien on the Site and the Improvements and Fixtures associated therewith and a valid, subsisting first priority security interest in and to the Fixtures, Personalty and Rents in accordance with the terms hereof.
Section 3.03. Financings . The only financings secured by the Pledged Estate are the Bank Payments Obligations.
Section 3.04. Impositions and Other Payments . The Debtor has filed all ad valorem tax returns required to be filed by the Debtor by all Governmental Authorities having jurisdiction over the Pledged Estate and has paid all other Impositions which have become due pursuant to such returns or pursuant to any assessments received by the Debtor and the Debtor knows of no basis for any additional assessment against the Pledged Estate in respect of any Impositions. The Debtor shall pay all Impositions not later than their respective due dates, except those Impositions which are matters contested in good faith and nonpayment of which
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will not materially adversely affect the Pledged Estate. Not later than ten (10) days after such due dates the Debtor shall produce to the Secured Party receipts for the payment thereof. The Debtor has paid or will pay in full when due (except for such retainages as may be permitted or requir
