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

 

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TABLE OF CONTENTS

 

(This Table of Contents is for convenience of reference only and is not a part
of the Land Deed of Trust.)

 

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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

 

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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

 

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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]

 

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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 required by any Governmental
Authority or by the terms of any applicable construction or related contract to
be withheld by the Debtor pending completion of the Facility or which are being
contested in good faith), all sums owing for labor, material, supplies, personal
property (whether or not forming a Fixture hereunder) and services of every kind
and character used, furnished or installed in or on the Pledged Estate.

 

Section 3.05. Incorporation of Representations and Warranties by Reference. The
Debtor hereby makes to the Secured Party the same representations and warranties
as are set forth in the Financing Documents, which representations and
warranties, as well as the related defined terms contained therein, are hereby
incorporated by reference with the same effect as if each and every such
representation and warranty and defined term were set forth herein in its
entirety. No amendment to such representations and warranties or defined terms
made pursuant to the Financing Documents shall be effective to amend such
representations and warranties and defined terms as incorporated by reference
herein without the consent of the Secured Party.

 

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ARTICLE IV

 

COVENANTS AND OBLIGATIONS OF THE DEBTOR

 

To protect and maintain the security of this Deed of Trust, in addition to the
covenants set out in the Financing Documents, the Debtor unconditionally
covenants with the Secured Party as follows, which covenants are, according to
their terms, of the essence hereof and will survive the delivery of this Deed of
Trust:

 

Section 4.01. Defects in Title. The Debtor will proceed with diligence to
correct any material defect in title to the Pledged Estate, should any such
defect be found to exist after the execution and delivery of this Deed of Trust,
and in this connection, should it be found after the execution and delivery of
this Deed of Trust, that there exists upon the Pledged Estate any Lien (other
than a Permitted Encumbrance), equal, inferior, or superior in rank or priority
to the lien and security interests created by this Deed of Trust (other than the
Permitted Encumbrances), or should any such Lien hereafter arise (other than the
Permitted Encumbrances), then, unless the Secured Party shall have given
specific prior written consent to the creation or continuation thereof, the
Debtor will promptly discharge and remove any such Lien from the Pledged Estate.
The Debtor further agrees that the Secured Party may take any action the Secured
Party deems advisable to protect and preserve its interest in the Pledged Estate
and, in such event, the Debtor will indemnify the Secured Party against any and
all reasonable costs, attorneys’ fees, and other expenses which the Secured
Party may incur in defending against any such adverse claims after providing
notice thereof to the Debtor.

 

Section 4.02. Maintenance and Repair. The Debtor shall, at its own expense, do
or cause to be done all things reasonably necessary to preserve and keep in good
repair, working order and efficiency, ordinary wear and tear excepted, all of
the Pledged Estate, as provided in the Loan Agreement and in the Reimbursement
Agreement.

 

Section 4.03. Incorporation of Covenants and Obligations by Reference. The
Debtor hereby makes to the Secured Party the same covenants and agreements as
set forth in the Financing Documents, which covenants and agreements, as well as
the related defined terms contained therein, are hereby incorporated by
reference with the same affect as if each and every covenant and agreement and
defined term were set forth herein in its entirety. No amendment to such
covenants and agreements or defined terms made pursuant to the Financing
Documents shall be effective to amend such covenants and agreements and defined
terms as incorporated by reference herein without the consent of the Secured
Party given in accordance with the Financing Documents.

 

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ARTICLE V

 

EVENTS OF DEFAULT; REMEDIES

 

Section 5.01. Event of Default.

 

(a) Any of the following events shall be considered an Event of Default under
this Deed of Trust:

 

(i) the Debtor fails to pay when due any amount specified in the Reimbursement
Agreement as and when the same is due and payable;

 

(ii) the Debtor fails to observe or perform any of the covenants, conditions or
provisions of the Reimbursement Documents (as defined in the Reimbursement
Agreement) to which it is a party (other than as specified in subparagraph (i)
above) and to remedy such default within thirty (30) days after the Secured
Party shall have provided the Debtor with notice of such failure;

 

(iii) any representation or warranty made by the Debtor in the Reimbursement
Agreement or in any certificate, financial or other statement furnished by the
Debtor to the Secured Party pursuant to the Reimbursement Documents or the
Related Documents (as defined in the Reimbursement Agreement) proves to have
been untrue or incomplete in any material respect when made;

 

(iv) the Debtor fails to make the payments required under the Loan Agreement
when due, except as a result of a wrongful dishonor by the Secured Party of a
properly requested draw under the Letter of Credit and at the time such payment
was due under the Loan Agreement adequate funds to make such payment were
available in the Reimbursement Account (as defined in the Reimbursement
Agreement);

 

(v) the occurrence of an Event of Bankruptcy (as defined in the Reimbursement
Agreement);

 

(vi) any provision of the Reimbursement Agreement or any of the other
Reimbursement Documents or Related Documents to which the Debtor is a party at
any time for any reason ceases to be the legal, valid and binding obligation of
the Debtor or ceases to be in full force and effect, or is declared to be null
and void and such result would have a Material Adverse Effect (as defined in the
Reimbursement Agreement), or the validity or enforceability of any provision of
the Reimbursement Agreement or any of the other Reimbursement Documents or
Related Documents is contested by the Debtor, or the Debtor renounces the same
or denies that it has any further liability under the Reimbursement Agreement or
thereunder;

 

(vii) the Debtor (a) fails to make any payment or payments of any Indebtedness
(as defined in the Reimbursement Agreement) of the Debtor when due

 

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(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure continues after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness, except
for Matters Contested in Good Faith (as defined in the Reimbursement Agreement),
or (b) fails to perform or observe any term, covenant or condition on its part
to be performed or observed under any agreement or instrument (other than any
failure to perform any term contemplated by sub-clause (a) hereof), except for
Matters Contested in Good Faith, if, in either case, the effect of such failure
to perform or observe is to accelerate, or to permit the acceleration, mandatory
redemption or tender of, the maturity of any Indebtedness of the Debtor in
excess of $250,000;

 

(viii) an event of default has occurred and is continuing as defined in any
other credit agreement under which the Debtor is now or hereafter obligated to
the Secured Party;

 

(ix) any party to any of the Related Documents fails duly to perform any
obligation thereunder and such failure has a Material Adverse Effect;

 

(x) the Facility or any portion thereof is subject to any material condemnation
or similar proceeding and the Debtor fails or refuses to reasonably use the
condemnation proceeds to rebuild the Facility or construct a replacement
Facility;

 

(xi) the Facility suffers a loss by fire or other casualty and such loss is not
fully insured (excluding any deductible amount permitted under the Reimbursement
Agreement) and Debtor fails to satisfy the requirements of Section 9.04 hereof;

 

(xii) any material permit or approval issued by any Governmental Authority (as
defined in the Reimbursement Agreement) with respect to the occupancy, operation
or use of the Facility is revoked, suspended or annulled which has a Material
Adverse Effect;

 

(xiii) a survey at any time shows that the improvements constituting the
Facility encroach upon any street, easement, right of way or adjoining property
or violate any setback requirement or that any adjoining structure encroaches on
the Pledged Estate to an extent that has a Material Adverse Effect;

 

(xiv) the Debtor or any ERISA Affiliate (as defined in the Reimbursement
Agreement) shall fail to pay when due an amount or amounts aggregating in excess
of $250,000 which it shall have become liable to pay under Title IV of ERISA (as
defined in the Reimbursement Agreement) or notice of intent to terminate a
Material Plan (as defined in the Reimbursement Agreement) shall be filed under
Title IV of ERISA by either the Debtor, any ERISA Affiliate, any Plan (as
defined in the Reimbursement Agreement) administrator or any combination of the
foregoing; or the PBGC (as defined in the Reimbursement Agreement) shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan (as defined in the
Reimbursement Agreement); or a condition shall

 

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exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Plan must be terminated; or there shall occur a complete
or partial withdrawal from, or default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to one or more Multiemployer Plans (as defined in the
Reimbursement Agreement) which could reasonably be expected to cause one or more
of the Debtor, any Subsidiary (as defined in the Reimbursement Agreement) or any
ERISA Affiliate to incur a current payment obligation in excess of $250,000;

 

(xv) a Change of Control (as defined in the Reimbursement Agreement) shall
occur;

 

(xvi) the loss or material impairment of any material license which is required
to operate the Facility and provided that if such reinstatement or reissuance of
such license is diligently pursued, such loss or impairment shall have remained
uncured for a period of fourteen (14) Business Days (as defined in the
Reimbursement Agreement); and

 

(xvii) any judgment involving monetary damages shall be entered against the
Debtor which shall become a lien on the Debtor’s properties or assets or any
portion thereof or interest therein and such execution, attachment or similar
process is not released, bonded, satisfied, vacated or stayed within thirty (30)
days after its entry or levy, and said writ of execution, attachment, levy or
judgment shall involve monetary damages aggregating more than $250,000.00; or a
writ of execution or attachment or any similar process shall be issued or levied
against all or any part of or interest in any of the properties or assets of the
Debtor or the seizure or foreclosure of any of the properties or assets of the
Debtor pursuant to process of law or by respect of legal self-help, involving
monetary damages aggregating more than $250,000.00 unless said execution,
attachment, seizure or foreclosure is stayed or bonded within thirty (30) days
after the occurrence of same.

 

Section 5.02. Remedies. If an Event of Default shall occur and be continuing as
provided in Section 5.01 hereof, the Secured Party, or an attorney or agent,
without bringing any action or proceeding, or by a receiver to be appointed by a
court in any appropriate action or proceeding, may do all or any of the
following subject to the terms of the Financing Documents:

 

(a) Enter upon and take exclusive possession of the Pledged Estate or any part
thereof, including all books, records and accounts relating thereto;

 

(b) Do any and all acts which the Secured Party deems proper to protect the
security hereof, including, for the account of the Debtor, making all payments
the Debtor is obligated to make under the Financing Documents;

 

(c) Cause the construction or completion of construction of any Improvements or
any portion of the Facility in accordance with the plans and specifications, if
applicable;

 

(d) To the extent permitted by law and the Financing Documents, enter into the
Project without being liable for any prosecution or damages therefor and may

 

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dispossess the Debtor and may lease the Project or any part thereof to another
party for a term which may extend beyond the term of the Financing Documents and
receive the rent therefor, upon such terms as shall be satisfactory to the
Secured Party. Such entry by the Secured Party shall not operate to release the
Debtor from any sums to be paid or covenants to be performed under the Financing
Documents during the full term thereof. In addition, the Debtor agrees that the
receipt of rents, awards, and any other moneys or evidences thereof, and any
disposition of the same by the Secured Party shall not constitute a waiver of
the right of foreclosure and sale of the Project by the Secured Party in the
case of an Event of Default. For the purpose of leasing the Project to another
party, the Secured Party shall be authorized to make such repairs or alterations
in or to the Project as the Secured Party may deem necessary to place the same
in good order and condition. The Debtor shall be liable to the Secured Party for
the cost of such repairs or alterations and all expenses of such leasing. If the
sum realized or to be realized from the leasing is insufficient to satisfy the
sum payable by the Debtor under the Financing Documents, the Secured Party, at
its option, may require the Debtor to pay such deficiency month by month, or may
hold the Debtor liable in advance for the entire deficiency to be realized
during the term of the leasing of the Project. Notwithstanding such entry by the
Secured Party, the Debtor agrees that it shall not discontinue or take any
action to cause the discontinuance of any utility service (including heat)
furnished to the Project prior to such entry and the Debtor further agrees any
such utility service shall continue to be furnished to the Project at the
expense of the Debtor;

 

(e) Perform any and all conditions and undertakings of any agreement or
commitment entered into between the Debtor and any Person, including the Secured
Party, provided, however, that if the Debtor retains possession of all or any
part of the Pledged Estate after an Event of Default and without the Secured
Party’s prior written consent thereto, the Secured Party may invoke any and all
legal remedies to dispossess the Debtor available to the Secured Party by
applicable law. Nothing contained in the foregoing sentence shall, however, be
construed to impose any greater obligation or any prerequisites to acquiring
possession of the Pledged Estate after an Event of Default than would have
existed in the absence of such sentence;

 

(f) Either with or without taking possession of the Pledged Estate, either by
itself or by any other Person, in such manner, for such time and upon such terms
that the Secured Party may deem to be prudent or reasonable under the
circumstances (making such repairs, alterations, additions and improvements
thereto and taking any and all other action with reference thereto from time to
time as the Secured Party may deem necessary or desirable), hold, lease, manage,
operate or otherwise use or permit the use of the Pledged Estate and collect and
receive the Rents, including accrued and unpaid Rents, issue binding receipts
therefor, and apply the same, less costs of operation and collection (including,
but not limited to, the reasonable costs, expenses and fees of a receiver, if
any), upon the Bank Payments Obligations secured by this Deed of Trust. The
receipt by the Secured Party of any Rents, pursuant to the foregoing, whether
prior to or during the pendency of sale proceedings under this Deed of Trust,
shall not cure such default, nor affect said notice or proceedings or any sale
pursuant thereto, but such Rents, less costs as aforesaid, shall be applied in
reduction of the entire Bank Payments Obligations from time to time outstanding
and secured hereby; and

 

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(g) The Trustee, at the direction of the Secured Party, may commence foreclosure
proceedings on all or any portion of the real property comprising a part of the
Pledged Estate, or on any interest in any part thereof it selects, by statutory
power of sale or action brought in its own name as plaintiff in a court of
competent jurisdiction, in the manner provided by law, and the filing of a
complaint to foreclose the same, to the extent permitted by applicable law,
shall be conclusive notice of the due exercise of such option; or the Secured
Party may execute and deliver to the Debtor written notice of such breach,
default or other Event of Default and of its election to cause this Deed of
Trust to be foreclosed by action to be brought by the Secured Party as plaintiff
in a court of competent jurisdiction in the manner provided by law, as
aforesaid; and thereafter the Secured Party shall bring such action. In case of
any sale under this Deed of Trust, whether by judicial proceedings or otherwise,
the Pledged Estate (and Debtor’s interest therein) may be sold in one parcel and
as an entirety or in such parcels (or interests), manner or order as the Secured
Party in their sole discretion may elect. In the event of foreclosure of this
Deed of Trust by action brought by the Secured Party as aforesaid, there shall
also be, and is, secured hereby, the payment of all reasonable costs and
expenses, including, without limitation, cost of search or other evidence of
insurance of title, for the benefit and protection of the Secured Party, and
attorneys’ fees and expenses (including attorneys’ fees and expenses on appeal
or arising out of any action in bankruptcy) in a reasonable sum to be fixed by
the court in any such action brought to foreclose the same, whether such
foreclosure action progresses to judgment or not; and the filing of a complaint
in any such action shall render due and payable by the Debtor such cost of
search or evidence of insurance of title and attorneys’ fees.

 

If Secured Party invokes the power of sale contained herein and directs Trustee
to foreclose on all or part of the Pledged Estate, Trustee may sell all or any
part of the Pledged Estate (including any property that may be subject to the
provisions of the UCC which may then be security for the debt hereby secured,
which sale may be conducted in connection with any sale of real property and
fixtures and in accordance with the UCC) after giving notice of the time, place
and terms of sale as required by Section 89-1-55 of the Mississippi Code of
1972, as amended, or any successor provisions. If the Pledged Estate is located
in two or more counties or in two judicial districts of the same county, whether
the Pledged Estate consists of one parcel or more than one parcel, then Trustee
shall have full power to select in which county, or judicial district, the sale
of all or any part of the Pledged Estate shall be made and its selection shall
be binding upon Debtor and Secured Party and all persons claiming through or
under them, whether by contract or by law. Trustee shall have full power to fix
the day, time, terms and place of sale and may sell the Pledged Estate in
parcels or as a whole as Trustee may deem best. Debtor waives the provisions of
Section 89-1-55 of the Mississippi Code of 1972, as amended, and any successor
provisions, as far as said section restricts the right of Trustee to offer at
sale more than one hundred sixty (160) acres at a time, and Trustee may offer
the Pledged Estate as a whole or in part and in such order as Trustee may deem
best, regardless of the manner in which it may be described. Trustee, without
demand on Debtor, shall sell the Pledged Estate at public auction to the highest
bidder for cash at such time and place in DeSoto County, Mississippi, as Trustee
designates in the notice of sale. Trustee may appoint an agent to conduct
foreclosure proceedings and any sale thereunder, which appointment need not be
recorded. Any foreclosure sale may be adjourned or continued from time to time
in the discretion of Trustee until such time

 

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as such sale can be validly and legally completed. At any sale made to enforce
the trust herein given, Trustee shall execute a deed of conveyance or other
appropriate instrument conveying the Pledged Estate so sold, which conveyance
shall be without any covenant or warranty, express or implied, and shall vest
full and perfect title in such purchaser upon payment of the purchase price. The
recitals in such instrument shall be prima facie evidence of the truth of the
statements made therein, and failure to give any notice to Debtor as provided
herein shall not adversely affect any foreclosure sale or create any liability
on the part of Trustee or Secured Party to Debtor. Upon any sale pursuant to
this Section, whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Secured Party may bid for and acquire the Pledged Estate or any part
thereof and in lieu of paying cash therefor may make settlement for the purchase
price by crediting upon the indebtedness of Debtor secured by this Deed of Trust
the net sales price after deducting therefrom the expenses of the sale and the
costs of the auction and any other sums which Trustee or Secured Party is
authorized to deduct under this Deed of Trust. If the Pledged Estate is sold
pursuant to this Section, Debtor or any person holding possession of the Pledged
Estate through Debtor shall immediately surrender possession of the Pledged
Estate to the purchaser at such sale. If possession is not surrendered, Debtor
or such person shall be deemed to be a tenant at sufferance and may be removed
by writ of possession or any other lawful means.

 

Section 5.03. Application of Proceeds. The proceeds of any sale of the Pledged
Estate shall be applied by the Trustee to the extent that funds are so available
to the following or in such order of priority that the Secured Party, in its
sole discretion may determine, subject to the requirements of State law:

 

(a) First, to all costs and expenses of the sale, including, but not limited to,
reasonable Trustee’s and attorney’s fees and costs of title evidence and any
other costs incurred in connection with the sale;

 

(b) Second, to all sums secured hereby; and

 

(c) Third, the excess, if any, to the person or persons legally entitled
thereto.

 

Section 5.04. Delivery of Possession. Any sale or sales of the Pledged Estate,
or any part thereof, under or by virtue of judicial proceedings, regardless of
the price paid for the Pledged Estate or any part thereof, shall, to the extent
permitted by applicable law, operate to divest all right, title, interest, claim
and demand whatsoever, either at law or in equity, of the Debtor of, in and to
the Pledged Estate and the property sold, and shall be a perpetual bar, both at
law and equity, against the Debtor, its successors and assigns and against any
and all Persons claiming or who shall thereafter claim all or any portion of the
property sold from, through, or under the Debtor, its successors or assigns and
the Debtor, if requested by the Secured Party so to do, shall join in the
execution and delivery of all property conveyances, assignments, and transfers
of the property so sold. The rights of the Secured Party to possession or for a
receiver are of the essence hereof, and shall continue during the running of the
period allowed by law for the reinstatement of the Bank Payments Obligations
secured hereby and thereafter until sale of

 

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the Pledged Estate. The Debtor hereby expressly waives and relinquishes any and
all rights the Debtor may have by statute or otherwise to the possession of the
Pledged Estate and the Rents during pendency of a sale or foreclosure of this
Deed of Trust. The Debtor agrees for itself and any and all Persons claiming by,
through or under the Debtor that if the Debtor shall hold possession of the
Pledged Estate or any part thereof subsequent to sale or foreclosure hereunder,
the Debtor, or the parties so holding possession, shall become and be considered
as tenants at will of the purchaser or purchasers of such foreclosure sale; and
any such tenant failing or refusing to surrender possession upon demand shall be
guilty of forcible detainer and shall be liable to such purchaser or purchasers
for reasonable rental on said Pledged Estate and shall be subject to eviction
and removal, forcible or otherwise, with or without process of law, damages
which may be sustained by the Debtor or any such tenant as a result thereof
being hereby expressly waived.

 

Section 5.05. Reserved.

 

Section 5.06. Remedies Cumulative, Concurrent and Non-Exclusive. The Secured
Party shall have all the rights, remedies and recourses granted herein, in the
Financing Documents and as available at law or equity (including specifically
those granted by the UCC), and the same:

 

(a) shall be cumulative and concurrent;

 

(b) may be pursued separately, successively or concurrently against the Debtor,
or against the Pledged Estate, at the sole discretion of the Secured Party;

 

(c) may be exercised as often as occasion therefor shall arise, it being agreed
by the Debtor that the failure to exercise any of same shall in no event be
construed as a waiver or release thereof or of any other right, remedy or
recourse of the Secured Party; and

 

(d) are intended to be, and shall be, non-exclusive.

 

Section 5.07. No Conditions Precedent to Exercise of Remedies. The Debtor will
not be relieved from the payment or fulfillment of the Bank Payments Obligations
by reason of:

 

(a) the failure of the Secured Party to comply with any request of the Debtor,
or any other Person so obligated to enforce any provisions of the Financing
Documents;

 

(b) the release, regardless of consideration, of the Pledged Estate or the
addition of any other property to the Pledged Estate;

 

(c) any agreement or stipulation between any subsequent owner of the Pledged
Estate and the Secured Party extending, renewing, rearranging or in any other
way modifying the terms of the Financing Documents without first having obtained
the consent of, given notice to, or paid any consideration to the Debtor, who,
in such event, shall continue to be

 

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liable to make payment according to the terms of any such extension or
modification agreement unless expressly released and discharged in writing by
the Secured Party; or

 

(d) any other act or occurrence, save and except the complete payment and
satisfactory fulfillment of all of the Bank Payments Obligations.

 

Section 5.08. Extension, Rearrangement or Renewal of the Bank Payments
Obligations. It is expressly agreed that any of the Bank Payments Obligations at
any time secured hereby may be from time to time extended for any period,
rearranged, modified, or renewed and that any part of the security herein
described, or any other security for the Bank Payments Obligations, may be
waived or released without in any way altering, varying or diminishing the
force, effect or Lien of this Deed of Trust; and the Lien and security interests
granted by this Deed of Trust shall continue as a prior Lien and security on all
of the Pledged Estate not expressly so released, until all sums with interest
and charges hereby secured are fully paid; and no other security now existing or
hereafter taken to secure the payment of the Bank Payments Obligations or any
part thereof or the performance of any obligation or liability whatsoever shall
in any manner impair or affect the security given by this Deed of Trust and all
security for the payment of the Bank Payments Obligations or any part thereof
and the performance of any obligation or liability shall be taken, considered
and held as cumulative.

 

Section 5.09. Waiver of Redemption, Notice and Marshalling of Assets. To the
fullest extent permitted by applicable law, the Debtor hereby irrevocably and
unconditionally waives and releases:

 

(a) all benefits that might accrue to the Debtor by virtue of any present or
future law exempting the Pledged Estate from attachment, levy or sale on
execution or providing for any appraisement, valuation, stay of execution,
exemption from civil process, redemption or extension of time for payment;

 

(b) except as expressly provided herein or in the Financing Documents, all
notices of any Event of Default or of the Secured Party’s election to exercise
or the Secured Party’s actual exercise of any right, remedy or recourse provided
for under the Financing Documents;

 

(c) any right to a marshalling of assets, right to direct the order in which
such property, if consisting of several known lots or parcels, shall be sold, or
right to a sale in inverse order of alienation; and

 

(d) the pleading of any statute of limitations as a defense to any and all Bank
Payments Obligations secured by this Deed of Trust;

 

and covenants not to hinder, delay or impede the execution of any power herein
granted or delegated to the Secured Party, but to suffer and permit the
execution of every power as though no such law or laws had been made or enacted.

 

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Section 5.10. Repayment of Expenses. Repayment of all expenses incurred by the
Secured Party hereunder or payments made by the Secured Party on behalf of the
Debtor hereunder, or under the Financing Documents, together with interest
thereon shall be secured by this Deed of Trust; following the occurrence of an
Event of Default, interest thereon shall be at the Default Rate.

 

ARTICLE VI

 

SECURITY AGREEMENT

 

Section 6.01. Security Agreement. To the extent that the Pledged Estate may be
subject to the UCC, this Deed of Trust shall also constitute and serve as a
“security agreement” on personal property within the meaning of, and shall
constitute a first and prior security interest under, the UCC with respect to
the Pledged Estate which is subject to the UCC, including without limitation,
the Personalty, Fixtures and Rents associated with the Project (collectively,
the “Collateral”). To this end, the Debtor has GRANTED, BARGAINED, CONVEYED,
ASSIGNED, TRANSFERRED and SET OVER and by these presents does GRANT, BARGAIN,
CONVEY, ASSIGN, TRANSFER and SET OVER unto the Secured Party a security interest
in all of the Debtor’s right, title and interest in to and under all of the
other Pledged Estate not constituting real property under the laws of the State
to secure the full and timely payment and the full and timely performance and
discharge of the Bank Payments Obligations. Upon any default of the Debtor
hereunder, the Secured Party, or if the Secured Party directs the Trustee, at
the direction of the Secured Party, shall be entitled to exercise with respect
to the Collateral all of the rights and remedies set forth herein and in the
Financing Documents or otherwise afforded to a secured party under the terms of
the UCC, any or all of which remedies or rights may be pursued and exercised
concurrently, consecutively, alternatively or otherwise. The Debtor hereby
authorizes the filing and refiling of one or more supplemental security
agreements and financing statements as the Secured Party may from time to time
require covering any property now or hereafter constituting a portion of the
Pledged Estate securing the Bank Payments Obligations secured hereunder and such
financing statements and other and further assurances as the Secured Party may
request to perfect or evidence the security interest herein created and to
particularize and identify the Collateral. The Debtor hereby authorizes the
Secured Party to file such financing statement or statements pursuant to the
UCC, without the signature of the Debtor, as the Secured Party may deem
necessary, to perfect such interests or right in its favor. It is the intent of
the Debtor and the Secured Party that this Deed of Trust encumber all Personalty
and Rents and as to all items contained in the definition of Personalty and
Rents which are included in the UCC, be covered by the security interests
granted in this Article VI and that all items contained in the definition of
Personalty and Rents which are excluded from the UCC be covered by the
provisions of Article II and Article VII hereof.

 

Section 6.02. Fixture Filing. This Deed of Trust shall also constitute a UCC
financing statement (the “Fixture Filing”) for all Personalty or Fixtures, now
or hereafter so affixed by or on behalf of the Debtor to the Pledged Estate so
that such becomes a fixture in accordance with the UCC. Information containing
the security interest herein granted may be

 

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obtained at the addresses set forth herein. The address of the Secured Party as
the “Secured Party” and the address of the Debtor as the “Debtor” are the
addresses set forth in Section 9.07 hereof. The Debtor is a Delaware Corporation
and its corporate ID number is 54-1910453.

 

Section 6.03. Security Agreement; Remedies. If an Event of Default shall occur,
the Secured Party, or the Trustee, at the direction of the Secured Party, may,
in addition to exercising any and all other rights, remedies and recourses set
forth in Article V hereof, and subject to the terms of Section 5.02 with respect
to the portion of the Pledged Estate constituting real property hereof, take any
or all of the following actions without notice to the Debtor (except where
expressly required below or in the Financing Documents):

 

(a) Declare all or part of the Bank Payments Obligations immediately due and
payable in accordance with Article VIII of the Reimbursement Agreement, and
enforce payment and performance of the same by the Debtor;

 

(b) Proceed in the manner set forth in the applicable provision of the UCC
relating to the procedure to be followed when a security agreement covers both
real and personal property;

 

(c) Take possession of the Collateral, or at the Secured Party’s request, the
Debtor shall, at the Debtor’s cost, assemble the Collateral and make it
available at a location to be specified by the Secured Party which is reasonably
convenient to the Debtor and the Secured Party. In any event, the risk of
accidental loss or damage to, or diminution in value of Collateral shall be on
the Debtor, and the Secured Party shall have no liability whatsoever for failure
to obtain or maintain insurance, nor to determine whether any insurance ever in
force is adequate as to amount or as to risk insured;

 

(d) Sell, in one or more sales and in one or more parcels, or otherwise dispose
of any or all of the Collateral in any commercially reasonable manner as the
Secured Party may elect, in a public or private transaction, at any location as
deemed reasonable by the Secured Party either for cash or credit or for future
delivery at such price as the Secured Party may deem fair, and unless prohibited
by the UCC, the Secured Party may be the purchaser of any or all Collateral so
sold and may apply upon the purchase price therefor any Bank Payments
Obligations secured hereby. Any sale pursuant to this paragraph (d) shall be
upon at least ten days notice to the Debtor, which the Debtor agrees is
reasonable. Any such sale or transfer by the Secured Party either to itself or
to any other Person shall be absolutely free from any claim or right by the
Debtor, including any equity or right of redemption, stay or appraisal which the
Debtor has or may have under any rule of law, regulation or statute now existing
or hereafter adopted. Upon any such sale or transfer, the Secured Party shall
have the right to deliver, assign and transfer to the purchaser or transferee
thereof the Collateral so sold or transferred. It shall not be necessary that
the Collateral or any part thereof be present at the location of any such sale
or transfer. The Secured Party, or at the Secured Party’s direction, the Trustee
may, at its discretion, provide for a public sale, and any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Secured Party may fix in the notice of such sale. The
Secured Party shall not be obligated to make any sale pursuant to any

 

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such notice. The Secured Party may, without notice or publication, adjourn any
public or private sale by announcement at any time and place fixed for such
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In the event any sale or transfer hereunder is not completed or is
defective in the opinion of the Secured Party, such sale or transfer shall not
exhaust the rights of the Secured Party hereunder, and the Secured Party shall
have the right to cause one or more subsequent sales or transfers to be made
hereunder. In the event that any of the Collateral not constituting real
property is sold or transferred on credit, or is to be held by the Secured Party
for future delivery to a purchaser or transferee, the Collateral so sold or
transferred may be retained by the Secured Party until the purchase price or
other consideration is paid by the purchaser or transferee thereof, but in the
event that such purchaser or transferee fails to pay for the Collateral so sold
or transferred or to take delivery thereof, the Secured Party shall incur no
liability in connection therewith. If only part of the Collateral is sold or
transferred such that the Bank Payments Obligations remain outstanding (in whole
or in part), the Secured Party’s rights and remedies hereunder shall not be
exhausted, waived or modified, and the Secured Party is specifically empowered
to make one or more successive sales or transfers until all the Collateral shall
be sold or transferred and all the Bank Payments Obligations are paid. In
addition to all of the rights and remedies set forth herein, the Secured Party
shall have all the rights and remedies of a “secured party” under the UCC;

 

(e) Take possession of all books and records of the Debtor pertaining to the
Collateral. The Trustee shall have the authority to enter upon any real property
or improvements in order to obtain any such books or records, or any Collateral
located thereon, and remove the same therefrom without liability; and

 

(f) Apply the proceeds of the disposition of Collateral to the Bank Payments
Obligations in the manner and priority provided in Section 5.03 of this Deed of
Trust. Such application may include, without limitation, the reasonable expenses
of retaking, holding, preparing for sale or other disposition, and reasonable
attorneys’ fees and legal expenses incurred by the Trustee (including attorneys’
fees on appeal or incurred in connection with any bankruptcy proceeding).

 

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ARTICLE VII

 

ASSIGNMENT OF RENTS

 

Section 7.01. Assignment of Rents. For Ten and No/100 Dollars ($10.00) and other
good and valuable consideration, including the Bank Payments Obligations, the
receipt and sufficiency of which are hereby acknowledged, the Debtor has
GRANTED, BARGAINED, SOLD, ASSIGNED and CONVEYED and by these presents does
GRANT, BARGAIN, SELL, ASSIGN and CONVEY absolutely unto the Secured Party, the
Rents subject only to the Permitted Encumbrances applicable thereto and the
hereinafter referenced limited license; TO HAVE AND TO HOLD the Rents unto the
Secured Party forever and the Debtor does hereby bind itself, its successors and
assigns to warrant and forever defend the title to the Rents unto the Secured
Party against every Person whomsoever lawfully claiming or to claim the same or
any part thereof; provided, however, if the Debtor pays or causes to be paid the
Bank Payments Obligations as and when the same shall become due and payable and
shall perform and discharge or cause to be performed and discharged the Bank
Payments Obligations on or before the date the same are to be performed and
discharged, then this assignment shall terminate and be of no further force and
effect, and all rights, titles and interests conveyed pursuant to this
assignment shall become revested in the Debtor without the necessity of any
further act or requirement by the Debtor or the Secured Party.

 

Section 7.02. Rights of the Debtor’s Limited License. The Secured Party hereby
grants to the Debtor a limited revocable license, non-exclusive with the rights
of the Secured Party reserved in Section 7.04 hereof to exercise and enjoy all
incidences of ownership of the Rents, including specifically, but without
limitation, the right to collect, demand, sue for, attach, levy, recover and
receive the Rents and to give proper receipts, releases and acquittances
therefor, prior to any default in the payment of any Bank Payments Obligations
secured hereby, to collect, deliver, disburse and use all such Rents and
exercise all rights under the Rents if not otherwise restricted under the
Financing Documents. This limited license shall be automatically revoked without
notice upon the occurrence of an Event of Default.

 

Section 7.03. Enforcement of Rents.

 

(a) So long as the limited license is in effect, the Debtor shall:

 

(i) duly and punctually perform and comply with any and all representations,
warranties, covenants and agreements expressed as binding upon the Debtor as
landlord under any lease or agreement;

 

(ii) maintain each of the leases or agreements in full force and effect during
the term thereof, unless the Debtor determines in its reasonable judgment that
it is in its best interest to terminate any such lease or agreement;

 

(iii) appear in and defend any action or proceeding in any manner connected with
any lease or agreement;

 

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(iv) deliver to the Secured Party such further information or estoppels, and
execute and deliver to the Secured Party such further assurances and
assignments, with respect to any leases or agreements as the Secured Party may
from time to time request; and

 

(v) notify the Secured Party immediately of any default asserted by any tenant
or other party under such a lease, agreement or contract.

 

(b) Without the Secured Party’s prior written consent, the Debtor shall not:

 

(i) grant concessions, do or knowingly permit to be done anything to impair the
value, in the aggregate, of any of the leases or agreements;

 

(ii) assign or grant a security interest in or to the limited license or any of
the rents, leases or agreements; or

 

(iii) receive or collect rents from any tenant, subtenant, undertenant, or other
occupant of any part of the Pledged Estate, more than one month in advance of
the due date or in any amount greater than that permitted by law.

 

Section 7.04. Suits and Attornment. Upon an Event of Default, the Secured Party
hereby reserves and may exercise the right and the Debtor hereby acknowledges
that the Secured Party has the right (but not the obligation) to collect,
demand, sue for, attach, levy, recover and receive any Rents, to give proper
receipts, releases and acquittances therefor and, after deducting the expenses
of collection, to apply the net proceeds thereof as a credit upon the Bank
Payments Obligations. The Debtor hereby authorizes and directs any Person or
lessee of all or any part of the Pledged Estate to deliver any such payments to,
and otherwise to attorn all other obligations under the lease or agreements
directly to the Secured Party in accordance herewith. The Debtor hereby ratifies
and confirms all that the Secured Party shall do or cause to be done by virtue
of this Section 7.04.

 

Section 7.05. No Merger of Estates. So long as any part of the Bank Payments
Obligations secured hereby remain unpaid and undischarged, the fee and leasehold
estates to the Pledged Estate shall not merge, but rather shall remain separate
and distinct, notwithstanding the union of such estates, either in the Debtor,
the Secured Party or any other Person by purchase or otherwise.

 

Section 7.06. Conflict. The absolute assignment contained in this Article VII is
in addition to, and not in lieu of, Article II hereof. It is the intent of the
parties that no conflict exist between the absolute assignment contained in this
Article VII and the collateral conveyance contained in Article II hereof.
However, if and to the extent such conflict is perceived to exist as to the
Rents, such conflict shall be resolved in favor of the absolute assignment
contained in this Article VII.

 

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Section 7.07. Assignment of Rents Remedies. Upon the occurrence of an Event of
Default, the limited license shall immediately terminate without any notice or
other further action being required of the Secured Party. Thereafter, the
Secured Party shall have the exclusive right, power and authority to take any
and all action in connection with the Rents, regardless of whether a foreclosure
or sale of the remainder of the Pledged Estate has occurred under this Deed of
Trust or whether the Secured Party has taken possession of the remainder of the
Pledged Estate or attempted to do any of the same. The Secured Party may make
such expenditures, including reasonable attorneys fees, in connection therewith
and each amount so paid or expended with interest at the Default Rate shall
become part of the Bank Payments Obligations and be secured hereby. The Secured
Party, may, at its option, have the right to apply to a court to have all Rents
paid into a court registry pending adjudication of the Secured Party’s rights to
such Rents. No action referred to in this Article VII taken by the Secured Party
shall constitute an election of remedies.

 

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ARTICLE VIII

 

ENVIRONMENTAL MATTERS

 

Section 8.01. Definitions. As used in this Article VIII, capitalized terms used
but not defined herein shall have the meanings as set forth in the Environmental
Indemnity Agreement.

 

Section 8.02. Representations and Warranties. Except as set forth in Schedule
8.02, and except as disclosed in the Phase I Environmental Assessment, the
Debtor hereby makes to the Secured Party the same representations and warranties
set forth in Section 1 of the Environmental Indemnity Agreement which
representations and warranties, as well as the related defined terms contained
therein, are hereby incorporated by reference with the same affect as if each
and every representation and warranty and defined term were set forth herein in
its entirety.

 

Section 8.03. Covenants. The Debtor hereby makes to the Secured Party the same
covenants set forth in Sections 3 and 4 of the Environmental Indemnity Agreement
which covenants, as well as the related defined terms contained therein, are
hereby incorporated by reference with the same affect as if each and every
covenant and defined term were set forth herein in its entirety.

 

Section 8.04. General.

 

(a) The representations, warranties, covenants and indemnities contained in this
Article VIII shall continue after and survive the execution and delivery of the
Deed of Trust, the discharge of the Bonds, the discharge of the Deed of Trust,
the payment in full of the Bank Payments Obligations and any foreclosure of the
Deed of Trust and any acquisition of title to the Pledged Estate by the Secured
Party and they shall be deemed continuing representations, warranties, covenants
and indemnities for the benefit of the Secured Party and any successors and
assigns of the Secured Party, including any transferee of the title of the
Secured Party or any subsequent purchaser at a foreclosure sale, and any
subsequent owner of the Pledged Estate claiming through or under the title of
the Secured Party.

 

(b) The representations and warranties of the Debtor in this Article VIII are
based on its investigations of the Pledged Estate, including the Phase I
Environmental Assessment, and the Secured Party is entitled to rely thereon
notwithstanding any independent investigations by the Secured Party or its
employees, agents, contractors or representatives.

 

(c) The Debtor and its successors and assigns, hereby forfeit and forever waive,
release and covenant not to sue the Secured Party with respect to, any claims,
rights, remedies or causes of action that the Debtor may have now or in the
future or that may arise against the Secured Party under Environmental Laws or
any other theory of liability with respect to (i) any environmental matters of
any kind or nature whatsoever respecting the Pledged Estate, including without
limitation any Environmental Conditions on, at, under or emanating

 

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from the Pledged Estate; and (ii) any of the matters described in the Article
VIII, except to the extent such claim, right, remedy or cause of action arises
or results from the acts or omissions of the Secured Party or its successors or
assigns either before or after any foreclosure pursuant to the terms hereof. It
is expressly understood and agreed that to the extent that the Secured Party is
strictly liable under any Environmental Law or other law, statute, code,
ordinance, regulation, rule or other requirement, the indemnification obligation
of the Debtor to the Secured Party under this Article VIII shall likewise be
without regard to fault on the part of the Debtor with respect to any violation
or condition which results in any liability to the Secured Party.

 

(d) The Secured Party’s rights and remedies against the Debtor under this
Article VIII shall be in addition to and not in lieu of all other rights and
remedies of the Secured Party under the Deed of Trust and the other Financing
Documents, at law or in equity.

 

(e) The provisions of this Section 8.04 shall survive the repayment of the Bank
Payments Obligations and the discharge of this Deed of Trust.

 

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ARTICLE IX

 

MISCELLANEOUS PROVISIONS

 

Section 9.01. Trustee Provisions. The following provisions shall govern with
respect to the Trustee:

 

(a) To the extent permitted by law, the Trustee shall not be liable for any
error of judgment or act done by the Trustee in good faith, or be otherwise
responsible or accountable to the Debtor under any circumstances whatsoever, nor
shall the Trustee be personally liable in case of entry by it, or anyone
entering by virtue of the powers herein granted, upon the Pledged Estate for
debts contracted or liability or damages incurred in the management or operation
of the Pledged Estate. The Trustee shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or
proposed to be taken by it hereunder, believed by it in good faith to be
genuine. The Trustee shall be entitled to reimbursement for expenses incurred by
it in the performance of its duties hereunder and to reasonable compensation for
such of its services hereunder as shall be rendered. The Debtor will, from time
to time, pay the compensation due to the Trustee hereunder and reimburse the
Trustee for, and save it harmless against, any and all liability and expenses
which may be incurred by it in the performance of its duties.

 

(b) All moneys received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated in any manner from any other moneys (except to the extent
required by law), and the Trustee shall be under no liability for interest on
any money received by it hereunder.

 

(c) The Trustee may resign at any time with or without notice. If the Trustee
shall resign or become disqualified from acting in the execution of this trust
or shall fail or refuse to execute the same when requested by the Secured Party
so to do, or if, for any reason, the Secured Party shall prefer to appoint a
substitute trustee to act instead of the aforenamed Trustee, the Secured Party
shall have full power to appoint a substitute trustee or trustees, either of
whom may act, and, if preferred and, to the extent permitted by law, several
substitute trustees in succession who shall succeed to all the estates, rights,
powers and duties of the aforenamed Trustee.

 

(d) Any new Trustee appointed pursuant to any of the provisions hereof shall,
without any further act, deed or conveyance, become vested with all the estates,
properties, rights, powers and trusts of its predecessor in the rights hereunder
with like effect as if originally named as the Trustee herein; but nevertheless,
upon the written request of Secured Party or of the successor Trustee, the
Trustee ceasing to act shall execute and deliver an instrument transferring to
such successor Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers and trusts of the Trustee so ceasing to act, and
shall duly assign, transfer and deliver any of the property and money held by
the Trustee to the successor Trustee so appointed in its place.

 

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Section 9.02. No Obligation of the Secured Party. Neither the acceptance by the
Secured Party of the assignment granted in Section 7.01 hereof, or the security
interest granted in Section 6.01 hereof, nor the granting of any other right,
power, privilege or authority in this Deed of Trust, nor the exercise of any of
the aforesaid, shall:

 

(a) prior to the taking of possession of the Pledged Estate by the Secured Party
be deemed to constitute the Secured Party as a “Secured Party in Possession”; or

 

(b) at any time thereafter, obligate the Secured Party:

 

(i) to appear and defend any action or proceeding relating to the Pledged
Estate;

 

(ii) to take any action hereunder;

 

(iii) to expend any money or incur any expenses to perform or discharge any
obligation, duty or liability with respect to any lease or agreement or with
respect to the Personalty, Fixtures, Rents or any other portion of the Pledged
Estate;

 

(iv) to assume any obligation or responsibility for any deposits which are not
physically delivered to the Secured Party; or

 

(v) for any injury or damage to any person or property sustained in or about the
Pledged Estate.

 

Section 9.03. Debtor’s Attorney-in-Fact. The Debtor will pay all costs of filing
any financing, continuation or termination statements with respect to the
security interests created by this Deed of Trust and shall make, execute and
deliver or cause to be made, executed or delivered to the Secured Party, any
further instruments, mortgages, conveyances, deeds, certificates and other
documents as may, in the opinion of the Secured Party, be reasonably necessary
or desirable in order to effectuate, complete, confirm, or perfect or to
continue to preserve the obligation of the Debtor under the Bank Payments
Obligations and the Lien of this Deed of Trust; and the Secured Party is hereby
appointed as the Debtor’s attorney-in-fact to do, at the Secured Party’s option
and at the Debtor’s expense, all acts and things which the Secured Party may
deem necessary to perfect and continue to perfect the lien and security interest
created by this Deed of Trust and to protect the Pledged Estate. After an Event
of Default, the Secured Party may execute, sign, endorse, transfer or deliver,
in the name of the Debtor, notes, checks, drafts or other instruments for the
payment of money and receipts, certificates of origin, certificates of title,
applications for certificates of title, or any other documents necessary to
evidence, perfect or realize upon the liens and security interests created or
secured by this Deed of Trust. This authority shall be considered a power
coupled with an interest and shall be irrevocable until all the Bank Payments
Obligations secured hereby shall have been paid in full.

 

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Section 9.04. Casualty Loss, Condemnation, Eminent Domain and Insurance.

 

(a) If the Pledged Estate shall be wholly or partially destroyed or damaged by
fire or other casualty covered by insurance, or if the Pledged Estate shall be
wholly or partially condemned, taken or injured by any person, including any
person possessing the right to exercise the power of or a power in the nature of
eminent domain or transferred to such a person, by way of a conveyance in lieu
of the exercise of such a power by such person, or if any part of the Pledged
Estate shall be lost because of failure of title, the Debtor covenants that it
will take all actions and will do all things which may be necessary to enable
recovery to be made upon such policies of insurance or on account of such
taking, condemnation, conveyance, damage, injury or loss of title in order that
moneys due on account of losses suffered may be collected and paid to the
Secured Party for application as provided herein. Any appraisement or adjustment
of loss or damage and any settlement or payment therefor, which may be agreed
upon by the Debtor and the appropriate insurer or condemnor or person, shall be
evidenced to the Secured Party by a certificate of the Debtor. The Secured Party
may rely conclusively upon such certificate.

 

(b) (i) Subject to the provisions of subsection (iv) below, immediately after
occurrence of loss or damage covered by insurance, the Debtor shall notify in
writing the Secured Party and an independent architect thereof. An independent
architect promptly shall determine and advise the Secured Party and the Debtor,
in writing, whether it is practicable to repair, reconstruct or replace such
damaged or destroyed or condemned or lost property and, if so, the estimated
time and funds required for such repair, reconstruction or replacement; provided
that no notice to or the advice of the architect shall be required if the
estimated cost of repair, reconstruction or replacement, as set forth in
reasonable detail in a certificate of the Debtor delivered to the Secured Party
is less than $1,000,000. The proceeds of insurance shall be applied as provided
in subsections (ii) and (iv) below.

 

(ii) If the proceeds of insurance are in excess of $1,000,000, such amounts
shall be retained by the Secured Party for application as follows:

 

(A) If the independent architect shall advise to the satisfaction of the Secured
Party that such repair, reconstruction or replacement is practicable, and if,
within ninety (90) days from the receipt of the independent architect’s report
(or such later date as may be reasonably acceptable to the Secured Party), the
Debtor delivers to the Secured Party: (1) evidence reasonably satisfactory to
the Secured Party that, based upon the Debtor’s best judgment of the net
insurance proceeds anticipated, the Debtor will have sufficient funds from the
net insurance proceeds (including business interruption insurance and other
available funds) and from reasonably anticipated continued operations to make
the payments required of the Debtor under the Reimbursement Agreement, to
satisfy the financial covenants set forth in the Reimbursement Agreement, to pay
the cost of repairing, restoring or replacing the portion of the Pledged Estate
affected by such loss or damage and to pay all operating expenses until
completion of the repair, reconstruction or replacement of such part of the
Pledged Estate which is affected by such loss or damage and for the first full
fiscal year after such completion; (2) an executed construction contract
reasonably satisfactory to the Secured Party for such work at a guaranteed
maximum price or fixed price; and (3) evidence of the availability of cash or an
irrevocable letter of credit in an amount at least equal to the excess, if any,
of the funds necessary for payment of the amounts due under such construction
contract, over the available net

 

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insurance proceeds, then the Debtor shall promptly proceed to repair,
reconstruct and replace such part of the Pledged Estate, including all fixtures,
furniture, equipment and affects, to its original condition insofar as possible.

 

(B) If the independent architect advises that such repair, reconstruction or
replacement is not practicable, or if the independent architect’s report or the
other documents described in (A) above are not delivered within the required
time period or are not reasonably satisfactory to the Secured Party, then the
Secured Party may elect to have the Loan (as defined in the Loan Agreement)
repaid to the extent of such net proceeds and such insurance or condemnation
proceeds shall be deposited in the Bond Fund and used to reimburse the Secured
Party for a draw under the Letter of Credit in connection with the mandatory
redemption of the Bonds.

 

(iii) The moneys required for such repair, reconstruction and replacement shall
be paid by the Secured Party to the Trustee for deposit in the Project Fund
established under the Indenture, which shall be reactivated and disbursed in
accordance with the provisions of the Indenture.

 

(iv) Notwithstanding anything in this Section 9.04(b) to the contrary (but
subject to the provisions of subsection (v) below), if the estimated cost of
such repair, reconstruction or replacement is (A) less than $50,000, such
amounts shall be released by the Secured Party to the Debtor for application
toward such lawful purposes as the Debtor may deem appropriate, and (B) equal to
or greater than $50,000 but less than $1,000,000, the Debtor shall not be
required to deliver the items referred to above, the net insurance proceeds
shall be paid to the Debtor and the Debtor shall promptly proceed with such
repair, reconstruction or replacement. Any net insurance proceeds remaining
after the completion of such repair, replacement or reconstruction shall
promptly, at the direction of the Debtor, be transferred to the Trustee for
deposit in the Bond Fund and used to reimburse the Secured Party for a draw
under the Letter of Credit in connection with the mandatory redemption of the
Bonds.

 

(v) Notwithstanding anything contained in this Section to the contrary, if an
Event of Default has occurred and is continuing hereunder or under the
Reimbursement Agreement, any proceeds from insurance shall, at the option of the
Secured Party, be transferred by the Secured Party to the Trustee for deposit in
the Bond Fund and used to reimburse the Secured Party for a draw under the
Letter of Credit in connection with the mandatory redemption of the Bonds.

 

(c) (i) Immediately after the commencement of any condemnation or similar
proceedings by a third party in the exercise of a power of eminent domain, or a
power in the nature of eminent domain affecting the Pledged Estate, the Debtor
shall notify the Secured Party in writing.

 

(ii) Subject to the provisions of subsection (iii) below, the proceeds of any
condemnation award or other compensation paid by reason of a conveyance in lieu
of the

 

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exercise of such power, with respect to all or substantially all the Pledged
Estate (after deducting any costs or expenses incurred by the Secured Party or
the Debtor in collecting the same, the “Net Condemnation Proceeds”) shall be
paid to the Secured Party which shall transfer such amounts to the Trustee for
deposit in the Bond Fund and used to reimburse the Secured Party for a draw
under the Letter of Credit in connection with the mandatory redemption of the
Bonds. Any Net Condemnation Proceeds received for a taking of less than
substantially all of the Pledged Estate shall be applied as provided in
subsections (iii), (iv) and (v) below.

 

(iii) Notwithstanding anything in this Section 9.04(c) to the contrary (but
subject to the provisions of subsection (vii) below), if the estimated cost of
replacing or restoring the portion of the Pledged Estate affected by such taking
or conveyance is (A) less than $50,000, the Debtor shall not be required to
deliver the items referred to in subsection (iv) below and the Net Condemnation
Proceeds shall be paid to the Debtor for application to such lawful purposes as
the Debtor may deem appropriate, and (B) equal to or greater than $50,000 but
less than $1,000,000, the Debtor shall not be required to deliver the items
referred to in subsection (iv) below, the Net Condemnation Proceeds shall be
paid to the Debtor and the Debtor shall promptly proceed to replace or restore
such portion of the Pledged Estate.

 

(iv) If, within ninety (90) days of receipt of such condemnation award (or by
such later date as may be reasonably acceptable to the Secured Party) or other
compensation which is equal to or greater than $1,000,000, the Debtor delivers
to the Secured Party

 

(A) a written report satisfactory to the Secured Party of an independent
architect stating such architect’s estimate of the cost of replacing or
restoring the portion of the Pledged Estate affected by such taking or
conveyance and

 

(B) evidence reasonably satisfactory to the Secured Party stating that, in the
Debtor’s best judgment, the Debtor will have sufficient funds from the Net
Condemnation Proceeds (and from proceeds of use and occupancy insurance and
other available funds and from reasonably anticipated continued operations) to
make the payments required of the Debtor under the Reimbursement Agreement, to
satisfy the financial covenants set forth in the Reimbursement Agreement, to pay
the cost of replacing or restoring the portion of the Pledged Estate affected by
such taking or conveyance and to pay all operating expenses until completion of
the replacement or restoration of such portion of the Pledged Estate which is
affected by such taking or conveyance and for the first full fiscal year after
such completion,

 

then:

 

(A) The Debtor may elect to replace or restore the portion of the Pledged Estate
affected by such taking or conveyance, in which event the Debtor shall promptly
proceed to replace or restore such portion of the Pledged Estate, including any
fixtures, furniture, equipment and effects, to its original usefulness and
condition insofar as possible, provided that the Debtor has delivered to the
Secured Party (i) an executed construction contract reasonably satisfactory to
the Secured Party for such work at a price not greater than the amount stated in
the

 

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independent architect’s report and (ii) evidence of the availability of cash or
an irrevocable letter of credit in an amount equal to the funds, if any,
required by such independent architect’s report in excess of the available Net
Condemnation Proceeds. The moneys required for such replacement or restoration
shall be paid (x) from the Net Condemnation Proceeds on deposit with the Secured
Party to the Trustee for deposit in the Project Fund established under the
Indenture, which shall be reactivated and disbursed in accordance with the
provisions of the Indenture; and (y) to the extent that such proceeds are not
sufficient, from moneys to be provided by the Debtor; or

 

(B) The Debtor may elect, with the consent of the Secured Party, to have all or
part of such Net Condemnation Proceeds transferred to the Trustee for deposit in
the Bond Fund and used to reimburse the Secured Party for a draw under the
Letter of Credit in connection with the redemption of the Bonds; or

 

(C) If the reports required by this subsection (iv) are not delivered within the
required time period or are not reasonably satisfactory to the Secured Party,
then the Net Condemnation Proceeds shall be deposited with the Secured Party and
transferred to the Trustee for deposit in the Bond Fund and used to reimburse
the Secured Party for a draw under the Letter of Credit in connection with the
redemption of the Bonds.

 

(v) Any Net Condemnation Proceeds remaining after the completion of such
replacement or reconstruction shall promptly at the direction of the Debtor be
transferred to the Trustee for deposit in the Bond Fund and used to reimburse
the Secured Party for a draw under the Letter of Credit in connection with the
mandatory redemption of the Bonds.

 

(vi) Notwithstanding the foregoing, if the Debtor advises to the reasonable
satisfaction of the Secured Party that (A) the Facility can continue to operate
effectively with less than full replacement or restoration of the portion of the
Pledged Estate affected by such taking or conveyance and (B) the Debtor can
continue to maintain all financial covenants contained in the Reimbursement
Agreement for a period of two fiscal years, then any Net Condemnation Proceeds
shall be paid to the Debtor for application to such lawful purposes as the
Debtor may deem appropriate.

 

(vii) Notwithstanding anything contained in this Section to the contrary, if an
Event of Default has occurred and is continuing hereunder or under the
Reimbursement Agreement, any Net Condemnation Proceeds shall, at the option of
the Secured Party, be transferred by the Secured Party to the Trustee for
deposit in the Bond Fund and used to reimburse the Secured Party for a draw
under the Letter of Credit in connection with the mandatory redemption of the
Bonds.

 

Section 9.05. No Waiver by the Secured Party. By accepting payment of any sum
secured hereby after its due date, the Secured Party does not waive any late
charge thereon not then paid or its right either to require prompt payment when
due of all other sums so secured or to declare a default for the Debtor’s
failure to pay when any amount is due.

 

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Section 9.06. Satisfaction. Except for the provisions which by their express
terms survive termination of this Deed of Trust, this Deed of Trust and the lien
and security interest created hereby shall be null and void and extinguished,
and the Trustee shall, following the written request by, and at the sole cost
and expense of the Debtor, execute and record a satisfaction of this Deed of
Trust and the Debtor shall be released from the covenants, agreements and
obligations of the Debtor contained herein upon the payment and performance of
all Bank Payments Obligations secured hereby and termination of all commitments
to extend credit.

 

The recitals in such satisfaction of any matters or facts shall be conclusive
proof against all Persons of the truthfulness thereof. The execution and
recordation of a satisfaction of this Deed of Trust by the Secured Party shall
be sufficient to extinguish all interests of the Secured Party and its
respective legal representatives, successors and assigns except those terms
which expressly survive the termination of this Deed of Trust.

 

Section 9.07. Notices. All communications under or in connection with this Deed
of Trust shall be in writing and shall be mailed by certified mail, return
receipt requested or by overnight express mail with notice for receipt, or
otherwise sent by telex, telegram, telecopy or similar form of rapid
transmission, or by telephone confirmed by mailing (in the manner stated above)
of written confirmation at substantially the same time as such rapid
transmission, or personally delivered to an office of the receiving party. All
such communications shall be mailed, sent or given to the following addresses:

 

If to the Debtor:

   Trex Company, Inc.      160 Exeter Drive      Winchester, Virginia 22603-8605
     Attention: Senior Vice President and Chief Financial Officer

If to the Trustee:

   Gary P. Snyder      Watkins Ludlam Winter & Stennis, P.A.      P.O. Box 1456
     Olive Branch, Mississippi 38654

If to the Secured Party:

   JPMorgan Chase Bank, N.A.      277 Park Avenue, 22nd Floor      New York, New
York 10172      Attention: Sandra BVW Braun, Vice President

 

Section 9.08. Amendment and Waiver. No amendment or waiver of any provision of
this Deed of Trust nor consent to any departure by the Debtor therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Trustee and the Secured Party and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

 

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Section 9.09. Payment of Costs and Expenses of Secured Party. The Debtor shall
promptly pay upon demand all reasonable expenses and costs incurred by the
Secured Party, including reasonable attorneys’ fees and expenses in connection
with (a) any action, proceeding, litigation or claim instituted or asserted by
or against the Secured Party or in which the Secured Party become engaged,
wherein it becomes necessary in the opinion of the Secured Party to defend or
uphold the lien of this Deed of Trust, or the validity or effectiveness of any
assignment or any claim, award, payment, property damage insurance policy or any
other right or property conveyed, encumbered or assigned by the Debtor to the
Secured Party hereunder, or the priority of any of the same, and (b) the
exercise or enforcement of any other rights or remedies of the Secured Party
hereunder, and in any case, all such reasonable expenses and costs may be added
to and become part of the principal indebtedness of the Debtor hereunder, bear
interest at the Default Rate, and be secured in all respects hereby as if part
of the principal indebtedness of the Debtor hereunder and under the Bank
Payments Obligations.

 

Section 9.10. Taxation of the Bank Payments Obligations and Deed of Trust. If at
any time before the Bank Payments Obligations hereby secured are fully paid, any
law of the State be enacted deducting from the value of the Pledged Estate for
the purposes of taxation the amount of any lien thereon, or imposing upon the
Secured Party the payment of the whole or any part of the Impositions herein
required to be paid by the Debtor revising or changing in any way the laws
relating to the taxation of mortgages or debts secured by mortgages or the
Secured Party’s interest in the Pledged Estate or the manner of collection of
taxes, so as to affect adversely this Deed of Trust or the debt hereby secured,
or the owner and holder thereof in respect thereto, then, and in any such event,
the Debtor upon demand by the Secured Party, shall pay such Impositions or
reimburse the Secured Party therefor; provided, however, that if, in the opinion
of Counsel for the Secured Party, (a) it would be unlawful to require the Debtor
to make such payment; or (b) the making of such payment might result in the
imposition of interest beyond the Highest Lawful Rate, then, in such event, the
Secured Party may elect, by notice in writing given to the Debtor, to declare
all of the Bank Payments Obligations secured hereby to be and become due and
payable within sixty (60) days from the giving of such notice. Notwithstanding
the foregoing, it is understood and agreed that the Debtor is not obligated to
pay any portion of the Secured Party’s federal or state income taxes.

 

Section 9.11. No Credit for Taxes. The Debtor will not claim or demand or be
entitled to receive any credit or credits on the Bank Payments Obligations, or
on the interest payable thereon, for so much of the taxes assessed against said
Pledged Estate as is equal to the tax rate applied to the Bank Payments
Obligations due on this Deed of Trust or any part thereof, and no deduction
shall be claimed from the taxable value of said Pledged Estate by reason of this
Deed of Trust.

 

Section 9.12. Due on Sale; Assignability. The financial stability and
developmental, managerial and operational ability of the Debtor are a
substantial and material consideration to the Secured Party in its agreement to
enter into the transaction evidenced by the Financing Documents. The Debtor
acknowledges that the transfer of the Pledged Estate could significantly and
materially alter, impair and reduce the Secured Party’s security for the Bank

 

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Payments Obligations. In order, therefore, to induce the Secured Party to accept
the Financing Documents, the Debtor agrees not to, directly or indirectly,
transfer the Pledged Estate, or any portion thereof, or any interest therein,
without the prior written consent of the Secured Party. In the event the Debtor,
or any successor in interest of the Debtor, shall transfer the Pledged Estate,
or any portion thereof, or any interest therein, to any person without complying
with the terms of the Reimbursement Agreement, all Bank Payments Obligations
unpaid pursuant to the Financing Documents, the payment of which is secured by
this Deed of Trust shall at the option of the Secured Party and without notice
or demand, become immediately due and payable, and, in addition, upon any such
prohibited transfer, such transfer shall be deemed to be an “Event of Default”
hereunder. Consent to one such transaction shall not be deemed to be a waiver of
the right to require consent to future or successive transactions. As used
herein, “transfer” includes the sale, transfer or conveyance of the Pledged
Estate, or any portion thereof, or any interest therein, whether voluntary,
involuntary (except by eminent domain), by operation of law or otherwise. The
Secured Party shall have the right to assign this Deed of Trust. All of the
rights, privileges, remedies and options given to the Secured Party hereunder
shall inure to the benefit of its successors and assigns; and all the terms,
conditions, promises, covenants, provisions and warranties of this Deed of Trust
shall inure to the benefit of and shall bind the representatives, successors and
assigns of the Secured Party and the Debtor.

 

Section 9.13. Severability. Any provision of this Deed of Trust which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.

 

Section 9.14. Governing Law. This Deed of Trust shall be governed by and
construed in accordance with the laws of the State without giving effect to
conflicts of laws.

 

Section 9.15. Future Advances. This Deed of Trust shall secure the Bank Payments
Obligations and any future or protective advances made hereunder or under the
Financing Documents. The total amount of indebtedness secured hereby may
decrease or increase from time to time.

 

Section 9.16. Headings. Section headings in this Deed of Trust are included
herein for convenience of reference only and shall not constitute a part of this
Deed of Trust for any other purpose.

 

Section 9.17. Entire Agreement. This Deed of Trust constitutes the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes and is full substitution for any and all
prior agreements and understandings between said parties related to such
transactions.

 

Section 9.18. Time of the Essence. Time is strictly of the essence under this
Deed of Trust and any amendment, modification or revision hereof.

 

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Section 9.19 Further Action By Debtor. The Debtor shall at its expense promptly
upon request of the Secured Party do all reasonable acts and things, including,
but not limited to, the execution of any further assurances deemed necessary by
the Secured Party, to establish, confirm, maintain, protect and continue the
lien created and intended to be created hereby, all assignments made or intended
to be made pursuant hereto and all other rights and benefits conferred or
intended to be conferred on the Secured Party hereby, and the Debtor shall pay
all reasonable costs incurred by the Secured Party in connection therewith,
including all filing and recording costs, cost of searches, and reasonable
attorneys’ fees incurred by the Secured Party.

 

Section 9.20 Advances by Secured Party. The Secured Party may, but are not
obligated to, pay any sum or perform any other obligation for the account of the
Debtor which the Debtor has failed to pay or perform (including, but not limited
to, procuring insurance), and sums so spent by the Secured Party shall be added
to the principal sum secured by this Deed of Trust and be repayable by the
Debtor on demand, and shall bear interest from the date of advance by the
Secured Party equal to the Default Rate.

 

Section 9.21 Invalid Provision Disregarded. If any term or provision of this
Deed of Trust or the application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, the remainder of this Deed of Trust or
the application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Deed of Trust shall be valid and be
enforced to the fullest extent permitted by law.

 

Section 9.22 Inspection and Repairs by the Secured Party. The Debtor will permit
the Secured Party and the Secured Party’s representatives to enter the Pledged
Estate at reasonable times to inspect the same; provided that so long as there
is no uncured or unwaived Event of Default, the Secured Party shall provide the
Debtor with prior notice of such inspection. Such right of access shall include,
without limitation, the right to enter upon the Pledged Estate to conduct such
tests, analyses, environmental audits, inspections and borings as the Secured
Party may deem necessary or advisable, in its reasonable discretion. In case of
any breach or default by the Debtor in its maintenance and repair obligations
with respect to the Pledged Estate under the Reimbursement Agreement, the
Secured Party may, at its option, enter the Pledged Estate to protect, restore
or repair any part thereof, but the Secured Party shall be under no obligation
to do so.

 

Section 9.23 No Liability of Secured Party. Notwithstanding anything to the
contrary contained herein, nothing herein shall cause the Secured Party to be
liable for or be bound by any obligations of the Debtor under the Collateral.

 

THE DEBTOR HEREBY DECLARES AND ACKNOWLEDGES THAT IT HAS RECEIVED, WITHOUT
CHARGE, A TRUE COPY OF THIS DEED OF TRUST.

 

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IN WITNESS WHEREOF, this Deed of Trust has been duly executed as of the day and
year first above written.

 

“Debtor”

TREX COMPANY, INC. By:  

/s/ Paul D. Fletcher

   

Paul D. Fletcher

   

SeniorVice President, Chief Financial Officer

 

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STATE OF                                        

 

COUNTY OF                                    

 

Personally appeared before me, the undersigned authority in and for the said
county and state, on this              day of                     , 2004, within
my jurisdiction, the within named Paul D. Fletcher, duly identified before me,
who acknowledged that he is Senior Vice President, Chief Financial Officer of
Trex Company, Inc., a Delaware corporation and that for and on behalf of said
corporation, and as its act and deed, he executed the above and foregoing
instrument, after first having been duly authorized by said corporation so to
do.

 

         

NOTARY PUBLIC

 

My Commission Expires: ____________________ (Affix official seal)

 

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