EXHIBIT 10.39
STATE OF NORTH CAROLINA
COUNTY OF CABARRUS
DEED OF TRUST AND SECURITY AGREEMENT
(COLLATERAL IS OR INCLUDES FIXTURES)
THIS DEED OF TRUST (herein "Deed of Trust") is made as of this ___ day
of October, 1996, by and between New U.S. Tire Recycling Corp., a Texas
corporation, whose mailing address is 000 Xxxxx Xxxxx Xxxxxxxxxx, Xxxxxx, Xxxxx
00000 (herein "Grantor"), ___________________________ (herein "Trustee"), and
U.S. Tire Recycling Partners, L.P., a Delaware limited liability company, whose
mailing address is _____________________________ (herein "Beneficiary"). The
designations Grantor, Trustee and Beneficiary as used herein shall include said
parties, their heirs, successors and assigns, and shall include singular,
plural, masculine, feminine or neuter as required by context.
WITNESSETH:
WHEREAS, the Grantor is indebted to the Beneficiary in the principal
sum of One Million Eight Hundred Thousand and No/100 Dollars ($1,850,000.00), as
evidenced by a Convertible Subordinated Note (the "Note") of even date herewith,
the terms of which are incorporated herein by reference. The final due date for
payment of said Note, if not sooner paid or extended as provided therein, is
October 31, 2000.
NOW, THEREFORE, as security for said indebtedness, advancements and
other sums expended by Beneficiary pursuant to this Deed of trust and costs of
collection (including attorneys' fees) and other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Grantor has
bargained, sold, given, granted and conveyed and does by these presents bargain,
sell, give, grant and convey to said Trustee, its successors and assigns, the
parcel(s) of land situated in the County of Cabarrus, State of North Carolina,
as more particularly described on SCHEDULE A attached hereto and by this
reference incorporated herein (the "Premises"), together with (a) all equipment
and improvements of every nature and description, real and personal, now or
hereafter built, constructed, put, placed and/or affixed to the Premises (the
"Improvements") and (b) all rents, profits, revenues, royalties, accounts,
intangible rights and other benefits arising from, related to or otherwise
connected to or flowing from the Premises and the Improvements (the "Rents and
Profits"). The Premises, the Improvements and the Rents and Profits are
collectively referred to herein as the "Mortgaged Property."
TO HAVE AND TO HOLD said Mortgaged Property with all privileges and
appurtenances thereunto belonging, to said Trustee, its successors and assigns
forever, upon the trusts, terms and conditions, and for the uses hereinafter set
forth.
If the Grantor shall pay the Note secured hereby in accordance with
its terms, together with interest thereon, and any renewals or extensions
thereof in whole or in part, or substitutions or replacements thereof, all other
sums secured hereby and shall comply with all of the covenants, terms and
conditions of this Deed of Trust and other agreements between Grantor and
Beneficiary relating to or
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entered into in connection with the debt evidenced by the Note, then this
conveyance shall be null and void and may be canceled of record at the
request and the expense of the Grantor. If, however, there shall be any
default: (a) in the payment of any sums due under the Note, this Deed of
Trust or any other instrument securing the Note and such default is not cured
within ten (10) days from the due date; or (b) if there shall be a default in
any of the other covenants, terms or conditions of the Note secured hereby,
or any failure or neglect to comply with the covenants, terms or conditions
contained in this Deed of Trust, or any other instrument securing the Note or
other agreement entered into between Grantor and Beneficiary in connection
with the debt evidenced by the Note, and such default is not cured within
fifteen (15) days after written notice, then and in any of such events,
without further notice and at the option of Beneficiary, all sums secured by
this Deed of Trust shall become immediately due and payable and it shall be
lawful for and the duty of the Trustee, upon request of the Beneficiary, to
sell the Mortgaged Property herein conveyed at one or more public auctions
for cash, after having first given such notice of hearing as to commencement
of foreclosure proceedings and obtained such findings or leave of court as
may then be required by law and giving such notice and advertising the time
and place of such sale or sales in such manner as may then be provided by
law, and upon such and any resales and upon compliance with the law then
relating to foreclosure proceedings under power of sale to convey title to
the purchaser(s) in as full and ample manner as the Trustee is empowered.
The Trustee shall be authorized to retain attorneys to represent it in such
proceedings.
The proceeds of the sale, after the Trustee retains his commission,
together with reasonable attorneys' fees incurred by the Trustee in such
proceeding, shall be applied to the costs of sale, including, but not limited
to, costs of collection, taxes, assessments, costs of recording, service fees
and incidental expenditures, the amount due on the Note hereby secured and
advancements and other sums expended by the Beneficiary according to the
provisions hereof and otherwise as required by the then existing law relating to
foreclosures. The Trustee's commission shall be five percent (5%) of the gross
proceeds of the sale or the minimum sum of $1,000.00, whichever is greater, for
a completed foreclosure. In the event foreclosure is commenced, but not
completed, the Grantor shall pay all expenses incurred by Trustee, including
reasonable attorneys' fees, and a partial commission computed on five percent
(5%) of the outstanding indebtedness or the above stated minimum sum, whichever
is greater, in accordance with the following schedule, to-wit: one-fourth (1/4)
thereof before the Trustee issues a notice of hearing on the right to foreclose;
one-half (1/2) thereof after issuance of said notice; three-fourths (3/4)
thereof after such hearing; and the greater of the full commission or minimum
sum after the initial sale.
And the said Grantor does hereby covenant and agree with the Trustee
as follows:
1. INSURANCE. Grantor shall keep all Improvements, now or hereafter
in existence, constantly insured for the benefit of the Beneficiary against loss
by fire, windstorm and such other casualties and contingencies, in such manner
and in such companies and for such amounts, not less than that amount necessary
to pay the sum secured by this Deed of Trust, and as may be satisfactory to the
Beneficiary. Grantor shall purchase such insurance, pay all premiums therefor,
and shall deliver to Beneficiary such policies or conformed copies thereof,
along with evidence of premium payment, as long as the Note secured hereby
remains unpaid. If Grantor fails to purchase such insurance, pay premiums
therefor or deliver said policies along with evidence of payment of premiums
thereon, then Beneficiary, at its option, may purchase such insurance. Such
amounts paid by Beneficiary shall be added to the principal of the Note secured
by this Deed of Trust, and shall be due and payable upon demand of Beneficiary.
At the option of Beneficiary, all proceeds from any insurance shall be applied
to the debt secured hereby, and if payable in installments, applied to the
inverse order of maturity of such installments, or to the repair or
reconstruction of any Improvements located upon the Premises.
2. TAXES, ASSESSMENTS, CHARGES. Grantor shall pay all taxes,
assessments
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and charges as may be lawfully levied against the Mortgaged Property within
thirty (30) days after the same shall become due. In the event that Grantor
fails to so pay all taxes, assessments and charges as herein required, then
Beneficiary, at its option, may pay the same and the amounts so paid shall be
added to the principal of the Note secured by this Deed of Trust, and shall
be due and payable upon demand of Beneficiary.
3. ASSIGNMENTS OF RENTS AND PROFITS, MANAGEMENT OF PROPERTY, AND
APPOINTMENT OF RECEIVER. As further security for the payment of the Note and
the other obligations secured by this Deed of Trust, Grantor assigns to
Beneficiary all Rents and Profits from the Mortgaged Property, and authorizes
Beneficiary, upon the occurrence of default hereunder, either by entering upon
and taking possession of the Mortgaged Property or otherwise, to rent same, at
any reasonable rate of rent determined by Beneficiary and/or to otherwise manage
and operate the Mortgaged Property in such manner as it deems necessary and
appropriate, and after deducting from any Rents and Profits realized from the
management and operation of the Mortgaged Property the costs and expenses
thereof (including payment of all expenses related to the Mortgaged Property as
may be required or permitted under this Deed of Trust or which may be necessary
to protect the security of this Deed of Trust, as Beneficiary in its discretion
deems appropriate), to apply the remainder to the indebtedness evidenced by the
Note secured hereby.
Also, Beneficiary shall have the absolute and unconditional right
to apply for and to obtain the appointment of a receiver or similar official for
all or a portion of the Mortgaged Property, to, among other things, manage and
operate the Mortgaged Property, or any part thereof, and to apply the Rents and
Profits as provided above. In the event of such applications, Grantor consents
to the appointment of such receiver or similar official and agrees that such
receiver or similar official may be appointed without notice to Grantor, without
regard to the adequacy of any security for the debt and without regard to the
solvency of Grantor or any other person, firm or corporation who or which may be
liable for the payment of the Note or any other obligations of Grantor
hereunder. All expenses related to the appointment of a receiver hereunder
shall be the responsibility of Grantor, and shall bear interest at the
applicable rate under the Note and shall be deemed part of the debt secured by
this Deed of Trust.
4. PARTIAL RELEASE. Grantor shall not be entitled to the partial
release of any of the above described property unless a specific provision
providing therefor is included in this Deed of Trust. In the event a partial
release provision is included in this Deed of Trust, Grantor must strictly
comply with the terms thereof. Notwithstanding anything herein contained,
Grantor shall not be entitled to any release of property unless Grantor is not
in default and is in full compliance with all of the terms and provisions of the
Note, this Deed of Trust and any other instrument that may be securing said Note
or entered into in connection with said Note.
5. WASTE. The Grantor covenants that it will keep the Mortgaged
Property herein conveyed in good order, repair and condition, reasonable wear
and tear excepted, and will comply with all governmental requirements respecting
the Mortgaged Property or their use, and that it will not commit or permit any
waste. Beneficiary shall have the option, in its discretion, to expend moneys
from time to time to prevent waste, to otherwise maintain the Mortgaged Property
in good order, repair and condition and to generally protect the security of
this Deed of Trust, and the moneys so expended and the costs associated
therewith shall be added to the principal of the Note secured by this Deed of
Trust, and shall be due and payable upon demand of Beneficiary.
6. CONDEMNATION. In the event that any or all of the Mortgaged
Property shall be condemned and taken under the power of eminent domain, Grantor
shall give immediate written notice to Beneficiary. Beneficiary shall have the
right to receive and collect all damages awarded by reason of such taking, and
shall have the right to receive and collect all damages awarded by reason of
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such taking, and shall have the discretion to apply the amount so received, or
any part thereof, to the indebtedness due hereunder and if payable in
installments, applied in the inverse order of maturity of such installments, or
to any alteration, repair or restoration of the Mortgaged Property by Grantor.
7. WARRANTIES. Unless otherwise stated on SCHEDULE B, Grantor
covenants with Trustee and Beneficiary that it is seized of the Mortgaged
Property in fee simple, has the right to convey the same in fee simple, that
title is marketable and free and clear of all encumbrances, and that it will
warrant and defend the title against the lawful claims of all persons
whomsoever, except for the exceptions hereinafter stated. Title to the property
hereinabove described is subject to the exceptions set forth on SCHEDULE B.
8. SUBSTITUTION OF TRUSTEE. Grantor and Trustee covenant and agree
to and with Beneficiary that in case the said Trustee, or any successor trustee,
shall die, become incapable of acting, renounce its trust, or for any reason the
holder of the Note desires to replace said Trustee, then the holder may appoint,
in writing, a trustee to take the place of the Trustee; and upon the probate and
registration of the same, the trustee thus appointed shall succeed to all
rights, powers and duties of the Trustee.
9. SALE OF MORTGAGED PROPERTY. Grantor agrees that if the Mortgaged
Property or any part thereof or interest therein is sold, assigned, transferred,
conveyed, leased, mortgaged or otherwise alienated by Grantor, whether
voluntarily or involuntarily or by operation of law, without the prior written
consent of Beneficiary, Beneficiary, at its own option, may declare the Note
secured hereby and all other obligations hereunder to be forthwith due and
payable. Any change in the legal or equitable title of the Mortgaged Property
or in the beneficial ownership of the Mortgaged Property shall be deemed to be
the transfer of an interest in the Mortgaged Property.
10. ADVANCEMENTS. If Grantor shall fail to perform any of the
covenants or obligations contained herein or in any other instrument given as
additional security for the Note secured hereby or other agreements entered into
between Beneficiary and Grantor in connection with the Note, or if the Grantor
shall fail to perform any of its obligations or covenants secured by a deed of
trust lien or other lien senior to the lien of this Deed of Trust (including,
without limitation, payment of the indebtedness secured thereby), the
Beneficiary may, but without obligation, make advances to perform such covenants
or obligations, and all such sums so advanced shall be added to the principal of
the Note secured hereby and shall be due on demand of the Beneficiary. No
advancement or anything contained in this paragraph or elsewhere shall
constitute a waiver by Beneficiary or prevent such failure to perform from
constituting an event of default.
11. INDEMNITY. If any suit or proceeding is brought against the
Trustee or Beneficiary or if any suit or proceeding is brought which may affect
the value or title of the Mortgaged Property, Grantor shall defend, indemnify
and hold harmless and on demand reimburse Trustee or Beneficiary from any loss,
cost, damage or expense and any sums expended by Trustee or Beneficiary shall be
added to the principal of the Note secured hereby and shall be due and payable
on demand.
12. WAIVERS. Grantor waives all rights to require marshaling of
assets by the Trustee or Beneficiary. No delay or omission of the Trustee or
Beneficiary in the exercise of any right, power or remedy arising under the Note
or this Deed of Trust shall be deemed a waiver of any default or acquiescence
therein or shall impair or waive the exercise of such right, power or remedy by
Trustee or Beneficiary at any other time.
13. CIVIL ACTION. In the event that the Trustee is named as a party
to any civil action as Trustee in this Deed of Trust, the Trustee shall be
entitled to employ attorneys at law, including
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Xxxxxx & Xxxxxxx, L.L.P., to represent it in said action and the reasonable
attorneys' fees of the Trustee in such action shall be paid by the
Beneficiary and added to principal of the Note secured by this Deed of Trust
and payable upon demand.
14. OTHER LIENS. Default under the terms of any instrument secured
by a lien on all or any part of the Mortgaged Property other than the lien
created by this Deed of Trust, whether or not such third party lien has been
consented to by Beneficiary, shall constitute default hereunder; provided,
however, this provision shall not be deemed consent by Beneficiary to the
placement of other liens on all or any part of the Mortgaged Property. Grantor
shall notify Beneficiary in writing of any notice it receives of a default under
any such instrument, such notice to be given within three (3) days of receipt of
notice of a default.
15. HAZARDOUS MATERIALS
(a) Grantor represents and warrants that, to the best of
Grantor's knowledge, after due inquiry and investigation, (i) there are no
Hazardous Materials (hereinafter defined) on the Premises, except those in
compliance with all applicable federal, state and local laws, ordinances, rules
and regulations, and (ii) no owner or occupant nor any prior owner or occupant
of the Premises has received any notice or advice from any governmental agency
or any source whatsoever with respect to Hazardous Materials on, from or
affecting the Premises. Grantor covenants that the Premises shall be kept free
of Hazardous Materials, and neither Grantor nor any occupant of the Premises
shall use, transport, store, dispose of or in any manner deal with Hazardous
Materials on the Premises, except to the extent that such use, transport,
storage or disposal shall be necessary and proper for the Grantor to use the
Premises and carry out the activities which Grantor has represented to
Beneficiary are to be carried out on the Premises in agreements executed
concurrently with this Deed of Trust, provided that such use, transport,
storage, disposal or handling of Hazardous Materials on the Premises shall be in
compliance with all applicable federal, state and local laws, ordinances, rules
and regulations. Grantor shall not, without prior notice to Beneficiary, engage
in any use or activity on the Premises which results in initial use or increased
uses, as the case may be, of Hazardous Materials on the Property which were not
disclosed to the Beneficiary or described in agreements executed concurrently
with this Deed of Trust. Grantor shall comply with, and ensure compliance by
all occupants of the Premises with all applicable federal, state and local laws,
ordinances, rules and regulations, and shall keep the Premises free and clear of
liens imposed pursuant to such laws, ordinances, rules or regulations. In the
event that Grantor receives any notice or advice from any governmental agency or
any source whatsoever with respect to Hazardous Materials on, from or affecting
the Premises, Grantor shall immediately notify Beneficiary. Grantor shall
promptly conduct and complete all investigations, studies, sampling and testing,
and all remedial actions necessary to clean up and remove all Hazardous
Materials from the Premises in accordance with all applicable federal, state and
local laws, ordinances, rules and regulations. Grantor further covenants that
it will promptly notify Beneficiary of any discharge or release of Hazardous
Materials on, from or affecting the Premises or of any change in the nature or
extent of any Hazardous Materials, substances or wastes maintained on, in or
under the Premises or used in connection therewith, and will transmit to
Beneficiary copies of any citations, orders, notices or other communication
received with respect to any other Hazardous Materials, substances, wastes or
other environmentally regulated substances affecting the Premises. The term
"Hazardous Materials" as used in this Deed of Trust shall include, without
limitation, gasoline, petroleum products, explosives, radioactive materials,
polychlorinated biphenyls or related or similar materials, asbestos or asbestos
containing materials or any other substance or material defined as a hazardous
or toxic substance or material by any federal, state or local law, ordinance,
rule or regulation. Grantor's violation of any covenant, representation or
warranty within this Section shall be a default hereunder, and Beneficiary may
pursue all rights and remedies to which it is entitled as set forth in this Deed
of Trust.
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(b) Grantor shall protect, defend, indemnify and save harmless
Beneficiary and the Trustee from and against all liabilities, obligations,
claims, damages, penalties, causes of action, response and clean up costs, and
other costs and expenses (including without limitation reasonable attorneys'
fees and expenses), imposed upon or incurred by or asserted against Trustee or
Beneficiary by reason of (i) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release or threatened release of any Hazardous
Materials (as defined above in this Section) on, from or affecting the Premises
or any other property; (ii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to such Hazardous
Materials; (iii) any lawsuit brought or threatened, settlement reached or
government order relating to such Hazardous Materials; or (iv) any violation of
laws, orders, regulations, requirements or demands of government authorities
which are based upon or in any way related to such Hazardous Materials,
including, but not limited to, the following laws; the Comprehensive
Environmental Response, Compensation and Liability Act; the Resource
Conservation and Recovery Act; the Clean Water Act; the Toxic Substances Control
Act; Coastal Area Management Act, N.C.G.S. 113A-113 et.seq.; Solid Waste
Management Act, N.C.G.S. 130A-290 et.seq.; Inactive Hazardous Sites Act,
N.C.G.S. 138-310 et.seq.; Water and Air Resources Act, N.C.G.S. Chapter 143,
Article 21; Oil Pollution and Hazardous Substances Control Act, N.C.G.S. Chapter
143, Article 21A; Air Pollution Control Act, N.C.G.S. Chapter 143, Article 21B;
and the Sedimentation Pollution Control Act of 1973, N.C.G.S. Chapter 113A,
Article 4, including, without limitation, the costs and expenses of any remedial
action, attorneys' and consultants' fees, investigation and laboratory fees,
court costs and litigation expenses. Any amounts payable to Trustee or
Beneficiary by reason of the application of this paragraph shall be added to the
principal of the Note secured by this Deed of trust and shall become due and
payable upon demand. The obligations and liabilities of Grantor under this
indemnification paragraph of this Deed of Trust shall survive any termination,
satisfaction, assignment, entry of a judgment of foreclosure or delivery of a
deed in lieu of foreclosure of this Deed of Trust, and if amounts are paid by
Beneficiary or Trustee after the happening of any of the foregoing, the amounts
so paid shall continue to be obligations of Grantor payable with interest at the
highest rate payable under the Note as if the Note was still outstanding.
(c) Notwithstanding the description of Mortgaged Property
contained in this Deed of Trust, all Hazardous Materials (as defined in this
Section) are specifically excluded from Mortgaged Property subject to this Deed
of Trust.
16. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Deed of Trust
is intended to be a security agreement with respect to items referred to herein
which may be subject to a security interest pursuant to the Uniform Commercial
Code as in effect in North Carolina, and Grantor hereby grants Beneficiary a
security interest with respect to the following:
All furniture, fixtures, contracts and contract rights,
documents, instruments, chattel paper, plans and specifications,
surveys, permits or any other documents or agreements or
information relating to the Premises (as hereinafter defined),
general intangibles and personal property of every kind and
nature owned by Grantor or in which Grantor has ownership or
possessory rights or interests and now or hereafter located on or
connected with or used in connection with the Premises, all
renewals or replacements thereof, all proceeds from the sale,
conversion or other disposition thereof, and, in addition, all
leases (both as lessor and lessee) and rents, security deposits,
proceeds or other income from the Premises, and all other
tangible or intangible rights relating to the Premises including,
but not limited to, the interest of Grantor in and to any and all
personal property, contract rights, inventory and general
intangibles related thereto, and the interest of Grantor in and
to any common areas and facilities located at the Premises.
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Grantor agrees that Beneficiary may file this Deed of Trust as a financing
statement, or at Grantor's request agrees to execute such financing statements,
extensions or amendments as Beneficiary may require to perfect a security
interest with respect to the aforesaid. In the event of default, Beneficiary
shall have, in addition to its other remedies, all rights and remedies provided
for in the Uniform Commercial Code as enacted in North Carolina.
17. NOTICES. All notices required to be given hereunder shall be in
writing and shall be deemed served forty-eight hours after deposit in
registered, certified or first-class United States Mail postage prepaid
addresses to the parties at the addresses set forth in the beginning of this
Deed of Trust, or at such other address or addresses as the parties may from
time to time designate by notice to the other parties.
18. MODIFICATION IN WRITING. This Deed of Trust may not be changed,
terminated or modified orally or in any other manner than by an instrument in
writing signed by the party against whom enforcement is sought.
19. GOVERNING LAW. This Deed of Trust shall be governed by and
construed in accordance with the laws of the State of North Carolina.
IN WITNESS WHEREOF, the Grantor has hereunto set its hand and seal the
day and year first above written.
ATTEST: NEW U.S. TIRE RECYCLING CORP.
By: /s/XXXXXXXX X. XXXXXXX By: /s/XXXXXX X. XXXXXXXX
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Secretary Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
[Corporate Seal]
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