Document:

Exhibit 10.5

	
  After recording please return to:

  	
   

  
	
   

  	
   

  
	
  Simpson Thacher & Bartlett LLP

  	
   

  
	
  425 Lexington Avenue

  	
  Harrison, Indiana

  
	
  New York, New York 10017

  	
   

  
	
  Attention:  Cynthia Parker

  	
   

  

 

 

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, 

AND FIXTURE FILING

 

made by

DARAMIC, INC.,

Mortgagor,

to

JPMORGAN
CHASE BANK, 

as Administrative Agent, Mortgagee

Dated
as of May 13, 2004

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Background

  	
   

  	
  1

  
	
  Granting Clauses

  	
   

  	
  2

  
	
  Terms and Conditions

  	
   

  	
  5

  
	
   

  	
  1.

  	
  Defined Terms

  	
  5

  
	
   

  	
  2.

  	
  Warranty of Title

  	
  5

  
	
   

  	
  3.

  	
  Payment
  of Obligations

  	
  5

  
	
   

  	
  4.

  	
  Requirements

  	
  5

  
	
   

  	
  5.

  	
  Payment of Taxes
  and Other Impositions

  	
  5

  
	
   

  	
  6.

  	
  Insurance

  	
  6

  
	
   

  	
  7.

  	
  Restrictions on
  Liens and Encumbrances

  	
  6

  
	
   

  	
  8.

  	
  Due on Sale
  and Other Transfer Restrictions

  	
  6

  
	
   

  	
  9.

  	
  Condemnation/Eminent Domain

  	
  6

  
	
   

  	
  10.

  	
  Leases

  	
  6

  
	
   

  	
  11.

  	
  Further
  Assurances

  	
  6

  
	
   

  	
  12.

  	
  Mortgagee’s Right to
  Perform

  	
  7

  
	
   

  	
  13.

  	
  Remedies

  	
  7

  
	
   

  	
  14.

  	
  Right of Mortgagee to
  Credit Sale

  	
  8

  
	
   

  	
  15.

  	
  Appointment
  of Receiver

  	
  9

  
	
   

  	
  16.

  	
  Extension, Release, etc

  	
  9

  
	
   

  	
  17.

  	
  Security
  Agreement under Uniform Commercial Code

  	
  10

  
	
   

  	
  18.

  	
  Assignment
  of Rents

  	
  10

  
	
   

  	
  19.

  	
  Additional Rights

  	
  11

  
	
   

  	
  20.

  	
  Notices

  	
  11

  
	
   

  	
  21.

  	
  No Oral
  Modification

  	
  11

  
	
   

  	
  22.

  	
  Partial
  Invalidity

  	
  11

  
	
   

  	
  23.

  	
  Mortgagor’s Waiver of
  Rights

  	
  11

  
	
   

  	
  24.

  	
  Remedies
  Not Exclusive

  	
  12

  
	
   

  	
  25.

  	
  Multiple Security

  	
  13

  
	
   

  	
  26.

  	
  Successors
  and Assigns

  	
  14

  
	
   

  	
  27.

  	
  No Waivers, etc.

  	
  14

  
	
   

  	
  28.

  	
  Governing Law, etc.

  	
  14

  
	
   

  	
  29.

  	
  Certain
  Definitions

  	
  14

  
	
   

  	
  30.

  	
  Last
  Dollars Secured; Priority

  	
  15

  
	
   

  	
  31.

  	
  Release

  	
  15

  
	
   

  	
  32.

  	
  FUTURE ADVANCES; MAXIMUM SECURED AMOUNT

  	
  15

  
						

 

 

MORTGAGE,
SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE FILING

THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND
FIXTURE FILING, dated as of May 13, 2004 is made by DARAMIC, INC., a Delaware
corporation (“Mortgagor”), whose address is c/o PP HOLDINGS CORPORATION 13800 South Lakes Drive, Charlotte, NC  28273, Attention:
Lynn Amos to JPMORGAN CHASE BANK, as Administrative Agent (in such capacity, “Mortgagee”)
whose address is 270 Park Avenue, New York, New York 10017, Attention: Peter Dedousis. References to this “Mortgage”
shall mean this instrument and any and all renewals, modifications, amendments,
supplements, extensions, consolidations, substitutions, spreaders and
replacements of this instrument.

Background

A.            PP Holdings Corporation and PP Acquisition Corporation
(collectively, “Borrower”) have entered into the Credit Agreement dated
as of the date hereof (as the same may be amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”) with the
several banks and other financial institutions from time to time parties
thereto (the “Lenders”), General Electric Capital Corporation, as documentation
agent, Bear Stearns Corporate Lending Inc., as syndication agent, and
Mortgagee.  The terms of the Credit
Agreement are incorporated by reference in this Mortgage as if the terms
thereof were fully set forth herein.  In
the event of any conflict between the provisions of this Mortgage and the
provisions of the Credit Agreement, the applicable provisions of the Credit
Agreement shall govern and control, provided, that in the case of a
provision in this Mortgage which is more specific and detailed than the related
provision in the Credit Agreement (including by way of illustration, the
section of this Mortgage entitled “Leases”), such Mortgage provision
shall not be deemed to be in conflict with the related provision in the Credit
Agreement.

B.            Mortgagor is the owner of the fee simple estate in the
parcel(s) of real property described on Schedule A attached (the “Land)
and owns the buildings, improvements, structures and fixtures now or
subsequently located on the Land (the “Improvements”; the Land and the
Improvements being collectively referred to as the “Real Estate”).

C.            Pursuant to the terms and conditions of the Credit
Agreement, inter  alia: (1) the Term Loan Lenders have severally
agreed to make certain Term Loans to Borrower in the original aggregate
principal amount of up to $370,000,000 and to make Euro Term Loans to Borrower
in the original aggregate principal amount of up to €36,000,000; (2) the
Revolving Credit Lenders have severally agreed to make certain Revolving Loans
to Borrower in the original aggregate principal amount of up to $90,000,000  (the “Revolving Facility”); (3) the Swingline Lender
has agreed to extend certain Swingline Loans not to exceed $5,000,000 in the
aggregate and the issuances of which shall reduce the availability of the
Revolving Credit Borrowing and (4) one or more Lenders may make Incremental
Loans in an aggregate principal amount not to exceed $200,000,000, as evidenced
by the Credit Agreement.

D.            It is a condition, among others, to the obligations of
the Lenders to make the Loans and enter into any Hedge Agreement that Mortgagor
secure its obligations under the

 

 

Guarantee and Collateral Agreement dated as of the
date hereof in favor of Mortgagee (as the same may be amended, supplemented,
restated or otherwise modified from time to time, the “Guarantee and
Collateral Agreement”) pursuant to which Mortgagor guaranteed the
obligations of Borrower under the Credit Agreement and the other Loan
Documents, by executing and delivering this Mortgage.  Mortgagor, a wholly-owned subsidiary of Borrower, will
receive substantial direct and indirect benefit from the extensions of credit
made to Borrower pursuant to the Credit Agreement.

Granting Clauses

For
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Mortgagor hereby agrees that to secure the following
(collectively, the “Obligations”):

(a)           the due and punctual payment of (i)
the principal of and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when
and as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral, and (iii) all
other monetary obligations of the Borrower to any of the Secured Parties under
the Credit Agreement and each of the other Loan Documents, including fees,
costs, expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding),

(b)           the due and punctual performance of
all other obligations of the Borrower under or pursuant to the Credit Agreement
and each of the other Loan Documents,

(c)           the due and punctual payment and
performance of all the obligations of each other Loan Party under or pursuant
to the Guarantee and Collateral Agreement and each of the other Loan Documents,
and

(d)           the due and
punctual payment and performance of all obligations of each Loan Party under
each Hedging Agreement that (i) is in effect on the Closing Date with a
counterparty that is a Lender or an Affiliate of a Lender as of the Closing
Date or (ii) is entered into after the Closing Date with any counterparty that
is a Lender or an Affiliate of a Lender at the time such Hedging Agreement is
entered into unless such Hedging Agreement provides the obligations thereunder
are not “Obligations” as defined in the Guarantee and Collateral Agreement.

MORTGAGOR
HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND HEREBY
MORTGAGES AND WARRANTS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER TO MORTGAGEE:

(a)           the Land;

 

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(b)           all right, title and interest
Mortgagor now has or may hereafter acquire in and to the Improvements or any
part thereof, and all the estate, right, title, claim or demand whatsoever of
Mortgagor, in possession or expectancy, in and to the Real Estate or any part
thereof;

(c)           all right, title and interest of
Mortgagor in, to and under all easements, rights of way, licenses, operating
agreements, abutting strips and gores of land, streets, ways, alleys, passages,
sewer rights, waters, water courses, water and flowage rights, development
rights, air rights, mineral and soil rights, plants, standing and fallen
timber, and all estates, rights, titles, interests, privileges, licenses,
tenements, hereditaments and appurtenances belonging, relating or appertaining
to the Real Estate, and any reversions, remainders, rents, issues, profits and
revenue thereof and all land lying in the bed of any street, road or avenue, in
front of or adjoining the Real Estate to the center line thereof;

(d)           all of the fixtures, chattels,
business machines, machinery, apparatus, equipment, furnishings, fittings,
appliances and articles of personal property of every kind and nature
whatsoever, and all appurtenances and additions thereto and substitutions or
replacements thereof (together with, in each case, attachments, components,
parts and accessories) currently owned or subsequently acquired by Mortgagor
and now or subsequently attached to, or contained in the Real Estate, including
but without limiting the generality of the foregoing, all screens, awnings,
shades, blinds, curtains, draperies, artwork, carpets, rugs, storm doors and
windows, furniture and furnishings, heating, electrical, and mechanical
equipment, lighting, switchboards, plumbing, ventilating, air conditioning and
air-cooling apparatus, refrigerating, and incinerating equipment, escalators,
elevators, loading and unloading equipment and systems, stoves, ranges, laundry
equipment, cleaning systems (including window cleaning apparatus), telephones,
communication systems (including satellite dishes and antennae), televisions,
computers, sprinkler systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines, machinery, pipes,
pumps, tanks, conduits, appliances, fittings and fixtures of every kind and
description (all of the foregoing in this paragraph (d) being referred to
as the “Equipment”);

(e)           all right, title and interest of Mortgagor
in and to all substitutes and replacements of, and all additions and
improvements to, the Real Estate and the Equipment, subsequently acquired by or
released to Mortgagor or constructed, assembled or placed by Mortgagor on the
Real Estate, immediately upon such acquisition, release, construction,
assembling or placement, including, without limitation, any and all building
materials whether stored at the Real Estate or offsite, and, in each such case,
without any further deed, conveyance, assignment or other act by Mortgagor;

(f)            all right, title and interest of
Mortgagor in, to and under all leases, subleases, underlettings, concession
agreements, management agreements, licenses and other agreements relating to
the use or occupancy of the Real Estate or the Equipment or any part thereof,
now existing or subsequently entered into by Mortgagor and whether written or
oral and all guarantees of any of the foregoing (collectively, as any of the
foregoing may be amended, restated, extended, renewed or modified from time to
time, the “Leases”), and all rights of Mortgagor in respect of cash and
securities deposited thereunder and the right to receive and collect the
revenues, income, rents, issues and

 

3

 

profits thereof, together
with all other rents, royalties, issues, profits, revenue, income and other
benefits arising from the use and enjoyment of the Mortgaged Property (as
defined below) (collectively, the “Rents”);

(g)           subject to the terms of the Credit
Agreement, all unearned premiums under insurance policies now or subsequently
obtained by Mortgagor relating to the Real Estate or Equipment and Mortgagor’s
interest in and to all proceeds of any such insurance policies (including title
insurance policies) including the right to collect and receive such proceeds,
subject to the provisions relating to insurance generally set forth below; and
all awards and other compensation, including the interest payable thereon and
the right to collect and receive the same, made to the present or any
subsequent owner of the Real Estate or Equipment for the taking by eminent
domain, condemnation or otherwise, of all or any part of the Real Estate or any
easement or other right therein;

(h)           to the extent not prohibited under the
applicable contract, consent, license or other item unless the appropriate
consent has been obtained, all right, title and interest of Mortgagor in and to
(i) all contracts from time to time executed by Mortgagor or any manager or
agent on its behalf relating to the ownership, construction, maintenance,
repair, operation, occupancy, sale or financing of the Real Estate or Equipment
or any part thereof and all agreements and options relating to the purchase or
lease of any portion of the Real Estate or any property which is adjacent or
peripheral to the Real Estate, together with the right to exercise such options  and all leases
of Equipment, (ii) all consents, licenses, building permits, certificates of
occupancy and other governmental approvals relating to construction,
completion, occupancy, use or operation of the Real Estate or any part thereof,
and (iii) all drawings, plans, specifications and similar or related items
relating to the Real Estate; and

(i)            all proceeds, both cash and noncash,
of the foregoing;

(All of the foregoing
property and rights and interests now owned or held or subsequently acquired by
Mortgagor and described in the foregoing clauses (a) through (c) are
collectively referred to as the “Premises”, and those described in the
foregoing clauses (a) through (i) are collectively referred to as the “Mortgaged
Property”).

TO HAVE AND TO HOLD the
Mortgaged Property and the rights and privileges hereby mortgaged unto
Mortgagee, its successors and assigns for the uses and purposes set forth, until
the Obligations are fully paid and performed, provided, however, that the
condition of this Mortgage is such that if the Obligations are fully paid and
performed, then the estate hereby granted shall cease, terminate and become
void but shall otherwise remain in full force and effect.

This Mortgage covers present
and future advances and re-advances, in the aggregate amount of the obligations
secured hereby, made by the Secured Parties for the benefit of Borrower, and
the lien of such future advances and re-advances shall relate back to the date
of this Mortgage.

 

4

 

Terms and Conditions

1.                             Defined Terms. Capitalized terms used herein (including
in the “Background” and “Granting Clauses” sections above) and not otherwise
defined herein shall have the meanings ascribed thereto in the Credit Agreement
and the Guarantee and Collateral Agreement, as applicable.  References in this Mortgage to the “Default
Rate” shall mean the interest rate applicable pursuant to Section 2.7 of
the Credit Agreement.

2.                             Warranty of Title. 
Mortgagor warrants that it has good record title in fee simple to the
Real Estate, subject only to the matters that are set forth in Schedule B of
the title insurance policy or policies being issued to Mortgagee to insure the
lien of this Mortgage and any other lien or encumbrance as permitted by Section
6.2 of the Credit Agreement (the “Permitted
Exceptions”).  Mortgagor
shall warrant, defend and preserve such title and the lien of this Mortgage
against all claims of all persons and entities (not including the holders of
the Permitted Exceptions).  Mortgagor
represents and warrants that it has the right to mortgage the Mortgaged
Property.

3.                             Payment of
Obligations.  Mortgagor shall pay
and perform the Obligations at the times and places and in the manner specified
in the Loan Documents.

4.                             Requirements.  Mortgagor shall promptly comply with all
covenants, restrictions and conditions now or later of record which may be
applicable to any of the Mortgaged Property, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Mortgaged Property, except where a failure to do
so could not reasonably be expected to have a Material Adverse Effect.

5.                             Payment of Taxes and Other Impositions.  (a) 
Promptly when due or prior to the date on which any fine, penalty,
interest or cost may be added thereto or imposed, Mortgagor shall pay and
discharge all taxes, charges and assessments of every kind and nature, all
charges for any easement or agreement maintained for the benefit of any of the
Real Estate, all general and special assessments, levies, permits, inspection
and license fees, all water and sewer rents and charges, vault taxes and all
other public charges even if unforeseen or extraordinary, imposed upon or
assessed against or which may become a lien on any of the Real Estate, or
arising in respect of the occupancy, use or possession thereof, together with
any penalties or interest on any of the foregoing (all of the foregoing are
collectively referred to herein  as the “Impositions”),
except where otherwise permitted under Section 5.3 of the Credit Agreement.  Upon request by Mortgagee, Mortgagor shall
deliver to Mortgagee evidence reasonably acceptable to Mortgagee showing the
payment of any such Imposition.  If by
law any Imposition, at Mortgagor’s option, may be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition),
Mortgagor may elect to pay such Imposition in such installments and shall be
responsible for the payment of such installments with interest, if any.

(b)           Nothing herein shall affect any right or remedy of
Mortgagee under this Mortgage or otherwise, without notice or demand to Mortgagor,
to pay any Imposition after the date such Imposition shall have become due, and
add to the Obligations the amount so paid, together with interest from the time
of payment at the Default Rate.  Any
sums paid by Mortgagee in discharge of any Impositions shall be (i) a lien on
the Premises secured hereby prior to any right or title to, interest in, or
claim upon the Premises subordinate to the lien of this

 

5

 

Mortgage, and (ii) payable on demand by Mortgagor to
Mortgagee together with interest at the Default Rate as set forth above.

6.                             Insurance.  (a)  Mortgagor shall maintain insurance policies
in connection with the Real Estate in such form and amounts, covering such
risks, issued by such companies and otherwise in the manner and to the extent
required pursuant to Section 5.2 of the Credit Agreement.

(b)           If the Mortgaged Property, or any part thereof, shall be
destroyed or damaged, to the extent required by Section 5.6 of the Credit
Agreement, Mortgagor shall give prompt notice thereof to Mortgagee.  All insurance proceeds paid or payable in
connection with any damage or casualty to the Real Estate shall be deemed
proceeds from a Recovery Event and applied in the manner specified in the
Credit Agreement.

(c)           To the extent required under Section 5.2(e) of the Credit
Agreement, Mortgagor shall notify the Mortgagee immediately whenever any
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained on the Mortgaged Property under Section 5.2 of
the Credit Agreement is taken out by the Mortgagor; and Mortgagor shall
promptly deliver to the Mortgagee a duplicate original copy of such policy or
policies.

7.                             Restrictions on Liens and Encumbrances.  Except for the lien of this Mortgage and the
Permitted Exceptions or as permitted by the Credit Agreement, Mortgagor shall
not further mortgage, nor otherwise encumber the Mortgaged Property nor create
or suffer to exist any lien, charge or encumbrance on the Mortgaged Property,
or any part thereof, whether superior or subordinate to the lien of this
Mortgage and whether recourse or non-recourse.

8.                             Due on Sale and Other Transfer
Restrictions.  Except as expressly
permitted under the Credit Agreement, Mortgagor shall not sell, transfer,
convey or assign all or any portion of, or any interest in, the Mortgaged
Property.

9.                             Condemnation/Eminent
Domain.  Promptly upon obtaining
knowledge of the institution of any proceedings for the condemnation of the
Mortgaged Property, or any material portion thereof, Mortgagor will notify
Mortgagee of the pendency of such proceedings. 
All awards and proceeds relating to such condemnation shall be deemed
proceeds from a Recovery Event and applied in the manner specified in the
Credit Agreement.

10.                           Leases.  Except as expressly permitted under the
Credit Agreement, Mortgagor shall not (a) execute an assignment or pledge of
any Lease relating to all or any portion of the Mortgaged Property other than
in favor of Mortgagee, or (b) execute or permit to exist any Lease of any of
the Mortgaged Property.

11.                           Further Assurances. 
To further assure Mortgagee’s rights under this Mortgage, Mortgagor
agrees promptly upon demand of Mortgagee to do any act or execute any
additional documents (including, but not limited to, security agreements on any
personalty included or to be included in the Mortgaged Property) as may be
reasonably required by Mortgagee to confirm the lien of this Mortgage and all
other rights or benefits conferred on Mortgagee by this Mortgage.

12.                           Mortgagee’s Right to Perform.  If Mortgagor fails to perform any of the
covenants or agreements of Mortgagor, within the applicable grace period, if
any, provided for in the Credit

 

6

 

Agreement or the Guarantee and Collateral Agreement,
Mortgagee, without waiving or releasing Mortgagor from any obligation or
default under this Mortgage, may, at any time upon 5 days’ notice to Mortgagor
(but shall be under no obligation to) pay or perform the same, and the amount
or cost thereof, with interest at the Default Rate, shall immediately be due
from Mortgagor to Mortgagee and the same shall be secured by this Mortgage and
shall be a lien on the Mortgaged Property prior to any right, title to, interest
in, or claim upon the Mortgaged Property attaching subsequent to the lien of
this Mortgage.  No payment or advance of
money by Mortgagee under this Section shall be deemed or construed to cure
Mortgagor’s default or waive any right or remedy of Mortgagee.

13.                           Remedies.  (a)  Upon the occurrence and during the
continuance of any Event of Default, Mortgagee may immediately take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Mortgagor and in and to the Mortgaged Property, including,
but not limited to, the following actions, each of which may be pursued
concurrently or otherwise, at such time and in such manner as Mortgagee may
determine, in its sole discretion, without impairing or otherwise affecting the
other rights and remedies of Mortgagee:

(i)            Mortgagee may, to the extent
permitted by applicable law, (A) institute and maintain an action of mortgage
foreclosure against all or any part of the Mortgaged Property, (B) institute
and maintain an action on the Credit Agreement, the Guarantee and Collateral
Agreement or any other Loan Document, (C) sell all or part of the Mortgaged
Property (Mortgagor expressly granting to Mortgagee the power of sale), or (D)
take such other action at law or in equity for the enforcement of this Mortgage
or any of the Loan Documents as the law may allow.  Mortgagee may proceed in any such action to final judgment and
execution thereon for all sums due hereunder, together with interest thereon at
the Default Rate and all costs of suit, including, without limitation,
reasonable attorneys’ fees and disbursements. 
Interest at the Default Rate shall be due on any judgment obtained by
Mortgagee from the date of judgment until actual payment is made of the full
amount of the judgment; and

(ii)           To the extent permitted by applicable
law, Mortgagee may personally, or by its agents, attorneys and employees and
without regard to the adequacy or inadequacy of the Mortgaged Property or any
other collateral as security for the Obligations enter into and upon the
Mortgaged Property and each and every part thereof and exclude Mortgagor and
its agents and employees therefrom without liability for trespass, damage or
otherwise (Mortgagor hereby agreeing to surrender possession of the Mortgaged
Property to Mortgagee upon demand at any such time) and use, operate, manage,
maintain and control the Mortgaged Property and every part thereof.  Following such entry and taking of
possession, Mortgagee shall be entitled, without limitation, (x) to lease all
or any part or parts of the Mortgaged Property for such periods of time and
upon such conditions as Mortgagee may, in its discretion, deem proper, (y) to
enforce, cancel or modify any Lease and (z) generally to execute, do and
perform any other act, deed, matter or thing concerning the Mortgaged Property
as Mortgagee shall deem appropriate as fully as Mortgagor might do.

 

7

 

(b)           In case of a foreclosure sale, the Real Estate may be
sold, at Mortgagee’s election, in one parcel or in more than one parcel and
Mortgagee is specifically empowered (without being required to do so, and in
its sole and absolute discretion) to cause successive sales of portions of the
Mortgaged Property to be held.

(c)           Upon the occurrence and during the continuance of any
Event of Default resulting from any breach of any of the covenants, agreements,
terms or conditions contained in this Mortgage, Mortgagee shall be entitled to
enjoin such breach and obtain specific performance of any covenant, agreement,
term or condition and Mortgagee shall have the right to invoke any equitable
right or remedy as though other remedies were not provided for in this
Mortgage.

(d)           It is agreed that if an Event of Default shall occur and
be continuing, any and all proceeds of the Mortgaged Property received by
Mortgagee shall be held by Mortgagee for the benefit of the Secured Parties as
collateral security for the Obligations (whether matured or unmatured), and
shall be applied in payment of the Obligations, in the following order:

First, to the
payment of all costs and expenses incurred by the Mortgagee (in its capacity as
such hereunder or under any other Loan Document) in connection with such
collection, sale, foreclosure or realization or otherwise in connection with
this Mortgage, any other Loan Document or any of the Obligations, including all
court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Mortgagee hereunder or under any other
Loan Document and any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Loan Document;

 

Second, to the
payment in full of the Obligations (the amounts so applied to be distributed
among the Secured Parties pro rata in accordance with the amounts of the
Obligations owed to them on the date of any such distribution); and

 

Third, to the
Borrower, their successors or assigns, or as a court of competent jurisdiction
may otherwise direct.

 

14.                           Right of Mortgagee to Credit Sale.  Upon the occurrence of any sale made under
this Mortgage, whether made under the power of sale or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, Mortgagee may
bid for and acquire the Mortgaged Property or any part thereof.  In lieu of paying cash therefore, Mortgagee
may make settlement for the purchase price by crediting upon the Obligations or
other sums secured by this Mortgage, the net sales price after deducting
therefrom the expenses of sale and the cost of the action and any other sums
which Mortgagee is authorized to deduct under this Mortgage.  In such event, this Mortgage, the Credit
Agreement, the Guarantee and Collateral Agreement and documents evidencing
expenditures secured hereby may be presented to the person or persons
conducting the sale in order that the amount so used or applied may be credited
upon the Obligations as having been paid.

15.                           Appointment of Receiver.  If an Event of Default shall have occurred
and be continuing, Mortgagee as a matter of right and without notice to
Mortgagor, unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Mortgaged

 

8

 

Property or any other collateral or the interest of
Mortgagor therein as security for the Obligations, shall have the right to
apply to any court having jurisdiction to appoint a receiver or receivers or
other manager of the Mortgaged Property, without requiring the posting of a
surety bond, and without reference to the adequacy or inadequacy of the value
of the Mortgaged Property or the solvency or insolvency of Mortgagor or any
other party obligated for payment of all or any part of the Obligations, and
whether or not waste has occurred with respect to the Mortgaged Property, and
Mortgagor hereby irrevocably consents to such appointment and waives notice of
any application therefore (except as may be required by law).  Any such receiver or receivers or manager
shall have all the usual powers and duties of receivers in like or similar
cases and all the powers and duties of Mortgagee in case of entry as provided
in this Mortgage, including, without limitation and to the extent permitted by
law, the right to enter into leases of all or any part of the Mortgaged
Property, and shall continue as such and exercise all such powers until the
date of confirmation of sale of the Mortgaged Property unless such receivership
is sooner terminated.

16.                           Extension, Release, etc. 
(a)  Without affecting the lien
or charge of this Mortgage upon any portion of the Mortgaged Property not then
or theretofore released as security for the full amount of the Obligations,
Mortgagee may, to the extent permitted elsewhere under the Loan Documents, from
time to time and without notice, agree to (i) release any person liable for the
indebtedness borrowed or guaranteed under the Loan Documents, (ii) extend the
maturity or alter any of the terms of the indebtedness borrowed or guaranteed
under the Loan Documents or any other guaranty thereof, (iii) grant other
indulgences, (iv) release or reconvey, or cause to be released or reconveyed at
any time at Mortgagee’s option any parcel, portion or all of the Mortgaged
Property, (v) take or release any other or additional security for any
obligation herein mentioned, or (vi) make compositions or other arrangements
with debtors in relation thereto.

(b)           No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect the lien of this Mortgage or any liens,
rights, powers or remedies of Mortgagee hereunder, and such liens, rights,
powers and remedies shall continue unimpaired.

(c)           If Mortgagee shall have the right to foreclose this
Mortgage or to direct a power of sale, Mortgagor authorizes Mortgagee at its
option to foreclose the lien of this Mortgage (or direct the sale of the
Mortgaged Property, as the case may be) subject to the rights of any tenants of
the Mortgaged Property.  The failure to
make any such tenants parties defendant to any such foreclosure proceeding and
to foreclose their rights, or to provide notice to such tenants as required in
any statutory procedure governing a sale of the Mortgaged Property, or to
terminate such tenant’s rights in such sale will not be asserted by Mortgagor
as a defense to any proceeding instituted by Mortgagee to collect the
Obligations or to foreclose the lien of this Mortgage.

(d)           Unless expressly provided otherwise, in the event that
ownership of this Mortgage and title to the Mortgaged Property or any estate
therein shall become vested in the same person or entity, this Mortgage shall
not merge in such title but shall continue as a valid lien on the Mortgaged
Property for the amount secured hereby.

17.                           Security Agreement under Uniform
Commercial Code.  (a)  It is the intention of the parties hereto
that this Mortgage shall constitute a “security agreement” within the meaning
of

 

9

 

the
Uniform Commercial Code (the “Code”) of the State of Indiana.  If an Event of Default shall occur and be
continuing under this Mortgage, then in addition to having any other right or
remedy available at law or in equity, Mortgagee shall have the option of either
(i) proceeding under the Code and exercising such rights and remedies as may be
provided to a secured party by the Code with respect to all or any portion of
the Mortgaged Property which is personal property (including, without limitation,
taking possession of and selling such property) or (ii) treating such property
as real property and proceeding with respect to both the real and personal
property constituting the Mortgaged Property in accordance with Mortgagee’s
rights, powers and remedies with respect to the real property (in which event
the default provisions of the Code shall not apply).  If Mortgagee shall elect to proceed under the Code, then ten
days’ notice of sale of the personal property shall be deemed reasonable notice
and the reasonable expenses of retaking, holding, preparing for sale, selling
and the like incurred by Mortgagee shall include, but not be limited to,
attorneys’ fees and legal expenses.  At
Mortgagee’s request, Mortgagor shall assemble the personal property and make it
available to Mortgagee at a place designated by Mortgagee which is reasonably
convenient to both parties.

(b)           Mortgagor and Mortgagee agree, to the extent permitted by
law, that: (i) all of the goods described within the definition of the word “Equipment”
are or are to become fixtures on the Real Estate; (ii) this Mortgage upon
recording or registration in the real estate records of the proper office shall
constitute a financing statement filed as a “fixture filing” within the meaning
of the Code; (iii) Mortgagor is the “debtor” and record owner of the Land; (iv)
Mortgagee is the “Secured Party” and (iv) the addresses of Mortgagor and
Mortgagee are as set forth on the first page of this Mortgage.

18.                           Assignment of Rents.  (a)  Mortgagor hereby
assigns to Mortgagee the Rents as further security for the payment of and
performance of the Obligations, and Mortgagor grants to Mortgagee the right to
enter the Mortgaged Property for the purpose of collecting the same and to let
the Mortgaged Property or any part thereof, and to apply the Rents on account
of the Obligations.  The foregoing
assignment and grant is present and absolute and shall continue in effect until
the Obligations are fully paid and performed, but Mortgagee hereby waives the
right to enter the Mortgaged Property for the purpose of collecting the Rents
and Mortgagor shall be entitled to collect, receive, use and retain the Rents
until the occurrence and during the continuance of an Event of Default under
this Mortgage; such right of Mortgagor to collect, receive, use and retain the
Rents may be revoked by Mortgagee upon the occurrence and during the
continuance of any Event of Default under this Mortgage by giving not less than
five days’ written notice of such revocation to Mortgagor; in the event such
notice is given, Mortgagor shall pay over to Mortgagee, or to any receiver
appointed to collect the Rents, any lease security deposits, and shall pay
monthly in advance to Mortgagee, or to any such receiver, the fair and
reasonable rental value as determined by Mortgagee for the use and occupancy of
such part of the Mortgaged Property as may be in the possession of Mortgagor or
any affiliate of Mortgagor, and upon default in any such payment Mortgagor and
any such affiliate will vacate and surrender the possession of the Mortgaged
Property to Mortgagee or to such receiver, and in default thereof may be
evicted by summary proceedings or otherwise. 
Mortgagor shall not accept prepayments of installments of Rent to become
due for a period of more than one month in advance (except for security
deposits and estimated payments of percentage rent, if any).

 

10

 

(b)           Mortgagor has not affirmatively done any act which would
prevent Mortgagee from, or limit Mortgagee in, acting under any of the
provisions of the foregoing assignment.

(c)           Except for any matter disclosed in the Credit Agreement,
no action has been brought or, so far as is known to Mortgagor, is threatened,
which would interfere in any way with the right of Mortgagor to execute the
foregoing assignment and perform all of Mortgagor’s obligations contained in
this Section and in the Leases.

19.                           Additional Rights. 
The holder of any subordinate lien or subordinate deed of trust on the
Mortgaged Property shall have no right to terminate any Lease whether or not
such Lease is subordinate to this Mortgage nor shall Mortgagor consent to any
holder of any subordinate lien or subordinate deed of trust joining any tenant
under any Lease in any action to foreclose the lien or modify, interfere with,
disturb or terminate the rights of any tenant under any Lease.  By recordation of this Mortgage all
subordinate lienholders and the mortgagees and beneficiaries under subordinate
mortgages are subject to and notified of this provision, and any action taken
by any such lienholder or beneficiary contrary to this provision shall be null
and void.  Upon the occurrence and
during the continuance of any Event of Default, Mortgagee may, in its sole
discretion and without regard to the adequacy of its security under this
Mortgage, apply all or any part of any amounts on deposit with Mortgagee under
this Mortgage against all or any part of the Obligations.  Any such application shall not be construed
to cure or waive any Default or Event of Default or invalidate any act taken by
Mortgagee on account of such Default or Event of Default.

20.                           Notices.  All notices, requests, demands and other
communications hereunder shall be given in accordance with the provisions of
Section  9.1 of the Credit
Agreement to Mortgagor and to Mortgagee as specified therein.

21.                           No Oral Modification.  This Mortgage may not be amended, supplemented or otherwise
modified except in accordance with the provisions of Section  9.8 of the Credit Agreement.  Any agreement made by Mortgagor and
Mortgagee after the date of this Mortgage relating to this Mortgage shall be
superior to the rights of the holder of any intervening or subordinate lien or
encumbrance.

22.                           Partial Invalidity. 
In the event any one or more of the provisions contained in this
Mortgage shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
affect any other provision hereof, but each shall be construed as if such
invalid, illegal or unenforceable provision had never been included.  Notwithstanding to the contrary anything
contained in this Mortgage or in any provisions of any Loan Document, the
obligations of Mortgagor and of any other obligor under any Loan Documents
shall be subject to the limitation that Mortgagee shall not charge, take or
receive, nor shall Mortgagor or any other obligor be obligated to pay to
Mortgagee, any amounts constituting interest in excess of the maximum rate
permitted by law to be charged by Mortgagee.

23.                           Mortgagor’s Waiver of Rights.  (a) 
Mortgagor hereby voluntarily and knowingly releases and waives any and
all rights to retain possession of the Mortgaged Property after the occurrence
of an Event of Default hereunder and any and all rights of redemption from sale
under any order or decree of foreclosure (whether full or partial), pursuant to
rights, if any, therein granted, as

 

11

 

allowed
under any applicable law, on its own behalf, on behalf of all persons claiming
or having an interest (direct or indirectly) by, through or under each
constituent of Mortgagor and on behalf of each and every person acquiring any
interest in the Mortgaged Property subsequent to the date hereof, it being the
intent hereof that any and all such rights or redemption of each constituent of
Mortgagor and all such other persons are and shall be deemed to be hereby
waived to the fullest extent permitted by applicable law or replacement
statute.  Each constituent of Mortgagor
shall not invoke or utilize any such law or laws or otherwise hinder, delay, or
impede the execution of any right, power, or remedy herein or otherwise granted
or delegated to Mortgagee, but shall permit the execution of every such right,
power, and remedy as though no such law or laws had been made or enacted.

(b)           To the fullest extent permitted by law, Mortgagor waives
the benefit of all laws now existing or that may subsequently be enacted
providing for (i) any appraisement before sale of any portion of the Mortgaged
Property, (ii) any extension of the time for the enforcement of the collection
of the Obligations or the creation or extension of a period of redemption from
any sale made in collecting such debt and (iii) exemption of the Mortgaged
Property from attachment, levy or sale under execution or exemption from civil
process.  To the full extent Mortgagor
may do so, Mortgagor agrees that Mortgagor will not at any time insist upon,
plead, claim or take the benefit or advantage of any law now or hereafter in
force providing for any appraisement, valuation, stay, exemption, extension or
redemption, or requiring foreclosure of this Mortgage before exercising any
other remedy granted hereunder and Mortgagor, for Mortgagor and its successors
and assigns, and for any and all persons ever claiming any interest in the
Mortgaged Property, to the extent permitted by law, hereby waives and releases
all rights of redemption, valuation, appraisement, stay of execution, notice of
election to mature (except as expressly provided in the Credit Agreement) or
declare due the whole of the secured indebtedness and marshalling in the event
of exercise by Mortgagee of the foreclosure rights, power of sale, or other
rights hereby created. Nothing in this Mortgage shall be deemed to constitute a
waiver by the Mortgagor of the time limitations on issuance of process under a
judgment or decree of foreclosure set out in Ind. Code §32-29-7-3 or any
successor provision of the Indiana Code.

24.                           Remedies Not Exclusive.  Mortgagee shall be entitled to enforce payment and performance of
the Obligations and to exercise all rights and powers under this Mortgage or
under any of the other Loan Documents or other agreement or any laws now or
hereafter in force, notwithstanding some or all of the Obligations may now or
hereafter be otherwise secured, whether by deed of trust, mortgage, security
agreement, pledge, lien, assignment or otherwise.  Neither the acceptance of this Mortgage nor its enforcement,
shall prejudice or in any manner affect Mortgagee’s rights to realize upon or
enforce any other security now or hereafter held by Mortgagee, it being agreed
that Mortgagee shall be entitled to enforce this Mortgage and any other
security now or hereafter held by Mortgagee in such order and manner as
Mortgagee may determine in its absolute discretion.  No remedy herein conferred upon or reserved to Mortgagee is
intended to be exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute.  Every power or remedy given by
any of the Loan Documents to Mortgagee or to which either may otherwise be
entitled, may be exercised, concurrently or independently, from time to time
and as often as may be deemed expedient by Mortgagee, as the case may be.  In no event shall Mortgagee, in the exercise
of the remedies provided in this Mortgage (including, without limitation, in
connection with the assignment of

 

12

 

Rents to Mortgagee, or the appointment of a receiver
and the entry of such receiver on to all or any part of the Mortgaged
Property), be deemed a “Mortgagee in possession,” and Mortgagee  shall not in any way be made liable for any
act, either of commission or omission, in connection with the exercise of such
remedies.

25.                           Multiple Security. 
If (a) the Premises shall consist of one or more parcels, whether or not
contiguous and whether or not located in the same county, or (b) in addition to
this Mortgage, Mortgagee shall now or hereafter hold or be the beneficiary of
one or more additional mortgages, liens, deeds of trust or other security
(directly or indirectly) for the Obligations upon other property in the State
in which the Premises are located (whether or not such property is owned by
Mortgagor or by others) or (c) both the circumstances described in clauses (a)
and (b) shall be true, then to the fullest extent permitted by law, Mortgagee
may, at its election, commence or consolidate in a single foreclosure action
all foreclosure proceedings against all such collateral securing the
Obligations (including the Mortgaged Property), which action may be brought or
consolidated in the courts of, or sale conducted in, any county in which any of
such collateral is located.  Mortgagor
acknowledges that the right to maintain a consolidated  foreclosure action is a specific inducement
to Mortgagee to extend the indebtedness borrowed pursuant to or guaranteed by
the Loan Documents, and Mortgagor expressly and irrevocably waives any
objections to the commencement or consolidation of the foreclosure proceedings
in a single action and any objections to the laying of venue or based on the
grounds of forum non conveniens which it may now or hereafter have.  Mortgagor further agrees that if Mortgagee
shall be prosecuting one or more foreclosure or other proceedings against a
portion of the Mortgaged Property or against any collateral other than the
Mortgaged Property, which collateral directly or indirectly secures the
Obligations, or if Mortgagee shall have obtained a judgment of foreclosure and
sale or similar judgment against such collateral, then, whether or not such
proceedings are being maintained or judgments were obtained in or outside the
State in which the Premises are located, Mortgagee may commence or continue
any  foreclosure proceedings and
exercise its other remedies granted in this Mortgage against all or any part of
the Mortgaged Property and Mortgagor waives any objections to the commencement
or continuation of a foreclosure of this Mortgage or exercise of any other
remedies hereunder based on such other proceedings or judgments, and waives any
right to seek to dismiss, stay, remove, transfer or consolidate either any
action under this Mortgage or such other proceedings on such basis.  Neither the commencement nor continuation of
proceedings to foreclose this Mortgage, nor the exercise of any other rights
hereunder nor the recovery of any judgment by Mortgagee in any such proceedings
or the occurrence of any sale in any such proceedings shall prejudice, limit or
preclude Mortgagee’s right to commence or continue one or more foreclosure or
other proceedings or obtain a judgment against any other collateral (either in
or outside the State in which the Premises are located) which directly or
indirectly secures the Obligations, and Mortgagor expressly waives any
objections to the commencement of, continuation of, or entry of a judgment in
such other sales or proceedings or exercise of any remedies in such sales or
proceedings based upon any action or judgment connected to this Mortgage, and
Mortgagor also waives any right to seek to dismiss, stay, remove, transfer or
consolidate either such other sales or proceedings or any sale or action under
this Mortgage on such basis.  It is
expressly understood and agreed that to the fullest extent permitted by law,
Mortgagee may, at its election, cause the sale of all collateral which is the subject
of a single  foreclosure action at
either a single sale or at multiple sales conducted simultaneously and take
such other measures as are appropriate in order to effect the agreement of the
parties to dispose of and administer all

 

13

 

collateral securing the Obligations (directly or
indirectly) in the most economical and least time-consuming manner.

26.                           Successors and Assigns.  All covenants of Mortgagor contained in this Mortgage are imposed
solely and exclusively for the benefit of Mortgagee, and its successors and
assigns, and no other person or entity shall have standing to require
compliance with such covenants or be deemed, under any circumstances, to be a
beneficiary of such covenants, any or all of which may be freely waived in
whole or in part by Mortgagee at any time if in the sole discretion of either
of them such a waiver is deemed advisable. 
All such covenants of Mortgagor shall run with the land and bind
Mortgagor, the successors and assigns of Mortgagor (and each of them) and all
subsequent owners, encumbrancers and tenants of the Mortgaged Property, and
shall inure to the benefit of Mortgagee and its successors and assigns.  The word “Mortgagor” shall be construed as
if it read “Mortgagors” whenever the sense of this Mortgage so requires and if
there shall be more than one Mortgagor, the obligations of the Mortgagors shall
be joint and several.

27.                           No
Waivers, etc.  Any failure by
Mortgagee to insist upon the strict performance by Mortgagor of any of the
terms and provisions of this Mortgage shall not be deemed to be a waiver of any
of the terms and provisions hereof, and Mortgagee, notwithstanding any such
failure, shall have the right thereafter to insist upon the strict performance
by Mortgagor of any and all of the terms and provisions of this Mortgage to be
performed by Mortgagor.  Mortgagee may
release, regardless of consideration and without the necessity for any notice
to or consent by the holder of any subordinate lien on the Mortgaged Property,
any part of the security held for the obligations secured by this Mortgage
without, as to the remainder of the security, in any way impairing or affecting
the lien of this Mortgage or the priority of such lien over any subordinate
lien or deed of trust.

28.                           Governing
Law, etc.  This Mortgage shall be
governed by and construed and interpreted in accordance with the laws of the of
Indiana, without regard to principles of conflict of law, except that Mortgagor
expressly acknowledges that by their respective terms the Loan Documents shall
be governed and construed in accordance with the laws of the State of New York,
and for purposes of consistency, Mortgagor agrees that in any in personam
proceeding related to this Mortgage the rights of the parties to this Mortgage
shall also be governed by and construed in accordance with the laws of the
State of New York governing contracts made and to be performed in that State.

29.                           Certain Definitions.  Unless the context clearly indicates a contrary intent or unless
otherwise specifically provided herein, words used in this Mortgage shall be
used interchangeably in singular or plural form and the word “Mortgagor” shall
mean “each Mortgagor or any subsequent owner or owners of the Mortgaged
Property or any part thereof or interest therein,” the word “Mortgagee” shall
mean “Mortgagee or any successor agent for the Lenders,” the word “person”
shall include any individual, corporation, partnership, limited liability
company, trust, unincorporated association, government, governmental authority,
or other entity, and the words “Mortgaged Property” shall include any portion
of the Mortgaged Property or interest therein. 
Whenever the context may require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.  The captions in this Mortgage are for
convenience or reference only and in no way limit or amplify the provisions
hereof.

 

14

 

30.                             Last Dollars Secured;  Priority.  This Mortgage
secures only a portion of the indebtedness owing or which may become owing by
Mortgagor to the Secured Parties.  The
parties agree that any payments or repayments of such indebtedness shall be and
be deemed to be applied first to the portion of the indebtedness that is not
secured hereby, it being the parties’ intent that the portion of the
indebtedness last remaining unpaid shall be secured hereby.  If at any time this Mortgage shall secure
less than all of the principal amount of the Obligations, it is expressly
agreed that any repayments of the principal amount of the Obligations shall not
reduce the amount of the lien of this Mortgage until the lien amount shall
equal the principal amount of the Obligations outstanding.

31.                           Release.  Supplementing the provisions of Section 9.18
of the Credit Agreement, if any of the Mortgaged Property shall be sold,
transferred or otherwise disposed of by any Mortgagor in a transaction
permitted by the Credit Agreement and the Net Cash Proceeds are applied in
accordance with the terms of the Credit Agreement, or otherwise consented to by
Mortgagee, then the Mortgagee, at the request and sole expense of such
Mortgagor, shall execute and deliver to such Mortgagor, in form suitable for
recording, all releases or other documents reasonably necessary or desirable
for the release of the Liens created hereby on such Mortgaged Property.  The Mortgagor shall deliver to the
Mortgagee, at least five Business Days prior to the date of the proposed
release, a written request for release identifying the sale or other
disposition in reasonable detail, including the price thereof and any expenses
in connection therewith, together with a certification by the Mortgagor stating
that such transaction is in compliance with, and permitted by, the Credit
Agreement and the other Loan Documents or otherwise consented to by Mortgagee.

32.                           FUTURE ADVANCES; MAXIMUM SECURED AMOUNT.  (b) 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, MORTGAGOR
HEREBY ACKNOWLEDGES AND AGREES THAT THE OBLIGATIONS SECURED BY THIS MORTGAGE
INCLUDE, AND THAT THIS MORTGAGE IS GIVEN TO SECURE, ADVANCES THAT MAY BE MADE
BY MORTGAGEE OR LENDERS TO MORTGAGOR AND OBLIGATIONS TO MORTGAGEE OR LENDERS
THAT MAY BE INCURRED BY MORTGAGOR AFTER THE EXECUTION OF THIS MORTGAGE (WHETHER
MADE AS AN OBLIGATION, MADE AT THE OPTION OF MORTGAGEE OR LENDERS, MADE AFTER A
REDUCTION TO A ZERO OR OTHER BALANCE, OR MADE OTHERWISE) (“FUTURE ADVANCES”)
AND THAT THIS MORTGAGE SHALL SECURE ALL FUTURE ADVANCES OF EVERY KIND AND
WHENEVER OCCURRING TO THE SAME EXTENT AS IF THE FUTURE OBLIGATIONS AND ADVANCES
WERE MADE ON THE DATE OF EXECUTION OF THIS MORTGAGE, PROVIDED HOWEVER, THAT THE
MAXIMUM AMOUNT OF UNPAID FUTURE ADVANCES OUTSTANDING AT ANY ONE TIME SHALL NOT
EXCEED $660,000,000 AND €36,000,000 SUCH MAXIMUM AMOUNT BEING STATED HEREIN
PURSUANT TO AND IN ACCORDANCE WITH INDIANA CODE §-32-29-1-10 AND NOT BEING A
COMMITMENT BY MORTGAGEE OR THE SECURED PARTIES TO MAKE FUTURE ADVANCES, AND
PROVIDED, FURTHER, THAT THE MAXIMUM PRINCIPAL AMOUNT OF THE INDEBTEDNESS
SECURED BY THIS MORTGAGE AT ANY ONE TIME IN ALL EVENTS SHALL NOT EXCEED
$660,000,000 AND €36,000,000.  SUCH
LIMITATION SHALL NOT LIMIT THE SECURITY OF THIS MORTGAGE WITH RESPECT TO (I)
INTEREST ON THE AFORESAID MAXIMUM AMOUNT OF PRINCIPAL INDEBTEDNESS AT THE RATES
PROVIDED IN THE DEBT DOCUMENTS, (II) AFTER A

 

15

 

DEFAULT BY MORTGAGOR TO
PAY OR PERFORM SAME, SUMS TO PAY IMPOSITIONS AS PROVIDED FOR HEREIN, (III)
AFTER A DEFAULT BY MORTGAGOR TO PAY OR PERFORM SAME, SUMS TO PAY PREMIUMS ON
INSURANCE POLICIES COVERING THE MORTGAGED PROPERTY AS PROVIDED FOR HEREIN, (IV)
EXPENSES INCURRED IN UPHOLDING OR ENFORCING THE LIEN OF THIS MORTGAGE,
INCLUDING, BUT NOT LIMITED TO, THE EXPENSES OF ANY LITIGATION TO PROSECUTE OR
DEFEND THE RIGHTS AND LIEN CREATED BY THIS MORTGAGE, (V) AFTER DEFAULT BY
MORTGAGOR TO PAY OR PERFORM SAME, EXPENSES INCURRED TO PROTECT THE MORTGAGED
PROPERTY, (VI) ANY AMOUNT, COSTS OR CHARGE TO WHICH MORTGAGEE BECOMES
SUBROGATED, UPON PAYMENT, WHETHER UNDER RECOGNIZED PRINCIPLES OF LAW OR EQUITY,
OR UNDER EXPRESS STATUTORY AUTHORITY AND (VII) ANY OTHER AMOUNT SECURED BY THIS
MORTGAGE WHICH IF NOT LIMITED BY SUCH LIMITATION WOULD NOT RENDER THIS MORTGAGE
INDEFINITE OR INCREASE THE AMOUNT OF MORTGAGE RECORDING TAXES, IF ANY, PAYABLE
WITH RESPECT TO THIS MORTGAGE. 
Mortgagor will pay all applicable mortgage recording tax incurred in
connection with the recordation of this Mortgage.

 

16

 

This
Mortgage has been duly executed by Mortgagor on May 13, 2004 and is intended to
be effective as of such date.

                                                                                                                

	
   

  	
  DARAMIC, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Lynn Amos

  
	
   

  	
   

  	
  Name:

  	
  Lynn Amos 

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer, Executive Vice President, Treasurer and  Secretary

  

 

 

 

 

This
instrument was prepared by:

Gavin
Loughlin, Esq.

Simpson
Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

 

 

 

	
  STATE OF NEW YORK)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  :  ss.:

  	
   

  	
   

  	
   

  	
   

  
	
  COUNTY OF NEW YORK)

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Before me, a Notary Public
in and for State of New York and a resident of New York County, New York,
personally appeared Lynn Amos of Daramic, Inc. a Delaware corporation, who
acknowledged execution of the foregoing Mortgage as such CFO, EVP, Treasurer
and Secretary for and on behalf of said Delaware corporation.

                Witness my hand and Notarial
Seal this 13th day of May, 2004.

Notary
Public

By:
/s/ Francis J. Kelleher

 

Francis
J. Kelleher, Notary Public

Print
Name

 

 

My
commission expires: August 26, 2006

 

and  I am a resident of New York, County, New
YorkExhibit 10.6

Daviess,
Kentucky

 

MORTGAGE, FIXTURE
FILING, AND ASSIGNMENT OF LEASES AND RENTS

 

made by

DARAMIC, INC., successor to
Polypore Group, Inc. by name change,

Mortgagor,

to

JPMORGAN
CHASE BANK, 

as
Administrative Agent, Mortgagee

Dated
as of May 13, 2004

 

 

After
recording please return to:

 

Simpson
Thacher & Bartlett LLP

425
Lexington Avenue

New
York, New York 10017

Attention:  Cynthia Parker

 

 

 

 

TABLE OF CONTENTS

Page

	
  Background

  	
   

  	
  1

  
	
  Granting Clauses

  	
  2

  
	
  Terms and Conditions

  	
  5

  
	
   

  	
  1.

  	
  Defined Terms

  	
  5

  
	
   

  	
  2.

  	
  Warranty of Title

  	
  5

  
	
   

  	
  3.

  	
  Payment
  of Obligations

  	
  5

  
	
   

  	
  4.

  	
  Requirements

  	
  5

  
	
   

  	
  5.

  	
  Payment of Taxes
  and Other Impositions

  	
  5

  
	
   

  	
  6.

  	
  Insurance

  	
  6

  
	
   

  	
  7.

  	
  Restrictions on
  Liens and Encumbrances

  	
  6

  
	
   

  	
  8.

  	
  Due on Sale
  and Other Transfer Restrictions

  	
  6

  
	
   

  	
  9.

  	
  Condemnation/Eminent Domain

  	
  6

  
	
   

  	
  10.

  	
  Leases

  	
  6

  
	
   

  	
  11.

  	
  Further
  Assurances

  	
  6

  
	
   

  	
  12.

  	
  Mortgagee’s Right to
  Perform

  	
  7

  
	
   

  	
  13.

  	
  Remedies

  	
  7

  
	
   

  	
  14.

  	
  Right of Mortgagee to
  Credit Sale

  	
  8

  
	
   

  	
  15.

  	
  Appointment
  of Receiver

  	
  9

  
	
   

  	
  16.

  	
  Extension, Release, etc

  	
  9

  
	
   

  	
  17.

  	
  Security
  Agreement under Uniform Commercial Code

  	
  10

  
	
   

  	
  18.

  	
  Assignment
  of Rents

  	
  10

  
	
   

  	
  19.

  	
  Additional Rights

  	
  11

  
	
   

  	
  20.

  	
  Notices

  	
  11

  
	
   

  	
  21.

  	
  No Oral
  Modification

  	
  11

  
	
   

  	
  22.

  	
  Partial
  Invalidity

  	
  11

  
	
   

  	
  23.

  	
  Mortgagor’s Waiver of
  Rights

  	
  11

  
	
   

  	
  24.

  	
  Remedies
  Not Exclusive

  	
  12

  
	
   

  	
  25.

  	
  Multiple Security

  	
  12

  
	
   

  	
  26.

  	
  Successors
  and Assigns

  	
  13

  
	
   

  	
  27.

  	
  No Waivers, etc.

  	
  13

  
	
   

  	
  28.

  	
  Governing Law, etc.

  	
  14

  
	
   

  	
  29.

  	
  Certain
  Definitions

  	
  14

  
	
   

  	
  30.

  	
  Last Dollars Secured;
  Priority

  	
  14

  
	
   

  	
  31.

  	
  Revolving Credit Facility.

  	
  14

  
	
   

  	
  32.

  	
  Maximum Additional
  Indebtedness.

  	
  14

  
	
   

  	
  33.

  	
  Release

  	
  15

  

 

 

 

MORTGAGE,
FIXTURE FILING AND ASSIGNMENT OF LEASES AND RENTS

THIS MORTGAGE, FIXTURE FILING AND ASSIGNMENT OF LEASES AND RENTS, dated
as of May 13, 2004 is made by DARAMIC, INC., successor to Polypore Group Inc.
by name change, a Delaware corporation (“Mortgagor”), whose address is
c/o PP HOLDINGS CORPORATION 13800
South Lakes Drive, Charlotte, NC  28273, Attention: Lynn Amos to JPMORGAN
CHASE BANK, as Administrative Agent (in such capacity, “Mortgagee”)
whose address is 270 Park Avenue, New York, New York 10017, Attention: Peter Dedousis. References to this “Mortgage”
shall mean this instrument and any and all renewals, modifications, amendments,
supplements, extensions, consolidations, substitutions, spreaders and
replacements of this instrument.

Background

A.            PP Holdings Corporation and PP Acquisition Corporation
(collectively, “Borrower”) have entered into the Credit Agreement dated
as of the date hereof (as the same may be amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”) with the
several banks and other financial institutions from time to time parties
thereto (the “Lenders”), General Electric Capital Corporation, as documentation
agent, Bear Stearns Corporate Lending Inc., as syndication agent, and
Mortgagee.  The terms of the Credit
Agreement are incorporated by reference in this Mortgage as if the terms
thereof were fully set forth herein.  In
the event of any conflict between the provisions of this Mortgage and the
provisions of the Credit Agreement, the applicable provisions of the Credit
Agreement shall govern and control, provided, that in the case of a
provision in this Mortgage which is more specific and detailed than the related
provision in the Credit Agreement (including by way of illustration, the
section of this Mortgage entitled “Leases”), such Mortgage provision
shall not be deemed to be in conflict with the related provision in the Credit
Agreement.

B.            Mortgagor is the owner of the fee simple estate in the
parcel(s) of real property described on Schedule A attached (the “Land)
and owns the buildings, improvements, structures and fixtures now or
subsequently located on the Land (the “Improvements”; the Land and the
Improvements being collectively referred to as the “Real Estate”).

C.            Pursuant to the terms and conditions of the Credit
Agreement, inter  alia: (1) the Term Loan Lenders have severally
agreed to make certain Term Loans to Borrower in the original aggregate principal
amount of up to $370,000,000 and to make Euro Term Loans to Borrower in the
original aggregate principal amount of up to €36,000,000; (2) the Revolving
Credit Lenders have severally agreed to make certain Revolving Loans to
Borrower in the original aggregate principal amount of up to $90,000,000  (the “Revolving Facility”); (3) the Swingline Lender
has agreed to extend certain Swingline Loans not to exceed $5,000,000 in the
aggregate and the issuances of which shall reduce the availability of the
Revolving Credit Borrowing and (4) one or more Lenders may make Incremental
Loans in an aggregate principal amount not to exceed $200,000,000, as evidenced
by the Credit Agreement.

D.            The maturity date of the last to mature term loans
secured hereby is November 12, 2011.

 

 

E.             It is a condition, among others, to the obligations of
the Lenders to make the Loans and enter into any Hedge Agreement that Mortgagor
secure its obligations under the Guarantee and Collateral Agreement dated as of
the date hereof in favor of Mortgagee (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the “Guarantee
and Collateral Agreement”) pursuant to which Mortgagor guaranteed the
obligations of Borrower under the Credit Agreement and the other Loan
Documents, by executing and delivering this Mortgage.  Mortgagor, a wholly-owned subsidiary of Borrower, will
receive substantial direct and indirect benefit from the extensions of credit
made to Borrower pursuant to the Credit Agreement.

Granting Clauses

For
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Mortgagor hereby agrees that to secure the following
(collectively, the “Obligations”):

(a)           the due and punctual payment of (i)
the principal of and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when
and as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral, and (iii) all
other monetary obligations of the Borrower to any of the Secured Parties under
the Credit Agreement and each of the other Loan Documents, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),

(b)           the due and punctual performance of
all other obligations of the Borrower under or pursuant to the Credit Agreement
and each of the other Loan Documents,

(c)           the due and punctual payment and
performance of all the obligations of each other Loan Party under or pursuant
to the Guarantee and Collateral Agreement and each of the other Loan Documents,
and

(d)           the due and
punctual payment and performance of all obligations of each Loan Party under
each Hedging Agreement that (i) is in effect on the Closing Date with a
counterparty that is a Lender or an Affiliate of a Lender as of the Closing
Date or (ii) is entered into after the Closing Date with any counterparty that
is a Lender or an Affiliate of a Lender at the time such Hedging Agreement is
entered into unless such Hedging Agreement provides the obligations thereunder
are not “Obligations” as defined in the Guarantee and Collateral Agreement.

MORTGAGOR
HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND HEREBY
MORTGAGES AND WARRANTS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER TO MORTGAGEE:

 

2

 

(a)           the Land;

(b)           all right, title and interest
Mortgagor now has or may hereafter acquire in and to the Improvements or any
part thereof, and all the estate, right, title, claim or demand whatsoever of
Mortgagor, in possession or expectancy, in and to the Real Estate or any part
thereof;

(c)           all right, title and interest of
Mortgagor in, to and under all easements, rights of way, licenses, operating
agreements, abutting strips and gores of land, streets, ways, alleys, passages,
sewer rights, waters, water courses, water and flowage rights, development
rights, air rights, mineral and soil rights, plants, standing and fallen
timber, and all estates, rights, titles, interests, privileges, licenses,
tenements, hereditaments and appurtenances belonging, relating or appertaining
to the Real Estate, and any reversions, remainders, rents, issues, profits and
revenue thereof and all land lying in the bed of any street, road or avenue, in
front of or adjoining the Real Estate to the center line thereof;

(d)           all of the fixtures, chattels,
business machines, machinery, apparatus, equipment, furnishings, fittings,
appliances and articles of personal property of every kind and nature
whatsoever, and all appurtenances and additions thereto and substitutions or
replacements thereof (together with, in each case, attachments, components,
parts and accessories) currently owned or subsequently acquired by Mortgagor
and now or subsequently attached to, or contained in the Real Estate, including
but without limiting the generality of the foregoing, all screens, awnings,
shades, blinds, curtains, draperies, artwork, carpets, rugs, storm doors and
windows, furniture and furnishings, heating, electrical, and mechanical
equipment, lighting, switchboards, plumbing, ventilating, air conditioning and
air-cooling apparatus, refrigerating, and incinerating equipment, escalators,
elevators, loading and unloading equipment and systems, stoves, ranges, laundry
equipment, cleaning systems (including window cleaning apparatus), telephones,
communication systems (including satellite dishes and antennae), televisions,
computers, sprinkler systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines, machinery, pipes,
pumps, tanks, conduits, appliances, fittings and fixtures of every kind and
description (all of the foregoing in this paragraph (d) being referred to
as the “Equipment”);

(e)           all right, title and interest of
Mortgagor in and to all substitutes and replacements of, and all additions and improvements
to, the Real Estate and the Equipment, subsequently acquired by or released to
Mortgagor or constructed, assembled or placed by Mortgagor on the Real Estate,
immediately upon such acquisition, release, construction, assembling or
placement, including, without limitation, any and all building materials
whether stored at the Real Estate or offsite, and, in each such case, without
any further deed, conveyance, assignment or other act by Mortgagor;

(f)            all right, title and interest of
Mortgagor in, to and under all leases, subleases, underlettings, concession
agreements, management agreements, licenses and other agreements relating to
the use or occupancy of the Real Estate or the Equipment or any part thereof,
now existing or subsequently entered into by Mortgagor and whether written or
oral and all guarantees of any of the foregoing (collectively, as any of the
foregoing may be amended, restated, extended, renewed or modified from time to
time,

 

3

 

the “Leases”), and
all rights of Mortgagor in respect of cash and securities deposited thereunder
and the right to receive and collect the revenues, income, rents, issues and
profits thereof, together with all other rents, royalties, issues, profits,
revenue, income and other benefits arising from the use and enjoyment of the
Mortgaged Property (as defined below) (collectively, the “Rents”);

(g)           subject to the terms of the Credit
Agreement, all unearned premiums under insurance policies now or subsequently obtained
by Mortgagor relating to the Real Estate or Equipment and Mortgagor’s interest
in and to all proceeds of any such insurance policies (including title
insurance policies) including the right to collect and receive such proceeds,
subject to the provisions relating to insurance generally set forth below; and
all awards and other compensation, including the interest payable thereon and
the right to collect and receive the same, made to the present or any
subsequent owner of the Real Estate or Equipment for the taking by eminent
domain, condemnation or otherwise, of all or any part of the Real Estate or any
easement or other right therein;

(h)           to the extent not prohibited under
the applicable contract, consent, license or other item unless the appropriate
consent has been obtained, all right, title and interest of Mortgagor in and to
(i) all contracts from time to time executed by Mortgagor or any manager or
agent on its behalf relating to the ownership, construction, maintenance,
repair, operation, occupancy, sale or financing of the Real Estate or Equipment
or any part thereof and all agreements and options relating to the purchase or
lease of any portion of the Real Estate or any property which is adjacent or
peripheral to the Real Estate, together with the right to exercise such options  and all leases
of Equipment, (ii) all consents, licenses, building permits, certificates of
occupancy and other governmental approvals relating to construction,
completion, occupancy, use or operation of the Real Estate or any part thereof,
and (iii) all drawings, plans, specifications and similar or related items
relating to the Real Estate; and

(i)            all proceeds, both cash and noncash,
of the foregoing;

(All of the foregoing
property and rights and interests now owned or held or subsequently acquired by
Mortgagor and described in the foregoing clauses (a) through (c) are
collectively referred to as the “Premises”, and those described in the
foregoing clauses (a) through (i) are collectively referred to as the “Mortgaged
Property”).

TO HAVE AND TO HOLD the
Mortgaged Property and the rights and privileges hereby mortgaged unto
Mortgagee, its successors and assigns for the uses and purposes set forth,
until the Obligations are fully paid and performed, provided, however, that the
condition of this Mortgage is such that if the Obligations are fully paid and
performed, then the estate hereby granted shall cease, terminate and become
void but shall otherwise remain in full force and effect.

This Mortgage covers present
and future advances and re-advances, in the aggregate amount of the obligations
secured hereby, made by the Secured Parties for the benefit of Borrower, and
the lien of such future advances and re-advances shall relate back to the date
of this Mortgage.

4

 

Terms and Conditions

1.                             Defined Terms.
Capitalized terms used herein (including in the “Background” and “Granting
Clauses” sections above) and not otherwise defined herein shall have the
meanings ascribed thereto in the Credit Agreement and the Guarantee and
Collateral Agreement, as applicable. 
References in this Mortgage to the “Default Rate” shall mean the
interest rate applicable pursuant to Section 2.7 of the Credit Agreement.

2.                             Warranty
of Title. 
Mortgagor warrants that it has good record title in fee simple to the
Real Estate, subject only to the matters that are set forth in Schedule B of
the title insurance policy or policies being issued to Mortgagee to insure the
lien of this Mortgage and any other lien or encumbrance as permitted by Section
6.2 of the Credit Agreement (the “Permitted Exceptions”).  Mortgagor shall warrant, defend and preserve
such title and the lien of this Mortgage against all claims of all persons and
entities (not including the holders of the Permitted Exceptions).  Mortgagor represents and warrants that it
has the right to mortgage the Mortgaged Property.

3.                             Payment
of Obligations. 
Mortgagor shall pay and perform the Obligations at the times and places
and in the manner specified in the Loan Documents.

4.                             Requirements.  Mortgagor shall promptly comply with all
covenants, restrictions and conditions now or later of record which may be
applicable to any of the Mortgaged Property, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Mortgaged Property, except where a failure to do
so could not reasonably be expected to have a Material Adverse Effect.

5.                             Paymentof
Taxes and Other Impositions.  (a) 
Promptly when due or prior to the date on which any fine, penalty,
interest or cost may be added thereto or imposed, Mortgagor shall pay and
discharge all taxes, charges and assessments of every kind and nature, all
charges for any easement or agreement maintained for the benefit of any of the
Real Estate, all general and special assessments, levies, permits, inspection
and license fees, all water and sewer rents and charges, vault taxes and all
other public charges even if unforeseen or extraordinary, imposed upon or assessed
against or which may become a lien on any of the Real Estate, or arising in
respect of the occupancy, use or possession thereof, together with any
penalties or interest on any of the foregoing (all of the foregoing are
collectively referred to herein  as the
“Impositions”), except where otherwise permitted under Section
5.3 of the Credit Agreement.  Upon request by Mortgagee, Mortgagor shall deliver to Mortgagee
evidence reasonably acceptable to Mortgagee showing the payment of any such
Imposition.  If by law any Imposition,
at Mortgagor’s option, may be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Mortgagor may elect to
pay such Imposition in such installments and shall be responsible for the payment
of such installments with interest, if any.

(b)           Nothing herein shall affect any right
or remedy of Mortgagee under this Mortgage or otherwise, without notice or
demand to Mortgagor, to pay any Imposition after the date such Imposition shall
have become due, and add to the Obligations the amount so paid, together with
interest from the time of payment at the Default Rate.  Any sums paid by Mortgagee in discharge of
any Impositions shall be (i) a lien on the Premises secured hereby prior to any
right or title to, interest in, or claim upon the Premises subordinate to the
lien of this 

 

5

 

Mortgage, and (ii) payable on demand by
Mortgagor to Mortgagee together with interest at the Default
Rate as set forth above.

6.                             Insurance.  (a) 
Mortgagor shall maintain insurance policies in connection with the Real
Estate in such form and amounts, covering such risks, issued by such companies
and otherwise in the manner and to the extent required pursuant to Section 5.2
of the Credit Agreement.

(b)           If the Mortgaged Property, or any
part thereof, shall be destroyed or damaged, to the extent required by Section
5.6 of the Credit Agreement, Mortgagor shall give prompt notice thereof to
Mortgagee.  All insurance proceeds paid
or payable in connection with any damage or casualty to the Real Estate shall
be deemed proceeds from a Recovery Event and applied in the manner specified in
the Credit Agreement.

(c)           To the extent required under Section
5.2(e) of the Credit Agreement, Mortgagor shall notify the Mortgagee
immediately whenever any separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained on the Mortgaged
Property under Section 5.2 of the Credit Agreement is taken out by the
Mortgagor; and Mortgagor shall promptly deliver to the Mortgagee a duplicate
original copy of such policy or
policies.

7.                             Restrictions
on Liens and Encumbrances.  Except for the lien of this Mortgage and the
Permitted Exceptions or as permitted by the Credit Agreement, Mortgagor shall
not further mortgage, nor otherwise encumber the Mortgaged Property nor create
or suffer to exist any lien, charge or encumbrance on the Mortgaged Property,
or any part thereof, whether superior or subordinate to the lien of this
Mortgage and whether recourse or non-recourse.

8.                             Due
on Sale and Other Transfer Restrictions.  Except as expressly permitted under the
Credit Agreement, Mortgagor shall not sell, transfer, convey or assign all or
any portion of, or any interest in, the Mortgaged Property.

9.                             Condemnation/Eminent
Domain.  Promptly upon obtaining
knowledge of the institution of any proceedings for the condemnation of the
Mortgaged Property, or any material portion thereof, Mortgagor will notify
Mortgagee of the pendency of such proceedings. 
All awards and proceeds relating to such condemnation shall be deemed
proceeds from a Recovery Event and applied in the manner specified in the
Credit Agreement.

10.                           Leases.  Except as expressly permitted under the
Credit Agreement, Mortgagor shall not (a) execute an assignment or pledge of
any Lease relating to all or any portion of the Mortgaged Property other than
in favor of Mortgagee, or (b) execute or permit to exist any Lease of any of
the Mortgaged Property.

11.                           Further
Assurances. 
To further assure Mortgagee’s rights under this Mortgage, Mortgagor
agrees promptly upon demand of Mortgagee to do any act or execute any
additional documents (including, but not limited to, security agreements on any
personalty included or to be included in the Mortgaged Property) as may be
reasonably required by Mortgagee to confirm the lien of this Mortgage and all
other rights or benefits conferred on Mortgagee by this Mortgage.

12.                           Mortgagee’s
Right to Perform. 
If Mortgagor fails to perform any of the covenants or agreements of
Mortgagor, within the applicable grace period, if any, provided for in the
Credit 

 

6

 

Agreement or the Guarantee and Collateral Agreement,
Mortgagee, without waiving or releasing Mortgagor from any obligation or
default under this Mortgage, may, at any time upon 5 days’ notice to Mortgagor
(but shall be under no obligation to) pay or perform the same, and the amount
or cost thereof, with interest at the Default Rate, shall immediately be due
from Mortgagor to Mortgagee and the same shall be secured by this Mortgage and
shall be a lien on the Mortgaged Property prior to any right, title to,
interest in, or claim upon the Mortgaged Property attaching subsequent to the
lien of this Mortgage.  No payment or
advance of money by Mortgagee under this Section shall be deemed or construed
to cure Mortgagor’s default or waive any right or remedy of
Mortgagee.

13.                           Remedies. 
(a)  Upon the occurrence and
during the continuance of any Event of Default, Mortgagee may immediately take
such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Mortgagor and in and to the Mortgaged Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such manner as Mortgagee
may determine, in its sole discretion, without impairing or otherwise affecting
the other rights and remedies of Mortgagee:

(i)            Mortgagee may, to the extent
permitted by applicable law, (A) institute and maintain an action of mortgage
foreclosure against all or any part of the Mortgaged Property, (B) institute
and maintain an action on the Credit Agreement, the Guarantee and Collateral
Agreement or any other Loan Document, (C) sell all or part of the Mortgaged
Property (Mortgagor expressly granting to Mortgagee the power of sale), or (D)
take such other action at law or in equity for the enforcement of this Mortgage
or any of the Loan Documents as the law may allow.  Mortgagee may proceed in any such action to final judgment and
execution thereon for all sums due hereunder, together with interest thereon at
the Default Rate and all costs of suit, including, without limitation,
reasonable attorneys’ fees and disbursements. 
Interest at the Default Rate shall be due on any judgment obtained by
Mortgagee from the date of judgment until actual payment is made of the full
amount of the judgment; and

(ii)           Mortgagee may personally, or by its
agents, attorneys and employees and without regard to the adequacy or
inadequacy of the Mortgaged Property or any other collateral as security for
the Obligations enter into and upon the Mortgaged Property and each and every
part thereof and exclude Mortgagor and its agents and employees therefrom
without liability for trespass, damage or otherwise (Mortgagor hereby agreeing
to surrender possession of the Mortgaged Property to Mortgagee upon demand at
any such time) and use, operate, manage, maintain and control the Mortgaged Property
and every part thereof.  Following such
entry and taking of possession, Mortgagee shall be entitled, without
limitation, (x) to lease all or any part or parts of the Mortgaged Property for
such periods of time and upon such conditions as Mortgagee may, in its
discretion, deem proper, (y) to enforce, cancel or modify any Lease and (z)
generally to execute, do and perform any other act, deed, matter or thing
concerning the Mortgaged Property as Mortgagee shall deem appropriate as fully
as Mortgagor might do.

 

7

 

(b)           In case of a foreclosure sale, the
Real Estate may be sold, at Mortgagee’s election, in one parcel or in more than
one parcel and Mortgagee is specifically empowered (without being required to
do so, and in its sole and absolute discretion) to cause successive sales of
portions of the Mortgaged Property to be held.

(c)           Upon the occurrence and during the
continuance of any Event of Default resulting from any breach of any of the
covenants, agreements, terms or conditions contained in this Mortgage,
Mortgagee shall be entitled to enjoin such breach and obtain specific
performance of any covenant, agreement, term or condition and Mortgagee shall
have the right to invoke any equitable right or remedy as though other remedies
were not provided for in this Mortgage.

(d)           It is agreed that if an Event of
Default shall occur and be continuing, any and all proceeds of the Mortgaged
Property received by Mortgagee shall be held by Mortgagee for the benefit of
the Secured Parties as collateral security for the Obligations (whether matured
or unmatured), and shall be applied in payment of the Obligations, in the
following order:

First, to the
payment of all costs and expenses incurred by the Mortgagee (in its capacity as
such hereunder or under any other Loan Document) in connection with such
collection, sale, foreclosure or realization or otherwise in connection with
this Mortgage, any other Loan Document or any of the Obligations, including all
court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Mortgagee hereunder or under any other
Loan Document and any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Loan Document;

 

Second, to the
payment in full of the Obligations (the amounts so applied to be distributed
among the Secured Parties pro rata in accordance with the amounts of the
Obligations owed to them on the date of any such distribution); and

 

Third, to the
Borrower, their successors or assigns, or as a court of competent jurisdiction
may otherwise direct.

 

14.                           Right
of Mortgagee to Credit Sale.  Upon the
occurrence of any sale made under this Mortgage, whether made under the power
of sale or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, Mortgagee may bid for and acquire the Mortgaged Property
or any part thereof.  In lieu of paying
cash therefore, Mortgagee may make settlement for the purchase price by
crediting upon the Obligations or other sums secured by this Mortgage, the net
sales price after deducting therefrom the expenses of sale and the cost of the
action and any other sums which Mortgagee is authorized to deduct under this
Mortgage.  In such event, this Mortgage,
the Credit Agreement, the Guarantee and Collateral Agreement and documents
evidencing expenditures secured hereby may be presented to the person or
persons conducting the sale in order that the amount so used or applied may be
credited upon the Obligations as having been paid.

15.                           Appointment
of Receiver.  If an Event of Default shall have occurred
and be continuing, Mortgagee as a matter of right and without notice to
Mortgagor, unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Mortgaged

 

8

 

Property or any other collateral or the interest of
Mortgagor therein as security for the Obligations, shall have the right to
apply to any court having jurisdiction to appoint a receiver or receivers or
other manager of the Mortgaged Property, without requiring the posting of a
surety bond, and without reference to the adequacy or inadequacy of the value
of the Mortgaged Property or the solvency or insolvency of Mortgagor or any
other party obligated for payment of all or any part of the Obligations, and
whether or not waste has occurred with respect to the Mortgaged Property, and
Mortgagor hereby irrevocably consents to such appointment and waives notice of
any application therefore (except as may be required by law).  Any such receiver or receivers or manager
shall have all the usual powers and duties of receivers in like or similar
cases and all the powers and duties of Mortgagee in case of entry as provided
in this Mortgage, including, without limitation and to the extent permitted by
law, the right to enter into leases of all or any part of the Mortgaged
Property, and shall continue as such and exercise all such powers until the
date of confirmation of sale of the Mortgaged Property unless such receivership is sooner terminated.

16.                           Extension, Release, etc.  (a)  Without affecting the
lien or charge of this Mortgage upon any portion of the Mortgaged Property not
then or theretofore released as security for the full amount of the
Obligations, Mortgagee may, to the extent permitted elsewhere under the Loan
Documents, from time to time and without notice, agree to (i) release any
person liable for the indebtedness borrowed or guaranteed under the Loan
Documents, (ii) extend the maturity or alter any of the terms of the
indebtedness borrowed or guaranteed under the Loan Documents or any other
guaranty thereof, (iii) grant other indulgences, (iv) release or reconvey, or
cause to be released or reconveyed at any time at Mortgagee’s option any
parcel, portion or all of the Mortgaged Property, (v) take or release any other
or additional security for any obligation herein mentioned, or (vi) make
compositions or other arrangements with debtors in relation thereto.

(b)           No recovery of any judgment by
Mortgagee and no levy of an execution under any judgment upon the Mortgaged
Property or upon any other property of Mortgagor shall affect the lien of this
Mortgage or any liens, rights, powers or remedies of Mortgagee hereunder, and
such liens, rights, powers and remedies shall continue unimpaired.

(c)           If Mortgagee shall have the right to
foreclose this Mortgage or to direct a power of sale, Mortgagor authorizes
Mortgagee at its option to foreclose the lien of this Mortgage (or direct the
sale of the Mortgaged Property, as the case may be) subject to the rights of
any tenants of the Mortgaged Property. 
The failure to make any such tenants parties defendant to any such
foreclosure proceeding and to foreclose their rights, or to provide notice to
such tenants as required in any statutory procedure governing a sale of the
Mortgaged Property, or to terminate such tenant’s rights in such sale will not
be asserted by Mortgagor as a defense to any proceeding instituted by Mortgagee
to collect the Obligations or to foreclose the lien of this Mortgage.

(d)           Unless expressly provided otherwise,
in the event that ownership of this Mortgage and title to the Mortgaged
Property or any estate therein shall become vested in the same person or
entity, this Mortgage shall not merge in such title but shall continue as a
valid lien on the Mortgaged Property for the amount secured hereby.

17.                           Security
Agreement under Uniform Commercial Code.  (a) 
It is the intention of the parties hereto that this Mortgage shall
constitute a “security agreement” within the meaning of

 

9

 

the
Uniform Commercial Code (the “Code”) of the Commonwealth of
Kentucky.  If an Event of Default shall
occur and be continuing under this Mortgage, then in addition to having any
other right or remedy available at law or in equity, Mortgagee shall have the
option of either (i) proceeding under the Code and exercising such rights and
remedies as may be provided to a secured party by the Code with respect to all
or any portion of the Mortgaged Property which is personal property (including,
without limitation, taking possession of and selling such property) or (ii)
treating such property as real property and proceeding with respect to both the
real and personal property constituting the Mortgaged Property in accordance
with Mortgagee’s rights, powers and remedies with respect to the real property
(in which event the default provisions of the Code shall not apply).  If Mortgagee shall elect to proceed under
the Code, then ten days’ notice of sale of the personal property shall be
deemed reasonable notice and the reasonable expenses of retaking, holding,
preparing for sale, selling and the like incurred by Mortgagee shall include,
but not be limited to, attorneys’ fees and legal expenses.  At Mortgagee’s request, Mortgagor shall
assemble the personal property and make it available to Mortgagee at a place
designated by Mortgagee which is reasonably convenient to both parties.

(b)           Mortgagor and Mortgagee agree, to the
extent permitted by law, that: (i) all of the goods described within the
definition of the word “Equipment” are or are to become fixtures on the
Real Estate; (ii) this Mortgage upon recording or registration in the real
estate records of the proper office shall constitute a financing statement
filed as a “fixture filing” within the meaning of Sections 9-334a and 9a-502
of the Code; (iii) Mortgagor is the record owner of the Land; and (iv) the
addresses of Mortgagor and Mortgagee are as set forth on the first page of this Mortgage.

18.                           Assignment
of Rents. 
(a)  Mortgagor hereby assigns to
Mortgagee the Rents as further security for the payment of and performance of
the Obligations, and Mortgagor grants to Mortgagee the right to enter the
Mortgaged Property for the purpose of collecting the same and to let the
Mortgaged Property or any part thereof, and to apply the Rents on account of
the Obligations.  The foregoing assignment
and grant is present and absolute and shall continue in effect until the
Obligations are fully paid and performed, but Mortgagee hereby waives the right
to enter the Mortgaged Property for the purpose of collecting the Rents and
Mortgagor shall be entitled to collect, receive, use and retain the Rents until
the occurrence and during the continuance of an Event of Default under this
Mortgage; such right of Mortgagor to collect, receive, use and retain the Rents
may be revoked by Mortgagee upon the occurrence and during the continuance of
any Event of Default under this Mortgage by giving not less than five days’
written notice of such revocation to Mortgagor; in the event such notice is
given, Mortgagor shall pay over to Mortgagee, or to any receiver appointed to
collect the Rents, any lease security deposits, and shall pay monthly in
advance to Mortgagee, or to any such receiver, the fair and reasonable rental
value as determined by Mortgagee for the use and occupancy of such part of the
Mortgaged Property as may be in the possession of Mortgagor or any affiliate of
Mortgagor, and upon default in any such payment Mortgagor and any such
affiliate will vacate and surrender the possession of the Mortgaged Property to
Mortgagee or to such receiver, and in default thereof may be evicted by summary
proceedings or otherwise.  Mortgagor
shall not accept prepayments of installments of Rent to become due for a period
of more than one month in advance (except for security deposits and estimated
payments of percentage rent, if any).

 

10

 

(b)           Mortgagor has not affirmatively done
any act which would prevent Mortgagee from, or limit Mortgagee in, acting under
any of the provisions of the foregoing assignment.

(c)           Except for any matter disclosed in
the Credit Agreement, no action has been brought or, so far as is known to
Mortgagor, is threatened, which would interfere in any way with the right of
Mortgagor to execute the foregoing assignment and perform all of Mortgagor’s
obligations contained in this Section and in the
Leases.

19.                           Additional
Rights.  The
holder of any subordinate lien or subordinate deed of trust on the Mortgaged
Property shall have no right to terminate any Lease whether or not such Lease
is subordinate to this Mortgage nor shall Mortgagor consent to any holder of
any subordinate lien or subordinate mortgage joining any tenant under any Lease
in any action to foreclose the lien or modify, interfere with, disturb or
terminate the rights of any tenant under any Lease.  By recordation of this Mortgage all subordinate lienholders and
the mortgagees and beneficiaries under subordinate mortgages are subject to and
notified of this provision, and any action taken by any such lienholder or
beneficiary contrary to this provision shall be null and void.  Upon the occurrence and during the
continuance of any Event of Default, Mortgagee may, in its sole discretion and
without regard to the adequacy of its security under this Mortgage, apply all
or any part of any amounts on deposit with Mortgagee under this Mortgage
against all or any part of the Obligations. 
Any such application shall not be construed to cure or waive any Default
or Event of Default or invalidate any act taken by Mortgagee on account of such
Default or Event of Default.

20.                           Notices.  All notices, requests, demands and other
communications hereunder shall be given in accordance with the provisions of
Section  9.1 of the Credit Agreement to
Mortgagor and to Mortgagee as specified therein.

21.                           No Oral Modification. 
This Mortgage may not be amended, supplemented or otherwise modified
except in accordance with the provisions of Section  9.8 of the Credit Agreement. 
Any agreement made by Mortgagor and Mortgagee after the date of this
Mortgage relating to this Mortgage shall be superior to the rights of the
holder of any intervening or subordinate lien or encumbrance.

22.                           Partial
Invalidity.  In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof, but each shall
be construed as if such invalid, illegal or unenforceable provision had never
been included.  Notwithstanding to the
contrary anything contained in this Mortgage or in any provisions of any Loan
Document, the obligations of Mortgagor and of any other obligor under any Loan
Documents shall be subject to the limitation that Mortgagee shall not charge,
take or receive, nor shall Mortgagor or any other obligor be obligated to pay
to Mortgagee, any amounts constituting interest in excess of the maximum rate
permitted by law to be charged by Mortgagee.

23.                           Mortgagor’s
Waiver of Rights.  To the fullest extent permitted by law,
Mortgagor waives the benefit of all laws now existing or that may subsequently
be enacted providing for (i) any appraisement before sale of any portion of the
Mortgaged Property, (ii) any extension of the time for the enforcement of the
collection of the Obligations or the creation or extension of a 

11

 

period of redemption from any sale made in
collecting such debt and (iii) exemption of the Mortgaged Property from
attachment, levy or sale under execution or exemption from civil process.  To the full extent Mortgagor may do so,
Mortgagor agrees that Mortgagor will not at any time insist upon, plead, claim
or take the benefit or advantage of any law now or hereafter in force providing
for any appraisement, valuation, stay, exemption, extension or redemption, or
requiring foreclosure of this Mortgage before exercising any other remedy
granted hereunder and Mortgagor, for Mortgagor and its successors and assigns,
and for any and all persons ever claiming any interest in the Mortgaged
Property, to the extent permitted by law, hereby waives and releases all rights
of redemption, valuation, appraisement, stay of execution, notice of election
to mature (except as expressly provided in the Credit Agreement) or declare due
the whole of the secured indebtedness and marshalling in the event of foreclosure of the liens hereby created.

24.                           Remedies
Not Exclusive. 
Mortgagee shall be entitled to enforce payment and performance of the
Obligations and to exercise all rights and powers under this Mortgage or under
any of the other Loan Documents or other agreement or any laws now or hereafter
in force, notwithstanding some or all of the Obligations may now or hereafter
be otherwise secured, whether by deed of trust, mortgage, security agreement,
pledge, lien, assignment or otherwise. 
Neither the acceptance of this Mortgage nor its enforcement, shall
prejudice or in any manner affect Mortgagee’s rights to realize upon or enforce
any other security now or hereafter held by Mortgagee, it being agreed that
Mortgagee shall be entitled to enforce this Mortgage and any other security now
or hereafter held by Mortgagee in such order and manner as Mortgagee may
determine in its absolute discretion. 
No remedy herein conferred upon or reserved to Mortgagee is intended to be
exclusive of any other remedy herein or by law provided or permitted, but each
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.  Every power or remedy given by any of the
Loan Documents to Mortgagee or to which either may otherwise be entitled, may
be exercised, concurrently or independently, from time to time and as often as
may be deemed expedient by Mortgagee, as the case may be.  In no event shall Mortgagee, in the exercise
of the remedies provided in this Mortgage (including, without limitation, in
connection with the assignment of Rents to Mortgagee, or the appointment of a
receiver and the entry of such receiver on to all or any part of the Mortgaged
Property), be deemed a “Mortgagee in possession,” and Mortgagee  shall not in any way be made liable for any
act, either of commission or omission, in connection with the exercise of such
remedies.

25.                           Multiple
Security. 
If (a) the Premises shall consist of one or more parcels, whether or not
contiguous and whether or not located in the same county, or (b) in addition to
this Mortgage, Mortgagee shall now or hereafter hold or be the beneficiary of
one or more additional mortgages, liens, deeds of trust or other security
(directly or indirectly) for the Obligations upon other property in the state
in which the Premises are located (whether or not such property is owned by
Mortgagor or by others) or (c) both the circumstances described in clauses (a)
and (b) shall be true, then to the fullest extent permitted by law, Mortgagee
may, at its election, commence or consolidate in a single foreclosure action
all foreclosure proceedings against all such collateral securing the
Obligations (including the Mortgaged Property), which action may be brought or
consolidated in the courts of, or sale conducted in, any county in which any of
such collateral is located.  Mortgagor
acknowledges that the right to maintain a consolidated  foreclosure action is a specific inducement
to Mortgagee to extend the indebtedness borrowed pursuant to or guaranteed by
the Loan Documents, and Mortgagor 

12

 

expressly and irrevocably waives any objections to the
commencement or consolidation of the foreclosure proceedings in a single action
and any objections to the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have. 
Mortgagor further agrees that if Mortgagee shall be prosecuting one or
more foreclosure or other proceedings against a portion of the Mortgaged
Property or against any collateral other than the Mortgaged Property, which
collateral directly or indirectly secures the Obligations, or if Mortgagee
shall have obtained a judgment of foreclosure and sale or similar judgment
against such collateral, then, whether or not such proceedings are being
maintained or judgments were obtained in or outside the state in which the
Premises are located, Mortgagee may commence or continue any  foreclosure proceedings and exercise its
other remedies granted in this Mortgage against all or any part of the
Mortgaged Property and Mortgagor waives any objections to the commencement or
continuation of a foreclosure of this Mortgage or exercise of any other remedies
hereunder based on such other proceedings or judgments, and waives any right to
seek to dismiss, stay, remove, transfer or consolidate either any action under
this Mortgage or such other proceedings on such basis.  Neither the commencement nor continuation of
proceedings to foreclose this Mortgage, nor the exercise of any other rights
hereunder nor the recovery of any judgment by Mortgagee in any such proceedings
or the occurrence of any sale in any such proceedings shall prejudice, limit or
preclude Mortgagee’s right to commence or continue one or more foreclosure or
other proceedings or obtain a judgment against any other collateral (either in
or outside the state in which the Premises are located) which directly or
indirectly secures the Obligations, and Mortgagor expressly waives any
objections to the commencement of, continuation of, or entry of a judgment in
such other sales or proceedings or exercise of any remedies in such sales or
proceedings based upon any action or judgment connected to this Mortgage, and
Mortgagor also waives any right to seek to dismiss, stay, remove, transfer or
consolidate either such other sales or proceedings or any sale or action under
this Mortgage on such basis.  It is
expressly understood and agreed that to the fullest extent permitted by law,
Mortgagee may, at its election, cause the sale of all collateral which is the
subject of a single  foreclosure action
at either a single sale or at multiple sales conducted simultaneously and take
such other measures as are appropriate in order to effect the agreement of the
parties to dispose of and administer all collateral securing the Obligations
(directly or indirectly) in the most economical and
least time-consuming manner.

26.                           Successors and
Assigns.  All covenants of Mortgagor contained in this
Mortgage are imposed solely and exclusively for the benefit of Mortgagee, and
its successors and assigns, and no other person or entity shall have standing
to require compliance with such covenants or be deemed, under any circumstances,
to be a beneficiary of such covenants, any or all of which may be freely waived
in whole or in part by Mortgagee at any time if in the sole discretion of
either of them such a waiver is deemed advisable.  All such covenants of Mortgagor shall run with the land and bind
Mortgagor, the successors and assigns of Mortgagor (and each of them) and all
subsequent owners, encumbrancers and tenants of the Mortgaged Property, and
shall inure to the benefit of Mortgagee and its successors and assigns.  The word “Mortgagor” shall be construed as
if it read “Mortgagors” whenever the sense of this Mortgage so requires and if
there shall be more than one Mortgagor, the obligations of the Mortgagors shall be joint and several.

27.                           No Waivers, etc. 
Any failure by Mortgagee to insist upon the strict performance by
Mortgagor of any of the terms and provisions of this Mortgage shall not be
deemed to be a waiver of any of the terms and provisions hereof, and Mortgagee,
notwithstanding any such failure, shall have the right thereafter to insist
upon the strict performance by Mortgagor of any 

 

13

 

and all of the terms and provisions of this Mortgage
to be performed by Mortgagor.  Mortgagee
may release, regardless of consideration and without the necessity for any
notice to or consent by the holder of any subordinate lien on the Mortgaged
Property, any part of the security held for the obligations secured by this
Mortgage without, as to the remainder of the security, in any way impairing or
affecting the lien of this Mortgage or the priority of such lien over any subordinate lien or deed of trust.

28.                           Governing Law, etc. 
This Mortgage shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Kentucky, without regard to
principles of conflict of law, except that Mortgagor expressly acknowledges
that by their respective terms the Loan Documents shall be governed and
construed in accordance with the laws of the State of New York, and for purposes
of consistency, Mortgagor agrees that in any in personam proceeding related to
this Mortgage the rights of the parties to this Mortgage shall also be governed
by and construed in accordance with the laws of the State of New York governing
contracts made and to be performed in that State.

29.                           Certain Definitions. 
Unless the context clearly indicates a contrary intent or unless
otherwise specifically provided herein, words used in this Mortgage shall be
used interchangeably in singular or plural form and the word “Mortgagor” shall
mean “each Mortgagor or any subsequent owner or owners of the Mortgaged
Property or any part thereof or interest therein,” the word “Mortgagee” shall
mean “Mortgagee or any successor agent for the Lenders,” the word “person” shall
include any individual, corporation, partnership, limited liability company,
trust, unincorporated association, government, governmental authority, or other
entity, and the words “Mortgaged Property” shall include any portion of the
Mortgaged Property or interest therein. 
Whenever the context may require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.  The captions in this Mortgage are for
convenience or reference only and in no way limit or amplify the provisions hereof

30.                           Last Dollars Secured;
Priority.  This Mortgage secures only a portion of the
indebtedness owing or which may become owing by Mortgagor to the Secured
Parties.  The parties agree that any
payments or repayments of such indebtedness shall be and be deemed to be
applied first to the portion of the indebtedness that is not secured hereby, it
being the parties’ intent that the portion of the indebtedness last remaining
unpaid shall be secured hereby.  If at
any time this Mortgage shall secure less than all of the principal amount of
the Obligations, it is expressly agreed that any repayments of the principal
amount of the Obligations shall not reduce the amount of the lien of this
Mortgage until the lien amount shall equal the principal amount of the Obligations outstanding.

31.                           Revolving Credit
Facility.  Mortgagor and Mortgagee intend, recognize
and agree that this Mortgage shall secure a revolving line of credit facility
to Mortgagee in a principal amount not to exceed $90,000,000 outstanding at any time.

32.                           Maximum Additional
Indebtedness.  This Mortgage secures not only the
obligations enumerated hereunder but also any renewal or extension of any part or
all of said indebtedness; any interest on any such renewal or extension; and
any “Future Advances,” as hereinafter defined. 
Any portion of said indebtedness which is incurred after the execution
of this Mortgage pursuant to any instrument executed by the Borrower referring
to this Mortgage, 

 

14

 

or which is evidenced by any instrument executed by
the Borrower stating that said indebtedness is secured by this Mortgage, shall
be defined as a “Future Advance”.  The
maximum additional indebtedness, excluding amounts advanced under the Revolving
Credit Facility, which may be secured hereby shall not exceed $660,000,000 and
€36,000,000.  This Section shall serve
as a notice to any subsequent holder of a lien, encumbrance, security title or
other claim in and to the Mortgaged Property, or of the Mortgaged Property, that
Mortgagee claims the priority of the lien of this Mortgage for all such Future
Advances, as well as for all other obligations secured hereby.  This Section shall also be notice that
Mortgagee reserves the right, upon agreement thereto with the Mortgagor, to
modify, extend, consolidate, and renew the said indebtedness, or any portions
thereof, and the rate of interest charged thereon, without affecting the
priority of the lien created by this Mortgage.Release.  Supplementing the provisions of Section 9.18 of the Credit
Agreement, if any of the Mortgaged Property shall be sold, transferred or
otherwise disposed of by any Mortgagor in a transaction permitted by the Credit
Agreement and the Net Cash Proceeds are applied in accordance with the terms of
the Credit Agreement, or otherwise consented to by Mortgagee, then the
Mortgagee, at the request and sole expense of such Mortgagor, shall execute and
deliver to such Mortgagor, in form suitable for recording, all releases or
other documents reasonably necessary or desirable for the release of the Liens created
hereby on such Mortgaged Property.  The
Mortgagor shall deliver to the Mortgagee, at least five Business Days prior to
the date of the proposed release, a written request for release identifying the
sale or other disposition in reasonable detail, including the price thereof and
any expenses in connection therewith, together with a certification by the
Mortgagor stating that such transaction is in compliance with, and permitted
by, the Credit Agreement and the other Loan Documents or otherwise consented to
by Mortgagee.

 

15

 

This Mortgage has been
duly executed by Mortgagor on May 13, 2004 and is intended to be effective as
of such date.

 

	
   

   

  	
  DARAMIC, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Lynn Amos

  
	
   

  	
   

  	
  Name: Lynn Amos

  
	
   

  	
   

  	
  Title: Chief Financial Officer, Executive Vice President, Treasurer
  and  Secretary

  

 

 

 

 

 

STATE
OF NEW YORK)
                                                                    : 
ss.: 

COUNTY OF NEW YORK)

Before me, a Notary Public
in and for State of New York and a resident of New York County, New York,
personally appeared Lynn Amos of Daramic, Inc. a Delaware corporation, who
acknowledged execution of the foregoing Mortgage as such CFO, EVP, Treasurer
and Secretary for and on behalf of said Delaware corporation.

                Witness my hand and Notarial
Seal this 13th day of May, 2004.

Notary
Public

By: /s/ Francis J. Kelleher

 

	
  Francis
  J. Kelleher, Notary Public

  	
   

  	
   

  
	
  Print
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  My
  commission expires: August 26, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  and  I am a resident of New York County, New
  York

  	
   

  	
   

  

 

 

 

 

THIS INSTRUMENT WAS PREPARED BY:

 

	
   

  	
   

  
	
  Gavin
  Loughlin, Esq.

  Simpson
  Thacher & Bartlett LLP

  425
  Lexington Avenue

  New York,
  New York 10017

  (212)
  455-2222

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