SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission file number 1-9838
NS GROUP, INC.
Exact name of registrant as specified in its charter
KENTUCKY 61-0985936
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Ninth and Lowell Streets, Newport, Kentucky 41072
(Address of principal executive offices)
Registrant's telephone number, including area code (606)
292-6809
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X
NO _____
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common stock, no par value 13,803,684
(Class) (Outstanding at July 24, 1995)
NS GROUP, INC.
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1 -- Financial Statements
Condensed Consolidated Balance Sheets . . . . . . . . 3
Condensed Consolidated Statements of Operations . . . 4
Condensed Consolidated Statements of Cash Flows . . . 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . 11
PART II OTHER INFORMATION
Item 6 -- Exhibits and Reports on Form 8-K . . . . 21
NS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JULY 1, 1995 AND SEPTEMBER 24, 1994
(Dollars in thousands)
(Unaudited)
July 1,
September 24,
1 9 9 5 1
9 9 4
CURRENT ASSETS
Cash and cash equivalents $ 1,303 $ 4,405
Short-term investments 17,144 40,071
Accounts receivable, less allowance
for doubtful accounts of $559 and
$637, respectively 49,941 42,651
Inventories 43,229 32,290
Other current assets 19,889 16,793
Total current assets 131,506 136,210
PROPERTY, PLANT AND EQUIPMENT 272,267 262,721
Less - accumulated depreciation (115,990) (102,182)
156,277 160,539
OTHER ASSETS 18,388 18,578
Total assets $306,171 $315,327
CURRENT LIABILITIES
Notes payable $ 31,998 $ 28,872
Accounts payable 29,224 27,312
Other current liabilities 18,831 19,281
Current portion of long-term debt 17,645 15,543
Total current liabilities 97,698 91,008
LONG-TERM DEBT 121,803 138,110
DEFERRED TAXES 9,655 9,745
COMMON SHAREHOLDERS' EQUITY
Common stock, no par value,
40,000,000 shares authorized;
13,803,684 shares issued and
outstanding 49,004 48,988
Common stock options and warrants 304 262
Unrealized gain (loss) on available
for sale securities (682) (124)
Retained earnings 28,389 27,338
Total common shareholders'
equity 77,015 76,464
Total liabilities and
shareholders' equity $306,171 $315,327
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
NS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED
JULY 1, 1995 AND JUNE 25, 1994
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
1995 1994 1995 1994
NET SALES $94,804 $80,807 $285,348 $218,778
COST AND EXPENSES
Cost of products
sold 84,212 73,604 253,121 201,953
Selling and
administrative
expenses 6,611 5,826 20,231 18,102
Operating income
(loss) 3,981 1,377 11,996 (1,277)
OTHER INCOME (EXPENSE)
Gain on sale
of subsidiary - - - 35,292
Interest expense (4,849) (4,987) (15,143) (15,066)
Interest income 286 425 1,206 1,272
Other, net 1,066 196 3,274 819
Income (loss) before
income taxes and
cumulative effect of
a change in
accounting
principle 484 (2,989) 1,333 21,040
PROVISION (CREDIT)
FOR INCOME TAXES (45) (999) 282 8,587
Income (loss)
before cumulative
effect of a change
in accounting
principle 529 (1,990) 1,051 12,453
CUMULATIVE EFFECT,
AS OF SEPTEMBER 25,
1993, OF A CHANGE
IN THE METHOD OF
ACCOUNTING FOR
INCOME TAXES - - - 1,715
Net income (loss) $ 529 $(1,990) $ 1,051 $14,168
PER COMMON SHARE
Income (loss)
before cumulative
effect of a change
in accounting
principle $.04 $(.14) $.08 $ .91
Cumulative effect
of a change in the
method of accounting
for income taxes - - - .12
Net income (loss) $.04 $(.14) $.08 $1.03
WEIGHTED AVERAGE SHARES
OUTSTANDING (000's) 13,790 13,804 13,798 13,783
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
NS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED
JULY 1, 1995 AND JUNE 25, 1994
(Dollars in thousands)
(Unaudited)
July 1, June 25,
1 9 9 5 1 9 9 4
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,051 $14,168
Adjustments to reconcile net income
to net cash flows from operating
activities:
Depreciation and amortization 14,263 13,953
Increase (decrease) in deferred
taxes 252 (3,031)
Gain on sale of subsidiary - (35,292)
(Increase) decrease in accounts
receivable, net (7,290) (2,044)
Increase in inventories (10,939) (5,986)
(Increase) decrease in other
current assets (3,080) 5,944
Increase in accounts payable 1,912 4,190
Increase (decrease) in accrued
liabilities (450) 4,255
Net cash flows from
operating activities (4,281) (3,843)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of subsidiary - 50,426
Cash dividend from sold subsidiary - 6,818
Increase in property, plant and
equipment, net (9,546) (8,458)
Increase in other assets (185) (3,190)
(Increase) decrease in short-term
investments 22,927 (29,016)
Net cash flows from investing
activities 13,196 16,580
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in notes payable 3,126 1,462
Proceeds from issuance of
long-term debt - 431
Repayments on long-term debt (14,205) (5,468)
Increase in deferred financing
costs (938) (76)
Proceeds from issuance of
common stock - 683
Net cash flows from financing
activities (12,017) (2,968)
Net increase (decrease) in
cash and cash equivalents (3,102) 9,769
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 4,405 5,797
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,303 $15,566
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $15,869 $14,297
Income taxes $ 743 $ 4,025
The accompanying notes to condensed consolidated
financial statements are an integral part of these
statements.
NS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Principles of Consolidation
The condensed consolidated financial statements include
the accounts of NS Group, Inc. and its wholly-owned
subsidiaries (the Company): Newport Steel Corporation
(Newport), Koppel Steel Corporation (Koppel), Erlanger
Tubular Corporation (Erlanger), Imperial Adhesives, Inc.
(Imperial), Northern Kentucky Management, Inc., Northern
Kentucky Air, Inc. and NSub I, Inc., formerly known as
Kentucky Electric Steel Corporation (KES). All significant
intercompany balances and transactions have been eliminated.
The accompanying information reflects, in the opinion
of management, all adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the
results for the interim periods. Reference should be made
to NS Group, Inc.'s Form 10-K/A for the fiscal year ended
September 24, 1994 for additional footnote disclosure,
including a summary of significant accounting policies.
In the first quarter of fiscal 1995, the Company
adopted the provisions of Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment
Benefits" (Statement 112). The impact on the Company's
financial statements from the adoption of Statement 112 was
not material.
The Company's fiscal year ends on the last Saturday of
September. The first quarter and nine month periods of
fiscal 1995 and 1994 are 14 and 13 week and 40 and 39 week
periods, respectively.
Note 2: Inventories
At July 1, 1995 and September 24, 1994, inventories
stated at the lower of LIFO (last-in, first-out) cost or
market represent approximately 31% and 27% of total
inventories before the LIFO reserve, respectively.
Inventories consist of the following components ($000's):
July 1, September 24,
1 9 9 5 1 9 9 4
Raw materials $ 7,960 $ 6,699
Semi-finished and
finished goods 37,573 27,695
45,533 34,394
LIFO reserve (2,304) (2,104)
$43,229 $32,290
Note 3: Other Current Assets
Included in other current assets at July 1, 1995 are
receivables for various property casualty and business
interruption insurance claims aggregating approximately $5.5
million, which the Company believes are realizable under the
terms of its insurance policies.
Note 4: Commitments and Contingencies
The Company has various commitments for the purchase of
materials, supplies and energy arising in the ordinary
course of business.
The Company is subject to various claims, lawsuits and
administrative proceedings arising in the ordinary course of
business with respect to commercial, product liability and
other matters, which seek remedies or damages. Based upon
its evaluation of available information, management does not
believe that any such matters are likely, individually or in
the aggregate, to have a material adverse effect upon the
Company's consolidated financial position, results of
operations or cash flows.
The Company is subject to federal, state and local
environmental laws and regulations, including, among others,
the Resource Conservation and Recovery Act (RCRA), the Clean
Air Act, the 1990 Amendments to the Clean Air Act (the 1990
Amendments), the Clean Water Act and all regulations
promulgated in connection therewith, including those
concerning the discharge of contaminants as air emissions or
waste water effluents and the disposal of solid and/or
hazardous wastes such as electric arc furnace dust. As
such, the Company is from time to time involved in
administrative and judicial proceedings and administrative
inquiries related to environmental matters.
As with similar mills in the industry, the Company's
steel mini-mills produce dust which contains lead, cadmium
and chromium, which is classified as a hazardous waste. The
Company currently collects the dust resulting from its
electric arc furnace operations through emission control
systems and contracts with a company for treatment and
disposal of the dust at an EPA-approved facility. The
Company also has on its property at Newport a permitted
hazardous waste disposal facility.
In two separate incidents occurring in fiscal 1992 and
1993, radioactive substances were accidentally melted at
Newport, resulting in the contamination of the melt shop's
electric arc furnace emission control facility, or "baghouse
facility". The occurrences of the accidental melting of
radioactive materials have not resulted in any notice of
violations from federal or state environmental regulatory
agencies. The Company is investigating and evaluating
various issues concerning storage, treatment and disposal of
the radiation contaminated baghouse dust; however a final
determination as to method of treatment and disposal, cost
and further regulatory requirements cannot be made at this
time. Depending on the ultimate timing and method of
treatment and disposal, which will require appropriate
federal and state regulatory approval, the actual cost of
disposal could substantially exceed current estimates and
the Company's insurance coverage. As of July 1, 1995,
claims recorded in connection with disposal costs exhaust
available insurance coverage. Based on current knowledge,
management believes the recorded gross reserves of $4.4
million for disposal costs pertaining to these incidents are
adequate.
In March 1995, Koppel and the EPA signed a Consent
Order relating to an April 1990 RCRA facility assessment
(the Assessment) completed by the EPA and the Pennsylvania
Department of Environmental Resources. The Assessment was
performed in connection with a permit application pertaining
to a landfill that is adjacent to the Koppel facilities.
The Assessment identified potential releases of hazardous
constituents at or adjacent to the Koppel facilities prior
to the Company's acquisition of the Koppel facilities. The
Consent Order establishes a schedule for investigating,
monitoring, testing and analyzing the potential releases.
Contamination documented as a result of the investigation
may require cleanup measures. Pursuant to various indemnity
provisions in agreements entered into at the time of the
Company's acquisition of the Koppel facilities, certain
parties have agreed to indemnify the Company against various
known and unknown environmental matters. While such parties
have not at this time acknowledged full responsibility for
potential costs under the Consent Order, the Company
believes that the indemnity provisions provide for it to be
fully indemnified against all matters covered by the Consent
Order, including all associated costs, claims and
liabilities.
Subject to the uncertainties concerning the Consent
Order and the storage and disposal of the radiation
contaminated dust, the Company believes that it is currently
in compliance with all known material and applicable
environmental regulations.
Regulations under the 1990 Amendments to the Clean Air
Act that will pertain to the Company's operations are
currently not expected to be promulgated until 1997 or
later. The Company cannot predict the level of required
capital expenditures or operating costs resulting from
future environmental regulations such as those forthcoming
as a result of the 1990 Amendments. However, the Company
believes that while the 1990 Amendments may require
additional expenditures, such expenditures will not have a
material impact on the Company's business or consolidated
financial position for the foreseeable future.
Capital expenditures for the next twelve months
relating to environmental control facilities are not
expected to be material, however, such expenditures could be
influenced by new and revised environmental regulations and
laws.
As of July 1, 1995, the Company had environmental
remediation reserves of $4.6 million of which $4.4 million
pertain to accrued disposal costs for radiation contaminated
baghouse dust. As of July 1, 1995, the possible range of
estimated losses related to the environmental contingency
matters discussed above in excess of those accrued by the
Company is $0 to $3.0 million; however, with respect to the
Consent Order, the Company cannot estimate the possible
range of losses should the Company ultimately not be
indemnified. Based upon its evaluation of available
information, management does not believe that any of the
environmental contingency matters discussed above are
likely, individually or in the aggregate, to have a material
adverse effect upon the Company's consolidated financial
position, results of operations or cash flows. However,
the Company cannot predict with certainty that new
information or developments with respect to the Consent
Order or its other environmental contingency matters,
individually or in the aggregate, will not have a material
adverse effect on the Company's consolidated financial
position, results of operations or cash flows.
Note 5: Subsequent Event
On July 28, 1995 the Company completed a public
offering (Offering) for the sale of $131.1 million aggregate
principal amount of 13.50% Senior Secured Notes due 2003
(Notes) together with warrants (Warrants) to purchase an
aggregate of approximately 1.5 million shares of the
Company's Common Stock at $4.00 per share. The Notes,
together with the Warrants, were priced at 95.35. Interest
on the Notes is payable semi-annually. The Warrants will be
exercisable beginning in January 1996 and, unless exercised,
will automatically expire in July 2003. Proceeds from the
sale of the Notes and Warrants of approximately $120.8
million, after underwriting discount and before expenses,
together with available cash on hand, were used to retire a
substantial portion of the Company's outstanding
indebtedness, including borrowings under its lines of
credit.
Through July 1998, the Company may redeem up to 40% of
the principal amount of the Notes with the net proceeds of a
public offering of common stock at a price of 113.50% of
par, provided that at least $75.0 million principal amount
of the Notes remain outstanding after redemption. The Notes
may be redeemed at the option of the Company, at any time,
in whole or in part, beginning in 2000, initially at a price
of 103.86% of par and declining to par in 2002.
The Notes are guaranteed by each subsidiary of NS
Group, Inc. and are secured by the property, plant and
equipment of the Company's steel-making operations. The
Indenture relating to the Notes contains a number of
restrictive covenants including, among other things,
limitations on the ability of the Company to incur
additional indebtedness; create liens; make certain
restricted payments, including dividends; engage in certain
transactions with affiliates; engage in sale and leaseback
transactions; dispose of assets; issue or sell stock of its
subsidiaries; enter into agreements that restrict the
ability of its subsidiaries to pay dividends and make
distributions; engage in mergers, consolidations and
transfers of substantially all of the Company's assets; and
make certain investments, loans and advances.
Contemporaneously with the Offering, the Company
entered into a new three year $45.0 million revolving credit
facility (Credit Facility), which was undrawn upon
completion of the Offering, and terminated its previous
revolving credit agreements. Borrowings are secured by
inventory and accounts receivable and interest accrues at a
rate per annum of (a) the sum of the alternate base rate
(which is the higher of prime rate or 1/2% over the federal
funds rate) plus 1% with respect to domestic rate loans or
(b) the sum of the Eurodollar rate (based on LIBOR) plus
23/4% with respect to Eurodollar rate loans. Borrowings are
due on demand and are limited to defined percentages of
eligible inventory and accounts receivable. The Credit
Facility contains financial covenants including maintenance
of minimum net worth, minimum interest coverage ratios,
maximum ratios of indebtedness to net worth, and minimum
current ratio and working capital requirements. The Credit
Facility also includes restrictions upon dividends,
investments, capital expenditures, indebtedness and the sale
of certain assets.
In connection with the retirement of its long-term
indebtedness, the Company incurred prepayment costs and will
write off unamortized debt issuance costs, which will result
in an after-tax extraordinary charge of approximately $5.4
million, or approximately $.39 per share, in the fourth
fiscal quarter ending September 30, 1995.
As a result of the refinancing, the Company's annual
long-term debt maturities will be $1.9 million in fiscal
1996, $2.5 million in fiscal 1997, $3.6 million in fiscal
1998, $2.3 million in fiscal 1999 and $0.7 million in fiscal
2000.
NS GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company operates in two separate business segments:
specialty steel and industrial adhesives. Within the
specialty steel segment are the operations of Newport, a
manufacturer of welded tubular steel products and hot rolled
coils; Koppel, a manufacturer of seamless tubular steel
products, special bar quality (SBQ) products and
semi-finished steel products; and Erlanger, a tubular steel
product finishing operation. The Company's specialty steel
products consist of: (i) seamless and welded oil country
tubular goods (OCTG) primarily used in oil and natural gas
drilling and production operations; (ii) line pipe used in
the transmission of oil, gas and other fluids; (iii) SBQ
products primarily used in the manufacture of heavy
industrial equipment; and (iv) hot rolled coils which are
sold to service centers and other manufacturers for further
processing. Within the adhesives segment are the operations
of Imperial, a manufacturer of industrial adhesives
products.
In October 1993, the Company sold KES, a manufacturer
of SBQ products, to a newly formed public company in
exchange for $45.6 million in cash and 400,000 shares
(approximately 8%) of the newly formed public company, then
valued at $4.8 million. Reference is made to Note 2 to the
audited annual Consolidated Financial Statements included in
the Company's Form 10-K/A for the fiscal year ended
September 24, 1994 concerning the Company's sale of KES.
Results of Operations
The Company's net sales, cost of products sold and
operating results by industry segment for the three and nine
month periods ended July 1, 1995 and June 25, 1994 are
summarized below. The first quarters of fiscal 1995 and
1994 are 14 and 13 week periods, respectively. As such, the
increases and decreases in operating results for the nine
month comparative periods, as discussed below, were
partially attributable to the additional week of operations
in the first quarter of fiscal 1995.
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
1995 1994 1995 1994
(in thousands of dollars)
Net sales
Specialty steel
segment... $85,666 $72,215 $258,609 $194,324
Adhesives segment 9,138 8,592 26,739 24,454
$94,804 $80,807 $285,348 $218,778
Cost of products sold
Specialty steel
segment... $77,226 $67,077 $232,368 $183,032
Adhesives segment 6,986 6,527 20,753 18,921
$84,212 $73,604 $253,121 $201,953
Operating income
Specialty steel
segment... $ 4,314 $ 1,723 $ 13,758 $ 130
Adhesives segment. 590 388 1,114 760
Corporate allocations
and income..... (923) (734) (2,876) (2,167)
$ 3,981 $ 1,377 $ 11,996 $ (1,277)
Sales data for the Company's specialty steel segment
for the three and nine month periods ended July 1, 1995 and
June 25, 1994 were as follows:
Three Months Ended Nine Months Ended
July 1, June 25, July 1, June 25,
1995 1994 1995 1994
Tons shipped
Welded tubular.. 78,700 72,400 248,500 193,700
Seamless tubular.. 28,700 25,300 86,300 66,000
SBQ............... 45,100 41,000 135,200 111,900
Other.......... . 12,000 12,000 37,000 29,000
164,500 150,700 507,000 400,600
Net sales ($000's)
Welded tubular.. $35,996 $30,306 $112,580 $ 81,236
Seamless tubular 22,521 19,631 66,773 53,206
SBQ............. 22,665 18,197 65,932 49,010
Other........... 4,484 4,081 13,324 10,872
$85,666 $72,215 $258,609 $194,324
Net sales for the third quarter of fiscal 1995
increased $14.0 million, or 17.3%, from the third quarter of
fiscal 1994 to $94.8 million. For the nine month
comparable period, net sales increased $66.6 million, or
30.4%, to $285.3 million. Specialty steel segment net sales
increased $13.5 million, or 18.6% and $64.3 million, or
33.1%, for the three and nine month periods, respectively.
Adhesives segment net sales increased $0.5 million, or 6.4%,
and $2.3 million, or 9.3%, for the three and nine month
periods, respectively. The overall increase in specialty
steel segment net sales was the result of both higher
average selling prices and increased shipment levels as more
fully discussed below.
Welded tubular net sales increased $5.7 million, or
18.8%, on a volume increase of 8.7%, and $31.3 million, or
38.6%, on a volume increase of 28.3%, for the comparable
three and nine month periods, respectively. The increase in
welded tubular net sales for the third quarter was due
partially to an overall 9.3% increase in average selling
prices for all welded tubular products and an increase in
shipments of welded OCTG products over the third quarter of
fiscal 1994. Fiscal 1995 third quarter average selling
price for welded OCTG products was $508 per ton, an increase
of 9.7% over the third quarter of fiscal 1994. Fiscal 1995
third quarter average selling prices for welded line pipe
was $493 per ton, an increase of 10.3% over the third
quarter of a year ago.
Seamless tubular net sales increased $2.9 million, or
14.7%, on a volume increase of 13.4% and $13.6 million, or
25.5%, on a volume increase of 30.8%, for the comparable
three and nine month periods, respectively. The increase in
seamless tubular net sales for the third quarter was
partially attributable to an increase in shipments, which
resulted in large part from product line expansion in fiscal
1995. Average selling prices for the third quarter of
fiscal 1995 for all seamless tubular products increased 1.2%
from the third quarter of fiscal 1994. Fiscal 1995 third
quarter average selling price for seamless OCTG products was
$843 per ton, an increase of 1.0% and from the third quarter
of fiscal 1994. Fiscal 1995 third quarter average selling
price for seamless line pipe products was $620 per ton, an
increase of 8.8% from the third quarter of fiscal 1994.
Price and volume levels in the domestic tubular market
are primarily dependent on the level of drilling activity in
the United States and abroad, the level of foreign imports,
as well as general economic conditions. The average number
of oil and natural gas drilling rigs in operation in the
United States (rig count) decreased 7.5%, from 732 in the
third quarter of fiscal 1994 to 677 in the third quarter of
fiscal 1995. The rig count decreased 5.0% from the second
quarter of fiscal 1995. On June 30, 1994, the Company and
six other U.S. steel companies filed antidumping petitions
against imports of OCTG products from seven foreign nations.
The cases ask the U.S. government to take action to offset
injury to the domestic OCTG industry from unfairly traded
imports. The antidumping petitions were filed against OCTG
imports from Argentina, Austria, Italy, Japan, Korea, Mexico
and Spain. The Company also joined in filing countervailing
duty cases charging subsidization of OCTG imports from
Austria and Italy. In July 1995, following evaluation of
determinations made by the International Trade
Administration of the United States Department of Commerce,
the International Trade Commission (ITC) announced its final
determinations. The ITC issued affirmative determinations
concerning OCTG and drill pipe products from Argentina,
Japan and Mexico, and OCTG products (other than drill pipe)
from Italy and Korea. The affirmative determinations mean
that the Department of Commerce will direct the Customs
Service to collet duties on imports of those products. No
duties will be imposed on OCTG and drill pipe imports from
Austria and Spain, because the ITC issued negative
determinations.
SBQ product net sales increased $4.5 million, or 24.6%,
on a volume increase of 10.0%, and $16.9 million, or 34.5%,
on a volume increase of 20.8%, for the comparable three and
nine month periods, respectively. Fiscal 1995 third quarter
average selling price for SBQ product was $503 per ton, an
increase of 13.5% over the third quarter of fiscal 1994.
SBQ product volume and prices increased as a result of
stronger market demand in fiscal 1995 as compared to fiscal
1994. Third quarter selling prices also have increased as a
result of the implementation of surcharges to recover
increases in certain raw material costs.
Other product shipments and sales for the third quarter
of fiscal 1995 were primarily attributable to shipments of
hot rolled coils.
Future levels of shipments and net sales of SBQ
products and hot rolled coils will be largely dependent on
the general state of the economy and the overall strength of
the steel industry.
Gross profit for the third quarter of fiscal 1995
increased $3.4 million from the third quarter of fiscal 1994
for a gross profit margin of 11.2% in fiscal 1995 compared
to 8.9% in the third quarter of fiscal 1994. For the nine
month comparable period, gross profit increased $15.4
million for a gross profit margin of 11.3% compared to 7.7%
for the first nine months of fiscal 1994. The specialty
steel segment accounted for $3.3 million and $14.9 million
of the increase in gross profit for the third quarter and
nine month periods, respectively. The increase in specialty
steel segment gross profit and margin was attributable to
improved operating efficiencies resulting from increased
production volume as well as increases in average selling
prices, as discussed above.
The adhesives segment gross profit increased $0.1
million and $0.5 million for the third quarter and nine
month comparable periods, respectively. Gross profit
margins were virtually unchanged for the comparable periods.
Selling and administrative expenses increased $0.8
million and $2.1 million for the third quarter and nine
month comparable periods, respectively. Selling and
administrative expenses declined as a percentage of net
sales from 7.2% in the third quarter of fiscal 1994 to 7.0%
in the current quarter and from 8.3% for the fiscal 1994
nine month period to 7.1% for the current nine month period.
The overall increase in selling and administrative expenses
was primarily attributable to increased production and sales
volumes.
As a result of the above factors, operating income
increased $2.6 million, from $1.4 million in the third
quarter of fiscal 1994 to $4.0 million in the current
quarter. For the nine month period, operating income
increased $13.3 million, from an operating loss of $1.3
million in fiscal 1994 to an operating profit of $12.0
million in the first nine months of fiscal 1995. The
specialty steel segment earned an operating profit of $4.3
million and $13.8 million for the third quarter and nine
month periods, respectively, compared to operating profit of
$1.7 million and $0.1 million for the third quarter and nine
month periods of fiscal 1994, respectively. The improvement
in operating results from the prior year periods were
primarily due to an overall increase in shipments, as
discussed above, as well as increases in selling prices and
improvements in production efficiencies resulting from
increased production volumes. The adhesives segment earned
an operating profit of $0.6 million and $1.1 million for the
three and nine month periods, respectively, compared to $0.4
million and $0.8 for the comparative periods of a year ago.
Interest expense was virtually unchanged from the prior
year comparable periods as a decline in interest expense on
long-term obligations was offset by increases in the average
borrowing and interest rates under the Company's short-term
borrowings.
Other income, net was $1.1 million and $3.3 million for
the fiscal 1995 third quarter and nine month periods,
respectively, and increased by $0.9 million and $2.5 million
over the prior year comparable periods, respectively,
primarily due to the recording of property claims filed with
the Company's insurance carrier in connection with a motor
failure at Newport in the second quarter. The Company's
effective income tax rate for the fiscal 1995 nine month
period was 21.2% compared to 40.8% for the comparative prior
year period. The decline was primarily attributable to
state tax refunds and certain insurance proceeds that were
not subject to income tax.
As a result of the above factors, net income was
$0.5 million, or $.04 per share in the third quarter of
fiscal 1995 compared to a loss of $2.0 million, or a $.14
loss per share in the third quarter of fiscal 1994. For the
current nine month period, net income was $1.1 million, or
$.08 per share compared to $14.2 million, or $1.03 per
share. Fiscal 1994 nine month net income includes a one-
time after-tax gain on the sale of KES of $21.5 million, or
$1.56 per share, and income of $1.7 million, or $.12 per
share, relating to the adoption of a new accounting
standard.
Liquidity and Capital Resources
On July 28, 1995 the Company completed a public
offering (Offering) for the sale of $131.1 million aggregate
principal amount of 13.50% Senior Secured Notes due 2003
(Notes) together with warrants (Warrants) to purchase an
aggregate of approximately 1.5 million shares of the
Company's Common Stock at $4.00 per share. The Notes,
together with the Warrants, were priced at 95.35. Interest
on the Notes is payable semi-annually. The Warrants will be
exercisable beginning in January 1996 and, unless exercised,
will automatically expire in July 2003. Proceeds from the
sale of the Notes and Warrants of approximately $120.8
million, after underwriting discount and before expenses,
together with available cash on hand, were used to retire a
substantial portion of the Company's outstanding
indebtedness, including borrowings under its lines of
credit.
The Notes are guaranteed by each subsidiary of NS
Group, Inc. and are secured by the property, plant and
equipment of the Company's steel-making operations. The
Indenture relating to the Notes contains a number of
restrictive covenants including, among other things,
limitations on the ability of the Company to incur
additional indebtedness; create liens; make certain
restricted payments, including dividends; engage in certain
transactions with affiliates; engage in sale and leaseback
transactions; dispose of assets; issue or sell stock of its
subsidiaries; enter into agreements that restrict the
ability of its subsidiaries to pay dividends and make
distributions; engage in mergers, consolidations and
transfers of substantially all of the Company's assets; and
make certain investments, loans and advances. Under the
terms of the Indenture, the Company is currently prohibited
from paying dividends to its shareholders.
Contemporaneously with the Offering, the Company
entered into a new three year $45.0 million revolving credit
facility (Credit Facility), which was undrawn upon
completion of the Offering, and terminated its previous
revolving credit agreements. Borrowings are secured by
inventory and accounts receivable and interest accrues at a
rate per annum of (a) the sum of the alternate base rate
(which is the higher of prime rate or 1/2% over the federal
funds rate) plus 1% with respect to domestic rate loans or
(b) the sum of the Eurodollar rate (based on LIBOR) plus
23/4% with respect to Eurodollar rate loans. Borrowings are
due on demand and are limited to defined percentages of
eligible inventory and accounts receivable. The Credit
Facility contains financial covenants including maintenance
of minimum net worth, minimum interest coverage ratios,
maximum ratios of indebtedness to net worth, and minimum
current ratio and working capital requirements. The Credit
Facility also includes restrictions upon dividends,
investments, capital expenditures, indebtedness and the sale
of certain assets.
In connection with the retirement of its long-term
indebtedness, the Company incurred prepayment costs and
will write off unamortized debt issuance costs, which will
result in an after-tax extraordinary charge of approximately
$5.4 million, or approximately $.39 per share, in the fourth
fiscal quarter ending September 30, 1995.
As a result of the refinancing, the Company's annual
long-term debt maturities will be $1.9 million in fiscal
1996, $2.5 million in fiscal 1997, $3.6 million in fiscal
1998, $2.3 million in fiscal 1999 and $0.7 million in fiscal
2000.
Reference is made to Note 5 to the Condensed
Consolidated Financial Statements for further information
concerning the Offering and Credit Facility.
Net cash flow used in operating activities totaled $4.3
million in the first nine months of fiscal 1995, compared to
$3.8 million used in the comparable prior year period. The
Company recorded net income of $1.1 million in the first
nine months of fiscal 1995 compared to a fiscal 1994 nine
month net loss of $9.1 million before the effect of the sale
of KES and a change in accounting principle. Major uses of
cash in operating activities for fiscal 1995 included a $7.3
million increase in trade accounts receivable and a $10.9
million increase in inventories resulting from an increase
in business activity and, for the increase in inventories,
unusually low levels at fiscal year end due to scheduled
maintenance outages at Newport. Management expects
inventory levels will decline during the remainder of the
year as a portion of the increase was also attributable to a
temporary inventory buildup associated with production and
shipment interruptions at Newport in the second quarter of
fiscal 1995. Other current assets increased $3.1 million
primarily due to the recording of various property casualty
and business interruption insurance claims. Offsetting
these uses were $14.3 million in non-cash depreciation and
amortization charges and $1.9 million resulting from an
increase in accounts payable.
Fiscal 1994 nine month cash flows from operating
activities, before the effect of the sale of KES and the
change in accounting principle, were primarily impacted by
an increase in inventories and trade accounts receivable,
partially offset by a decrease in other current assets and
an increase in accounts payable and accrued liabilities.
The increase in inventories and accounts payable was the
result of unusually low levels at the end of fiscal 1993,
due in part to a fiscal 1993 shutdown at Newport, as well as
an increase in Koppel's business during fiscal 1994. The
decrease in other current assets resulted primarily from the
sale of land held for development and the increase in
accrued liabilities was primarily attributable to an
increase in accrued income taxes related to the gain on the
sale of KES.
The Company invested $9.5 million in capital
expenditures during the first nine months of fiscal 1995,
primarily related to improvements to and acquisition of
machinery and equipment in the specialty steel segment. The
Company currently estimates that capital spending in fiscal
1995 will approximate $12.5 million. It is anticipated that
capital spending will be funded through cash flow from
operations and available borrowing sources as well as
available cash and short-term investments. During the first
nine months of fiscal 1995, short-term investments decreased
$22.9 million, due in large part to an increase in net
working capital, particularly the inventory component.
As a result of the sale of KES in the first quarter of
fiscal 1994, the Company received $45.6 million in cash and
$4.8 million in common stock of the new entity. In
addition, the Company received $6.8 million in cash from the
new entity in satisfaction of a dividend declared by KES
prior to the sale. The Company intends to hold as an
available-for-sale investment the common stock acquired in
the sale of KES. As of July 1, 1995 and September 24, 1994,
such common stock was recorded at $3.7 million and $4.6
million, respectively, and has resulted in a direct
after-tax charge to common shareholders' equity of $0.6
million in the first nine months of fiscal 1995.
Net cash flows used by financing activities were $12.0
million in the first nine months of fiscal 1995. The
Company made scheduled payments on long-term debt
obligations of $14.2 million during the first nine months
and increased its borrowings under its lines of credit by
$3.1 million. See Note 5 to the Condensed Consolidated
Financial Statements.
The Company believes that its current available cash
and short-term investments, its cash flow from operations
and borrowing sources will be sufficient to meet its
anticipated operating cash requirements, including capital
expenditures, for at least the next twelve months.
Inflation
The Company believes that inflation has not had a
material effect on its results of operations to date.
Generally, the Company experiences inflationary increases in
its costs of raw materials, energy, supplies, salaries and
benefits and selling and administrative expenses. Except
with respect to significant increases in steel scrap prices,
the Company has generally been able to pass these
inflationary increases through to its customers.
Other Matters
Legal Matters
The Company is subject to various claims, lawsuits and
administrative proceedings arising in the ordinary course of
business with respect to commercial, product liability and
other matters, which seek remedies or damages. Based upon
its evaluation of available information, management does not
believe that any such matters are likely, individually or in
the aggregate, to have a material adverse effect upon the
Company's consolidated financial position, results of
operations or cash flows.
Environmental Matters
The Company is subject to federal, state and local
environmental laws and regulations, including, among others,
RCRA, the Clean Air Act, the 1990 Amendments, the Clean
Water Act and all regulations promulgated in connection
therewith, including those concerning the discharge of
contaminants as air emissions or waste water effluents and
the disposal of solid and/or hazardous wastes such as
electric arc furnace dust. As such, the Company is from
time to time involved in administrative and judicial
proceedings and administrative inquiries related to
environmental matters.
As with similar mills in the industry, the Company's
steel mini-mills produce dust which contains lead, cadmium,
and chromium and is classified as a hazardous waste. The
Company currently collects the dust resulting from its
electric arc furnace operations through emission control
systems and contracts with a company for treatment and
disposal of the dust at an EPA-approved facility. The
Company also has on its property at Newport a permitted
hazardous waste disposal facility.
In two separate incidents occurring in fiscal 1992 and
1993, radioactive substances were accidentally melted at
Newport, resulting in the contamination of the melt shop's
electric arc furnace emission control facility, or "baghouse
facility". The occurrences of accidental melting of
radioactive materials have not resulted in any notice of
violations from federal or state environmental regulatory
agencies. The Company is investigating and evaluating
various issues concerning storage, treatment and disposal of
the radiation contaminated baghouse dust; however, a final
determination as to method of treatment and disposal, cost
and further regulatory requirements cannot be made at this
time. Depending on the ultimate timing and method of
treatment and disposal, which will require appropriate
federal and state regulatory approval, the actual cost of
disposal could substantially exceed current estimates and
the Company's insurance coverage. As of July 1, 1995,
claims recorded in connection with disposal costs exhaust
available insurance coverage. Based on current knowledge,
management believes the recorded gross reserves of $4.4
million for disposal costs pertaining to these incidents are
adequate.
In March 1995, Koppel and the EPA signed a Consent
Order relating to an April 1990 RCRA facility assessment
(the "Assessment") completed by the EPA and the Pennsylvania
Department of Environmental Resources. The Assessment was
performed in connection with a permit application pertaining
to a landfill that is adjacent to the Koppel facilities.
The Assessment identified potential releases of hazardous
constituents at or adjacent to the Koppel facilities prior
to the Company's acquisition of the Koppel facilities. The
Consent Order establishes a schedule for investigating,
monitoring, testing and analyzing the potential releases.
Contamination documented as a result of the investigation
may require cleanup measures. Pursuant to various indemnity
provisions in agreements entered into at the time of the
Company's acquisition of the Koppel facilities in fiscal
1991, certain parties agreed to indemnify the Company
against various known and unknown environmental matters.
While such parties have not at this time acknowledged full
responsibility for potential costs under the Consent Order,
the Company believes that the indemnity provisions provide
for it to be fully indemnified against all matters covered
by the Consent Order, including all associated costs, claims
and liabilities.
Subject to the uncertainties concerning the Consent
Order and the storage and disposal of the radiation
contaminated baghouse dust, the Company believes it is in
compliance in all material respects with all applicable
environmental regulations.
Regulations resulting from the 1990 Amendments to the
Clean Air Act that will pertain to the Company's operations
are currently not expected to be promulgated until 1997 or
later. The Company cannot predict the level of required
capital expenditures or operating costs resulting from
future environmental regulations such as those forthcoming
as a result of the 1990 Amendments. However, the Company
believes that while the 1990 Amendments may require
additional expenditures, such expenditures will not have a
material impact on the Company's business or consolidated
financial position for the foreseeable future.
Capital expenditures for the next twelve months
relating to environmental control facilities are not
expected to be material; however, such expenditures could be
influenced by new and revised environmental laws and
regulations.
As of July 1, 1995, the Company had environmental
remediation reserves of $4.6 million, of which $4.4 million
pertain to accrued disposal costs for radiation contaminated
baghouse dust. As of July 1, 1995, the possible range of
estimated losses related to the environmental contingency
matters discussed above in excess of those accrued by the
Company is $0 to $3.0 million; however, with respect to the
Consent Order, the Company cannot estimate the possible
range of losses should the Company ultimately not be
indemnified. Based upon its evaluation of available
information, management does not believe that any of the
environmental contingency matters discussed above are
likely, individually or in the aggregate, to have a material
adverse effect upon the Company's consolidated financial
position, results of operations or cash flows. However, the
Company cannot predict with certainty that new information
or developments with respect to the Consent Order or its
other environmental contingency matters, individually or in
the aggregate, will not have a material adverse effect on
the Company's consolidated financial position, results of
operations or cash flows.
PART II -- OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits - Reference is made to the Index to
Exhibits, which is incorporated herein by
reference.
b) Reports on Form 8-K - None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NS GROUP, INC.
Date: August 9, 1995 By: /s/Clifford R. Borland
Clifford R. Borland
President
Date: August 9, 1995 By: /s/John R. Parker
John R. Parker
Vice President and Treasurer
INDEX TO EXHIBITS
Number Description
3.1 Amended and Restated Articles of Incorporation of
Registrant, filed as Exhibit 3.1 to Amendment No.
1 to Registrants' Form S-1 dated January 17, 1995,
File No. 33-56637, and incorporated herein by this
reference
3.2 Amended and Restated By-Laws of Registrant, dated
November 14, 1991, filed as Exhibit 3(b) to
Registrant's Form 10-K for the fiscal year ended
September 28, 1991, File No. 1-9838, and
incorporated herein by this reference
4.1 Indenture (including form of Senior Secured Note)
between the Company and Huntington National Bank,
as trustee (the "Trustee")
4.2 Leasehold and Fee Mortgage, Assignment of Rents
and Leases and Security Agreement from Newport to
the Trustee (Kentucky)
4.3 Mortgage, Assignment of Rents and Leases and
Security Agreement from Koppel to the Trustee
(Pennsylvania)
4.4 Deed of Trust, Assignment of Rents and Leases and
Security Agreement from Koppel to the Trustee
(Texas)
4.5 Leasehold Mortgage, Assignment of Rents and Leases
and Security Agreement from Erlanger to the
Trustee (Oklahoma)
4.6 Junior Leasehold and Fee Mortgage, Assignment of
Rents and Leases and Security Agreement from
Newport to the Company (Kentucky)
4.7 Junior Mortgage, Assignment of Rents and Leases
and Security Agreement from Koppel to the Company
(Pennsylvania)
4.8 Junior Deed of Trust, Assignment of Rents and
Leases and Security Agreement from Koppel to the
Company (Texas)
4.9 Junior Leasehold Mortgage, Assignment of Rents and
Leases and Security Agreement from Erlanger to the
Company (Oklahoma)
4.10 Subsidiary Security Agreement between Newport and
the Trustee
4.11 Subsidiary Security Agreement between Koppel and
the Trustee
4.12 Subsidiary Security Agreement between Erlanger and
the Trustee
4.13 ICN Security Agreement between Newport and the
Company
4.14 ICN Security Agreement between Koppel and the
Company
4.15 ICN Security Agreement between Erlanger and the
Company
4.16 Pledge and Security Agreement between the Company
and the Trustee
4.17 Subsidiary Guarantee
4.18 Intercreditor Agreement between the Trustee and
the Bank of New York Commercial Corporation, as
agent under the Credit Facility
4.19 Agreement between the Trustee, Koppel, and the
Commonwealth of Pennsylvania, Department of
Commerce
4.20 Subordination Agreement between the Trustee and
the City of Dayton, Kentucky
4.21 Revolving Credit, Guaranty and Security Agreement
among Bank of New York Commercial Corporation, PNC
Bank Ohio, N.A., Newport, Koppel, Imperial, the
Company, Erlanger, Northern Kentucky Air, Inc. and
Northern Kentucky Management, Inc.
4.22 Warrant Agreement between the Company and the
Huntington National Bank, as warrant agent
27 Financial Data Schedule
INDENTURE, dated as of July 28, 1995, between NS GROUP,
INC., a corporation duly organized and existing under the laws of
the State of
Kentucky (herein called the "Company"), having its principal
office at Ninth and
Lowell Streets, Newport, Kentucky 41072, and The Huntington
National Bank,
a national banking association duly organized and existing under
the laws of
the United States, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an
issue of its
13-1/2% Senior Secured Notes due 2003 (herein called the
"Securities") of
substantially the tenor and amount hereinafter set forth, and to
provide
therefor the Company has duly authorized the execution and
delivery of this
Indenture.
All things necessary to make the Securities, when
executed by the
Company and authenticated and delivered hereunder and duly issued
by the
Company, the valid obligations of the Company, and to make this
Indenture a
valid agreement of the Company, in accordance with their and its
terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the
Securities by the Holders thereof, it is mutually agreed, for the
equal and
proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise
expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned
to them in this Article and include the plural as well as
the singular;
(2) all other terms used herein which are defined in
the Trust
Indenture Act, either directly or by reference therein, have
the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein
have the
meanings assigned to them in accordance with generally
accepted
accounting principles, and, except as otherwise herein
expressly
provided, the term "generally accepted accounting
principles" with respect
to any computation required or permitted hereunder shall
mean such
accounting principles as are generally accepted at the date
of this
instrument;
(4) the words "herein", "hereof" and "hereunder" and
other words
of similar import refer to this Indenture as a whole and not
to any
particular Article, Section or other subdivision; and
(5) all reference to the Collateral Agent shall be
deemed to
include a reference to the Trustee, and the reverse thereof shall
similarly apply.
"Accounts Receivable" means, as to the Company and each
Subsidiary all of the following assets of such Person which arise
out of or in
connection with the sale or lease of Inventory or the rendition
of services: all
accounts, contract rights, instruments (including those
evidencing indebtedness
among the Company and its Subsidiaries and their Affiliates
except the
Intercompany Notes) intercompany debt arising in connection with
the sale or
lease of Inventory or the rendition of services), documents,
chattel paper,
general intangibles relating to accounts, drafts and acceptances,
and all other
forms of obligations owing to such person, including guarantees
and other
security therefor, whether secured or unsecured, now existing or
hereafter
created.
"Acquired Debt" means Debt of a Person existing at the
time such
Person becomes a Subsidiary of the Company or assumed in
connection with
an Asset Acquisition by such Person, including, without
limitation, Debt
incurred in connection with, or in anticipation of, such Person
becoming a
Subsidiary of the Company or such acquisition.
"Act" when used with respect to any Holder, has the
meaning
specified in Section 1.4.
"Affiliate" of any specified Person means (i) any other
Person
which, directly or indirectly, is in control of, is controlled by
or is under
common control with such specified Person or (ii) any other
Person who is a
director or officer (A) of such specified Person, (B) of any
subsidiary of such
specified Person or (C) of any Person described in clause (i)
above or (iii) any
Person in which such Person has, directly or indirectly, a 5% or
greater voting
or economic interest or the power to control. For the purposes
of this
definition, "control" of a Person means the power, direct or
indirect, to direct
or cause the direction of the management or policies of such
Person whether
through the ownership of voting securities, or by contract or
otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the
foregoing.
"Appraiser" means a Person who in the course of its
business
appraises property and, where real property is involved, who is a
member in
good standing of the American Institute of Real Estate
Appraisers, recognized
and licensed to do business in the jurisdiction where the
applicable real
property is situated, and who may be employed by the Company.
"Asset Acquisition" means (i) any capital contribution
(by means
of transfer of cash or other property to others or payments for
property or
services for the account or use of others, or otherwise), or
purchase or
acquisition of Capital Stock by the Company or any of its
Subsidiaries in any
other Person, in either case pursuant to which such Person shall
become a
Subsidiary of the Company or any of its Subsidiaries or shall be
merged with
or into the Company or any of its Subsidiaries or (ii) any
acquisition by the
Company or any of its Subsidiaries of the assets of any Person
which
constitute substantially all of an operating unit or business of
such Person.
"Asset Disposition" or "Asset Sale" means any sale,
lease, transfer
or other disposition (or series of related sales, leases,
transfers, or dispositions)
of shares of Capital Stock of a Subsidiary (other than directors'
qualifying
shares), property or other assets (each referred to for the
purposes of this
definition as a "disposition") by the Company or any of its
Subsidiaries,
including any disposition by means of a merger, consolidation or
similar
transaction, other than (i) a disposition by a Subsidiary to the
Company or by
the Company or a Subsidiary to a Wholly-Owned Recourse
Subsidiary, (ii) a
disposition of property or assets at fair market value in the
ordinary course of
business or (iii) a disposition that constitutes a Restricted
Payment or a Sale
and Leaseback Transaction.
"Average Life" means, as of the date of determination,
with
respect to any Debt or Preferred Stock, the quotient obtained by
dividing (i)
the sum of the products of the numbers of the years from the date
of
determination to the dates of each successive scheduled principal
payment of
such Debt or redemption or similar payment with respect to such
Preferred
Stock multiplied by the amount of such payment by (ii) the sum of
all such
payments.
"Asset Sale Offer" has the meaning specified in Section
6.15(b).
"Asset Sale Payment Date" has the meaning specified in
Section
6.15(c).
"Authenticating Agent" means any Person authorized by
the
Trustee pursuant to Section 9.14 to act on behalf of the Trustee
to authenticate
Securities.
"Available Amount" has the meaning specified in Section
6.15(b).
"Bankruptcy Law" means Title 11, United States Code or
any
similar Federal or state law for the relief of debtors, as
amended.
"Board of Directors" means the Board of Directors of
the Company
or its Subsidiaries, as the case may be, or any committee thereof
duly
authorized to act on behalf of such Board.
"Board Resolution" means a copy of a resolution
certified by the
Secretary or an Assistant Secretary of the Company or its
Subsidiaries, as the
case may be, to have been duly adopted by the Board of Directors
of the
Company or its Subsidiaries, as the case may be, and to be in
full force and
effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day that is not a Saturday, a
Sunday
or a day on which banking institutions are required to close in
the State of
New York, the State of Ohio or the State of Kentucky.
"Capital Lease Obligations" of a Person means any
obligation
which is required to be classified and accounted for as a capital
lease on the
face of a balance sheet of such Person prepared in accordance
with GAAP; the
amount of such obligation shall be the capitalized amount
thereof, determined
in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
rights to
purchase, warrants, options, participations or other equivalents
of or interest in
(however designated and whether voting or non-voting) corporate
stock of a
corporation and any and all equivalent ownership interests in a
Person (other
than a corporation), in each case whether outstanding on the
Issue Date or
thereafter issued, including any Preferred Stock.
"Cash Equivalents" means (i) investments in U.S.
Government
Obligations maturing within 180 days of the date of acquisition
thereof, (ii)
investments in certificates of deposit maturing within 90 days of
the date of
acquisition thereof issued by a bank or trust company which is
organized
under the laws of the United States or any state thereof having
capital, surplus
and undivided profits aggregating in excess of $250,000,000,
(iii) investments in
commercial paper rated at least A-1 by Standard & Poor's
Corporation, Inc.
and P-1 by Moody's Investors Service, Inc. and maturing not more
than 180
days from the date of acquisition thereof, (iv) securities issued
or fully
guaranteed by any state, commonwealth or territory of the United
States, or by
any political subdivision or taxing authority thereof, which
mature in the
hands of the Company within 180 days of acquisition thereof, and
rated at
least "A" by Standard & Poor's Corporation, Inc. or "A" by
Moody's Investors
Service, Inc. and (v) money market, money market mutual funds and
auction
rate preferred stocks which, at the date of acquisition and at
all times
thereafter, are accorded ratings of at least AA- by Standard and
Poor's
Corporation, Inc. or Aa3 by Moody's Investors Service, Inc.
"Caster Loan" means the Note Agreements, dated as of
November
15, 1989, between Newport Steel Corporation and certain
Noteholders
pursuant to which the Noteholders purchased from Newport $45
million in
aggregate principal amount of Newport's 10.40% Senior Secured
Notes due
November 15, 1999.
"Change of Control" means the occurrence of one or more
of the
following events:
(i) the direct or indirect sale, lease, exchange
or other
transfer of all or substantially all of the assets of
the Company to
any Person or entity or group of Persons or entities
acting in
concert as a partnership or other group (a "Group of
Persons")
other than a Person described in clause (i) of the
definition of
Affiliate;
(ii) the consummation of any consolidation or
merger of
the Company with or into another corporation with the
effect that
the stockholders of the Company immediately prior to
the date of
the consolidation or merger hold less than 51% of the
combined
voting power of the outstanding voting securities of
the surviving
entity of such merger or the corporation resulting from
such
consolidation ordinarily having the right to vote in
the election of
directors (apart from rights accruing under special
circumstances)
immediately after such merger or consolidation;
(iii) the stockholders of the Company shall
approve any
plan or proposal for the liquidation or dissolution of
the
Company;
(iv) a Person or Group of Persons acting in
concert as a
partnership, limited partnership, syndicate or other
group shall,
as a result of a tender or exchange offer, open market
purchases,
privately negotiated purchases or otherwise, have
become the
direct or indirect beneficial owner (within the meaning
of Rule
13d-3 under the Exchange Act) of securities of the
Company
representing 30% or more of the combined voting power
of the
then outstanding securities of the Company ordinarily
(and apart
from rights accruing under special circumstances)
having the
right to vote in the election of directors; and
(v) a Person or Group of Persons, together with
any
Affiliates thereof, shall succeed in having a
sufficient number of
its nominees elected to the Board of Directors of the
Company
such that such nominees, when added to any existing
director
remaining on the Board of Directors of the Company
after such
election who is an Affiliate of such Person or Group of
Persons,
will constitute a majority of the Board of Directors of
the
Company;
provided that the Person or Group of Persons referred to in
clauses (i), (iv) and
(v) shall not mean Clifford Borland or any Group of Persons the
majority of
the voting equity interests of which is beneficially owned
(within the meaning
of Rule 13d-3(a)(1) under the Exchange Act) by Clifford Borland.
"Change of Control Date" has the meaning specified in
Section 6.18.
"Change of Control Offer" has the meaning specified in
Section
6.18.
"Change of Control Payment Date" has the meaning
specified in
Section 6.18.
"Collateral" means, collectively, all of the property
and assets that
are from time to time subject to the Liens of the Security
Documents,
including, without limitation, Trust Moneys.
"Collateral Account" means the collateral account to be
established
pursuant to this Indenture.
"Collateral Agent" means the Trustee acting in its
capacity as
agent for the Holders with respect to the Collateral under the
Security
Documents.
"Collateral Proceeds" means the Net Available Cash
received by
the Collateral Agent or the Trustee, as the case may be, from the
sale of
Collateral.
"Commission" means the Securities and Exchange
Commission, as
from time to time constituted, created under the Exchange Act,
or, if at any
time after the execution of this instrument such Commission is
not existing
and performing the duties now assigned to it under the Trust
Indenture Act,
then the body performing such duties at such time.
"Common Stock" includes any stock of any class of the
Company
or its Subsidiaries which has no preference in respect of
dividends or of
amounts payable in the event of any voluntary or involuntary
liquidation,
dissolution or winding-up of the Company or its Subsidiaries and
which is not
subject to redemption by the Company or its Subsidiaries.
"Company" means the Person named as the "Company" in
the first
paragraph of this instrument until a successor Person shall have
become such
pursuant to the applicable provisions of this Indenture, and
thereafter
"Company" shall mean such successor Person.
"Company Obligations" has the meaning specified in
Section
12.1(a).
"Company Request" or "Company Order" means a written
request
or order signed in the name of the Company by its Chairman of the
Board, its
Vice Chairman of the Board, its President or a Vice President,
and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and
delivered to the Trustee.
"Condemnation Award" means any proceeds, award or
payment
paid to the mortgagee or beneficiary under the Security Documents
relating to
any taking of the Collateral subject to such Security Document by
condemnation or eminent domain or similar action, together with
interest
accrued thereon.
"Consolidated EBITDA Coverage Ratio" as of any date of
determination (the "Determination Date") means the ratio of (i)
the aggregate
amount of EBITDA for the period of the most recent four
consecutive fiscal
quarters ending prior to the date of such determination to (ii)
Net Interest
Expense for such four fiscal quarters; provided, however, that
(1) if the Company
or any Recourse Subsidiary has issued any Debt since the
beginning of such
period that remains outstanding or if the transaction giving rise
to the need to
calculate the Consolidated EBITDA Coverage Ratio is an issuance
of Debt, or
both, EBITDA and Consolidated Interest Expense for such period
shall be
calculated after giving effect on a pro forma basis to such Debt
as if such Debt
had been issued on the first day of such period and as if the
discharge of any
other Debt repaid, repurchased, defeased or otherwise discharged
with the
proceeds of such new Debt had occurred on the first day of such
period, (2) if
since the beginning of such period the Company or any Recourse
Subsidiary
shall have made any Asset Disposition which constitutes all or
substantially all
of an operating unit of a business, the EBITDA for such period
shall be
reduced by an amount equal to the EBITDA (if positive) directly
attributable to
the assets which are the subject of such Asset Disposition for
such period, or
increased by an amount equal to the EBITDA (if negative),
directly attributable
thereto for such period, and Consolidated Interest Expense for
such period
shall be reduced by an amount equal to the Consolidated Interest
Expense
directly attributable to any Debt of the Company or any Recourse
Subsidiary
repaid, repurchased, defeased or otherwise discharged with
respect to the
Company and its continuing Recourse Subsidiaries in connection
with such
Asset Dispositions for such period (or, if the Capital Stock of
any Recourse
Subsidiary is sold, the Consolidated Interest Expense for such
period directly
attributable to the Debt of such Recourse Subsidiary to the
extent the
Company and its continuing Recourse Subsidiaries are no longer
liable for
such Debt after such sale), as if such Asset Disposition occurred
on the first
day of such period, (3) if since the beginning of such period the
Company or
any Recourse Subsidiary (by merger or otherwise) shall have made
an
Investment in any Recourse Subsidiary (or any Person which
becomes a
Recourse Subsidiary) or an Asset Acquisition, including any
acquisition of
assets occurring in connection with a transaction causing a
calculation to be
made hereunder, EBITDA and Consolidated Interest Expense for such
period
shall be calculated after giving pro forma effect thereto
(including the issuance
of any Debt) as if such Investment or Asset Acquisition occurred
on the first
day of such period, (4) if since the beginning of such period any
Person (that
subsequently became a Recourse Subsidiary or was merged with or
into the
Company or any Recourse Subsidiary since the beginning of such
period) shall
have made any Asset Disposition or any Investment or Asset
Acquisition that
would have required an adjustment pursuant to clause (2) or (3)
above if made
by the Company or a Recourse Subsidiary during such period,
EBITDA and
Consolidated Interest Expense for such period shall be calculated
after giving
pro forma effect thereto as if such Asset Disposition or
Investment or Asset
Acquisition occurred on the first day of such period and (5)
there shall be
excluded from Consolidated Interest Expense any Consolidated
Interest
Expense related to any Debt which was outstanding during the
period but is
not outstanding on the Determination Date, except for
Consolidated Interest
Expense actually incurred with respect to Debt borrowed under a
revolving
credit or similar arrangement to the extent the commitment
thereunder
remains in effect on the Determination Date. For purposes of
this definition,
whenever pro forma effect is to be given to an Asset Disposition,
an Investment
or an Asset Acquisition, the amount of income or earnings
relating thereto,
and the amount of Consolidated Interest Expense associated with
any Debt
issued, redeemed or defeased in connection therewith, the pro
forma
calculations shall be determined in good faith by a responsible
financial or
accounting officer of the Company. If any Debt bears a floating
rate of interest
and is being given pro forma effect, the interest of such Debt
shall be calculated
as if the rate in effect on the Determination Date had been the
applicable rate
for the entire period (taking into account any Interest Rate
Protection
Agreement applicable to such Debt if such Interest Rate
Protection Agreement
has a remaining term in excess of 12 months).
"Consolidated Income Tax Expense" of any Person for any
period
means, without duplication, the aggregate amount of net taxes
based on
income or profits for such period of the operations of such
Person and its
Consolidated Recourse Subsidiaries actually payable with respect
to such
period, determined in accordance with GAAP (to the extent such
income or
profits were included in computing Consolidated Net Income).
"Consolidated Interest Expense" of any Person means,
for any
period, the total interest expense of the Company and its
Consolidated
Recourse Subsidiaries, including, without duplication, (i)
interest expense
attributable to Capital Lease Obligations, (ii) amortization of
debt discount and
debt issuance cost, (iii) capitalized interest, (iv) non-cash
interest payment or
accruals, (v) commissions, discounts and other fees and charges
owed with
respect to letters of credit and bankers' acceptance financing,
(vi) net costs
under Interest Rate Protection Agreements and Hedging Agreements
(including amortization of fees), (vii) Preferred Stock dividends
paid in respect
of all Preferred Stock issued by the Company or its Recourse
Subsidiaries held
by Persons other than the Company or a Wholly-Owned Recourse
Subsidiary,
(viii) amortization of other financing fees and expenses and the
interest portion
of any deferred payment obligations and (ix) interest actually
paid by the
Company or any of its Consolidated Recourse Subsidiaries under
any
Guarantee of Debt or other obligation of any other Person.
"Consolidated Interest Income" of any Person means, for
any
period, all amounts that would be included under interest income
on a
consolidated income statement of such Person and its Consolidated
Recourse
Subsidiaries determined in accordance with GAAP, less accreted
amounts
attributable to original issue discount securities prior to the
receipt thereof and
other non-cash interest payments.
"Consolidated Net Income" of any Person for any period
means the
Net Income of such Person and its Consolidated Recourse
Subsidiaries for such
period, determined on a consolidated basis in accordance with
GAAP; provided,
that (a) there shall be excluded (i) the Net Income of any Person
(other than a
Consolidated Recourse Subsidiary) in which such Person or any of
its
Consolidated Recourse Subsidiaries has a joint interest with a
third party
except to the extent of the amount of dividends or distributions
actually paid
to such Person or its Consolidated Recourse Subsidiary during
such period; (ii)
except to the extent includable pursuant to the foregoing clause
(i), the Net
Income of any Person accrued prior to the date it becomes a
Recourse
Subsidiary of such Person or is merged into or consolidated with
such Person
or any of its Recourse Subsidiaries or that Person's assets are
acquired by such
Person or any of its Recourse Subsidiaries; (iii) the Net Income
(if positive), or
any portion thereof, of any Recourse Subsidiary of such Person to
the extent
that the declaration or payment of dividends or similar
distributions by that
Recourse Subsidiary to such Person or to any other Recourse
Subsidiary of
such Net Income is not at the time permitted by operation of the
terms of its
charter or any agreement, instrument, judgment, decree, order,
statute, rule or
governmental regulation applicable to that Recourse Subsidiary,
except that (A)
the Company's equity in the Net Income of any such Recourse
Subsidiary for
such period shall be included in such Consolidated Net Income up
to the
aggregate amount of cash actually distributed by such Recourse
Subsidiary
during such period to the Company or another Recourse Subsidiary
as a
dividend or other distribution (subject, in the case of a
dividend or other
distribution to a Recourse Subsidiary, to the limitation
contained in this clause)
and (B) the Company's equity in a net loss of any such Recourse
Subsidiary
for such period shall be included in determining such
Consolidated Net
Income; (iv) without duplication, any gains or losses
attributable to Asset Sales;
(v) Net Income (if positive) arising from the adoption of changes
in accounting
policy to comply with GAAP or voluntarily by the Company with the
consent
of its independent auditors that so qualify under Regulation S-X
of the
Securities Act; (vi) Net Income arising for periods prior to the
date of a
transaction in connection with the accounting treatment for a
merger,
combination or consolidation under the pooling of interests
method; and (vii)
foreign currency translation gains and losses and (b) the
Company's equity in
the Net Income of a Non-Recourse Subsidiary shall be included up
to the
aggregate amount of cash actually distributed by such
Non-Recourse
Subsidiary during such period to the Company or a consolidated
Recourse
Subsidiary as a dividend or other distribution.
"Consolidated Net Worth" of any Person means the total
of the
amounts shown on the balance sheet of such Person and its
Consolidated
Recourse Subsidiaries, determined on a consolidated basis in
accordance with
GAAP, as of the end of the most recent fiscal quarter of such
Person prior to
the taking of any action for the purpose of which the
determination is being
made, as (i) the par or stated value of all outstanding Capital
Stock of such
Person plus (ii) paid-in capital or capital surplus relating to
such Capital Stock
plus (iii) any retained earnings or earned surplus less (A) any
accumulated
deficit and (B) any amounts attributable to Disqualified Stock.
"Consolidated Recourse Subsidiary" of any Person means
a Recourse
Subsidiary which for financial reporting purposes is or, in
accordance with
GAAP, should be, accounted for by such Person as a consolidated
Subsidiary.
"Corporate Trust Office" means the principal office of
the Trustee
in Columbus, Ohio at which at any particular time its corporate
trust business
shall be administered.
"Credit Facility" means the Revolving Credit, Guaranty
and
Security Agreement dated July 28, 1995 among The Bank of New York
Commercial Corporation, as lender, co-agent and ACM agent, PNC
Bank Ohio,
National Association, as lender and co-agent, with Newport Steel
Corporation,
Koppel Steel Corporation and Imperial Adhesives, Inc. as
borrowers
thereunder, and the Company, Erlanger Tubular Corporation, and
the NK
Subsidiaries as guarantors thereunder, and any renewals,
extensions or
refinancings thereof.
"Custodian" means any receiver, trustee, assignee,
liquidator or
similar official under any Bankruptcy Law.
"Debt" of any Person means, without duplication:
(i) the principal of and any premium (if any) in
respect of (A)
indebtedness of such Person for money borrowed and (B)
indebtedness
evidenced by notes, debentures, bonds or other similar
instruments for
the payment of which such Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person;
(iii) all obligations of such Person issued or
assumed as the
deferred purchase price of property, all conditional sale
obligations of
such Person and all obligations of such Person under any
title retention
agreement (but excluding trade accounts payable arising in
the ordinary
course of business);
(iv) all obligations of such Person for the
reimbursement of any
obligor on any letter of credit, banker's acceptance or
similar credit
transaction (other than obligations with respect to letters
of credit
securing obligations (other than obligations described in
(i) through (iii)
above) entered into in the ordinary course of business of
such Person to
the extent such letters of credit are not drawn upon or, if
and to the
extent drawn upon, such drawing is reimbursed no later than
the third
Business Day following receipt by such Person of a demand
for
reimbursement following payment on the letter of credit);
(v) the amount of all obligations of such Person with
respect
to the redemption, repayment or other repurchase of any
Disqualified
Stock (the amount of Debt represented by any Disqualified
Stock will be
the liquidation preference, plus accrued and unpaid
dividends);
(vi) to the extent not otherwise included, all
obligations under
Interest Rate Protection Agreements and Hedging Agreements;
(vii) all obligations of the type referred to in
clauses (i) through
(vi) of other Persons and all dividends of other persons for
the payment
of which, in either case, such Person is responsible or
liable, directly or
indirectly, as obligor, guarantor or otherwise, including by
means of any
Guarantee; and
(viii) all obligations of the type referred to in
clauses (i) through
(vii) of other Persons secured by any Lien on any property
or asset of
such Person (whether or not such obligation is assumed by
such
Person); provided, that if recourse with respect to such
Debt is limited to
such asset, the amount of such Debt being deemed to be the
lesser of
the value of such property or assets or the amount of the
obligation so
secured.
"Default" means any event which is, or after the giving
of notice
or passage of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in
Section 3.7.
"Depositary" means The Depository Trust Company or any
successor thereto.
"Disqualified Stock" means any Capital Stock which, by
its terms
(or by the terms of any security into which it is convertible or
for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable
at the option of the holder thereof, in whole or in part on, or
prior to, the final
maturity date of the Securities.
"EBITDA" for any period means the Consolidated Net
Income for
such period (but without giving effect to adjustments, accruals,
deductions or
entries resulting from purchase accounting), plus the following
to the extent
deducted in calculating such Consolidated Net Income for such
period (i)
Consolidated Income Tax Expense; (ii) Consolidated Interest
Expense; and (iii)
depreciation and amortization expense determined on a
consolidated basis for
such Person and its Consolidated Recourse Subsidiaries in
accordance with
GAAP for such period.
"Event of Default" has the meaning specified in Section
8.1.
"Exchange Act" means the Securities Exchange Act of
1934, as
amended.
"Excluded Assets" means the stock of Kentucky Electric
Steel, Inc.
held on the Issue Date by the Company or its Subsidiaries and the
stock and
assets of Imperial Adhesives, Inc. and the NK Subsidiaries.
"Excluded Company" means any existing Subsidiary, each
of which
is executing, or will execute upon becoming a Subsidiary, the
Subsidiary
Guarantee in respect of the obligations of the Company, but that
does not
execute security agreements and/or mortgages in favor of the
Collateral Agent
for the benefit of the Holders relating to substantially all of
its real property,
fixtures, machinery, tools, equipment and similar property or a
negative
pledge with respect to certain intangibles.
"Financial Advisor" means an investment banking firm of
national
reputation which (except as otherwise expressly provided in this
Indenture)
may be employed by the Company.
"GAAP" means generally accepted accounting principles
in the
United States as in effect from time to time, including, without
limitation,
those set forth in the opinions and pronouncements of the
Accounting
Principles Board of the American Institute of Certified Public
Accountants and
statements and pronouncements of the Financial Accounting
Standards Board
or in such other statements by such other entity as may be
approved by a
significant segment of the accounting profession of the United
States, which
are applicable as of the date of determination.
"GECC Loans" means (i) the Loan Agreement, dated as of
October
4, 1990, among Koppel Steel Corporation and General Electric
Credit
Corporation, in its capacity as agent for the benefit of itself
and any other
lenders from time to time party to such Loan Agreement ("GECC")
and (ii) the
Loan Agreement, dated as of October 4, 1990, among Newport Steel
Corporation and GECC.
"Global Security" means a Security evidencing all or
part of a
series of Securities which is issued to the Depositary or its
nominee and is
registered in the name of the Depositary or its nominee.
"Government Loans" means any Debt issued, guaranteed or
otherwise sponsored by any state or local governmental entity
that carries an
annual interest rate not in excess of the rate which is 2% less
than the prime
rate of interest charged by the Trustee at the time such Debt is
incurred.
"Guarantee" means any obligation, contingent or
otherwise, of any
Person directly or indirectly guaranteeing any Debt or other
obligation of any
other Person and any obligation, direct or indirect, contingent
or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds
for the
purchase or payment of) such Debt or other obligation of such
other Person
(whether arising by virtue of partnership arrangements, or by
agreement to
keepwell, to purchase assets, goods, securities or services, to
take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii)
entered into for
purposes of assuring in any other manner the obligee of such Debt
or other
obligation of the payment thereof or to protect such obligee
against loss in
respect thereof (in whole or in part); provided, however, that
the term
"Guarantee" shall not include endorsements for collection or
deposits in the
ordinary course of business. The term "Guarantee" used as a verb
has a
corresponding meaning. The amount of any Guarantee shall be
deemed to be
an amount equal to the stated or determinable amount of the
primary
obligation in respect of which such Guarantee is made (unless
such Guarantee
shall be expressly limited to a lesser amount, in which case such
lesser amount
shall apply) or, if not stated or determinable, the maximum
reasonably
anticipated liability in respect thereof as determined by such
Person in good
faith.
"Hedging Agreement" means any foreign exchange or
commodity,
hedge, exchange or similar agreement designed to protect the
Company or its
Subsidiaries against fluctuations in foreign currency exchange
rates or
commodity prices in respect of foreign exchange or commodity
exposures
incurred by the Company or its Subsidiaries in the ordinary
course of business.
"Holder" means a Person in whose name a Security is
registered
in the Security Register.
"ICN Mortgage" means each mortgage (or deed of trust)
dated as
of the date hereof, between a Steelmaking Subsidiary and the
Company, in
either case in substantially the form of Exhibit C, as the same
may be
amended, supplemented or otherwise modified from time to time.
"ICN Security Agreement" means each security agreement
dated as
of the date hereof between a Steelmaking Subsidiary and the
Company,
substantially in the form of Exhibit G, as the same may be
amended,
supplemented or otherwise modified from time to time.
"Indenture" means this instrument as originally
executed or as it
may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the
applicable
provisions hereof, including, for all purposes of this instrument
and any such
supplemental indenture, the provisions of the Trust Indenture Act
that are
deemed to be a part of and govern this instrument and any such
supplemental
indenture, respectively.
"Independent" when used with respect to any specified
Person
means such a Person who (i) is in fact independent, (ii) does not
have any
direct financial interest or any material indirect financial
interest in the
Company or in any other obligor in respect of the Securities or
in any Affiliate
of the Company or such other obligor and (iii) is not an officer,
employee,
promotor, underwriter, trustee, partner, director or person
performing similar
functions to any of the foregoing for the Company or such other
obligor or any
Affiliate thereof. Whenever it is provided in this Indenture
that any
Independent Person's opinion or certificate shall be furnished to
the Trustee,
such Person shall be appointed by the Company and approved by the
Trustee
in the exercise of reasonable care, and such opinion or
certificate shall state
that the signer has read this definition and that the signer is
Independent
within the meaning thereof.
"Intercompany Note" means each Intercompany Note dated
as of
the date hereof, between the Company and each of the Steelmaking
Subsidiaries in an aggregate amount at least equal to the
principal amount of
the Securities, substantially in the Form of Exhibit A hereto, as
the same may
be amended, supplemented or otherwise modified from time to time.
"Intercreditor Agreement" means the Intercreditor
Agreement dated
as of the date hereof among the Company, the Bank of New York
Commercial
Corporation, as ACM agent for the financial institutions parties
to the Credit
Facility, and The Huntington National Bank, in substantially the
form of
Exhibit H hereto, as the same may be amended, supplemented or
otherwise
modified from time to time.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Protection Agreement" means any interest
rate swap
agreement, interest rate cap agreement or other financial
agreement or
arrangement designed to protect the Company or any Subsidiary
against
fluctuations in interest rates, to or under which the Company or
any of its
Subsidiaries is a party or a beneficiary on the date of the
Indenture or becomes
a party or a beneficiary thereafter.
"Internal Revenue Code" means the Internal Revenue Code
of 1986,
as amended.
"Inventory" means, as to each of the Company and its
Subsidiaries, all of such Person's now owned or hereafter
acquired goods,
merchandise and other personal property, wherever located, which
goods,
merchandise and other personal property are to be furnished under
any
contract of service or held for sale or lease in the ordinary
course of such
Person's business, all raw materials, work in process, finished
goods and
materials and supplies of any kind, nature or description which
are or might
be used or consumed in such Person's business or used in selling
or furnishing
such goods, merchandise and other personal property, and all
documents of
title or other documents representing them.
"Investment" of any Person means (i) all investments by
such
Person in any other Person in the form of loans, advances or
capital
contributions (excluding commission, travel and similar advances
to officers
and employees made in the ordinary course of business) or (ii)
all purchases
(or other acquisitions for consideration) by such Person of Debt,
Capital Stock
or other securities of any other Person or (iii) all other items
that would be
classified as investments on a balance sheet of such Person
prepared in
accordance with GAAP.
"Issue" means issue, assume, guarantee, incur or
otherwise
become liable for; provided, however, that any Debt or Capital
Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by
merger,
consolidation, acquisition or otherwise) shall be deemed to be
issued by such
Subsidiary at the time it becomes a Subsidiary.
"Issue Date" means the original date of issuance of the
Securities.
"Joint Venture" means a joint venture, partnership or
other similar
arrangement, whether in corporate, partnership or other legal
form; provided,
that as to any such arrangement in corporate form, such
corporation shall not,
as to any Person of which such corporation is a Subsidiary, be
considered to be
a Joint Venture to which such Person is a party.
"Lenders" means the lenders who are from time to time
parties to
the Credit Facility.
"Lender Secured Property" means the Accounts
Receivable,
Inventory and certain intangibles of the Company, Newport Steel
Corporation,
Koppel Steel Corporation, Imperial Adhesives, Inc., Erlanger
Tubular
Corporation and the NK Subsidiaries, and the proceeds thereof,
that secure the
obligations of Newport Steel Corporation, Koppel Steel
Corporation and
Imperial Adhesives, Inc. with respect to the Credit Facility.
"Lien" means, with respect to any property, any
mortgage, deed
of trust, lien, pledge, security interest, lease, easement,
restriction, covenant,
right-of-way, charge, encumbrance, conditional sale or other
title retention
agreement or other similar lien. For the purposes of this
Indenture and the
Security Documents, the Company and its Subsidiaries shall be
deemed to own
subject to a Lien any property which they have acquired or hold
subject to the
interests of a vendor or lessor under any conditional sales
agreement, capital
lease or other title retention agreement relating to such
property.
"Material Adverse Effect" means a material adverse
effect on (i) the
business, operations, property, condition (financial or
otherwise) or prospects
of the Company and its Recourse Subsidiaries taken as a whole,
(ii) the ability
of the Company and its Subsidiaries to perform their respective
obligations
under the Securities and the Security Documents or (iii) the
validity or
enforceability of the Securities or any of the Security
Documents.
"Maturity Date" when used with respect to any Security,
means
the date on which the principal of such Security becomes due and
payable as
therein or herein provided, whether at the Stated Maturity or by
declaration of
acceleration, call for redemption, Asset Sales Offer, Change of
Control Offer or
otherwise.
"Mortgage" means each mortgage (or deed of trust),
dated as of
the date hereof, or with respect to Persons that become Recourse
Subsidiaries
of the Company after the date hereof, as of such subsequent date,
between a
Subsidiary of the Company and the Collateral Agent, in either
case in
substantially the form of Exhibit B, as the same may be amended,
supplemented or otherwise modified from time to time in
accordance with its
terms.
"Net Available Cash" from an Asset Disposition means
cash
payments received (including any cash payments received by way of
deferred
payment of principal pursuant to a note or installment receivable
or otherwise,
but only as and when received (including any cash received upon
sale or
disposition of such note or receivable), but excluding any other
consideration
received in the form of assumption by the acquiring Person of
Debt or other
obligations relating to such properties or assets or received in
any other non-
cash form) therefrom, in each case net of all legal, title and
recording tax
expenses, commissions and other fees and expenses incurred, and
all Federal,
state, provincial, foreign and local taxes required to be accrued
as a liability
under GAAP, as a consequence of such Asset Disposition, and in
each case net
of appropriate amounts to be provided by the Company or its
Subsidiaries as a
reserve, in accordance with GAAP, against any liabilities
associated with such
assets and retained by the Company or any Subsidiary after such
Asset
Disposition, including, without limitation, pension and other
post-employment
benefit liabilities and liabilities related to environmental
matters and the after-
tax cost of any indemnification payments (fixed or contingent)
attributable to
the seller's indemnities to the purchaser undertaken by the
Company or any of
its Subsidiaries in connection with such Asset Disposition (but
excluding any
payments, which by the terms of the indemnities will not, under
any
circumstances, be made during the term of the Securities) and net
of all
payments made on any Debt which is secured by any assets subject
to such
Asset Disposition, in accordance with the terms of any Lien upon
or other
security agreement of any kind with respect to such assets, or
which must by
its terms, or in order to obtain a release of such Lien or a
necessary consent to
such Asset Disposition, or by applicable law be repaid out of the
proceeds
from such Asset Disposition, and net of all distributions and
other payments
required to be made to minority interest holders in Subsidiaries
or Joint
Ventures as a result of such Asset Disposition.
"Net Cash Proceeds" means, with respect to any issuance
or sale of
Capital Stock, the cash proceeds of such issuance or sale net of
attorneys' fees,
accountants' fees, underwriters' or placement agents' fees,
discounts and
commissions and brokerage, consultant and other fees actually
incurred in
connection with such issuance or sale and net of taxes paid or
payable as a
result thereof.
"Net Income" of any Person for any period means the net
income
(loss) of such Person for such period, determined in accordance
with GAAP,
except that extraordinary, unusual and non-recurring gains and
losses as
determined in accordance with GAAP shall be excluded.
"Net Insurance Proceeds" means all proceeds paid to
either the
Company, its Subsidiaries and/or the Collateral Agent or any
mortgagee or
beneficiary under the Security Documents relating to damage to,
or loss or
destruction of, Collateral (but not including those proceeds
which, in the
reasonable judgment of the Trustee, constitute proceeds of
"business
interruption insurance"), together with interest earned thereon,
less expenses
related to the receipt of such Net Insurance Proceeds.
"Net Interest Expense" means the difference between
Consolidated
Interest Expense and Consolidated Interest Income; provided, that
such amount
shall not be less than zero.
"NK Subsidiaries" means Northern Kentucky Management,
Inc.
and Northern Kentucky Air, Inc.
"No. 3 Melt Shop" means the No. 3 Melt Shop and
Blooming Mill
owned by Koppel Steel Corporation which is the subject of the
Agreement by
and between Koppel Steel Corporation and The Commonwealth of
Pennsylvania, dated as of the date hereof, as may be amended,
modified or
supplemented from time to time.
"Non-Collateral Proceeds" means the Net Available Cash
of any
Asset Disposition that does not represent Collateral Proceeds.
"Non-Recourse Debt" means Debt or the portion of Debt
of a Non-
Recourse Subsidiary (i) as to which neither the Company nor any
Recourse
Subsidiary (a) provides credit support or a Guarantee (including
any
undertaking, agreement or instrument which would constitute Debt)
or (b) is
directly or indirectly liable; (ii) the holders of such Debt
(other than the
Company or any Recourse Subsidiary) expressly waive all claims
and any
recourse which they may have, in law, equity or otherwise,
whether based on
misrepresentation, control, ownership or otherwise, to each of
the Company
and any Recourse Subsidiary, including, without limitation, a
waiver of the
benefits of the provisions of Section 1111(b) of the Bankruptcy
Code (Title 11,
United States Code), as amended, on or in respect of such Debt
against the
Company or any Recourse Subsidiary of the Company and such waiver
is a
legal, valid and binding obligations of the lender that is
enforceable subject to
certain exceptions enumerated in an Opinion of Counsel, and the
Company
has delivered to the Trustee an Opinion of Counsel to such effect
by a law
firm reasonably acceptable to the Trustee and a Board Resolution
confirming
the foregoing, in each case in form and substance satisfactory to
the Trustee;
and (iii) no default with respect to such Debt (including any
rights which the
holder thereof may have to take enforcement action against such
Non-Recourse
Subsidiary) would permit (upon notice, lapse of time or both) any
holder of
any other Debt of the Company or any Recourse Subsidiary to
declare a
default on such other Debt or cause the payment thereof to be
accelerated or
payable prior to its stated maturity. Notwithstanding the
foregoing, a Non-
Recourse Subsidiary may pledge its assets as security for any
Non-Recourse
Debt issued by any Non-Recourse Subsidiary.
"Non-Recourse Subsidiary" means a Subsidiary of the
Company or
any of its Subsidiaries formed to acquire securities or assets of
a third party
and which (i) has no Debt other than Non-Recourse Debt and (ii)
does not,
directly or indirectly, own any Debt, stock or securities of, and
has no
Investment in, the Company or any Recourse Subsidiary and (iii)
has not
acquired any assets from the Company or any of its Recourse
Subsidiaries that
are essential to the steelmaking operations of the Company and
its Recourse
Subsidiaries.
"Obsolete Assets" means machinery, equipment,
furniture,
apparatus, tools or implements or other similar property which a
Subsidiary
reasonably determines to have become worn out, obsolete or no
longer
necessary to the operation of the business of the Company or its
Subsidiaries,
as the case may be.
"Officers' Certificate" means, when used with respect
to the
Company, a certificate signed by the Chairman of the Board, the
President, a
Vice Chairman of the Board or the Chief Financial Officer of the
Company (or
any other officer identified by any of the foregoing officers in
an Officers'
Certificate to be an executive officer of the Company) and the
Secretary, an
Assistant Secretary or the Controller of the Company. One of the
officers
signing an Officers' Certificate given pursuant to Section 6.5
shall be the
principal executive, financial or accounting officer of the
Company.
"Opinion of Counsel" means an opinion in writing signed
by legal
counsel, who may be an employee of or of counsel to the Company,
or who
may be other counsel reasonably satisfactory to the Trustee.
"Outstanding", when used with respect to Securities,
means, as of
the date of determination, all Securities theretofore
authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered
to the Trustee for cancellation;
(ii) Securities for whose payment or redemption
money in the
necessary amount has been theretofore deposited with the
Trustee or
any Paying Agent (other than the Company) in trust or set
aside and
segregated in trust by the Company (if the Company shall act
as its own
Paying Agent) for the Holders of such Securities; provided,
that if such
Securities are to be redeemed, notice of such redemption has
been duly
given pursuant to this Indenture or provision therefor
satisfactory to the
Trustee has been made; and
(iii) Securities which have been paid pursuant to
Section 3.6 or
in exchange for or in lieu of which other Securities have
been
authenticated and delivered pursuant to this Indenture,
other than any
such Securities in respect of which there shall have been
presented to
the Trustee proof satisfactory to it that such Securities
are held by a bona
fide purchaser in whose hands such Securities are valid
obligations of
the Company;
provided, however, that in determining whether the Holders of the
requisite
principal amount of the Outstanding Securities have given any
request,
demand, authorization, direction, notice, consent or waiver
hereunder,
Securities owned by the Company or any other obligor upon the
Securities or
any Affiliate of the Company or of such other obligor shall be
disregarded and
deemed not to be Outstanding, except that, in determining whether
the Trustee
shall be protected in relying upon any such request, demand,
authorization,
direction, notice, consent or waiver, only Securities which the
Trustee knows to
be so owned shall be so disregarded. Securities so owned which
have been
pledged in good faith may be regarded as Outstanding if the
pledgee
establishes to the satisfaction of the Trustee the pledgee's
right so to act with
respect to such Securities and that the pledgee is not the
Company or any
other obligor upon the Securities or any Affiliate of the Company
or of such
other obligor.
"Paying Agent" means any Person authorized by the
Company to
pay the principal of or interest on any Securities on behalf of
the Company.
"Permitted Investments" means (i) Cash Equivalents;
(ii)
Investments in a Wholly-Owned Recourse Subsidiary of the Company
(other
than a Restricted Subsidiary) or a Person that will become a
Wholly-Owned
Recourse Subsidiary of the Company (other than a Restricted
Subsidiary) as a
result of such Investment; provided that any Person that becomes
a Wholly-
Owned Recourse Subsidiary is engaged in lines of businesses which
the Board
of Directors in good faith determines to be related to those of
the Company on
the Issue Date; (iii) the Company and its Subsidiaries may make
advances and
loans to officers and employees in the ordinary course of
business not to
exceed $50,000 to any one officer or employee or $100,000 in the
aggregate at
any one time outstanding; (iv) the Company and its Subsidiaries
may make
payroll advances in the ordinary course of business; (v) the
Company may
make advances or loans in connection with Hedging Agreements
provided
such agreements are made in the ordinary course of business; (vi)
the
Company may make advances or loans in connection with Interest
Rate
Protection Agreements provided such agreements are made in the
ordinary
course of business; (vii) the Company and its Subsidiaries may
make
Investments representing the non-cash consideration received in
connection
with the sale of assets disposed of in accordance with Section
6.15; (viii) the
Company and its Subsidiaries may make Investments in the form of
advances,
extensions of credit, progress payments and prepayments for asset
purchases
by it in the ordinary course of business; (ix) accounts
receivable arising and
trade credit granted in the ordinary course of business and any
securities
received in satisfaction or partial satisfaction thereof from
financially troubled
account debtors to the extent reasonably necessary in order to
prevent or limit
loss; (x) Investments in the Securities; and (xi) an Investment,
if any, of up to
$1.2 million to improve property in connection with a coating
facility to be
leased to a third party.
"Permitted Liens" means (i) Liens for taxes,
assessments,
governmental charges or claims which are not yet delinquent or
which are
being contested in good faith by appropriate proceedings, if a
reserve or other
appropriate provision, if any, as shall be required in conformity
with GAAP
shall have been made therefor; (ii) other Liens incidental to the
conduct of the
Company's and its Subsidiaries' business or the ownership of its
property and
assets not securing any Debt, and which do not in the aggregate
materially
detract from the value of the Company's and its Subsidiaries'
property or
assets when taken as a whole, or materially impair the use
thereof in the
operation of its business (including, without limitation, Liens
securing any
obligation to landlords, vendors, carriers, warehousemen,
mechanics, laborers
and materialmen and other similar obligations arising by
operation of law not
yet delinquent or which are being contested in good faith by
appropriate
proceedings, if a reserve or other appropriate provision, if any,
as shall be
required in conformity with GAAP shall have been made therefor);
(iii) Liens
with respect to assets of a Subsidiary granted by such Subsidiary
to the
Company to secure Debt owing to the Company; (iv) Liens on assets
owned
by Non-Recourse Subsidiaries to secure Non-Recourse Debt; (v)
Liens on assets
not constituting Collateral with an aggregate book value not in
excess of 5% of
the book value of the Company's total consolidated assets as
shown on the
Company's most recent consolidated balance sheet; (vi) pledges
and deposits
made in the ordinary course of business in connection with
workers'
compensation, unemployment insurance and other types of social
security;
(vii) deposits made to secure the performance of tenders, bids,
leases and
statutory obligations of a like nature incurred in the ordinary
course of
business (exclusive of obligations for the payment of borrowed
money);
(viii) zoning restrictions, servitudes, easements, rights-of-way,
restrictions and
other similar charges or encumbrances incurred in the ordinary
course of
business, or easements in favor of any state or federal
environmental agencies
for environmental remediation work, which, in the aggregate, do
not
materially detract from the value of the property subject thereto
or interfere
with the ordinary conduct of the business of the Company or its
Subsidiaries;
(ix) Liens arising out of judgments or awards against the Company
or any
Subsidiary with respect to which the Company or such Subsidiary
is
prosecuting an appeal or proceeding for review and the Company or
such
Subsidiary is maintaining adequate reserves in accordance with
GAAP; (x) any
interest or title of a lessor in the property subject to any
Capital Lease
Obligation or operating lease; and (xi) Liens in favor of the
Company (and
pledged to the Trustee for the benefit of the Holders pursuant to
the Pledge
Agreement) with respect to the Intercompany Notes.
"Permitted Payments" means, with respect to the Company
or any
of its Subsidiaries, (i) any dividend on shares of Capital Stock
payable solely in
shares of Capital Stock (other than Disqualified Stock) or in
options, warrants
or other rights to purchase Capital Stock (other than
Disqualified Stock);
(ii) any dividend, other distribution, loan or advance to the
Company by any
of its Subsidiaries or by a Subsidiary to another Subsidiary
(except to a
Non-Recourse Subsidiary or a Restricted Subsidiary); (iii) any
defeasance,
redemption, repurchase or other acquisition for value of any Debt
of the
Company with the proceeds from the issuance of (a) Debt which is
subordinate to the Securities at least to the extent and in the
manner as the
Debt to be defeased, redeemed, repurchased or otherwise acquired
is
subordinate in right of payment to the Securities; provided, that
(1) such newly-
issued subordinated Debt provides for no payments of principal by
way of
sinking fund, mandatory redemption, defeasance or otherwise by
the
Company or its Subsidiaries (including, without limitation, at
the option of the
holder thereof other than an option given to a holder pursuant to
a "Change of
Control" covenant which (x) is no more favorable to the holders
of such Debt
than the provisions in favor of the Holders and (y) such Debt
provides that the
Company or its Subsidiaries will not repurchase such Debt
pursuant to such
provisions prior to the Company's repurchase of the Securities
required to be
repurchased by the Company upon a Change of Control) prior to the
maturity
of the Debt being replaced and (2) the proceeds of such new Debt
are utilized
for such purpose within 45 days of issuance or (b) Capital Stock
(other than
Disqualified Stock) issued in accordance with the provisions of
this Indenture;
(iv) the redemption or repurchase by a Wholly-Owned Subsidiary of
its
Capital Stock owned by the Company or a Wholly-Owned Recourse
Subsidiary; (v) the redemption by the Company of up to $12
million
aggregate principal amount of the issue titled "11% Subordinated
Convertible
Debenture Due October 4, 2005" relating to principal payments due
following
maturity of the Securities, plus any accrued interest thereon and
(vi) payments
with respect to the Intercompany Notes.
"Permitted Related Acquisition" has the meaning
specified in
Section 6.15(b).
"Person" means any individual, corporation,
partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization,
government or any agency or political subdivision thereof or any
other entity.
"Pledge Agreement" means the Pledge and Security
Agreement
dated as of the date hereof between the Collateral Agent and the
Company,
substantially in the form of Exhibit D hereto, as the same may be
amended,
supplemented or otherwise modified from time to time.
"Predecessor Security" of any particular Security means
every
previous Security evidencing all or a portion of the same debt as
that
evidenced by such particular Security; and, for the purposes of
this definition,
any Security authenticated and delivered under Section 3.6 in
exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall
be deemed to
evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Preferred Stock" means, with respect to any Person,
any and all
shares, interests, participations or other equivalents (however
designated) of
such Person's preferred or preference stock whether now
outstanding or
hereafter outstanding, and includes, without limitation, all
classes and series of
preferred or preference stock.
"Prospectus" means the Prospectus dated July 21, 1995
pursuant to
which the Securities were offered.
"Public Equity Offering" means an underwritten public
offering of
Common Stock of the Company for cash pursuant to an effective
registration
statement under the Securities Act of 1933, as amended; provided
that the
Common Stock is not a Disqualified Stock.
"Recourse Debt" means any Debt other than Non-Recourse
Debt.
"Recourse Subsidiary" means any Subsidiary other than a
Non-Recourse Subsidiary.
"Reference Period" means the four fiscal quarters for
which
financial information is available preceding the date of a
transaction giving rise
to the need to make a financial calculation.
"Regular Record Date" for the interest payable on any
Interest
Payment Date means the January 1 or July 1 (whether or not a
Business Day),
as the case may be, next preceding such Interest Payment Date.
"Released Interests" has the meaning specified in
Section 12.5(b).
"Released Trust Moneys" has the meaning specified in
Section 13.4.
"Responsible Officer", when used with respect to the
Trustee,
means the chairman or any vice-chairman of the board of
directors, the
chairman or any vice-chairman of the executive committee of the
board of
directors, the chairman of the trust committee, the president,
any vice
president, the secretary, any assistant secretary, the treasurer,
any assistant
treasurer, the cashier, any assistant cashier, any Trust Officer
or assistant Trust
Officer, the controller or any assistant controller or any other
officer of the
Trustee customarily performing functions similar to those
performed by any of
the above designated officers and also means, with respect to a
particular
corporate trust matter, any other officer to whom such matter is
referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Payment" means, with respect to any Person,
(i) any
dividend or other distribution on any shares of such Person's
Capital Stock
(other than dividends or distributions payable in Capital Stock
that is not
Disqualified Stock); (ii) any payment on account of the purchase,
redemption,
retirement or other acquisition of (a) any shares of such
Person's Capital Stock
or (b) any option, warrant or other right to acquire shares of
such Person's
Capital Stock; (iii) any defeasance, redemption, repurchase or
other acquisition
or retirement for value prior to scheduled maturity, scheduled
repayment or
scheduled sinking fund payment of any Debt ranked pari passu or
subordinate
in right of payment to the Securities and having a maturity date
subsequent to
the maturity of the Securities; or (iv) any Investment (other
than a Permitted
Investment); provided, that "Restricted Payments" shall not
include any payment
described in (i), (ii) or (iii) above made by a Subsidiary to the
Company or to a
Wholly-Owned Recourse Subsidiary of the Company. Notwithstanding
the
foregoing, Restricted Payment shall not include any Permitted
Payment.
"Restricted Subsidiary" means any Subsidiary subject to
consensual
restrictions, other than pursuant to the Credit Facility, direct
or indirect, on the
declaration or payment of dividends or similar distributions by
that Subsidiary
to the Company or any other Consolidated Subsidiary of the
Company.
"Retained Trust Moneys" has the meaning specified in
Section 13.5.
"Sale and Leaseback Transaction" means, with respect to
any
Person, an arrangement with any bank, insurance company or other
lender or
investor or to which such lender or investor is a party,
providing for the
leasing by such Person or any of its Subsidiaries of any property
or asset of
such Person or any of its Subsidiaries which has been or is being
sold or
transferred by such Person or such Subsidiary to such lender or
investor or to
any person to whom funds have been or are to be advanced by such
lender or
investor on the security of such property or asset.
"Security Documents" means, collectively, (i) the
Mortgages,
(ii) the ICN Mortgages; (iii) the Subsidiary Security Agreements,
(iv) the ICN
Security Agreements; (v) the Subsidiary Guarantee, (vi) the
Intercompany
Notes, (vii) the Pledge Agreement and the assignment executed in
connection
therewith, (viii) the Intercreditor Agreement, and (ix) any other
mortgage,
security agreement or other agreement evidencing a security
interest executed
in accordance with Section 12.1 after the Issue Date.
"Security Register" and "Security Registrar" have the
respective
meanings specified in Section 3.5.
"Separation Date" means the date 90 days after the
issuance of the
Warrants or such earlier date designated by the Underwriters,
from which date
the Senior Secured Notes and the Warrants may trade separately.
"Special Record Date" for the payment of any Defaulted
Interest
means a date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any
Security or any
installment of interest thereon, means the date specified in such
Security as the
fixed date on which the principal of such Security or such
installment of
interest is due and payable.
"Steelmaking Subsidiaries" means Newport Steel
Corporation,
Koppel Steel Corporation and Erlanger Tubular Corporation.
"Subsidiary" means any corporation, association,
partnership, or
other business entity of which 50% or more of the total voting
power of shares
of Capital Stock or other ownership interests (including
partnership interests)
entitled (without regard to the occurrence of any contingency) to
vote in the
election of directors, managers or trustees thereof is at the
time owned or
controlled, directly or indirectly, by (i) the Company, (ii) the
Company and one
or more Subsidiaries, or (iii) one or more Subsidiaries.
"Subsidiary Guarantee" means the guarantee dated as of
the date
hereof, or with respect to Persons that become Recourse
Subsidiaries of the
Company subsequent to the Issue Date, as of such subsequent date,
between
the Collateral Agent and each Recourse Subsidiary of the Company,
substantially in the form of Exhibit E hereto, as the same may be
amended,
supplemented or otherwise modified from time to time.
"Subsidiary Security Agreement" means each Security
Agreement
dated as of the date hereof, or with respect to Persons that
become Recourse
Subsidiaries of the Company subsequent to the Issue Date, as of
such
subsequent date, between the Collateral Agent and each Recourse
Subsidiary
of the Company, substantially in the form of Exhibit F hereto, as
the same may
be amended, supplemented or otherwise modified from time to time.
"Trade Payables" means accounts payable or any other
Debt or
monetary obligations to trade creditors created or assumed by the
Company or
its Subsidiaries in the ordinary course of business in connection
with the
obtaining of materials or services.
"Trustee" means the Person named as the "Trustee" in
the first
paragraph of this instrument until a successor Trustee shall have
become such
pursuant to the applicable provisions of this Indenture, and
thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as
amended, and as in force at the date as of which this instrument
was executed;
provided, however, that in the event the Trust Indenture Act is
amended after
such date, "Trust Indenture Act" means, to the extent required by
any such
amendment, the Trust Indenture Act of 1939, as so amended.
"Trust Moneys" means all cash or Cash Equivalents
received by
the Collateral Agent (i) as Net Cash Proceeds received by the
Company and its
Subsidiaries from Asset Sales with such proceeds to be subject to
the Lien of
the Security Documents in accordance with Section 6.15; or (ii)
as
Condemnation Proceeds with respect to all or any part of the
Collateral; or
(iii) as Net Insurance Proceeds with respect to all or any part
of the Collateral;
or (iv) as proceeds of any other sale or other disposition of all
or any part of
the Collateral by or on behalf of the Collateral Agent or any
collection,
recovery, receipt, appropriation or other realization of or from
all or any part
of the Collateral pursuant to the Security Documents or
otherwise; or (e) for
application under Article XIII as elsewhere provided in this
Indenture or the
Security Documents or whose disposition is not elsewhere
otherwise
specifically provided for in the Indenture or in the Security
Documents;
provided, however, that Trust Moneys shall not include any
property deposited
with the Trustee pursuant to Article IV or XIV or Section 5.5 or
delivered to or
received by the Trustee for application in accordance with
Section 8.6 hereof.
Trust Moneys shall be held by the Collateral Agent for the
benefit of the
Holders as a part of the Collateral and, upon any entry upon or
sale or other
disposition of the Collateral or any part thereof pursuant to the
Security
Documents, said Trust Moneys shall be applied in accordance with
Section 8.6;
but, prior to any such entry, sale or other disposition, all or
any part of the
Trust Moneys may be withdrawn, and shall be released, paid or
applied by the
Trustee, from time to time as provided in Article XIII.
"Trust Moneys Release Notice" has the meaning specified
in Section
13.4.
"Trust Officer" means any Vice President, any Assistant
Vice
President or any other officer or assistant officer of the
Trustee assigned by the
Trustee to administer its corporate trust matters.
"U.S. Government Obligations" means securities that are
(x) direct
obligations of the United States of America for the payment of
which its full
faith and credit is pledged or (y) obligations of a Person
controlled or
supervised by and acting as an agency or instrumentality of the
United States
of America, the payment of which is unconditionally guaranteed as
a full faith
and credit obligation by the United States of America, which, in
either case, are
not callable or redeemable at the option of the issuer thereof,
and shall also
include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect
to any such
U.S. Government Obligation or a specific payment of principal of
or interest on
any such U.S. Government Obligation held by such custodian for
the account
of the holder of such depository receipt; provided, that (except
as required by
law) such custodian is not authorized to make any deduction from
the amount
payable to the holder of such depository receipt from any amount
received by
the custodian in respect of the U.S. Government Obligation or the
specific
payment of principal of or interest on the U.S. Government
Obligation
evidenced by such depository receipt.
"Valuation Date" has the meaning specified in Section
12.5(b).
"Vice President", when used with respect to the Company
or the
Trustee, means any vice president, whether or not designated by a
number or
a word or words added before or after the title "vice president".
"Warrant Agreement" means the Warrant Agreement dated
on
even date herewith between the Company and The Huntington
National Bank.
"Warrants" means the warrants issued by the Company
pursuant
to the Warrant Agreement.
"Wholly-Owned Recourse Subsidiary" means a Wholly-Owned
Subsidiary that is a Recourse Subsidiary.
"Wholly-Owned Subsidiary" means a Subsidiary all the
Capital
Stock of which (other than any director's qualifying stock) or,
in the case of a
non-corporate Subsidiary, other equity interests having ordinary
voting power
for the election of directors or other governing body of such
Subsidiary, is
owned by the Company or another Wholly-Owned Subsidiary of the
Company.
"Withdrawal Notice" has the meaning specified in
Section 13.5.
SECTION 1.2. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee
to take any action under any provision of this Indenture, the
Company shall
furnish to the Trustee such certificates and opinions as may be
required under
the Trust Indenture Act or under this Indenture. Each such
certificate or
opinion shall be given in the form of an Officers' Certificate,
if to be given by
officers of the Company, or an Opinion of Counsel, if to be given
by counsel,
and shall comply with the requirements of the Trust Indenture Act
and any
other requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance
with a
condition or covenant provided for in this Indenture shall
include:
(i a statement that each individual signing such
certificate
or opinion has read such covenant or condition and the
definitions
herein relating thereto;
(ii a brief statement as to the nature and scope of
the
examination or investigation upon which the statements or
opinions
contained in such certificate or opinion are based;
(iii a statement that, in the opinion of each such
individual,
he has made such examination or investigation as is
necessary to enable
him to express an informed opinion as to whether or not such
covenant
or condition has been complied with; and
(iv a statement as to whether, in the opinion of
each such
individual, such condition or covenant has been complied
with.
SECTION 1.3. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by,
or covered by an opinion of, any specified Person, it is not
necessary that all
such matters be certified by, or covered by the opinion of, only
one such
Person, or that they be so certified or covered by only one
document, but one
such Person may certify or give an opinion with respect to some
matters and
one or more other such Persons as to other matters, and any such
Person may
certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an officer of the Company
may be
based, insofar as it relates to legal matters, upon a certificate
or opinion of, or
representations by, counsel, unless such officer knows, or in the
exercise of
reasonable care should know, that the certificate or opinion or
representations
with respect to the matters upon which his certificate or opinion
is based are
erroneous. Any such certificate or opinion of counsel may be
based, insofar as
it relates to factual matters, upon a certificate or opinion of,
or representations
by, an officer or officers of the Company stating that the
information with
respect to such factual matters is in the possession of the
Company, unless
such counsel knows, or in the exercise of reasonable care should
know, that
the certificate or opinion or representations with respect to
such matters are
erroneous.
Where any Person is required to make, give or execute
two or
more applications, requests, consents, certificates, statements,
opinions or other
instruments under this Indenture, they may, but need not, be
consolidated and
form one instrument.
SECTION 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction,
notice,
consent, waiver or other action provided by this Indenture to be
given or taken
by Holders may be embodied in and evidenced by one or more
instruments of
substantially similar tenor signed by such Holders in person or
by one or more
agents duly appointed in writing; and, except as herein otherwise
expressly
provided, such action shall become effective when such instrument
or
instruments are delivered to the Trustee and, where it is hereby
expressly
required, to the Company. Such instrument or instruments (and
the action
embodied therein and evidenced thereby) are herein sometimes
referred to as
the "Act" of the Holders signing such instrument or instruments.
Proof of
execution of any such instrument or of a writing appointing any
such agent
shall be sufficient for any purpose of this Indenture and
(subject to Section 9.1)
conclusive in favor of the Trustee and the Company, if made in
the manner
provided in this Section 1.4.
(b) The fact and date of the execution of any such
instrument or
writing, or the authority of the Person executing the same, may
be proved in
any manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by
the
Trust Indenture Act, fix any day as the record date for the
purpose of
determining the Holders entitled to give or take any request,
demand,
authorization, direction, notice, consent, waiver or other
action, or to vote on
any action, authorized or permitted to be given or taken by
Holders. If not set
by the Company prior to the first solicitation of a Holder made
by any Person
in respect of any such action, or, in the case of any such vote,
prior to such
vote, the record date for any such action or vote shall be the
30th day (or, if
later, the date of the most recent list of Holders required to be
provided
pursuant to Section 10.1) prior to such first solicitation or
vote, as the case may
be. With regard to any record date, only the Holders on such
date (or their
duly designated proxies) shall be entitled to give or take, or
vote on, the
relevant action.
(d) The ownership of Securities shall be proved by the
Security
Register.
(e) Any request, demand, authorization, direction,
notice,
consent, waiver or other Act of the Holder of any Security shall
bind every
future Holder of the same Security and the Holder of every
Security issued
upon the registration of transfer thereof or in exchange therefor
or in lieu
thereof in respect of anything done, omitted or suffered to be
done by the
Trustee or the Company in reliance thereon, whether or not
notation of such
action is made upon such Security.
SECTION 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent,
waiver or Act of Holders or other document provided or permitted
by this
Indenture (or any Security Document) to be made upon, given or
furnished to,
or filed with:
(i the Trustee by any Holder or by the Company (or
by any
Subsidiary pursuant to any Security Document) shall be
sufficient for
every purpose hereunder if made, given, furnished or filed
in writing to
or with the Trustee at its Corporate Trust Office,
Attention: Corporate
Trustee, The Huntington National Bank, 540 Madison Avenue,
Covington, Kentucky 41011.
(ii the Company (or any Subsidiary pursuant to any
Security
Document) or by the Trustee or by any Holder shall be
sufficient for
every purpose hereunder (unless otherwise herein expressly
provided) if
in writing and mailed, first-class postage prepaid, to the
Company
addressed to the attention of its Secretary at the address
of its principal
office specified in the first paragraph of this instrument
or at any other
address previously furnished in writing to the Trustee by
the Company.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of
any event,
such notice shall be sufficiently given (unless otherwise herein
expressly
provided) if in writing and mailed, first-class postage prepaid,
to each Holder
affected by such event, at his address as it appears in the
Security Register, not
later than the latest date (if any), and not earlier than the
earliest date (if any),
prescribed for the giving of such notice. In any case where
notice to Holders
is given by mail, neither the failure to mail such notice, nor
any defect in any
notice so mailed, to any particular Holder shall affect the
sufficiency of such
notice with respect to other Holders. Where this Indenture
provides for notice
in any manner, such notice may be waived in writing by the Person
entitled to
receive such notice, either before or after the event, and such
waiver shall be
the equivalent of such notice. Waivers of notice by Holders
shall be filed with
the Trustee, but such filing shall not be a condition precedent
to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by
reason of any other cause it shall be impracticable to give such
notice by mail,
then such notification as shall be made with the approval of the
Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts
with a
provision of the Trust Indenture Act that is required under such
Act to be a
part of and govern this Indenture, the latter provision shall
control. If any
provision of this Indenture modifies or excludes any provision of
the Trust
Indenture Act that may be so modified or excluded, the latter
provision shall
be deemed to apply to this Indenture as so modified or to be
excluded, as the
case may be.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table
of
Contents are for convenience only and shall not affect the
construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company
shall bind its successors and assigns, whether so expressed or
not.
SECTION 1.10. Separability Clause.
In case any provision in this Indenture or in the
Securities shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of
the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express
or implied,
shall give to any Person, other than the parties hereto and their
successors
hereunder and the Holders of Securities, any benefit or any legal
or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
This Indenture and the Securities shall be governed by
and
construed in accordance with the laws of the State of New York.
SECTION 1.13. Legal Holidays.
In any case where any Interest Payment Date, Maturity
Date or
Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the
Securities)
payment of interest or principal need not be made on such date,
but may be
made on the next succeeding Business Day with the same force and
effect as if
made on the Interest Payment Date or Maturity Date, or at the
Stated
Maturity; provided, that no interest shall accrue for the period
from and after
such Maturity Date or Stated Maturity, as the case may be.
SECTION 1.14. Immunity of Incorporators, Stockholders,
Officers and
Directors.
No recourse shall be had for the payment of the
principal of or
interest on any Security or for any claim based thereon, or upon
any
obligation, covenant or agreement of this Indenture, against any
incorporator,
stockholder, officer or director, as such, past, present or
future, of the
Company or of any successor corporation, either directly or
indirectly through
the Company or any successor corporation, whether by virtue of
any
constitution, statute or rule of law or by the enforcement of any
assessment of
penalty or otherwise; it being expressly agreed and understood
that this
Indenture and all the Securities are solely corporate
obligations, and that no
personal liability whatever shall attach to, or is incurred by,
any incorporator,
stockholder, officer or director, past, present or future, of the
Company or of
any successor corporation, either directly or indirectly through
the Company
or any successor corporation, because of the incurring of the
indebtedness
hereby authorized or under or by reason of any of the
obligations, covenants
or agreements contained in this Indenture or in any of the
Securities, or to be
implied herefrom or therefrom; and that all such personal
liability is hereby
expressly released and waived as a condition of, and as part of
the
consideration for, the execution of this Indenture and the
issuance of the
Securities.
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities and the Trustee's certificates of
authentication shall
be in substantially the forms set forth in this Article, with
such appropriate
insertions, omissions, substitutions and other variations as are
required or
permitted by this Indenture, and may have such letters, numbers
or other
marks of identification and such legends or endorsements placed
thereon as
may be required to comply with the rules of any securities
exchange or as
may, consistently herewith, be determined by the officers
executing such
Securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed,
lithographed or
engraved or produced by any combination of these methods on steel
engraved
borders or may be produced in any other manner permitted by the
rules of
any securities exchange on which the Securities may be listed, if
any, all as
determined by the officers executing such Securities, as
evidenced by their
execution of such Securities.
SECTION 2.2. Form of Face of Security.
NS GROUP, INC.
Registered
Registered
No.
$
This Security is a Global Security within the meaning
of the
Indenture hereinafter referred to and is registered in the name
of The
Depository Trust Company (the "Depositary") or a nominee of the
Depositary.
This Global Security is exchangeable for Securities registered in
the name of a
Person other than the Depositary or its nominee only in the
limited
circumstances described in the Indenture, and no transfer of this
Security
(other than a transfer of this Security as a whole by the
Depositary to a
nominee of the Depositary or by a nominee of the Depositary to
the
Depositary or another nominee of the Depositary) may be
registered except in
such limited circumstances.
Unless this Security is presented by an authorized
representative
of the Depositary (55 Water Street, New York, New York) to the
issuer or its
agent for registration of transfer, exchange or payment, and any
Security
issued upon registration or transfer of, or in exchange for, or
in lieu of, this
Security is registered in the name of Cede & Co. or such other
name as
requested by an authorized representative of the Depositary and
any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an
interest
herein.
NS GROUP, INC., a corporation duly organized and
existing
under the laws of Kentucky (herein called the "Company", which
term includes
any successor Person under the Indenture hereinafter referred
to), for value
received, hereby promises to pay to Cede & Co., as nominee for
the Depositary
or registered assigns, the principal sum of $131,096,000 on July
15, 2003, and to
pay interest thereon from July 28, 1995 or from the most recent
Interest
Payment Date to which interest has been paid or duly provided
for,
semi-annually on January 15 and July 15 in each year, commencing
January 15,
1996, at the rate of 13-1/2% per annum, until the principal
hereof is paid or
made available for payment. The interest so payable, and
punctually paid or
duly provided for, on any Interest Payment Date will, as provided
in such
Indenture, be paid to the Person in whose name this Security (or
one or more
Predecessor Securities) is registered at the close of business on
the Regular
Record Date for such interest, which shall be the January 1 or
July 1 (whether
or not a Business Day), as the case may be, next preceding such
Interest
Payment Date. Interest will be computed on the basis of a
360-day year of
twelve 30-day months. Any such interest not so punctually paid
or duly
provided for will forthwith cease to be payable to the Holder on
such Regular
Record Date and may either be paid to the Person in whose name
this Security
(or one or more Predecessor Securities) is registered at the
close of business on
a Special Record Date for the payment of such Defaulted Interest
to be fixed
by the Trustee, notice whereof shall be given to Holders of
Securities not less
than 10 days prior to such Special Record Date, or be paid at any
time in any
other lawful manner not inconsistent with the requirements of any
securities
exchange on which the Securities may be listed, and upon such
notice as may
be required by such exchange, all as more fully provided in said
Indenture.
The Company will pay interest on overdue principal and on overdue
interest
(to the full extent permitted by law) at a rate of 13-1/2% per
annum.
Immediately available funds for the payment of the
principal of
(and premium, if any) and interest on this Security due on any
Interest
Payment Date, Maturity Date or on Stated Maturity will be made
available to
the Paying Agent to permit the Paying Agent to pay such funds to
the
Depositary on such respective dates. The Depositary will
allocate and pay
such funds to the owners of beneficial interests in the Security
in accordance
with its existing operating procedures.
Reference is hereby made to the further provisions of
this
Security set forth on the reverse hereof, which further
provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has
been executed
by the Trustee referred to on the reverse hereof by manual
signature, this
Security shall not be entitled to any benefit under the Indenture
or be valid or
obligatory for any purpose.
By acceptance of this Security, the Holder hereby
irrevocably
appoints the Trustee as its special attorney-in-fact for the
Holder and vests the
Trustee (and the Collateral Agent) on behalf of the Holder with
full power to
act on such Holder's behalf and enforce the Security Documents
for the benefit
of the Holder.
The Company will appoint and at all times maintain a
Paying
Agent (which may be the Trustee) authorized by the Company to pay
the
principal of (and premium, if any) and interest on any Securities
on behalf of
the Company and having an office or agency in the City of
Columbus, Ohio,
where Securities may be presented or surrendered for payment and
where
notice, designations or requests in respect of payments with
respect to
Securities may be served. The Company has initially appointed
The
Huntington National Bank as such Paying Agent, with its Corporate
Trust
Office currently at 41 S. High Street, Columbus, Ohio 43215. In
addition, the
Company has initially appointed The Huntington National Bank as
Security
Registrar. The Company will give prompt written notice to the
Trustee of any
such change in appointments.
Prior to the Separation Date, the Senior Secured Notes
evidenced
by this certificate may not be transferred or exchanged
separately from,
but may be transferred or exchanged only together with, the
Warrants
issued by the Company in connection herewith.
NS GROUP, INC.
By:
Chief Financial Officer
Attest by:
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities issued
under the Indenture described herein.
THE HUNTINGTON NATIONAL BANK,
as Trustee
By
Authorized Signer
[Form of Reverse of Security]
This Security is one of a duly authorized issue of
Securities of the
Company designated as its 13-1/2% Senior Secured Notes due 2003
(herein
called the "Securities"), limited in aggregate principal amount
to $131,096,000,
issued and to be issued under an Indenture, dated as of July 28,
1995 (herein
called the "Indenture"), among the Company, each of the Company's
Subsidiaries and The Huntington National Bank, as Trustee (herein
called the
"Trustee", which term includes any successor trustee under the
Indenture), to
which Indenture and all indentures supplemental thereto reference
is hereby
made for a statement of the respective rights, limitations of
rights, duties and
immunities thereunder of the Company, the Trustee and the Holders
of the
Securities and of the terms upon which the Securities are, and
are to be,
authenticated and delivered. The terms of this Security include
those stated in
the Indenture and those made part of the Indenture by reference
to the Trust
Indenture Act. This Security is subject to all such terms, and
the Holders of
the Securities are referred to the Indenture and the Trust
Indenture Act for a
statement of them. Capitalized and certain other terms used
herein and not
otherwise defined have the meanings set forth in the Indenture.
This Security is a secured obligation of the Company
limited in
aggregate principal amount to $131,096,000. The Indenture
limits, among other
things, the ability of the Company and its Subsidiaries to incur
additional
Debt; create Liens; make restricted payments; engage in certain
transactions
with Affiliates; engage in Sale and Leaseback Transactions;
dispose of assets;
issue Preferred Stock of Subsidiaries; issue and sell Capital
Stock of
Subsidiaries; transfer assets to its Subsidiaries; enter into
agreements that
restrict the ability of its Subsidiaries to make dividends and
distributions;
engage in mergers, consolidations and transfers of substantially
all of its assets;
make certain Investments, loans, and advances; and create
Non-Recourse
Subsidiaries. These limitations are subject to a number of
important
qualifications and exceptions. The Company must report to the
Trustee
quarterly its compliance with the limitations contained in the
Indenture.
The Company, at its option, may redeem this Security,
in whole
or in part, from time to time on and after July 15, 2000, at the
redemption
prices set forth below (expressed as a percentage of the
principal amount
thereof), in each case together with accrued interest, if any, to
the date of
redemption, if redeemed during the twelve-month period beginning
July 15 of
the years indicated below:
Year
Percentage
2000
103.86%
2001
101.93%
2002 and thereafter
100%
provided, that if the date fixed for redemption is January 15 or
July 15, then the
interest payable on such date shall be paid to the Holder of
record on the next
preceding January 1 or July 1.
On or prior to July 15, 1998, the Company may redeem up
to 40%
of the principal amount of the Securities with the net proceeds
of a Public
Equity Offering of Common Stock at 113.50% of the principal
amount thereof
plus accrued interest to the redemption date; provided that at
least $75,000,000
of the Securities remain outstanding following the redemption.
In the event that less than all of the Securities are
to be redeemed
at any time, selection of Securities for redemption will be made
by the Trustee
on a pro rata basis, by lot or by such method as the Trustee
shall deem fair and
appropriate; provided, however, that no Securities of $1,000 or
less shall be
redeemed in part. Notice of redemption shall be mailed by first
class mail at
least 30 but not more than 60 days before the redemption date to
each Holder
to be redeemed at its registered address. If any Security is to
be redeemed in
part only, the notice of redemption that relates to such Security
shall state the
portion of the principal amount thereof to be redeemed. A new
Security in a
principal amount equal to the unredeemed portion thereof will be
issued in the
name of the Holder thereof upon cancellation of the original
Security. On and
after the redemption date, interest will cease to accrue on
Securities or the
portion thereof called for redemption unless the Company defaults
in the
payment of the redemption price or accrued interest.
Sections 6.15 and 6.18 of the Indenture provide that
after certain
Asset Sales and upon the occurrence of a Change of Control, and
subject to
further limitations contained therein, the Company may be
required to make
an offer to purchase certain amounts of Securities in accordance
with the
procedures set forth in the Indenture.
In order to secure the due and punctual payment of the
principal
of and interest on the Securities and all other amounts payable
by the
Company under the Indenture and the Securities when and as the
same
become due and payable, whether at maturity, by acceleration or
otherwise,
according to the terms of the Securities and the Indenture, the
Company,
subject to certain exceptions, has pledged the Intercompany Notes
and granted
security interests in and Liens on the Intercompany Notes, and
pledged the
security interests securing the Intercompany Notes, to the
Collateral Agent for
the benefit of the Holders pursuant to the Indenture and the
Security
Documents. The obligations of the Steelmaking Subsidiaries under
the
Intercompany Notes will be secured by a second priority security
interest in
the Collateral assigned by such Subsidiaries pursuant to the ICN
Security
Agreements and the ICN Mortgages. The existing and future
Recourse
Subsidiaries of the Company shall execute a Subsidiary Guarantee
to guarantee
the obligations of the Company with respect to the Securities.
The obligations
of the Steelmaking Subsidiaries and all future Recourse
Subsidiaries under the
Subsidiary Guarantee will be secured by a first priority security
interest in and
Liens on the Collateral granted by such Subsidiaries pursuant to
respective
Subsidiary Security Agreements.
Each Holder, by accepting a Security, agrees to all of
the terms
and provisions of the Security Documents, as the same may be
amended from
time to time pursuant to the respective provisions thereof and
the Indenture.
The Trustee, the Collateral Agent and each Holder
acknowledge
that a release of any of the Collateral or any Lien strictly in
accordance with
the terms and provisions of the Indenture and Security Documents
will not be
deemed for any purpose to be an impairment of the Security under
the
Indenture.
If an Event of Default (other than an Event of Default
specified in
Section 8.1(ix) or (x)) occurs and is continuing, the Trustee or
the Holders of at
least 25% of the principal amount of the Outstanding Securities
by notice to
the Company (and to the Trustee if such notice is given by the
Holders) may
declare the principal amount and accrued interest on the
Securities to be
immediately due and payable. If an Event of Default specified in
Section
8.1(ix) or (x) occurs, the principal amount and accrued interest
shall ipso facto
become and be immediately due and payable on all Outstanding
Securities
without any declaration or other act on the part of the Trustee
or any Holder.
The Holders of a majority in principal amount of the then
Outstanding
Securities by notice to the Trustee and the Company may rescind
an
acceleration and its consequences if the Company has paid or
deposited with
the Trustee a sum sufficient to pay all amounts due, other than
amounts due
by declaration of acceleration, and all existing Events of
Default, other than the
nonpayment of the principal of the Securities which have became
due solely
by such dclaration of acceleration, have been cured or waived.
The Holders of
a majority in principal amount of the outstanding Securities also
have the right
to waive certain past defaults under the Indenture, except a
default in the
payment of the principal of, premium, if any, or interest on the
Security, or in
respect of a covenant or a provision which cannot be modified or
amended
without the consent of all Holders.
From time to time, the Company when authorized by a
Board
Resolution, and the Trustee (or the Collateral Agent, if a party
thereto), may,
without the consent of any Holders, amend, waive, or supplement
the
Indenture, the Security Documents or the Securities or cause the
Recourse
Subsidiaries to amend, waive or supplement the Security Documents
for
certain specified purposes, including, among other things, curing
ambiguities,
defects or inconsistences, maintaining the qualification of the
Indenture under
the Trust Indenture Act, making any change that does not
adversely affect the
rights of any Holder, giving effect to the release of any
Released Collateral,
evidencing the succession of another Person to the Company or any
Subsidiary
of the Company and the assumption by any such successor of the
covenants of
the Company or such Subsidiary, as the case may be, to evidence
the release
and discharge of the obligations of any Subsidiary of the Company
the Capital
Stock of which has been sold or otherwise disposed of in
accordance with the
applicable provisions of the Indenture, pledging or granting a
security interest
in favor of the Collateral Agent as additional security for the
payment and
performance of the obligations under the Indenture, in any
property or assets,
including any which are required to be mortgaged, pledged or
hypothecated,
or in which a security interest is required to be granted, to the
Collateral Agent
pursuant to any Security Document or otherwise; provided, that
the Company
delivers to the Trustee an Opinion of Counsel as required by the
Indenture
which shall state that such change does not adversely affect the
rights of any
Holder. Other amendments and modifications of the Indenture, the
Securities
or the Security Documents may be made by the Company, the
Collateral
Agent (if a party thereto) and the Trustee with the consent of
the Holders of
not less than a majority of the aggregate principal amount of the
outstanding
Senior Secured Notes; provided, that no such modification or
amendment may,
without the consent of the Holder of each outstanding Security
affected
thereby, (i) reduce the principal amount of, change the time or
place for
payment, extend the final maturity of, alter the redemption
provisions of, or
alter the provisions with respect to Change of Control Offers or
Asset Sale
Offers for the Securities, (ii) change the currency in which any
Securities or
any premium thereon is payable, (iii) reduce the percentage in
principal
amount of outstanding Securities that must consent to an
amendment,
supplement or waiver or consent to take any action under the
Indenture, the
Securities or the Security Documents, (iv) impair the right to
institute suit for
the enforcement of any payment on or with respect to the
Securities, (v) waive
a default in payment with respect to the Securities, (vi) reduce
or change the
rate or time for payment of interest on the Securities, (vii)
affect the ranking of
the Securities or the security for the Subsidiary Guarantee or
the Intercompany
Notes, or (viii) modify any of the foregoing provisions or reduce
the principal
amount of outstanding Securities necessary to waive any covenant
or past
Default.
No reference herein to the Indenture and no provision
of this
Security or of the Indenture shall alter or impair the obligation
of the
Company, which is absolute and unconditional, to pay the
principal of and
interest on this Security at the times, place and rate, and in
the coin or
currency, herein prescribed.
If money for the payment of principal or interest
remains
unclaimed for two years, the Trustee or Paying Agent will pay the
money back
to the Company at its request. After that, Holders entitled to
the money must
look to the Company for payment as unsecured general creditors.
As provided in the Indenture and subject to certain
limitations set
forth therein (including in case of any Global Security, certain
additional
limitations) and as may be set forth on the face hereof, the
transfer of this
Security is registrable in the Security Register upon surrender
of this Security
for registration of transfer at the office or agency of the
Company in any place
where the principal of and interest on this Security are payable,
duly endorsed
by, or accompanied by a written instrument of transfer in form
satisfactory to
the Company and the Security Registrar, duly executed by the
Holder hereof
or his attorney duly authorized in writing, and thereupon one or
more new
Securities in an authorized denomination and for the same
aggregate principal
amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form
without
coupons in denominations of $1,000 and any integral multiple
thereof. As
provided in the Indenture and subject to certain limitations
therein and herein
set forth, Securities are exchangeable for a like aggregate
principal amount of
Securities of different authorized denominations, as requested by
the Holder
surrendering the same.
No service charge shall be made for any such
registration of
transfer or exchange, but the Company may require appropriate
endorsements
and the payment of a sum sufficient to cover any tax or other
governmental
charge payable in connection therewith, other than exchanges
pursuant to
Section 3.4 or 11.6 not including any transfer. During the
period of 15 days
preceding any Interest Payment Date or Maturity Date, the Company
shall not
be required to register the transfer of or to exchange any
Securities. In
addition, the Company shall not be required (i) to register the
transfer of or to
exchange any Securities for a period of 15 days immediately
preceding any
date fixed for any selection of Securities of such series to be
redeemed and (ii)
to register the transfer of or to exchange any Securities
selected for
redemption, except the unredeemed portion of any Security being
redeemed in
part.
Prior to due presentment of this Security for
registration of
transfer, the Company, the Trustee and any agent of the Company
or the
Trustee may treat the Person in whose name this Security is
registered as the
owner hereof for all purposes, whether or not this Security be
overdue, and
neither the Company, the Trustee nor any such agent shall be
affected by
notice to the contrary.
The Indenture and the Securities endorsed thereon shall
be
governed by and construed in accordance with the laws of the
State of New
York.
When a successor corporation assumes all the
obligations of its
predecessor under the Securities and the Indenture and the
transaction
complies with the terms of Article VII of the Indenture, the
predecessor
corporation will be released from those obligations.
The Trustee, in its individual or any other capacity,
may make
loans to, accept deposits and pledges from, and perform services
for the
Company or its Affiliates, and may otherwise deal with the
Company or its
Affiliates, as if it were not Trustee.
Directors, officers, employees or shareholders of the
Company
shall not have any liability for any obligations of the Company
under the
Securities, the Indenture or the Security Documents or for any
claim based on,
in respect of, or by reason of, such obligation or their
creation. The Holder of
this Security, or any beneficial interests in this Security,
hereby waives and
releases all such liability. Such waiver and release are part of
the
consideration for the issue of the Securities.
Customary abbreviations may be used in the name of a
holder or
an assignee, such as TEN COM (= tenants in common), TEN ENT (=
tenants
by the entireties), JT TEN (= joint tenants with rights of
survivorship and not
as tenants in common), CUST (= custodian), and U/G/M/A (= Uniform
Gifts
to Minors Act).
Pursuant to a recommendation promulgated by the
Committee on
Uniform Security Identification Procedures the Company has caused
CUSIP
numbers to be printed on the Securities and has directed the
Trustee to use
CUSIP numbers in notices of redemption as a convenience to
Holders. No
representation is made as to the accuracy of such numbers either
as printed in
the Securities or as contained in any notice of redemption, and
reliance may be
placed only on the other identification numbers placed thereon.
SECTION 2.3. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the
within-mentioned
Indenture.
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities
issued under the Indenture
described herein.
THE HUNTINGTON NATIONAL
BANK,
as Trustee
By
Authorized Signer
Date of Authentication:
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities which may
be
authenticated and delivered under this Indenture is limited to
$131,096,000,
except for Securities authenticated and delivered upon
registration of transfer
of, or in exchange for, or in lieu of, other Securities. Subject
to Section 3.5, the
Securities will be represented by a Global Security in the name
of the
Depositary or its nominee.
The Securities shall be known and designated as the
"13-1/2%
Senior Secured Notes due 2003" of the Company. Their Stated
Maturity shall
be July 15, 2003, and they shall bear interest at the rate of
13-1/2% per annum,
from July 28, 1995 or from the most recent Interest Payment Date
to which
interest has been paid or duly provided for, as the case may be,
payable
semi-annually on January 15 and July 15 in each year, commencing
January 15,
1996, until the principal thereof is paid or made available for
payment.
The principal of and interest on the Securities shall
be payable at
the office or agency of the Paying Agent in The City of Columbus
Ohio,
maintained for such purpose; provided, however, that at the
option of the
Company payment of interest may be made by check mailed to the
address of
the Person entitled thereto as such address shall appear in the
Security
Register; provided, further, that a Holder of $10,000,000 in
aggregate principal
amount of the Securities shall be entitled to receive payments of
interest by
wire transfer in immediately available funds (but only if
appropriate payment
instructions have been received in writing by the Paying Agent
not less than
15 calendar days prior to the applicable Interest Payment Date).
Notwithstanding any other provision of this Section
3.1, if the
Security is in the form of a Global Security, immediately
available funds for
the payment of the principal of (and premium, if any) and
interest on the
Security due on any Interest Payment Date or Maturity Date, as
the case may
be, will be made available to the Paying Agent to permit the
Paying Agent to
pay such funds to the Depositary on such respective dates. The
Depositary
will allocate and pay such funds to the owners of beneficial
interests in the
Security in accordance with its existing operating procedures.
The Securities shall be subject to redemption and
repurchase by
the Company as provided herein.
SECTION 3.2. Denominations.
The Securities shall be issuable only in registered
form without
coupons and only in denominations of $1,000 and any integral
multiple
thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the
Company by its
Chairman of the Board, its Vice Chairman of the Board, its
President or its
Chief Financial Officer, under its corporate seal reproduced
thereon. The
signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures
of
individuals who were at any time the proper officers of the
Company shall
bind the Company, notwithstanding that such individuals or any of
them have
ceased to hold such offices prior to the authentication and
delivery of such
Securities or did not hold such offices on the date of such
Securities.
At any time and from time to time after the execution
and
delivery of this Indenture, the Company may deliver Securities
executed by the
Company to the Trustee for authentication, together with a
Company Order
for the authentication and delivery of such Securities; and the
Trustee in
accordance with such Company Order shall authenticate and deliver
such
Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this
Indenture
or be valid or obligatory for any purpose unless there appears on
such
Security a certificate of authentication substantially in the
form provided for
herein executed by the Trustee by manual signature (except as
otherwise
provided in Section 9.14), and such certificate upon any Security
shall be
conclusive evidence, and the only evidence, that such Security
has been duly
authenticated and delivered hereunder.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities, the
Company
may execute, and upon Company Order the Trustee shall
authenticate and
deliver, temporary Securities which are printed, lithographed,
typewritten,
mimeographed or otherwise produced, in any authorized
denomination, sub-
stantially of the tenor of the definitive Securities in lieu of
which they are
issued and with such appropriate insertions, omissions,
substitutions and other
variations as the officers executing such Securities may
determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will
cause
definitive Securities to be prepared without unreasonable delay.
After the
preparation of definitive Securities, the temporary Securities
shall be
exchangeable for definitive Securities upon surrender of the
temporary
Securities at any office or agency of the Company designated
pursuant to
Section 6.2, without charge to the Holder. Upon surrender for
cancellation of
any one or more temporary Securities the Company shall execute
and the
Trustee shall authenticate and deliver in exchange therefor a
like principal
amount of definitive Securities of authorized denominations.
Until so
exchanged the temporary Securities shall in all respects be
entitled to the same
benefits under this Indenture as definitive Securities.
SECTION 3.5. Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate
Trust Office
of the Trustee a register (the register maintained in such office
and in any
other office or agency designated pursuant to Section 6.2 being
herein
sometimes collectively referred to as the "Security Register") in
which, subject to
such reasonable regulations as it may prescribe, the Company
shall provide for
the registration of Securities and of transfers of Securities.
The Trustee is
hereby appointed Security Registrar for the purpose of
registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any
Security at an
office or agency of the Company designated pursuant to Section
6.2 for such
purpose, the Company shall execute, and the Trustee shall
authenticate and
deliver, in the name of the designated transferee or transferees,
one or more
new Securities of any authorized denominations and of a like
aggregate
principal amount.
Notwithstanding any other provision of this Section
3.5, unless
and until it is exchanged in whole or in part for Securities in
definitive form, a
Global Security representing all or a portion of the Securities
may not be
transferred except as a whole by the Depositary to a nominee of
such
Depositary or by a nominee of such Depositary to such Depositary
or another
nominee of such Depositary or by such Depositary or any such
nominee to a
successor Depositary or a nominee of such successor Depositary.
Unless
otherwise provided as contemplated by Section 3.1 with respect to
Securities
evidenced in whole or in part by a Global Security, the
Depositary may not
sell, assign, transfer or otherwise convey any beneficial
interest in a Global
Security evidencing all or part of the Securities unless such
beneficial interest is
in an amount equal to an authorized denomination for the
Securities.
If at any time the Depositary for the Securities
notifies the
Company that it is unwilling or unable to continue as a
Depositary for the
Securities or if at any time the Depositary for Securities shall
no longer be
registered or in good standing under the Exchange Act or other
applicable
statute or regulation, the Company shall appoint a successor
Depositary with
respect to the Securities. If a successor Depositary for the
Securities is not
appointed by the Company within 90 days after the Company
receives such
notice or becomes aware of such condition, the Company will
execute, and the
Trustee, upon the written request or authorization of any officer
of the
Company, will authenticate and deliver Securities in definitive
form in an
aggregate principal amount equal to the principal amount of the
Global
Security representing Securities in exchange for such Global
Security.
In the event that (i) the Company at any time and in
its sole
discretion determines that the Securities issued in the form of a
Global Security
shall no longer be represented by such Global Security or (ii)
there shall have
occurred and be continuing a Default or an Event of Default, the
Company
will execute, and the Trustee, upon the written request or
authorization of any
officer of the Company, will authenticate and deliver Securities
in definitive
form and in an aggregate principal amount equal to the principal
amount of
the Global Security representing the Securities in exchange for
such Global
Security.
The Depositary may surrender a Global Security in
exchange, in
whole or in part, for Securities in definitive form on such terms
as are
acceptable to the Company and such Depositary. Thereupon, the
Company
shall execute and the Trustee shall authenticate and deliver,
without charge,
(i to each Person specified by the Depositary, a
new
Security or Securities in definitive form in an aggregate
principal
amount equal to and in exchange for such Person's beneficial
interest in
the surrendered Global Security; and
(ii to the Depositary, a new Global Security in a
denomination equal to the difference, if any, between the
principal
amount of the surrendered Global Security and the aggregate
principal
amount of Securities of such series delivered in definitive
form to
Holders pursuant to clause (i) above.
Upon the exchange of a Global Security for Securities
in definitive
form, such Global Security shall be cancelled by the Trustee.
Securities issued
in definitive form in exchange for a Global Security pursuant to
this Section 3.5
shall be registered in such names and in such authorized
denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver
such Securities
in definitive form to the Person in whose name such Securities
are so
registered.
At the option of the Holder, Securities may be
exchanged for
other Securities of any authorized denominations and of a like
aggregate
principal amount, upon surrender of the Securities to be
exchanged at such
office or agency. Whenever any Securities are so surrendered for
exchange,
the Company shall execute, and the Trustee shall authenticate and
deliver, the
Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer
or exchange
of Securities shall be the valid obligations of the Company,
evidencing the
same debt, and entitled to the same benefits under this
Indenture, as the
Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for
registration of
transfer or for exchange shall (if so required by the Company or
the Trustee)
be duly endorsed, or be accompanied by a written instrument of
transfer in
form satisfactory to the Company and the Security Registrar, duly
executed by
the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or
exchange of Securities, but the Company may require payment of a
sum
sufficient to cover any tax or other governmental charge that may
be imposed
in connection with any registration of transfer or exchange of
Securities, other
than exchanges pursuant to this Section 3.5 or 3.6 not involving
any transfer.
During the period of 15 days preceding any Interest
Payment
Date or Maturity Date, the Company shall not be required to
register the
transfer of or to exchange any Securities. In addition, the
Company shall not
be required (i) to register the transfer of or to exchange any
Securities for a
period of 15 days immediately preceding any date fixed for any
selection of
Securities of such series to be redeemed and (ii) to register the
transfer of or to
exchange any Securities selected for redemption, except the
unredeemed
portion of any Security being redeemed in part.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the
Trustee, the
Company shall execute and the Trustee shall authenticate and
deliver in
exchange therefor a new Security of like tenor and principal
amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the
Trustee (i)
evidence to their satisfaction of the destruction, loss or theft
of any Security
and (ii) such security or indemnity as may be required by them to
save each of
them and any agent of either of them harmless, then, in the
absence of notice
to the Company or the Trustee that such Security has been
acquired by a bona
fide purchaser, the Company shall execute and the Trustee shall
authenticate
and deliver, in lieu of any such destroyed, lost or stolen
Security, a new
Security of like tenor and principal amount and bearing a number
not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has
become or is about to become due and payable, the Company in its
discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this
Section 3.6, the
Company may require the payment of a sum sufficient to cover any
tax or
other governmental charge that may be imposed in relation thereto
and any
other expenses (including the fees and expenses of the Trustee)
connected
therewith.
Every new Security issued pursuant to this Section 3.6
in lieu of
any destroyed, lost or stolen Security shall constitute an
original additional
contractual obligation of the Company, whether or not the
destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and
shall be
entitled to all the benefits of this Indenture equally and
proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to
the extent lawful) all other rights and remedies with respect to
the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is
punctually paid
or duly provided for, on any Interest Payment Date shall be paid
to the Person
in whose name that Security (or one or more Predecessor
Securities) is
registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security which is payable, but is
not
punctually paid or duly provided for, on any Interest Payment
Date (herein
called "Defaulted Interest") shall forthwith cease to be payable
to the Holder on
the relevant Regular Record Date by virtue of having been such
Holder, and
such Defaulted Interest may be paid by the Company, at its
election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities (or their
respective Predecessor Securities) are registered at the
close of business
on a Special Record Date for the payment of such Defaulted
Interest,
which shall be fixed in the following manner. The Company
shall
notify the Trustee in writing of the amount of Defaulted
Interest
proposed to be paid on each Security and the date of the
proposed
payment, and at the same time the Company shall deposit with
the
Trustee an amount of money equal to the aggregate amount
proposed to
be paid in respect of such Defaulted Interest or shall make
arrangements
satisfactory to the Trustee for such deposit prior to the
date of the
proposed payment, such money when deposited to be held in
trust for
the benefit of the Persons entitled to such Defaulted
Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special
Record Date
for the payment of such Defaulted Interest which shall be
not more than
15 days and not less than 10 days prior to the date of the
proposed
payment and not less than 10 days after the receipt by the
Trustee of the
notice of the proposed payment. The Trustee shall promptly
notify the
Company of such Special Record Date and, in the name and at
the
expense of the Company, shall cause notice of the proposed
payment of
such Defaulted Interest and the Special Record Date therefor
to be
mailed, first-class postage prepaid, to each Holder at his
address as it
appears in the Security Register, not less than 10 days
prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted
Interest and the Special Record Date therefor having been so
mailed,
such Defaulted Interest shall be paid to the Persons in
whose names the
Securities (or their respective Predecessor Securities) are
registered at
the close of business on such Special Record Date and shall
no longer be
payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with
the
requirements of any securities exchange on which the
Securities may be
listed, and upon such notice as may be required by such
exchange, if,
after notice given by the Company to the Trustee of the
proposed
payment pursuant to this Clause, such manner of payment
shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section,
each Security
delivered under this Indenture upon registration of transfer of
or in exchange
for or in lieu of any other Security shall carry the rights to
interest accrued and
unpaid, and to accrue, which were carried by such other Security.
SECTION 3.8. Persons Deemed Owners.
Prior to due presentment of a Security for registration
of transfer,
the Company, the Trustee and any agent of the Company or the
Trustee may
treat the Person in whose name such Security is registered as the
owner of
such Security for the purpose of receiving payment of principal
of and (subject
to Section 3.7) interest on such Security and for all other
purposes whatsoever,
whether or not such Security be overdue, and neither the Company,
the
Trustee nor any agent of the Company or the Trustee shall be
affected by
notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption,
repurchase,
registration of transfer or exchange shall, if surrendered to any
Person other
than the Trustee, be delivered to the Trustee and shall be
promptly cancelled
by it. The Company may at any time deliver to the Trustee for
cancellation
any Securities previously authenticated and delivered hereunder
which the
Company may have acquired in any manner whatsoever, and all
Securities so
delivered shall be promptly cancelled by the Trustee. No
Securities shall be
authenticated in lieu of or in exchange for any Securities
cancelled as provided
in this Section, except as expressly permitted by this Indenture.
All cancelled
Securities held by the Trustee shall be destroyed and
certification of their
destruction delivered to the Company unless by a Company Order
the
Company shall direct that cancelled Securities be returned to it.
SECTION 3.10. Computation of Interest.
Interest on the Securities shall be computed on the
basis of a
360-day year of twelve 30-day months.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect
(except as to any
surviving rights of registration of transfer or exchange of
Securities herein
expressly provided for), and the Trustee, on demand of and at the
expense of
the Company, shall execute proper instruments acknowledging
satisfaction and
discharge of this Indenture and the Security Documents, when
(1) either
(A) all Securities theretofore authenticated and
issued (other
than (i) Securities which have been destroyed, lost or
stolen and which
have been replaced or paid as provided in Section 3.6 and
(ii) Securities
for whose payment money has theretofore been deposited in
trust or
segregated and held in trust by the Company and thereafter
repaid to
the Trustee or discharged from such trust, as provided in
Section 6.26)
have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee
for cancellation
(i) have become due and payable; or
(ii) will become due and payable within
one year,
and the Company, in the case of (B) (i) or (ii) above,
has
irrevocably deposited or caused to be deposited with the
Trustee as
trust funds in trust an amount sufficient to pay and
discharge the entire
indebtedness on such Securities not theretofore delivered to
the Trustee
for cancellation, for principal, premium and interest to the
date of such
deposit (in the case of Securities which have become due and
payable)
or to the Maturity Date, as the case may be;
(2) the Company has paid or caused to be paid all
other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions
precedent herein provided for relating to the satisfaction
and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the
obligations of the Company to the Trustee under Section 9.7, the
obligations of
the Trustee to any Authenticating Agent under Section 9.14 and,
if money shall
have been deposited with the Trustee pursuant to subclause (B) of
Clause (1)
of this Section 4.1, the obligations of the Trustee under Section
4.2 and the last
paragraph of Section 6.26 shall survive.
SECTION 4.2. Application of Monies for Satisfaction and
Discharge.
Subject to the provisions of the last paragraph of
Section 6.26, all
money deposited with the Trustee pursuant to Section 4.1 shall be
held in trust
and applied by it, in accordance with the provisions of the
Securities and this
Indenture, to the payment, either directly or through any Paying
Agent
(including the Company acting as its own Paying Agent) as the
Trustee may
determine, to the Persons entitled thereto, of the principal,
premium and
interest for whose payment such money has been deposited with the
Trustee.
ARTICLE V
REDEMPTION
SECTION 5.1. Notices to Trustee.
If the Company elects to redeem Securities, it shall
notify the
Trustee and the Paying Agent in writing of the redemption date
and the
principal amount of Securities to be redeemed; provided that the
Company
may rescind and annul such election by written notice to the
Trustee prior to
(i) any announcement or public disclosure of the redemption of
the Securities
or (ii) the Securities becoming due and payable pursuant to
Section 5.4 of this
Indenture.
The Company shall give each notice provided for in this
Section
5.1 at least 75 days before the redemption date (unless a shorter
notice shall be
agreed to by the Trustee in writing), together with an Officers'
Certificate
stating that such redemption shall comply with the conditions
contained herein
and in the Securities.
SECTION 5.2. Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed,
the Trustee
shall select the Securities to be redeemed in compliance with the
requirements
of the principal national securities exchange, if any, on which
the Securities
being redeemed are listed or, if the Securities are not listed on
a national
securities exchange, on a pro rata basis, by lot or by such
method as the
Trustee shall deem fair and appropriate; provided, that no
Securities of $1,000
or less shall be redeemed in part.
The Trustee shall make the selection from the
Outstanding
Securities not previously called for redemption. The Trustee
shall promptly,
but in no event less than 45 days before the redemption date,
notify the
Company in writing of such Securities and, in the case of
Securities selected
for partial redemption, the principal amount to be redeemed. The
Trustee may
select for redemption portions (equal to $1,000 or any integral
multiple thereof)
of the principal of Securities that have denominations larger
than $1,000. The
Securities and portions of them the Trustee selects shall be in
amounts of
$1,000 or integral multiples of $1,000. Provisions of this
Indenture that apply
to Securities called for redemption also apply to portions of
Securities called
for redemption.
At the Company's request, the Trustee shall give the
notice of
redemption in the Company's name and at the Company's expense.
SECTION 5.3. Notice of Redemption.
At least 30 days but not more than 60 days prior to a
redemption
date, the Company shall mail or cause the mailing of a notice of
redemption
by first-class mail to each Holder of Securities to be redeemed
at its registered
address.
The notice shall identify the Securities to be redeemed
and shall
state:
(1) the redemption date;
(2) the redemption price and the amount of accrued
interest, if
any, to be paid;
(3) the name and address of the Paying Agent;
(4) that the Securities called for redemption must be
surrendered
to the Paying Agent to collect the redemption price and
accrued interest,
if any;
(5) that, unless the Company defaults in making the
redemption
payment, interest on Securities called for redemption ceases
to accrue on
and after the redemption date and the only remaining right
of the
Holders is to receive payment of the redemption price upon
surrender
to the Trustee or the Paying Agent of the Securities
redeemed;
(6) if any Security is being redeemed in part, the
portion of the
principal amount (equal to $1,000 or any integral multiple
thereof) of
such Security to be redeemed and that, on and after the
redemption
date, upon surrender of such Security, a new Security or
Securities in
principal amount equal to the unredeemed portion thereof
shall be
issued without charge to the Holder; and
(7) if less than all of the Securities are to be
redeemed, the
identification of the particular Securities (or portion
thereof) to be
redeemed as well as the aggregate principal amount of
Securities to be
redeemed and the aggregate principal amount of the
Securities
estimated to be outstanding after the redemption.
SECTION 5.4. Effect of Notice of Redemption.
Once notice of redemption is mailed to the Holders,
Securities
called for redemption become due and payable on the redemption
date and at
the redemption price and shall cease to bear interest from and
after the
redemption date (unless the Company shall default in the payment
of the
redemption price or accrued interest). Upon surrender to the
Paying Agent,
such Securities shall be paid at the redemption price, plus
accrued interest to
the redemption date; provided, that if the redemption date is
January 15 or July
15, then the interest payable on such date shall be paid to the
Holder of record
on the next preceding January 1 or July 1.
SECTION 5.5. Deposit of Redemption Price.
At least one Business Day prior to the redemption date,
the
Company shall deposit with the Paying Agent in immediately
available funds
money sufficient to pay the redemption price of and accrued
interest on all
Securities or portions thereof to be redeemed on the redemption
date.
If any Security surrendered for redemption in the
manner
provided in the Securities shall not be so paid on the redemption
date due to
the failure of the Company to deposit sufficient funds with the
Paying Agent,
interest shall continue to accrue from the redemption date until
such payment
is made on the unpaid principal and, to the extent lawful, on any
interest not
paid on such unpaid principal, in each case at the rate and in
the manner
provided in the Securities.
SECTION 5.6. Optional Redemption.
Except as described in Section 5.8, the Senior Secured
Notes may
not be redeemed prior to July 15, 2000. On and after July 15,
2000, the
Company may, at its option, redeem the Senior Secured Notes, in
whole or in
part, from time to time, at the redemption prices set forth below
(expressed as
a percentage of the principal amount thereof), in each case
together with
accrued interest, if any, to the date of redemption, if redeemed
during the
twelve-month period beginning July 15 of the years indicated
below:
Year
Percentage
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .
103.86%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .
101.93%
2002 and thereafter. . . . . . . . . . . . . . . . . . . . . . .
. . .
100.00%
If the date fixed for redemption is January 15 or July 15, then
the interest
payable on such date shall be paid to the Holder of record on the
next
preceding January 1 or July 1.
SECTION 5.7. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part,
the
Company shall issue and the Trustee shall authenticate for the
Holder a new
Security equal in principal amount to the unredeemed portion of
the Security
surrendered.
SECTION 5.8. Public Equity Offering.
On or prior to July 15, 1998, the Company may redeem up
to 40%
of the principal amount of the Senior Secured Notes with the net
proceeds of a
Public Equity Offering of Common Stock at 113.50% of the
principal amount
thereof plus accrued interest to the redemption date; provided
that at least
$75,000,000 of the Senior Secured Notes remain outstanding
following the
redemption.
ARTICLE VI
COVENANTS
SECTION 6.1. Payment of Securities.
The Company shall pay, or cause to be paid, the
principal of and
interest on the Securities on the dates and in the manner
provided in the
Securities and this Indenture. If the Securities are represented
by one or more
Global Securities, an installment of principal or interest shall
be considered
paid on the date due if the Trustee or Paying Agent (other than
the Company
or any Subsidiary) holds on that date money in immediately
available funds
designated for and sufficient to pay such installment. The
Company agrees
with the Trustee to deposit such funds with the Trustee or Paying
Agent prior
to the close of business on the Business Day immediately
preceding the date
such payment is due.
The Company shall pay interest on overdue principal and
(to the
extent permitted by law) on overdue installments of interest at a
rate equal to
13 1/2%.
SECTION 6.2. Maintenance of Office or Agency.
The Company shall maintain in the City of Columbus,
Ohio an
office or agency where Securities may be surrendered for
registration of
transfer or exchange or for presentation for payment and where
notices and
demands to or upon the Company in respect of the Securities and
this
Indenture may be served. The Company shall give prompt written
notice to
the Trustee of the location, and any change in the location, of
such office or
agency. If at any time the Company shall fail to maintain any
such required
office or agency or shall fail to furnish the Trustee with the
address thereof,
such presentations, surrenders, notices and demands may be made
or served
at the address of the Trustee as set forth in Section 1.5 hereof.
The Company may also from time to time designate one or
more
other offices or agencies where the Securities may be presented
or surrendered
for any or all such purposes and may from time to time rescind
such
designations; provided, however, that no such designation or
rescission shall in
any manner relieve the Company of its obligation to maintain an
office or
agency in the City of Columbus, Ohio for such purposes. The
Company shall
give prompt written notice to the Trustee of such designation or
rescission and
of any change in the location of any such other office or agency.
The Company hereby initially designates the Corporate
Trust
Office of the Trustee located at 41 S. High Street, Columbus,
Ohio 43215 as
such offices of the Company in accordance with Section 3.5
hereof.
SECTION 6.3. Corporate Existence.
Subject to Article VII, and without limiting the right
of the
Company to transfer ownership of any Subsidiary in accordance
with this
Indenture, the Company shall do or cause to be done, at its own
cost and
expense, all things necessary to, and shall cause each Subsidiary
to, preserve
and keep in full force and effect the corporate existence and the
rights (charter
and statutory), licenses and franchises of the Company and its
Subsidiaries;
provided, however, that the Company shall not be required to
preserve any such
right, license or franchise, or the corporate existence of any
Subsidiary, if in the
judgment of the Board of Directors of the Company, (a) such
preservation or
existence is not desirable in the conduct of business of the
Company or such
Subsidiary and (b) the loss of such right, license or franchise
or the dissolution
of such Subsidiary is not adverse in any material respect to the
Holders.
SECTION 6.4. Payment of Taxes and Other Claims; Tax
Consolidation.
The Company shall, and shall cause each Subsidiary to,
pay or
discharge or cause to be paid or discharged, before the same
shall become
delinquent, (a) all taxes, assessments and governmental charges
levied or
imposed upon the Company or any Subsidiary or upon the income,
profits or
property of the Company or any Subsidiary, and (b) all lawful
claims for labor,
materials and supplies that, if unpaid, might by law become a
Lien upon the
property of the Company or any Recourse Subsidiary; provided,
however, that,
subject to the terms of the applicable Security Documents, the
Company or any
Subsidiary shall not be required to pay or discharge or cause to
be paid or
discharged any such tax, assessment, charge or claim whose
amount,
applicability or validity is being contested in good faith by
appropriate
proceedings and for which adequate reserves (in the good faith
judgment of
the Board of Directors of the Company) have been made.
SECTION 6.5. Compliance Certificates.
(a) The Company shall deliver to the Trustee, within
45 days
after the end of each of the respective first three quarters of
the Company's
fiscal year, and within 90 days after the end of its respective
fiscal year,
Officers' Certificates of the Company stating (i) that a review
of the activities
of the Company and its Subsidiaries during the preceding fiscal
quarter or
year, as the case may be, has been made under the supervision of
the signing
officers with a view to determining whether the Company and its
Subsidiaries
have kept, observed, performed and fulfilled their obligations
under this
Indenture, and further stating, as to each such Responsible
Officer signing such
certificate, (ii) that, to the best knowledge of such Responsible
Officer, the
Company and its Subsidiaries have kept, observed, performed and
fulfilled
each and every covenant contained in this Indenture and are not
in default in
the performance or observance of any of the terms, provisions and
conditions
hereof (or, if a Default or Event of Default shall have occurred,
describing all
such Defaults or Events of Default of which such Responsible
Officer may
have knowledge, their status and what action the Company is
taking or
proposes to take with respect thereto) and (iii) that to the best
of his
knowledge no event has occurred and remains in existence by
reason of which
payments on account of the principal of or interest, if any, on
the Securities are
prohibited (or, if such event has occurred, describing the event
and what
action the Company is taking or proposes to take with respect
thereto).
(b) So long as (and to the extent) not contrary to the
then current
recommendations of the American Institute of Certified Public
Accountants,
the annual financial statements delivered pursuant to Section 6.6
shall be
accompanied by a written statement of the Company's independent
public
accountants that in making the examination necessary for
certification of such
annual financial statements nothing has come to their attention
that would lead
them to believe that the Company and its Subsidiaries have
violated any
provisions of this Indenture or, if any such violation has
occurred, specifying
the nature and period of existence thereof, it being understood
that such
accountants shall not be liable directly or indirectly to any
Person for any
failure to obtain knowledge of any such violation that would not
be disclosed
in the course of an audit examination conducted in accordance
with generally
accepted auditing standards.
(c) The Company shall, so long as any of the
Securities are
outstanding, deliver to the Trustee, forthwith upon any officer
becoming aware
of any Default or Event of Default, an Officers' Certificate
specifying such
Default or Event of Default and what action the Company is taking
or
proposes to take with respect thereto.
SECTION 6.6. SEC Reports.
(a) In accordance with the provisions of Section
314(a) of the
Trust Indenture Act, at any time that the Company is required to
file periodic
reports with the Commission pursuant to Section 13 or 15(d) of
the Exchange
Act, the Company shall file with the Trustee, within 5 days after
it files them
with the Commission, copies of annual reports and of the
information,
documents and other reports (or copies of such portions of any of
the
foregoing as the Commission may by rules and regulations
prescribe) which
the Company is required to file with the Commission. The Company
also
shall comply with the other provisions of Section 314(a) of the
Trust Indenture
Act. In addition, at any time that the Company has a class of
equity securities
registered under the Exchange Act, the Company shall cause its
annual report
to stockholders and any quarterly or other financial reports
furnished by it to
stockholders generally to be filed with the Trustee and mailed,
no later than
the date such materials are mailed or made available to the
Company's
stockholders, to the Holders at their addresses as set forth in
the Securities
Register.
(b) At any time that the Company does not have a class
of
securities registered under the Exchange Act, the Company shall
furnish to
the Trustee (who is hereby authorized and directed to furnish a
copy thereof
to any person requesting the same in writing) and shall mail (or
cause to be
mailed by the Trustee at the Company's expense) to each of the
Holders at
their addresses as set forth in the Securities Register
maintained by the
Securities Registrar within 60 days after the close of each of
the first three
quarters of each fiscal year and within 105 days after the close
of each fiscal
year consolidated balance sheets of the Company as of the end of
each such
quarter or fiscal year, as the case may be, and consolidated
statements of
income and changes in financial position of the Company for the
period
commencing at the end of the Company's previous fiscal year and
ending with
the end of such quarter or fiscal year, as the case may be, all
such financial
statements setting forth in comparative form the corresponding
figures for the
corresponding period of the preceding fiscal year, all in
reasonable detail and
duly certified (subject to year-end adjustments) by a Responsible
Officer of the
Company as having been prepared in accordance with GAAP
consistently
applied, and, in the case of annual consolidated financial
statements, certified
by independent public accountants of recognized standing and a
discussion
and analysis of the results of operations and financial condition
of the
Company and its Subsidiaries for the periods presented, which
discussion and
analysis shall be prepared by the management of the Company in a
manner
responsive to the requirements of Item 303 (or any successor item
or section)
of Regulation S-K. All financial statements shall be prepared in
accordance
with GAAP consistently applied, except for changes with which the
Company's independent public accountants concur and except that
quarterly
statements may be subject to year-end adjustments.
SECTION 6.7. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so)
that it shall not at any time insist upon, plead, or in any
manner whatsoever
claim or take the benefit or advantage of, any stay or extension
law or any
usury law or other law that would prohibit or forgive the Company
from
paying all or any portion of the principal of (and premium, if
any) or interest
on the Securities as contemplated herein, wherever enacted, now
or at any
time hereafter in force, or that may affect the covenants or the
performance of
this Indenture; and (to the extent that it may lawfully do so)
the Company
hereby expressly waives all benefit or advantage of any such law,
and
covenants that it shall not hinder, delay or impede the execution
of any power
herein granted to the Trustee but shall suffer and permit the
execution of every
such power as though no such law had been enacted.
SECTION 6.8. Maintenance of Properties; Insurance; Books and
Records;
Compliance with Law.
(a) Subject to the applicable provisions of the
Security
Documents, the Company shall, and shall cause each Subsidiary to,
at all times
cause all properties used or useful in the conduct of its
business to be
maintained and kept in good working order and condition, ordinary
wear and
tear excepted, and shall cause to be made all necessary (in the
good faith
opinion of management) repairs, renewals, replacements,
additions,
betterments and improvements thereto.
(b) The Company shall and shall cause each Subsidiary
to
maintain insurance with insurance companies or associations with
a rating of
"A-" or better, as established by Best's Rating Guide (or an
equivalent rating
with such other publication of a similar nature as shall be in
current use),
subject to the provisions of the applicable Security Documents,
in such
amounts and covering such risks as are usually and customarily
carried with
respect to similar facilities according to their respective
locations.
(c) The Company shall and shall cause each Subsidiary
to keep
proper books of record and account in which full and correct
entries shall be
made of all financial transactions and the assets and business of
the Company
and each Subsidiary, in accordance with GAAP consistently applied
to the
Company and its Subsidiaries taken as a whole.
(d) The Company shall and shall cause each Subsidiary
to
comply with all statutes, laws, ordinances, or government rules
and
regulations to which it is subject, non-compliance with which
would have a
Material Adverse Affect.
SECTION 6.9. Limitations on Debt.
(a) The Company shall not, and shall not permit any
Subsidiary
to, Issue (each event, an "incurrence"), directly or indirectly,
any Debt
(including Acquired Debt) unless the pro forma Consolidated
EBITDA Coverage
Ratio of the Company and its Recourse Subsidiaries for the
Reference Period
prior to the incurrence of such Debt would have been greater than
from the
date hereof until June 28, 1997, 2.0 to 1.0 and (B) from June 29,
1997 and
thereafter, 2.5 to 1.0.
(b) The limitation set forth in paragraph (a) shall
not apply to:
(i) Debt evidenced by the Securities and the
obligations of the
Company and its Subsidiaries under the Indenture and the
Security
Documents;
(ii) Debt issued pursuant to the Credit Facility
in the aggregate
principal amount outstanding at any time not to exceed the
greater of
(a) $50 million or (b) the sum of (1) 85% of the aggregate
face amount of
Accounts Receivable plus (2) 50% of the aggregate book value
of
Inventory, in each case, measured as of the end of the most
recent fiscal
month for which information regarding Accounts Receivable
and
Inventory is then available;
(iii) Debt of the Company issued to any
Wholly-Owned
Recourse Subsidiary; provided, that (a) any such Debt is
unsecured and is
subordinated to the Securities and (b) that any subsequent
issuance or
transfer of any Capital Stock which results in any such
Wholly-Owned
Recourse Subsidiary ceasing to be a Wholly-Owned Recourse
Subsidiary
or any transfer of such Debt by any Wholly-Owned Recourse
Subsidiary
to a Person not a Wholly-Owned Recourse Subsidiary will, in
each case,
be deemed an incurrence of such Debt under the Indenture;
(iv) Debt of a Wholly-Owned Recourse Subsidiary
issued to
and held by the Company or any Wholly-Owned Recourse
Subsidiary
of the Company; provided, that any subsequent issuance or
transfer of
any Capital Stock which results in any such Wholly-Owned
Recourse
Subsidiary ceasing to be a Wholly-Owned Recourse Subsidiary
or any
transfer of such Debt by the Company or any Wholly-Owned
Recourse
Subsidiary to a Person not a Wholly-Owned Recourse
Subsidiary will, in
each case, be deemed an incurrence of Debt under the
Indenture;
(v) Debt of the Company and its Subsidiaries which is
existing
immediately following the issuance of the Securities and the
application
of the proceeds of the Securities (in no event shall this
clause be deemed
to permit Debt in connection with the GECC Loans or to the
Caster
Loan to remain outstanding);
(vi) Debt issued pursuant to (a) Interest Rate
Protection
Agreements in respect of Debt of the Company or any of its
Subsidiaries
that is permitted under this covenant to the extent the
notional principal
amount of such Interest Rate Protection Agreements does not
exceed the
aggregate principal amount of the Debt to which such
Interest Rate
Protection Agreements relate and (b) Hedging Agreements in
respect of
foreign exchange or commodity exposures incurred by the
Company or
any of its Subsidiaries in the ordinary course of business;
(vii) Debt evidenced by Industrial Development
Bonds
(including Pollution Control Bonds) as such terms are
defined under the
Internal Revenue Code, or Government Loans in an aggregate
principal
amount not to exceed $20,000,000;
(viii) Non-Recourse Debt of a Non-Recourse
Subsidiary; provided,
however, that if any such Debt thereafter ceases to be a
Non-Recourse
Debt of a Non-Recourse Subsidiary, then such event shall be
deemed to
constitute the issuance of such Debt by the issuer thereof;
(ix) Debt incurred with respect to the deferred
purchase price
of machinery and equipment (including all capitalized costs
incurred in
connection therewith, such as engineering studies and
installation
thereof) related to the business of the Company or its
Subsidiaries at the
time of purchase and other purchase money obligations
(including
Capital Lease Obligations) not to exceed, in the aggregate,
$20,000,000
outstanding at any time; provided, that the maturity of any
such
obligation does not exceed the anticipated useful life of
the asset being
financed; and
(x) any renewal, extension or refinancing (and
subsequent
renewals, extensions or refinancings) of any Debt permitted
at the time
incurred of the Company and its Subsidiaries; provided,
however, that (a)
the principal amount of the Debt so issued shall not exceed
the
maximum principal amount of the Debt so exchanged, refunded
or
refinanced, (b) Debt which constitutes a renewal, extension
or
refinancing of Debt of the Company shall be pari passu or
subordinated
in right of payment to the Securities, (c) Debt which
constitutes a
renewal, extension or refinancing of Debt of Subsidiaries
shall be pari
passu or subordinated in right of payment to the Subsidiary
Guarantee
and (d) the Debt so issued (1) shall not mature prior to the
maturity of
the Debt so exchanged, refunded or refinanced and (2) shall
have an
Average Life equal to or greater than the remaining Average
Life of the
Debt so exchanged, refunded or refinanced; and provided,
further, that in
no event may Debt be renewed, extended or refinanced by
means of
Debt of any Subsidiary of the Company if such Debt was
originally
incurred by the Company.
SECTION 6.10. Limitation on Liens.
The Company shall not, and shall not permit, cause or
suffer any
of its Subsidiaries to, create, incur, assume or suffer to exist
any Liens of any
kind upon any property or assets of the Company or any
Subsidiary, whether
now owned or hereafter acquired, except for:
(i) Liens in favor of the Collateral Agent or the
Holders,
including Liens created by the Securities, the Indenture and
the Security
Documents;
(ii) Liens on the Lender Secured Property to
secure the Credit
Facility and the guarantees executed in connection
therewith;
(iii) Permitted Liens;
(iv) Liens on the property of the Company or any
of its
Subsidiaries created solely for the purpose of securing
purchase money
obligations for property acquired in the ordinary course of
business;
provided, that (a) such property so acquired for use in the
ordinary
course of business is for use in lines of business related
to the
Company's or its Subsidiaries' business as it exists
immediately prior to
the issuance of the related Debt, (b) no such Lien shall
extend to or
cover other property or assets of the Company and its
Subsidiaries other
than the respective property or assets so acquired and (c)
the principal
amount of Debt secured by any such Lien shall at no time
exceed the
original purchase price of such property or assets;
(v) Liens on the property or assets of a Subsidiary
acquired
after the Issue Date or on property or assets acquired in an
asset
purchase transaction with a Person that is not an Affiliate
created solely
to secure the obligations that financed the acquisition of
such Subsidiary
or such property and assets; provided that (a) no such Lien
shall extend
to or cover property or assets of the Company and its
Subsidiaries other
than the property or assets of the Subsidiary so acquired or
the property
or assets so acquired and (b) no such Lien shall extend to
the Capital
Stock of any Subsidiary so acquired and (c) the principal
amount of
Debt secured by any such Lien shall not exceed the original
purchase
price of such Subsidiary or such property or assets;
(vi) Liens on the assets of any entity existing at
the time such
entity or assets are acquired by the Company or any of its
Subsidiaries,
whether by merger, consolidation, purchase of assets or
otherwise;
provided, that such Liens (a) are not created, incurred or
assumed in
connection with, or in contemplation of, such assets being
acquired by
the Company or any of its Subsidiaries and (b) do not extend
to any
other property of the Company or any of its Subsidiaries;
(vii) Liens in existence on the date of the
Indenture (excluding
Liens relating to all or any portion of Debt incurred in
connection with
the GECC Loans or the Caster Loan);
(viii) Liens securing Industrial Development Bonds
(including
Pollution Control Bonds) as such terms are defined in the
Internal
Revenue Code; provided, that any Lien permitted by this
clause (viii)
shall not extend to any other property of the Company or any
of its
Subsidiaries; and
(ix) Liens on the No. 3 Melt Shop to secure
Government Loans;
provided, that this provision shall not apply to Collateral
transferred to
the No. 3 Melt Shop or Collateral acquired in respect of the
No. 3 Melt
Shop (unless in such cases, the Collateral was acquired with
the
proceeds of Governmental Loans); and
(x) any extension, renewal or replacement (or
successive
extensions, renewals or replacements), in whole or in part,
of any Lien
referred to in the foregoing clauses; provided, that the
principal amount
of Debt secured thereby shall not exceed the principal
amount of Debt
so secured immediately prior to the time of such extension,
renewal or
replacement (or with respect to the Credit Facility, the
maximum
amount permitted to be borrowed thereunder) and that such
extension,
renewal, or replacement Lien shall be limited to all or a
part of the
property which secured the Lien so extended, renewed or
replaced (plus
improvements on such property).
SECTION 6.11. Limitation on the Issuance of Preferred Stock
by Subsidiaries.
The Company shall not permit any of its Recourse
Subsidiaries to
issue, directly or indirectly, any Preferred Stock, except:
(i) Preferred Stock issued to and held by the Company
or a
Wholly-Owned Recourse Subsidiary, except that any subsequent
issuance or transfer of any Capital Stock which results in
any Wholly-
Owned Recourse Subsidiary ceasing to be a Wholly-Owned
Recourse
Subsidiary or any transfer of such Preferred Stock by any
Wholly-
Owned Recourse Subsidiary to a Person not a Wholly-Owned
Recourse
Subsidiary will, in each case, be deemed an issuance of
Preferred Stock
under the Indenture;
(ii) Preferred Stock issued by a Person prior to
the time (a)
such Person became a Subsidiary, (b) such Person merges with
or into a
Subsidiary or (c) a Subsidiary merges with or into such
Person (in a
transaction in which such Person becomes a Subsidiary), in
each case if
such Preferred Stock was not issued in anticipation of such
transaction;
and
(iii) Preferred Stock issued in exchange for, or
the proceeds of
which are used to refund Debt or refinance Preferred Stock
issued
pursuant to clauses (i) or (ii) (other than Preferred Stock
which by its
terms (or by the terms of any security into which it is
convertible or for
which it is exchangeable) that is redeemable at the option
of the holder
thereof or that is otherwise redeemable, pursuant to sinking
fund
obligations or otherwise, prior to the date of redemption or
maturity of
the Preferred Stock or Debt being so refunded or
refinanced); provided,
that (a) the liquidation value of such Preferred Stock so
issued shall not
exceed the principal amount or the liquidation value of the
Debt or
Preferred Stock, as the case may be, so refunded or
refinanced and (b)
the Preferred Stock so issued (i) shall have a stated
maturity not earlier
than the stated maturity of the Debt or Preferred Stock
being refunded
or refinanced and (2) shall have an Average Life equal to or
greater than
the remaining Average Life of the Debt or Preferred Stock
being
refunded or refinanced.
SECTION 6.12. Transfer of Assets to Subsidiaries.
Notwithstanding the covenant restricting Asset Sales,
Restricted
Payments and transactions with Affiliates, the Company shall not,
and shall
not permit any of its Recourse Subsidiaries to, make any sale,
transfer or other
disposition (including by way of Sale and Leaseback Transaction)
to any of its
Subsidiaries (other than in the ordinary course of business) of
(i) any assets of
the Company or its Recourse Subsidiaries or (ii) any shares of
Capital Stock of
any of the Company's Recourse Subsidiaries, in either case with
an aggregate
fair market value in excess of $1,000,000 (as determined in good
faith by the
Company) unless the Company or its Recourse Subsidiaries shall
receive
consideration from the Subsidiary acquiring such assets or
Capital Stock by
way of any such sale, transfer or otherwise in cash or Cash
Equivalents equal
to the amount in excess of $1,000,000 (the fair market value of
such assets or
Capital Stock to be determined in good faith by an Independent
Appraiser or
Independent Financial Advisor, as the circumstances dictate, with
respect to a
transaction with a fair market value in excess of $1,000,000);
provided, that there
shall be no restriction on the transfer of assets of Erlanger
Tubular Corporation
to either Koppel Steel Corporation or Newport Steel Corporation;
and provided
further, that assets may not be transferred by any Recourse
Subsidiary to any
Excluded Company.
SECTION 6.13. Limitations on Restricted Payments.
The Company shall not, and shall not permit any
Recourse
Subsidiary, directly or indirectly, to declare, pay or set apart
for payment, any
Restricted Payment, if after giving effect thereto: (i) a
Default shall have
occurred and be continuing (or would result therefrom); (ii) the
Company and
its Recourse Subsidiaries are not permitted to incur $1.00 of
Debt pursuant to
Section 6.9(a); or (iii) the aggregate amount of such Restricted
Payment and all
other Restricted Payments made by the Company or any of its
Recourse
Subsidiaries (the amount expected or distributed for such
purposes, if other
than in cash, to be valued at its fair market value as determined
in good faith
by the Board of Directors of the Company, whose determination
shall be
conclusive and evidenced by a Board Resolution delivered to the
Trustee) since
the Issue Date would exceed the sum of:
(i) 50% of the Company's Consolidated Net Income
accrued
for the period (treated as one accounting period) from the
first day of
the fiscal quarter succeeding the Issue Date to the end of
the most
recent fiscal quarter ending prior to the date of such
Restricted Payment
(or, in case such Consolidated Net Income shall be a
deficit, minus 100%
of such deficit); and
(ii) the aggregate Net Cash Proceeds received by
the Company
from the issuance or sale of its Capital Stock (other than
Disqualified
Stock) subsequent to the Issue Date (other than to a
Subsidiary of the
Company or an employee stock ownership plan or similar
trust),
including Net Cash Proceeds from the exercise of warrants;
and
(iii) the aggregate Net Cash Proceeds received by
the Company
from the issuance or sale of its Capital Stock (other than
Disqualified
Stock) to an employee stock ownership plan subsequent to the
Issue
Date; provided, that if such employee stock ownership plan
issues any
Debt, only to the extent that any such proceeds are equal to
any increase
in the Consolidated Net Worth of the Company resulting from
principal
repayments made by such employee stock ownership plan with
respect
to Debt issued by it to finance the purchase of such Capital
Stock; and
(iv) the aggregate Net Cash Proceeds received by
the Company
from the issuance of its Capital Stock upon the conversion
of or
exchange for (other than by a Subsidiary of the Company),
securities
evidencing Debt of the Company subsequent to the Issue Date,
calculated on the assumption that the gross proceeds from
such issuance
are equal to the aggregate principal amount (or if
discounted Debt, the
accreted principal amount) of Debt evidenced by such
securities
converted or exchanged, plus any additional sums payable
upon
conversion or exchange (less the amount of any cash, or the
fair market
value of other property, distributed to the holder of such
Debt by the
Company or any of its Subsidiaries upon such conversion or
exchange).
Notwithstanding the foregoing, this provision shall not
prevent (i)
the payment of any dividend within 60 days after the date of its
declaration (if
the declaration of such dividend was permitted by the foregoing
provision at
the time of such declaration); or (ii) the repurchase, retirement
or other
acquisition of any shares of the Company's Capital Stock, or any
option,
warrant or other right to purchase shares of the Company's
Capital Stock, or
the repayment of any Debt of the Company solely in exchange for
shares of, or
out of the proceeds of a substantially contemporaneous issuance
of, Capital
Stock (other than Disqualified Stock).
SECTION 6.14. Limitations on Transactions with Affiliates.
The Company shall not, and shall not permit any
Recourse
Subsidiary to, conduct any business or enter into or permit to
exist any
transaction or series of related transactions, including, without
limitation, any
loan, advance, Guarantee or capital contribution to, or for the
benefit of, or any
sale, purchase, lease, exchange or other disposition of any
property or the
rendering of any service, or any other direct or indirect
payment, transfer or
other disposition) with any Affiliate of the Company or any legal
or beneficial
owner of 5% or more of any class of Capital Stock of the Company
or with an
Affiliate of any such owner unless the terms of such business,
transaction or
series of transactions are (i) set forth in writing, (ii) as
favorable to the
Company or such Recourse Subsidiary as terms that would be
obtainable at
the time for a comparable transaction or series of similar
transactions in arms-
length dealings with an unrelated third Person and (iii) the
Board of Directors
has, by resolution, determined in good faith that such business
or transaction
or series of transactions meets the criteria set forth in (ii)
above; except that (a)
the requirements of clauses (i) and (iii) shall not apply to
transactions
involving the sale of goods and services in the ordinary course
of business that
are consistent with the Company's and its Recourse Subsidiaries'
past practices
and (b) the foregoing shall not prohibit (1) Restricted Payments,
Permitted
Investments and Permitted Payments otherwise permitted by the
Indenture, (2)
transactions between the Company and one or more of its
Wholly-Owned
Recourse Subsidiaries, provided that such transactions are not
otherwise
prohibited, (3) payments of reasonable and customary compensation
for
services, directors fees, meeting expenses, insurance premiums
and indemnities
to the extent permitted by applicable law, (4) the issuance of
stock options
(and shares of stock upon the exercise thereof) pursuant to any
stock option
plan approved by the Board of Directors and stockholders of the
Company
and (5) loans or advances to employees for relocation or travel
related
expenses consistent with ordinary practices of the Company.
SECTION 6.15. Restrictions on Assets Sales.
(a) The Company shall not, and shall not permit any of
its
Recourse Subsidiaries to, make any Asset Sale, unless (i) the
Company (or its
Recourse Subsidiary, as the case may be) receives consideration
at the time of
such Asset Sale at least equal to the fair market value of the
Capital Stock or
assets to be sold (as determined in good faith by its Board of
Directors); (ii) at
least 85% of the consideration therefor is received by the
Company or such
Recourse Subsidiary in the form of cash or Cash Equivalents; and
(iii) 100% of
the consideration therefor is received by the Company or such
Recourse
Subsidiary in the form of cash, Cash Equivalents or instruments
with respect
to which a security interest therein may be perfected by
possession; provided,
that the limitations set forth in (ii) and (iii) above shall not
be applicable to the
sale of Excluded Assets.
(b) Within 360 days of the date that the sum of the
Net Available
Cash of Asset Sales by the Company and its Recourse Subsidiaries
(excluding
the Net Available Cash (i) previously applied to the acquisition
of property
and assets used in lines of business related to the Company's or
the Recourse
Subsidiaries' business at such time (each a "Permitted Related
Acquisition")
and (ii) from the sale of Obsolete Assets not exceeding an
aggregate fair
market value of $1,000,000 in any year), together with
Condemnation Awards
and Net Insurance Proceeds (the "Available Amount"), equals or
exceeds
$5,000,000, the Company will elect to either (a) apply or cause
to be applied
the Available Amount to a Permitted Related Acquisition or the
commencement thereof (provided that such project is completed
within a
reasonable time of the commencement thereof), (b) make an offer
to purchase
Securities from all Holders up to an amount equal to the
Available Amount
(rounded to the next lowest multiple of $1,000) at a purchase
price equal to
100% of the principal amount thereof plus accrued interest
thereon, if any, to
the date of purchase (an "Asset Sale Offer") or (c) any
combination of clauses
(a) and (b) above; provided, that (i) property acquired at any
time as a
Permitted Related Acquisition that has been acquired with
Collateral Proceeds
shall be subject to a first priority Lien in favor of the
Collateral Agent for the
benefit of the Trustee and the Holders; (ii) pending application
to a Permitted
Related Acquisition or an Asset Sale Offer, the Collateral
Proceeds, together
with all Condemnation Awards and Net Insurance Proceeds received
by the
Collateral Agent, will be retained by the Collateral Agent in
Collateral
Accounts; and (iii) notwithstanding the foregoing, the Company
and its
Subsidiaries, in the aggregate, shall be permitted to retain (x)
$1,000,000 of Net
Available Cash from Asset Sales other than sales of Obsolete
Assets and (y) the
Net Available Cash from the sale of the Excluded Assets. To the
extent that
Holders do not subscribe to an Asset Sale Offer, the Company may
retain the
unutilized Available Amount free of the Lien of the Security
Documents. The
Company and its Subsidiaries collectively may retain the Net
Available Cash
from the sale of Obsolete Assets in an aggregate amount not to
exceed
$1,000,000 in any year.
(c) The Company shall provide the Trustee with notice
of any
Asset Sale Offer at least 10 days before any notice of an Asset
Sale Offer is
mailed to Holders of the Securities (unless shorter notice is
acceptable to the
Trustee). If the Company elects to make an Asset Sale Offer,
notice of such
Asset Sale Offer shall be mailed by the Company to all Holders of
Securities,
with a copy to the Trustee and the Paying Agent, not more than
375 days after
the Available Amount equals or exceeds $5,000,000 which notice
shall specify
the purchase date (which shall be no earlier than 30 days nor
later than 60
days from the date such notice is mailed (the "Asset Sale Payment
Date"). The
Asset Sale Offer shall remain open from the time of mailing for
at least 20
Business Days and until at least 5:00 p.m., Eastern time, on the
Business Day
immediately preceding the Asset Sale Payment Date. The notice,
which shall
govern the terms of the Asset Sale Offer, shall include such
disclosures as are
required by law and shall state:
(i) that the Asset Sale Offer is being made pursuant
to this
Section 6.15;
(ii) the purchase price (including the amount of
accrued
interest, if any) for each Security and the Asset Sale
Payment Date;
(iii) that any Security not tendered or accepted
for payment
shall continue to accrue interest in accordance with the
terms thereof;
(iv) that any Security accepted for payment
pursuant to the
Asset Sale Offer shall cease to accrue interest after the
Asset Sale
Payment Date;
(v) that Holders electing to have Securities purchased
pursuant to an Asset Sale Offer must surrender their
Securities with the
form "Option of Holder to Elect Purchase" on the reverse of
the
Securities completed, to the Paying Agent at the address
specified in the
notice prior to 5:00 p.m., Eastern time, on the Business Day
immediately
preceding the Asset Sale Payment Date and must complete any
form
letter of transmittal proposed by the Company and acceptable
to the
Trustee and the Paying Agent;
(vi) that Holders shall be entitled to withdraw
their elections if
the Paying Agent receives, not later than 5:00 p.m., Eastern
time, on the
third Business Day immediately preceding the Asset Sale
Payment Date,
a telegram, facsimile transmission or letter setting forth
the name of the
Holder, the principal amount of Securities the Holder
delivered for
purchase, the Security certificate number (if any) and a
statement that
such Holder is withdrawing his election to have such
Securities
purchased;
(vii) that if Securities in a principal amount in
excess of the
Holders' pro rata share of the Available Amount are tendered
pursuant
to the Asset Sale Offer, the Company shall purchase on a pro
rata basis
among the Securities tendered (with such adjustments as may
be
deemed appropriate by the Company so that only Securities in
denominations of $1,000 or integral multiples of $1,000
shall be
acquired);
(viii) that Holders whose Securities are purchased
only in part
shall be issued new Securities equal in principal amount to
the
unpurchased portion of the Securities surrendered; and
(ix) the instructions that Holders must follow to
tender their
Securities.
On or about the Asset Sale Payment Date, the Company
shall (i)
accept for payment, on a pro rata basis among the Securities
tendered,
Securities or portions thereof pursuant to the Asset Sale Offer
in an amount
equal to the Available Amount (ranked to the next lowest multiple
of $1,000)
and (ii) deliver to the Paying Agent the Securities so accepted
together with an
Officers' Certificate setting forth the Securities or portions
thereof tendered to
and accepted for payment by the Company. The Paying Agent shall
promptly
mail or deliver (or, in the case of a Global Security, transfer
immediately
available funds, on the Asset Sale Payment Date to the
Depositary) to each
Holder of the Securities so accepted payment in an amount equal
to the
purchase price, and the Trustee shall promptly authenticate and
mail or deliver
to each such Holder a new Security equal in principal amount to
any
unpurchased portion of the Securities surrendered upon receipt
from the
Company thereof. Any Security not so accepted shall be promptly
mailed or
delivered by the Company to the Holder thereof. The Company
shall publicly
announce the results of the Asset Sale Offer on the first
Business Day
following the Asset Sale Payment Date. To the extent an Asset
Sale Offer is
not fully subscribed to by such Holders, the Company may retain
(free and
clear of the Lien of this Indenture and the Security Documents)
such unutilized
portion. The Paying Agent shall promptly deliver to the Company
the balance
of any such Trust Moneys held by the Paying Agent after payment
to the
Holders as aforesaid. For purposes of this Section 6.15, so long
as the
Collateral Agent is also the Trustee, the Collateral Agent shall
act as the
Paying Agent and, otherwise, the Trustee shall act as Paying
Agent.
The Company shall comply, to the extent applicable,
with the
requirements of Section 14(e) of the Exchange Act and any other
securities
laws or regulations in connection with the repurchase of
Securities pursuant to
the Asset Sale Offer. To the extent that the provisions of any
securities laws or
regulations conflict with provisions of this Section 6.15, the
Company shall
comply with the applicable securities laws and regulations and
shall not be
deemed to have breached its obligations under this Section 6.15
by virtue
thereof.
SECTION 6.16. Limitation on Restrictions on Distributions
from Recourse
Subsidiaries.
The Company shall not, and shall not permit any
Recourse
Subsidiary to, create, or permit to exist or become effective any
encumbrance
or restriction on the ability of any Recourse Subsidiary to (a)
pay dividends, in
cash or otherwise, or make any other distributions on its Capital
Stock; (b)
make payments in respect of any Debt owed to the Company or any
of the
Company's Recourse Subsidiaries; (c) make any loans or advances
to the
Company or any of the Company's Recourse Subsidiaries; or (d)
transfer any
of its property or assets to the Company or any of the Company's
Subsidiaries,
except: (i) any encumbrance or restriction pursuant to the
Securities, the
Indenture or the Security Documents; (ii) any encumbrance or
restriction
pursuant to an agreement in effect at or entered into on the
Issue Date
(including, without limitation, the Credit Facility); (iii) any
encumbrance or
restriction with respect to a Recourse Subsidiary pursuant to an
agreement
relating to any Debt issued by such Recourse Subsidiary on or
prior to the date
on which such Recourse Subsidiary was acquired by the Company
(other than
Debt issued as consideration in, or to provide all or any portion
of the funds
utilized to consummate, the transaction or series of related
transactions
pursuant to which such Recourse Subsidiary became a Recourse
Subsidiary or
was acquired by the Company) and outstanding on such date; (iv)
any
encumbrance or restriction pursuant to an agreement effecting a
refinancing of
Debt issued pursuant to an agreement referred to in clause (ii)
or (iii) or
contained in any amendment to an agreement referred to in clause
(ii) or (iii);
provided, however, that the encumbrances and restrictions
contained in any such
refinancing agreement or amendment are not more restrictive than
encumbrances and restrictions contained in the refinanced or
amended
agreements; (v) customary non-assignment provisions restricting
subletting or
assignment of any lease or assignment entered into by a Recourse
Subsidiary;
and (vi) any restrictions with respect to a Recourse Subsidiary
of the Company
imposed pursuant to an agreement which has been entered into for
the sale or
disposition of all or substantially all of the Capital Stock or
assets of such
Recourse Subsidiary.
SECTION 6.17. Limitation on Sale and Leaseback
Transactions.
The Company shall not, and shall not permit any of its
Recourse
Subsidiaries to, enter into, directly or indirectly, any Sale and
Leaseback
Transaction, with respect to any real or tangible personal
property, other than
(i) a Sale and Leaseback Transaction entered into between the
Company and
any of its Wholly-Owned Recourse Subsidiaries or between
Wholly-Owned
Recourse Subsidiaries; provided that upon either (a) the transfer
or other
disposition by such Wholly-Owned Recourse Subsidiary of any such
lease to a
Person other than the Company or another Wholly-Owned Recourse
Subsidiary or (b) the issuance, sale, lease, transfer or other
disposition of
Capital Stock (including by way of consolidation or merger) of
such Wholly-
Owned Recourse Subsidiary to a Person other than the Company or
another
Wholly-Owned Recourse Subsidiary, the provisions of this clause
(i) shall no
longer be applicable to such lease and such lease shall be deemed
for purposes
of this paragraph to constitute the entering into of such Sale
and Leaseback
transaction by the parties thereto; and (ii) Capital Lease
Obligations permitted
to be incurred by the Company or any of its Subsidiaries pursuant
to the
limitations on Debt set forth in Section 6.9.
SECTION 6.18. Change of Control.
In the event of a Change of Control (the date of such
occurrence,
the "Change of Control Date"), the Company shall notify the
Holders of
Securities in writing of such occurrence and shall make an offer
to purchase
(the "Change of Control Offer") on a Business Day (the "Change of
Control
Payment Date") not earlier than 30 days nor later than 60 days
from the date
such notice is mailed all Securities then outstanding at a
purchase price equal
to 101% of the principal amount thereof plus accrued interest to
the Change of
Control Payment Date, if any.
Notice of a Change of Control Offer shall be mailed by
the
Company within 30 days following the Change of Control Date to
the Holders
of Securities at their last registered addresses with a copy to
the Trustee and
the Paying Agent. The Change of Control Offer shall remain open
from the
time of mailing for at least 20 Business Days and until 5:00
p.m., Eastern time,
on the Business Day immediately preceding the Change of Control
Payment
Date. The notice, which shall govern the terms of the Change of
Control Offer,
shall include such disclosures as are required by law and shall
state:
(i) that the Change of Control Offer is being made
pursuant
to this Section 6.18 and that all Securities tendered shall
be accepted for
payment;
(ii) the purchase price (including the amount of
accrued
interest, if any) for each Security and the Change of
Control Payment
Date;
(iii) that any Security not tendered or accepted
for payment
shall continue to accrue interest in accordance with the
terms thereof;
(iv) that any Security accepted for payment pursuant to
the
Change of Control Offer shall cease to accrue interest after
the Change
of Control Payment Date;
(v) that Holders electing to have Securities purchased
pursuant to a Change of Control Offer must surrender their
Securities
with the form "Option of Holder to Elect Purchase" on the
reverse of the
Securities completed, to the Paying Agent at the address
specified in the
notice prior to 5:00 p.m., Eastern time, on the Business Day
immediately
preceding the Change of Control Payment Date and must
complete any
form letter of transmittal proposed by the Company and
acceptable to
the Trustee and the Paying Agent;
(vi) that Holders shall be entitled to withdraw their
election if
the Paying Agent receives, not later than 5:00 p.m., Eastern
time, on the
third Business Day (or such shorter period as may be
required by
applicable law) immediately preceding the Change of Control
Payment
Date, a telegram, telex, facsimile transmission or letter
setting forth the
name of the Holder, the principal amount of Securities the
Holder
delivered for purchase, the Security certificate number (if
any), and a
statement that such Holder is withdrawing his election to
have such
Securities purchased;
(vii) that Holders whose Securities are purchased
only in part
shall be issued Securities equal in principal amount to the
unpurchased
portion of the Securities surrendered;
(viii) the instructions that Holders must follow to
tender their
Securities; and
(ix) the circumstances and relevant facts regarding
such
Change of Control (including, but not limited to,
information with
respect to pro forma historical financial information,
including income,
cash flow and capitalization, after giving effect to such
Change of
Control, information regarding the Persons acquiring control
and such
Person's business plans going forward).
On or before the Change of Control Payment Date, the
Company
shall (i) accept for payment Securities or portions thereof
tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent
money
sufficient to pay the purchase price of all Securities or
portions thereof so
tendered and accepted and (iii) deliver to the Trustee the
Securities so accepted
together with an Officers' Certificate setting forth the
Securities or portions
thereof tendered to and accepted for payment by the Company. The
Paying
Agent shall promptly mail or deliver (or, in the case of a Global
Security,
transfer immediately available funds on the Change of Control
Payment Date
to the Depositary) to the Holders of Securities so accepted for
payment in an
amount equal to the purchase price, and the Trustee shall
promptly
authenticate and mail or deliver to such Holders a new Security
equal in
principal amount to any unpurchased portion of the Security
surrendered
upon receipt from the Company thereof. The Company shall
publicly
announce the results of the Change of Control Offer not later
than the first
Business Day following the Change of Control Payment Date.
The Company shall comply, to the extent applicable,
with the
requirements of Section 14(e) of the Exchange Act, and any other
securities
laws or regulations in connection with the repurchase of
Securities pursuant to
a Change of Control Offer. To the extent that the provisions of
any securities
laws or regulations conflict with provisions of this Section
6.18, the Company
shall comply with the applicable securities laws and regulations
and shall not
be deemed to have breached its obligations under this Section
6.18 by virtue
thereof.
SECTION 6.19. Limitation on Issuance and Sale of Capital
Stock of Recourse
Subsidiaries.
The Company shall not sell any Capital Stock of a
Recourse
Subsidiary, and shall not permit any Recourse Subsidiary to issue
or sell any
Capital Stock, or permit any Person, other than the Company and
its Recourse
Subsidiaries, to own or hold any such interest, other than any
interest owned
or held on the Issue Date by a Person other than the Company and
its
Recourse Subsidiaries in any Capital Stock of any Recourse
Subsidiary (other
than a Joint Venture); provided, that the foregoing limitation
shall not apply to
(i) the sale of 100% of the Capital Stock of any Subsidiary made
in accordance
with Section 6.15, (ii) the sale or issuance of any Capital Stock
of Imperial
Adhesives, Inc. and (iii) issuances of Preferred stock permitted
pursuant to
clauses (i) or (iii) of Section 6.11.
SECTION 6.20. Limitations as to Non-Recourse Subsidiaries.
The Company shall not permit any Non-Recourse
Subsidiary to
Issue create, assume, incur, Guarantee or otherwise become liable
in respect to
any Debt other than Non-Recourse Debt. Neither the Company nor
any of its
Recourse Subsidiaries will sell, lease, convey or otherwise
transfer to any Non-
Recourse Subsidiary any asset which is essential to the
steelmaking operations
of the Company or its Recourse Subsidiaries. The Company will
not permit
any Non-Recourse Subsidiary to acquire from any Person any asset
essential to
the steelmaking operations of the Company or its Recourse
Subsidiaries or all
or any porion of its Recourse Subsidiaries.
SECTION 6.21. Impairment of Security Interest.
Subject to Section 12.5, the Company shall not, and
shall not
permit any of its Subsidiaries to, take or omit to take any
action, which action
or omission would have the result of affecting or impairing the
security
interest in favor of the Collateral Agent with respect to the
Collateral, and the
Company shall not grant to any Person (other than the Collateral
Agent and
the Holders) any interest whatsoever in the Collateral, except,
in either case, as
expressly permitted by Section 6.10 and the Security Documents.
SECTION 6.22. Conflicting Agreements.
The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any agreement or instrument that by
its terms
expressly (i) prohibits the Company from redeeming or otherwise
making any
payments on or in respect of the Securities in accordance with
the terms
thereof or hereof, as in effect from time to time except as
provided in Section
7.17 of the Credit Facility, or (ii) requires that the proceeds
received from the
sale of any Collateral be applied to repay, redeem or otherwise
retire any Debt
of any Person other than the Debt represented by the Securities,
except as
expressly permitted hereby or by the Security Documents.
SECTION 6.23. Amendment to Security Documents.
The Company shall not, and shall not permit any of its
other
Subsidiaries to, amend, modify or supplement, or permit or
consent to any
amendment, modification or supplement of, any of the Security
Documents in
any way which would be adverse to the Holders or which would
constitute a
Default hereunder or a default under any Security Document. The
Company
shall not amend, modify or supplement the Pledge Agreement, ICN
Security
Agreements, ICN Mortgages or the Intercompany Notes, or waive or
consent
to any default in respect of the foregoing, without the express
written consent
of the Trustee, which consent shall not be unreasonably withheld
if such
amendment, modification, supplement, waiver or consent is in a
form
satisfactory to the Trustee and is for any of the following
purposes:
(i) to evidence succession of another Person to the
Company
or any Subsidiary of the Company and the assumption by any
such
succeeding Person of the covenants of the Company or such
Subsidiary,
as the case may be, under the Intercompany Notes, the ICN
Security
Agreements or the ICN Mortgages; or
(ii) to add to the covenants of the Subsidiaries for
the benefit
of the Company, or to surrender any right or power of the
Subsidiaries;
or
(iii) to pledge or grant a security interest in
favor of the
Company as additional security for the payment and
performance of the
Steelmaking Subsidiaries' obligations with respect to the
Intercompany
Notes in any property or assets, including any that are
required to be
mortgaged, pledged or hypothecated or in which a security
interest is
required to be granted, to the Company pursuant to the ICN
Security
Agreements or the ICN Mortgages;
(iv) to cure any ambiguity, to correct or supplement
any
provision herein which may be inconsistent with any other
provision
herein, or to make any other provisions with respect to
matters or
questions arising under the ICN Security Agreements or ICN
Mortgages
which shall not be inconsistent with the provisions thereof;
provided, that
such action pursuant to this Clause (iv) shall not adversely
affect the
interests of the Holders assuming the foreclosure by the
Collateral
Agent under the Pledge Agreement on the Company's rights and
obligations under the Intercompany Notes, the ICN Security
Agreements
or the ICN Mortgages; or
(v) to evidence the full release and discharge of a
Subsidiary
under the Indenture, the Securities and the Security
Documents upon
the sale or other disposition of all of the Capital Stock of
the Subsidiary
or all or substantially all of its assets; provided, that
such sale or other
disposition does not violate and occurs in accordance with
the terms of
this Indenture.
SECTION 6.24. Inspection.
The Company shall, and shall cause each of its
Subsidiaries to,
permit authorized representatives of the Trustee and the
Collateral Agent to
visit and inspect the properties of the Company or its
Subsidiaries, and any or
all books, records and documents in the possession of the Company
relating to
the Collateral, and to make copies and take extracts therefrom
and to visit and
inspect the Collateral, all upon reasonable prior notice and at
such reasonable
times during normal business hours and as often as may be
reasonably
requested.
SECTION 6.25. Use of Proceeds.
The Company shall use the proceeds of the Securities in
the
manner described in the Prospectus. The Company shall not use
any part of
such proceeds to purchase or carry any margin stock or to extend
credit to
others for the purpose of purchasing or carrying any margin
stock. Neither
the issuance of any Security nor the use of the proceeds thereof
shall violate or
be inconsistent with the provisions of Regulations G, T, U or X
of the Board of
Governors of the Federal Reserve System.
SECTION 6.26. Money for Security Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying
Agent, it
will, on or before each due date of the principal of or interest
on any of the
Securities, segregate and hold in trust for the benefit of the
Persons entitled
thereto a sum sufficient to pay the principal (and premium, if
any) or interest
so becoming due until such sums shall be paid to such Persons or
otherwise
disposed of as herein provided and will promptly notify the
Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying
Agents, it
will, at least one business day prior to each due date of the
principal of or
interest on any Securities, deposit with a Paying Agent a sum, in
immediately
available funds, sufficient to pay such amount, such sum to be
held as
provided by the Trust Indenture Act, and (unless such Paying
Agent is the
Trustee) the Company will promptly notify the Trustee of its
action or failure
so to act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such
Paying Agent shall agree with the Trustee, subject to the
provisions of this
Section, that such Paying Agent will (i) comply with the
provisions of Section
317 of the Trust Indenture Act applicable to it as a Paying Agent
and (ii)
during the continuance of any Default by the Company (or any
other obligor
upon the Securities) in the making of any payment in respect of
the Securities,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums
held in trust by such Paying Agent as such.
The Company may at any time, for the purpose of
obtaining the
satisfaction and discharge of this Indenture or for any other
purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee
all sums
held in trust by the Company or such Paying Agent, such sums to
be held by
the Trustee upon the same terms as those upon which such sums
were held by
the Company or such Paying Agent; and, upon such payment by any
Paying
Agent to the Trustee, such Paying Agent shall be released from
all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or
then held by the Company, in trust for the payment of the
principal of (and
premium, if any) or interest on any Security and remaining
unclaimed for two
years after such principal (and premium, if any) or interest has
become due
and payable shall be paid to the Company on Company Request, or
(if then
held by the Company) shall be discharged from such trust; and the
Holder of
such Security shall thereafter, as an unsecured general creditor,
look only to
the Company for payment thereof, and all liability of the Trustee
or such
Paying Agent with respect to such trust money, and all liability
of the
Company as trustee thereof, shall thereupon cease; provided,
however, that the
Trustee or such Paying Agent, before being required to make any
such
repayment, may at the expense of the Company cause to be
published once, in
a newspaper published in the English language, customarily
published on each
Business Day and of general circulation in New York City, or give
by mail to
each Holder, notice that such money remains unclaimed and that,
after a date
specified therein, which shall not be less than 30 days from the
date of such
publication or mailing, any unclaimed balance of such money then
remaining
will be repaid to the Company.
ARTICLE VII
SUCCESSOR CORPORATION
SECTION 7.1. When Company May Merge, etc.
The Company shall not consolidate with or merge with or
into
any Person (other than a Recourse Subsidiary that is not an
Excluded
Company), and the Company will not, and will not permit, any of
its
Subsidiaries to sell, assign, transfer, lease or convey or
otherwise dispose of all
or substantially all of its properties and assets (determined on
a consolidated
basis for the Company and its Subsidiaries taken as a whole) in
one
transaction or a series of transactions to any other Person or
Persons (other
than a Recourse Subsidiary that is not an Excluded Company), or
permit any
Person (other than a Recourse Subsidiary) to consolidate with or
merge with or
into the Company, or convey, sell, assign, transfer or lease all
or substantially
all of such Person's properties and assets in one transaction or
a series of
transactions to the Company, unless:
(i) the resulting, surviving or transferee Person
shall be a
solvent Person organized and existing under the laws of the
United
States of America, any State thereof or the District of
Columbia;
(ii) the resulting, surviving or transferee Person
(if other than the
Company) shall expressly assume by an indenture supplemental
to the
Indenture, executed and delivered to the Trustee, in form
satisfactory to
the Trustee, all of the Company's obligations under the
Securities, the
Indenture and the Security Documents;
(iii) immediately before and after giving effect to
such transaction
or series of transactions, no Default shall have occurred
and be
continuing;
(iv) immediately after giving effect to such
transaction or series
of transactions (including, without limitation, any Debt
incurred or
anticipated to be incurred in connection with or in respect
of the
transaction or series of transactions), the resulting,
surviving or
transferee Person would be permitted to incur at least $1.00
of Debt
pursuant to the Indenture;
(v) immediately after giving effect to such
transaction or series
of transactions, the resulting, surviving or transferee
Person shall have a
Consolidated Net Worth in an amount which is not less than
the
Consolidated Net Worth of the Company prior to such
transaction;
(vi) each Recourse Subsidiary shall expressly
confirm that its
obligations under the Guarantee shall apply to the
obligations under the
Securities of any successor to the Company; and
(vii) the Company or the surviving entity shall
have delivered
to the Trustee an Officer's Certificate and an Opinion of
Counsel, each
stating that such consolidation, merger, conveyance, sale,
transfer or
lease and, if a supplemental indenture has been executed in
connection
with such transaction or series of transactions, such
supplemental
indenture complies with this covenant and that all
conditions precedent
in the Indenture relating to the transaction or series of
transactions have
been satisfied.
Notwithstanding the foregoing, clause (iv) shall not
prohibit a
transaction, the principal purpose of which is (as determined in
good faith by
the Board of Directors of the Company and evidenced by the Board
Resolution
or Board Resolutions thereof) to change the state of
incorporation of the
Company, and such transaction does not have as one of its
purposes the
evasion of the limitation on merger, consolidations and sales of
assets
contained herein. Nothing contained in this Article shall be
deemed to prevent
the Company or any Subsidiary from granting a security interest
in, or a
mortgage or Lien upon, or otherwise encumbering, any of its
assets, subject to
the limitations on Liens set forth in Section 6.10.
Notwithstanding the
foregoing, the Company and its Recourse Subsidiaries may not
consolidate
with or merge with or into a Non-Recourse Subsidiary or any
Excluded
Company or convey, sell, assign, transfer or lease all or
substantially all of
their properties and assets (determined, with respect to the
Company, on a
consolidated basis for the Company and its Subsidiaries taken as
a whole) in
one transaction or a series of transactions to any Non-Recourse
Subsidiary or
Excluded Company, or unless such transaction satisfies the
restrictions under
Sections 6.9, 6.13 and the other covenants (treating, under each
covenant, any
Non-Recourse Debt as Recourse Debt), permit any Non-Recourse
Subsidiary to
consolidate with or merge with or into the Company or any of its
Recourse
Subsidiaries or convey, sell, assign, transfer or lease all or
substantially all of
such Non-Recourse Subsidiary's properties and assets in one
transaction or a
series of transactions to the Company or any of its Recourse
Subsidiaries.
SECTION 7.2. Surviving Person Substituted.
Upon any consolidation or merger or any transfer of all
or
substantially all of the assets of the Company in accordance with
Section 7.1,
the surviving person formed by such consolidation or into which
the Company
is merged or to which such transfer is made shall succeed to, and
be
substituted for, and may exercise every right and power of, the
Company
under this Indenture with the same effect as if such surviving
person had been
named as the Company herein.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Events of Default.
"Event of Default", wherever used herein, means any one
of the
following events (whatever the reason for such Event of Default
and whether
it shall be voluntary or involuntary or be effected by operation
of law or
pursuant to any judgment, decree or order of any court or any
order, rule or
regulation of any administrative or governmental body):
(i) default in the payment of any interest upon any
Security
when it becomes due and payable, and continuance of such
default for a
period of 30 days; or
(ii) default in the payment of the principal, or
premium, if
any, of any Security on a Maturity Date; or
(iii) failure to redeem or purchase Securities when
required
pursuant to the Indenture and the Securities (including,
without
limitation, failure to make payments when due pursuant to a
Change of
Control Offer or Asset Sale Offer); or
(iv) default in the performance, or breach, of any
covenant or
agreement described in Section 7.1 of this Indenture; or
(v) default in the performance, or breach, of any
covenant or
agreement described in Sections 6.15 or 6.18 of this
Indenture, and
continuance of such default or breach for a period of five
days after the
Company has received notice of such noncompliance; or
(vi) failure to observe or perform any covenant,
condition or
agreement in the Securities, the Indenture or the Security
Documents by
the Company or any of its Subsidiaries (other than as
described in
clause (i), (ii), (iii), (iv) or (v)) and such failure to
observe or perform
continues for a period of 60 days after there has been given
to the
Company by the Trustee, or has been received by the Company
and the
Trustee from the Holders of at least 25% of the principal
amount of the
Securities then outstanding, a written notice specifying
such default,
demanding that it be remedied and stating that the notice is
a "Notice of
Default", unless, with respect to defaults under the
Security Documents,
the remedy or cure of such default requires work to be
performed, acts
to be done or conditions to be removed which cannot, by
their nature,
reasonably be performed, done or removed within such 60-day
period,
or if such remedy or cure is prevented by causes outside of
the control
or responsibility of the Company, or its Subsidiaries, as
the case may be,
in which case no "Event of Default" shall be deemed to exist
until the
date that is 90 days after such written notice so long as
the Company or
its Subsidiaries, as the case may be, shall have commenced
cure within
such 90-day period and shall diligently prosecute the same
to
completion; or
(vii) a default in the payment of principal at
final maturity
under any bond, debenture, note or other evidence of Debt,
including
any mortgage, indenture or instrument (other than this
Indenture or the
Securities) under which there may be issued or by which
there may be
secured or evidenced any Debt of the Company or any of its
Recourse
Subsidiaries (or the payment of which is Guaranteed now or
hereafter
by the Company or any of its Recourse Subsidiaries), whether
such Debt
or Guarantee now exists or shall hereafter be created, which
default
shall constitute a failure to pay any portion of the
principal of such Debt
in a principal amount of at least $2,000,000 when due and
payable after
the expiration of any applicable grace period with respect
thereto; or
(viii) a default under any bond, debenture, note or
other
evidence of Debt, including any mortgage, indenture or
instrument
(other than this Indenture or the Securities) under which
there may be
issued or by which there may be secured or evidenced any
Debt
(including any interest thereon) of the Company or its
Recourse
Subsidiaries or the payment of which is Guaranteed now or
hereafter by
the Company or any of its Recourse Subsidiaries, whether
such Debt or
Guarantee now exists or shall hereafter be created if (i) as
a result of
such event of default the maturity of such Debt has been
accelerated
prior to its stated maturity and (ii) the principal amount
of such Debt,
together with the principal amount of any other Debt of the
Company
and its Recourse Subsidiaries the maturity of which has been
so
accelerated, aggregates $5,000,000 or more; or
(ix) the Company or any Subsidiary (other than a
Non-
Recourse Subsidiary, unless such action or proceeding has a
Material
Adverse Effect on the interests of the Company or any
Recourse
Subsidiary) pursuant to or within the meaning of any
Bankruptcy Law:
(a) commences a voluntary case or proceeding; (b) consents
to the entry
of an order for relief against it in an involuntary case or
proceeding; (c)
consents to the appointment of a Custodian of it or for all
or
substantially all of its property; (d) makes a general
assignment for the
benefit of its creditors; or (e) admits in writing its
inability to pay its
debts as the same become due; or
(x) a court of competent jurisdiction enters an order
or decree
under any Bankruptcy Law that remains unstayed and in effect
for 60
days and: (a) is for relief against the Company or any
Subsidiary in an
involuntary case; (b) appoints a Custodian of the Company or
any
Subsidiary for all or substantially all of its property; or
(c) orders the
liquidation of the Company or any Subsidiary; provided, that
clauses (a),
(b) and (c) shall not apply to a Non-Recourse Subsidiary,
unless such
action or proceeding has a Material Adverse Effect on the
interests of
the Company or any Recourse Subsidiary; or
(xi) the Company or any Recourse Subsidiary shall
fail to
discharge any one or more judgments not covered by insurance
(from
which no further appeal may be taken) in excess of
$1,000,000, and
either (A) an enforcement proceeding has been commenced by
any
creditor upon such judgments or (B) such judgments shall
remain in
force, undischarged, unsatisfied, unstayed and unbonded for
more than
30 days; or
(xii) the Security Documents shall cease, for any
reason, to be in
full force and effect or shall cease to be effective to
grant a perfected
Lien on the Collateral with the priority purported to be
created thereby
(unless the cessation of effectiveness is due to the failure
by the Trustee
(or any agent or representative of the Trustee) to file
continuation
statements or similar filings or due to the gross negligence
of the
Trustee) with respect to any Collateral that, individually
or in the
aggregate, represents more than 1% of the book value of the
consolidated assets of the Company and the Resource
Subsidiaries
constituting Collateral or is material to the lines of
business in which the
Company and the Recourse Subsidiaries are engaged; or
(xiii) cessation of all or any portion of the
Subsidiary Guarantee
to be in full force and effect or the declaration of all or
any portion of
the Subsidiary Guarantee to be null and void and
unenforceable or the
finding that all or any portion of the Subsidiary Guarantee
to be invalid
on the denial of any Subsidiary of its liability under the
Subsidiary
Guarantee (other than by reason of release of a Subsidiary
in accordance
with its terms).
SECTION 8.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default
specified in
subparagraph (ix) or (x) of Section 8.1) occurs and is
continuing, then and in
every such case the Trustee or the Holders of at least 25% of the
principal
amount of the Outstanding Securities may declare the principal
amount and
accrued interest on all the Securities to be immediately due and
payable, by a
notice in writing to the Company (and to the Trustee if given by
the Holders),
and upon any such declaration such principal shall become
immediately due
and payable. If an Event of Default specified in clause (ix) or
(x) of Section 8.1
occurs, the principal amount and accrued interest shall ipso
facto become and
be immediately due and payable on all Outstanding Securities
without any
declaration or other act on the part of the Trustee or any
Holder.
At any time after such a declaration of acceleration
has been
made and before a judgment or decree for payment of the money due
has
been obtained by the Trustee as hereinafter in this Article
provided, the
Holders of a majority in principal amount of the Outstanding
Securities, by
written notice to the Company and the Trustee, may rescind and
annul such
declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee
a
sum sufficient to pay:
(a) all overdue interest on all Securities;
(b) the principal of any Securities which have
become due
otherwise than by such declaration of acceleration and
interest
thereon at the rate borne by the Securities;
(c) to the extent that payment of such interest
is lawful,
interest up on overdue interest at the rate borne by
the Securities;
and
(d) all sums paid or advanced by the Trustee
hereunder
and the reasonable compensation, expenses,
disbursements and
advances of the Trustee, its agents and counsel; and
(ii) all Events of Default, other than the
non-payment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as
provided in
Section 8.13.
No such rescission shall affect any subsequent default or impair
any right
consequent thereon.
SECTION 8.3. Collection of Debt and Suits for Enforcement by
Trustee.
The Company covenants that if:
(i) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days; or
(ii) default is made in the payment of the principal of
any Security on a Maturity Date,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the
Holders of such Securities, the whole amount then due and payable
on such
Securities for principal and interest, and, to the extent that
payment of such
interest shall be legally enforceable, interest on any overdue
principal and on
any overdue interest, at the rate set forth in Section 6.1, and,
in addition
thereto, such further amount as shall be sufficient to cover the
costs and
expenses of collection, including the reasonable compensation,
expenses,
disbursements and advances of the Trustee, its agents and
counsel.
If an Event of Default occurs and is continuing, the
Trustee may
in its discretion proceed to protect and enforce its rights and
the rights of the
Holders by such appropriate judicial proceedings as the Trustee
shall deem
most effectual to protect and enforce any such rights, whether
for the specific
enforcement of any covenant or agreement in this Indenture or the
Security
Documents or in aid of the exercise of any power granted herein,
or to enforce
any other proper remedy.
Each Holder, by accepting a Security, acknowledges that
the
exercise of remedies by the Trustee with respect to the
Collateral is subject to
the terms and conditions of the Security Documents and the
proceeds received
upon realization of the Collateral shall be applied by the
Trustee in accordance
with Section 8.6.
SECTION 8.4. Trustee May File Proofs of Claims.
In case of any judicial proceeding relative to the
Company (or
any other obligor upon the Securities), its property or its
creditors, the Trustee
shall be entitled and empowered, by intervention in such
proceeding or
otherwise, to take any and all actions authorized under the Trust
Indenture
Act in order to have claims of the Holders and the Trustee
allowed in any
such proceeding. In particular, the Trustee shall be authorized
to collect and
receive any moneys or other property payable or deliverable on
any such
claims and to distribute the same; and any custodian, receiver,
assignee,
trustee, liquidator, sequestrator or other similar official in
any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the
Trustee and, in the event that the Trustee shall consent to the
making of such
payments directly to the Holders, to pay to the Trustee any
amount due it for
the reasonable compensation, expenses, disbursements and advances
of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under
this Article VIII and Section 9.7.
No provision of this Indenture shall be deemed to
authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Holder
any plan of reorganization, arrangement, adjustment or
composition affecting
the Securities or the rights of any Holder thereof or to
authorize the Trustee to
vote in respect of the claim of any Holder in any such
proceeding.
SECTION 8.5. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture,
the Security
Documents, or the Securities may be prosecuted and enforced by
the Trustee
without the possession of any of the Securities or the production
thereof in any
proceeding relating thereto, and any such proceeding instituted
by the Trustee
shall be brought in its own name as trustee of an express trust,
and any
recovery of judgment shall, after provision for the payment of
the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents
and counsel, be for the ratable benefit of the Holders of the
Securities in
respect of which such judgment has been recovered.
SECTION 8.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this
Article shall
be applied in the following order, at the date or dates fixed by
the Trustee
and, in case of the distribution of such money on account of
principal (and
premium, if any) or interest, upon presentation of the Securities
and the
notation thereon of the payment if only partially paid and upon
surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the
Trustee under this Article VIII and Section 9.7 and, in
its
capacity as Collateral Agent, for amounts due under the
Security Documents;
SECOND: To the payment of unpaid interest
accrued on the Securities in respect of which or for
the
benefit of which such money has been collected,
ratably,
without preference or priority of any kind, according
to the
amounts due and payable on such Securities for
interest;
THIRD: To the payment of the unpaid
principal of the Securities in respect of which or for
the benefit of which such money has been collected,
ratably, without preference or priority of any kind,
according to the amounts due and payable on such
Securities for principal;
FOURTH: To the payment of the unpaid
premium in respect of which or for the benefit of
which such money has been collected, ratably,
without preference or priority of any kind,
according to the amounts due and payable on such
Securities for principal; and
FIFTH: To the Company or any other
obligors on the Securities, as their interests may
appear, or as a court of competent jurisdiction may
direct.
SECTION 8.7. Limitation on Suits.
Except as provided in Section 8.8, no Holder of any
Security shall
have any right to institute any proceeding, judicial or
otherwise, with respect
to this Indenture or the Security Documents, or for the
appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(ii) the Holders of at least 25% in principal amount of
the Outstanding Securities shall have made written request
to the
Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the
Trustee
reasonable indemnity against the costs, expenses and
liabilities to
be incurred in compliance with such request;
(iv) the Trustee for 15 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any
such proceeding; and
(v) no direction inconsistent with such written
request
has been given to the Trustee during such 15-day period by
the
Holders of a majority in principal amount of the Outstanding
Securities;
it being understood and intended that no one or more Holders
shall have any
right in any manner whether by virtue of, or by availing of, any
provision of
this Indenture or the Security Documents to affect, disturb or
prejudice the
rights of any other Holders, or to obtain or to seek to obtain
priority or
preference over any other Holders or to enforce any right under
this Indenture
or the Security Documents, except in the manner herein provided
and for the
equal and ratable benefit of all the Holders.
The foregoing limitations shall not apply to a suit
instituted by a
Holder for the enforcement of the payment of principal of (and
premium, if
any) or accrued interest on such Securities on or after the
respective due dates
set forth in such Securities.
SECTION 8.8. Unconditional Right of Holders to Receive Principal
and
Interest.
Notwithstanding any other provision in this Indenture,
the
Holder of any Security shall have the right, which is absolute
and
unconditional, to receive payment of the principal of (and
premium, if any)
and (subject to Section 3.7) interest on such Security on the
respective Maturity
Dates expressed in such Security and to institute suit for the
enforcement of
any such payment, and such rights shall not be impaired or
affected without
the consent of such Holder, except to the extent that the
institution or
prosecution of such suit or entry of judgment therein would,
under applicable
law, result in the surrender, impairment or waiver of the Lien of
this Indenture
and the Security Documents upon the Collateral.
SECTION 8.9. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to
enforce any right or remedy under this Indenture or the Security
Documents
and such proceeding has been discontinued or abandoned for any
reason, or
has been determined adversely to the Trustee or to such Holder,
then and in
every such case, subject to any determination in such proceeding,
the
Company, the Trustee and the Holders shall be restored severally
and
respectively to their former positions hereunder and thereafter
all rights and
remedies of the Trustee and the Holders shall continue as though
no such
proceeding had been instituted.
SECTION 8.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the
replacement or
payment of mutilated, destroyed, lost or stolen Securities in the
last paragraph
of Section 3.6, no right or remedy herein conferred upon or
reserved to the
Trustee or to the Holders is intended to be exclusive of any
other right or
remedy, and every right and remedy shall, to the extent permitted
by law, be
cumulative and in addition to every other right and remedy given
hereunder
or now or hereafter existing at law or in equity or otherwise.
The assertion or
employment of any right or remedy hereunder, or otherwise, shall
not prevent
the concurrent assertion or employment of any other appropriate
right or
remedy.
SECTION 8.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of
any
Security to exercise any right or remedy accruing upon any Event
of Default
shall impair any such right or remedy or constitute a waiver of
any such Event
of Default or an acquiescence therein. Every right and remedy
given by this
Article or by law to the Trustee or to the Holders may be
exercised from time
to time, and as often as may be deemed expedient, by the Trustee
or by the
Holders, as the case may be.
SECTION 8.12. Control by Holders.
The Holders of a majority in principal amount of the
Outstanding
Securities shall have the right to direct the time, method and
place of
conducting any proceeding for any remedy available to the Trustee
or
exercising any trust or power conferred on the Trustee under this
Indenture or
the Security Documents or available at law or equity; provided,
that the Trustee
may refuse to follow any direction that:
(i) conflicts with any rule of law or with this
Indenture or the
Security Documents;
(ii) the Trustee determines may be unduly
prejudicial to the
rights of another Holder; or
(iii) may involve the Trustee in personal liability
unless the
Trustee has indemnification satisfactory to it in its sole
discretion against
any loss or expense caused by it following such directions;
provided, further, that the Trustee may take any other action
deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 8.13. Waiver of Past Defaults.
The Holders of a majority in principal amount of the
Outstanding
Securities may on behalf of the Holders of all the Securities
waive any past
default hereunder and its consequences, except a default
(i) in the payment of the principal of (or premium, if
any) or
interest on any Security; or
(ii) in respect of a covenant or provision hereof
which under
Article XI cannot be modified or amended without the consent
of the
Holder of each Outstanding Security affected by such a
modification or
amendment.
Upon any such waiver, such default shall cease to
exist, and any
Event of Default arising therefrom shall be deemed to have been
cured, for
every purpose of this Indenture; but no such waiver shall extend
to any
subsequent or other default or impair any right consequent
thereon.
SECTION 8.14. Undertaking for Costs.
In any suit for the enforcement of any right or remedy
under this
Indenture, or in any suit against the Trustee for any action
taken, suffered or
omitted by it as Trustee, a court may require any party litigant
in such suit to
file an undertaking to pay the costs of such suit, and may assess
reasonable
costs, including reasonable attorneys' fees, against any such
party litigant, in
the manner and to the extent provided in the Trust Indenture Act;
provided,
that neither this Section nor the Trust Indenture Act shall be
deemed to
authorize any court to require such an undertaking or to make
such an
assessment in any suit instituted by the Trustee, a suit by a
Holder pursuant to
Section 8.8, or a suit by a Holder or Holders of more than 10% in
aggregate
principal amount of the Outstanding Securities.
SECTION 8.15. Collection Suit by Trustee.
If an Event of Default specified in Section 8.1(i) or
8.1(ii) or 8.1(iii)
occurs and is continuing, the Trustee may recover judgment in its
own name
and as trustee of an express trust against the Company (or any
other obligor
upon the Securities) for the whole amount of principal and
accrued interest
remaining unpaid, together with interest overdue on principal
and, to the
extent that payment of such interest is lawful, interest on
overdue installments
of interest, in each case at the default rate set forth in
Section 6.1, and such
further amount as shall be sufficient to cover the costs and
expenses of
collection, including the reasonable compensation, expenses,
disbursements
and advances of the Trustee, its agents and counsel.
ARTICLE IX
THE TRUSTEE
SECTION 9.1. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be
as provided
by the Trust Indenture Act. Notwithstanding the foregoing, no
provision of
this Indenture shall require the Trustee to expend or risk its
own funds or
otherwise incur any financial liability in the performance of any
of its duties
hereunder, or in the exercise of any of its rights or powers, if
it shall have
reasonable grounds for believing that repayment of such funds or
adequate
indemnity against such risk or liability is not reasonably
assured to it.
Whether or not therein expressly so provided, every provision of
this
Indenture relating to the conduct or affecting the liability of
or affording
protection to the Trustee shall be subject to the provisions of
this Section 9.1.
If an Event of Default has occurred and is continuing, the
Trustee shall
exercise such of the rights and powers vested in it by this
Indenture and the
Security Documents and use the same degree of care and skill in
its exercise as
a prudent Person would exercise or use under the circumstances in
the
conduct of its own affairs.
SECTION 9.2. Notice of Defaults.
The Trustee shall give the Holders notice of any
default
hereunder as and to the extent provided by Section 315(b) of the
Trust
Indenture Act. Except in the case of a Default or an Event of
Default in
payment of principal of or interest on any Security (including
the failure to
make payments with respect to redemptions, Asset Sale Offers or a
Change of
Control Offer), the Trustee may withhold the notice if and so
long as the
Trustee in good faith determines that withholding the notice is
in the interest
of Holders.
SECTION 9.3. Certain Rights of Trustee.
Subject to Sections 315(a) through (d) of the Trust
Indenture Act,
the terms of which are hereby incorporated herein by this
reference:
(a) the Trustee may rely and shall be protected in
acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein
shall be sufficiently evidenced by a Company Request or
Company
Order and any resolution of the Board of Directors may be
sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture
the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any
action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel
shall be
full and complete authorization and protection in respect of
any
action taken, suffered or omitted by it hereunder in good
faith
and in reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of
the rights or powers vested in it by this Indenture at the
request or
direction of any of the Holders pursuant to this Indenture,
unless such
Holders shall have offered to the Trustee reasonable
security or
indemnity against the costs, expenses and liabilities which
might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution,
certificate, statement, instrument, opinion, report, notice,
request,
direction, consent, order, bond, debenture, note, other
evidence of
indebtedness or other paper or document, but the Trustee, in
its
discretion, may make such further inquiry or investigation
into
such facts or matters as it may see fit, and, if the Trustee
shall
determine to make such further inquiry or investigation, it
shall
be entitled to examine the books, records and premises of
the
Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or
powers
hereunder or perform any duties hereunder either directly or
by or
through agents or attorneys and the Trustee shall not be
responsible for
any misconduct or negligence on the part of any agent or
attorney
appointed with due care by it hereunder; and
(h) subject to Section 11.2 hereof, the Trustee may
(but shall
not be obligated to), without the consent of the Holders,
give any
consent, waiver or approval required under the Security
Documents or
by the terms hereof with respect to the Collateral, but
shall not without
the consent of the Holders of a majority in aggregate
principal amount
of the Outstanding Securities at the time (i) give any
consent, waiver or
approval or (ii) agree to any amendment or modification of
the Security
Documents, in each case, that shall have an adverse effect
on the
interests of any Holder. The Trustee shall be entitled to
request and
conclusively rely on an Opinion of Counsel with respect to
whether any
consent, waiver, approval, amendment or modification shall
have an
adverse effect on the interests of any Holder.
SECTION 9.4. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities,
except the
Trustee's certificates of authentication, shall be taken as the
statements of the
Company, and the Trustee assumes no responsibility for their
correctness. The
Trustee makes no representations as to the validity or
sufficiency of this
Indenture or of the Securities. The Trustee shall not be
accountable for the use
or application by the Company of Securities or the proceeds
thereof.
SECTION 9.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying
Agent, any
Security Registrar or any other agent of the Company, in its
individual or any
other capacity, may become the owner or pledgee of Securities
and, subject to
Section 9.8 and 9.13, may otherwise deal with the Company with
the same
rights it would have if it were not Trustee, Authenticating
Agent, Paying
Agent, Security Registrar or such other agent.
SECTION 9.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not
be
segregated from other funds except to the extent required by law.
The Trustee
shall be under no liability for interest on any money received by
it hereunder
except as otherwise agreed in writing with the Company.
SECTION 9.7. Compensation and Reimbursement.
The Company agrees:
(i) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder and
under the
Security Documents (which compensation shall not be limited
by any
provision of law in regard to the compensation of a trustee
of an
express trust);
(ii) except as otherwise expressly provided
herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
or the
Security Documents (including the reasonable compensation
and
the expenses and disbursements of its agents and counsel),
except
any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(iii) to indemnify the Trustee for, and to hold it
harmless
against, any loss, liability or expense incurred without
negligence or bad
faith on its part, arising out of or in connection with the
acceptance or
administration of this Indenture or the Security Documents,
including
the costs and expenses of defending itself against any claim
or liability
in connection with the exercise or performance of any of its
powers or
duties hereunder or thereunder.
The Trustee shall notify the Company promptly of any
claim
asserted against it for which it may seek indemnity.
As security for the performance of the obligations of
the
Company under this Section the Trustee shall have a Lien prior to
the
Securities on all properties and funds held or collected by the
Trustee as such,
except funds held in trust for the payment of principal of (or
premium, if any)
or interest on particular Securities.
If the Trustee incurs expenses or renders services
after an Event
of Default specified in Section 8.1(ix) or (x) occurs, the
expenses and
compensation for the services will be intended to constitute
expenses of
administration under any applicable Bankruptcy Law or other
similar law.
The Company's obligations under this Section 9.7 and
any Lien
arising hereunder shall survive the resignation or removal of any
Trustee, the
discharge of the Company's obligations pursuant to Articles IV or
XIV of this
Indenture and/or the termination of this Indenture. Furthermore,
the Holders
shall be subrogated to the rights of the Trustee under this
Section 9.7, and this
Section 9.7 shall inure to the benefit of the Holders in
connection with any
actions by the Holders as permitted under Sections 8.7 and 8.8.
SECTION 9.8. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting
interest within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee
shall either
eliminate such interest or resign, to the extent and in the
manner provided by,
and subject to the provisions of, the Trust Indenture Act and
this Indenture.
SECTION 9.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall be a
Person that is eligible pursuant to Section 310(a) of the Trust
Indenture Act to
act as such and has a combined capital and surplus of at least
$50,000,000. If
such Person publishes reports of condition at least annually,
pursuant to law
or to the requirements of any supervising or examining authority,
then for the
purposes of this Section 9.9, the combined capital and surplus of
such Person
shall be deemed to be its combined capital and surplus as set
forth in its most
recent report of condition so published. If at any time the
Trustee shall cease
to be eligible in accordance with the provisions of this Section
9.9, it shall
resign immediately in the manner and with the effect hereinafter
specified in
this Article.
SECTION 9.10. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become
effective until the acceptance of appointment by the successor
Trustee under
Section 9.11.
(b) The Trustee may resign at any time by giving
written
notice thereof to the Company. If an instrument of acceptance by
a successor
Trustee shall not have been delivered to the Trustee within 30
days after the
giving of such notice of resignation, the resigning Trustee may
petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of
the
Holders of a majority in principal amount of the Outstanding
Securities,
delivered to the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section
9.8 after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at
least
six months; or
(ii) the Trustee shall cease to be eligible
under Section
9.9 and shall fail to resign after written request therefor
by the Company
or by any such Holder; or
(iii) the Trustee shall become incapable of
acting or shall
be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of
its property shall be appointed or any public officer shall
take charge or
control of the Trustee or of its property or affairs for the
purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (1) the Company by a Board Resolution may
remove
the Trustee, or (2) subject to Section 8.14, any Holder who has
been a bona fide
Holder of a Security for at least six months may, on behalf of
himself and all
others similarly situated, petition any court of competent
jurisdiction for the
removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any
cause, the Company, by a Board Resolution, shall promptly appoint
a
successor Trustee. If, within one year after such resignation,
removal or
incapability, or the occurrence of such vacancy, a successor
Trustee shall be
appointed by Act of the Holders of a majority in principal amount
of the
Outstanding Securities delivered to the Company and the retiring
Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such
appointment, become the successor Trustee and supersede the
successor
Trustee appointed by the Company. If no successor Trustee shall
have been so
appointed by the Company or the Holders and accepted appointment
in the
manner hereinafter provided, any Holder who has been a bona fide
Holder of a
Security for at least six months may, on behalf of himself and
all others
similarly situated, petition any court of competent jurisdiction
for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation
and
each removal of the Trustee and each appointment of a successor
Trustee to all
Holders in the manner provided in Section 1.6. Each notice shall
include the
name of the successor Trustee and the address of its Corporate
Trust Office.
(g) Any resignation or removal of the Trustee pursuant
to this
Indenture shall be deemed to be a resignation or removal of the
Trustee in its
capacity as Collateral Agent under the Security Documents and any
appointment of a successor Trustee pursuant to this Indenture
shall be deemed
to be an appointment of a successor Collateral Agent under the
Security
Documents and such successor shall assume all of the obligations
of the
Trustee in its capacity as Collateral Agent under the Security
Documents.
SECTION 9.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall
execute,
acknowledge and deliver to the Company and to the retiring
Trustee an
instrument accepting such appointment, and thereupon the
resignation or
removal of the retiring Trustee shall become effective and such
successor
Trustee, without any further act, deed or conveyance, shall
become vested with
all the rights, powers, trusts and duties of the retiring
Trustee; but, on request
of the Company or the successor Trustee, such retiring Trustee
shall, upon
payment of its charges, execute and deliver an instrument
transferring to such
successor Trustee all the rights, powers and trusts of the
retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee
all property
and money held by such retiring Trustee hereunder, subject
nevertheless to its
Lien, if any, provided for in Section 9.7. Upon request of any
such successor
Trustee, the Company shall execute any and all instruments for
more fully and
certainly vesting in and confirming to such successor Trustee all
such rights,
powers and trusts.
No successor Trustee shall accept its appointment
unless at the
time of such acceptance such successor Trustee shall be qualified
and eligible
under this Article.
SECTION 9.12. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting
from any merger, conversion or consolidation to which the Trustee
shall be a
party, or any corporation succeeding to all or substantially all
the corporate
trust business of the Trustee, shall be the successor of the
Trustee hereunder;
provided such corporation shall be otherwise qualified and
eligible under this
Article, without the execution or filing of any paper or any
further act on the
part of any of the parties hereto. In case any Securities shall
have been
authenticated, but not delivered, by the Trustee then in office,
any successor by
merger, conversion or consolidation to such authenticating
Trustee may adopt
such authentication and deliver the Securities so authenticated
with the same
effect as if such successor Trustee had itself authenticated such
Securities.
SECTION 9.13. Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a creditor
of the
Company (or any other obligor upon the Securities), the Trustee
shall be
subject to the provisions of Section 311 of the Trust Indenture
Act regarding
the collection of claims against the Company (or any such other
obligor).
SECTION 9.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or
Agents
which shall be authorized to act on behalf of the Trustee to
authenticate
Securities issued upon original issue and upon exchange,
registration of
transfer or partial repurchase or pursuant to Section 3.6, and
Securities so
authenticated shall be entitled to the benefits of this Indenture
and shall be
valid and obligatory for all purposes as if authenticated by the
Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication
and delivery of Securities by the Trustee or the Trustee's
certificate of
authentication, such reference shall be deemed to include
authentication and
delivery on behalf of the Trustee by an Authenticating Agent and
a certificate
of authentication executed on behalf of the Trustee by an
Authenticating
Agent. Each Authenticating Agent shall be acceptable to the
Company and
shall at all times be a corporation organized and doing business
under the
laws of the United States of America, any State thereof or the
District of
Columbia, authorized under such laws to act as Authenticating
Agent, having
a combined capital and surplus of not less than $50,000,000 and
subject to
supervision or examination by Federal or State authority. If
such
Authenticating Agent publishes reports of condition at least
annually, pursuant
to law or to the requirements of said supervising or examining
authority, then
for the purposes of this Section 9.14, the combined capital and
surplus of such
Authenticating Agent shall be deemed to be its combined capital
and surplus
as set forth in its most recent report of condition so published.
If at any time
an Authenticating Agent shall cease to be eligible in accordance
with the
provisions of this Section 9.14, such Authenticating Agent shall
resign
immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may
be
merged or converted or with which it may be consolidated, or any
corporation
resulting from any merger, conversion or consolidation to which
such
Authenticating Agent shall be a party, or any corporation
succeeding to the
corporate agency or corporate trust business of an Authenticating
Agent, shall
continue to be an Authenticating Agent, provided such corporation
shall be
otherwise eligible under this Section 9.14, without the execution
or filing of
any paper or any further act on the part of the Trustee or the
Authenticating
Agent.
An Authenticating Agent may resign at any time by
giving
written notice thereof to the Trustee and to the Company. The
Trustee may at
any time terminate the agency of an Authenticating Agent by
giving written
notice thereof to such Authenticating Agent and to the Company.
Upon
receiving such a notice of resignation or upon such a
termination, or in case at
any time such Authenticating Agent shall cease to be eligible in
accordance
with the provisions of this Section 9.14, the Trustee may appoint
a successor
Authenticating Agent which shall be acceptable to the Company and
shall mail
written notice of such appointment by first-class mail, postage
prepaid, to all
Holders as their names and addresses appear in the Security
Register. Any
successor Authenticating Agent upon acceptance of its appointment
hereunder
shall become vested with all the rights, powers and duties of its
predecessor
hereunder, with like effect as if originally named as an
Authenticating Agent.
No successor Authenticating Agent shall be appointed unless
eligible under
the provisions of this Section 9.14.
The Trustee agrees to pay to each Authenticating Agent
from
time to time reasonable compensation for its services under this
Section 9.14,
and the Trustee shall be entitled to be reimbursed for such
payments, subject
to the provisions of Section 9.7.
If an appointment is made pursuant to this Section
9.14, the
Securities may have endorsed thereon, in addition to the
Trustee's certificate of
authentication, an alternative certificate of authentication in
the following form:
This is one of the Securities described in the
within-mentioned
Indenture.
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities
issued under the Indenture
described herein.
THE HUNTINGTON NATIONAL BANK,
As Trustee
By_______________________________
As Authenticating Agent
By_______________________________
Authorized Signer
ARTICLE X
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 10.1. Company to Furnish Trustee Names and
Addresses of
Holders.
The Company will furnish or cause to be furnished to
the
Trustee:
(i) semi-annually, not more than 15 days after each
Regular
Record Date, a list, in such form as the Trustee may
reasonably require,
of the names and addresses of the Holders as of such Regular
Record
Date; and
(ii) at such other times as the Trustee may
request in
writing, within 30 days after the receipt by the Company of
any
such request, a list of similar form and content as of a
date not
more than 15 days prior to the time such list is furnished;
provided, no such list need be furnished if the Trustee is acting
as Security
Registrar.
SECTION 10.2. Preservation of Information; Communications
to Holders.
(a) The Trustee shall preserve, in as current a form
as is
reasonably practicable, the names and addresses of Holders
contained in the
most recent list furnished to the Trustee as provided in Section
10.1 and the
names and addresses of Holders received by the Trustee in its
capacity as
Security Registrar. The Trustee may destroy any list furnished
to it as
provided in Section 10.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other
Holders
with respect to their rights under this Indenture or under the
Securities, and
the corresponding rights and duties of the Trustee, shall be as
provided by
Section 312 of the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and
holding the
same, agrees with the Company and the Trustee that neither the
Company nor
the Trustee nor any agent of either of them shall be held
accountable by reason
of any disclosure of information as to names and addresses of
Holders made
pursuant to Section 312 of the Trust Indenture Act.
SECTION 10.3. Reports by Trustee.
(a) Within 60 days after each July 15 beginning with
July 15,
1996, the Trustee shall transmit to Holders such reports
concerning the Trustee
and its actions under this Indenture as may be required pursuant
to Section
313 of the Trust Indenture Act at the times and in the manner
provided
pursuant thereto.
(b) A copy of each such report shall, at the time of
such
transmission to Holders, be filed by the Trustee with each stock
exchange
upon which the Securities are listed, with the Commission and
with the
Company. The Company will notify the Trustee when the Securities
are listed
on any stock exchange.
SECTION 10.4. Reports by Company.
The Company shall file with the Trustee and the
Commission,
and transmit to Holders, such information, documents and other
reports, and
such summaries thereof, as may be required pursuant to Section
314 of the
Trust Indenture Act at the times and in the manner provided
pursuant to such
Act; provided, that any such information, documents or reports
required to be
filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act
shall be filed with the Trustee within 5 days after the same
shall be so required
to be filed with the Commission; provided further that if the
Company is not
subject to the periodic reporting and information requirements of
the Exchange
Act, it will provide to Holders annual reports containing audited
consolidated
financial statements and an opinion thereon by the Company's
independent
certified public accountants, and quarterly reports for the first
three quarters of
each fiscal year containing unaudited condensed consolidated
financial
statements.
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.1. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders, the Company and the
Recourse Subsidiaries (if a party thereto), when authorized by a
Board
Resolution, and the Trustee (if a party thereto) and the
Collateral Agent (if a
party thereto) from time to time, may enter into one or more
indentures
supplemental hereto or waivers of or amendments to the Security
Documents
or the Securities, in form reasonably satisfactory to the
Trustee, for any of the
following purposes:
(i) to evidence the succession of another Person to
the
Company or any Subsidiary of the Company and the assumption
by any such successor of the covenants of the Company or
such
Subsidiary, as the case may be, herein and in the
Securities; or
(ii) to add to the covenants of the Company for
the
benefit of the Holders, or to surrender any right or power
herein
conferred upon the Company; or
(iii) to comply with any requirements of the
Commission
in order to maintain the qualification of this Indenture
under the
Trust Indenture Act, as contemplated by Section 11.5; or
(iv) to pledge or grant a security interest in
favor of the
Collateral Agent as additional security for the payment and
performance of (A) the Company's obligations with respect to
this Indenture, (B) the Recourse Subsidiaries' obligations
with
respect to the Subsidiary Guarantee or (C) the Steelmaking
Subsidiaries with respect to the Intercompany Notes, in any
property or assets, including any that are required to be
mortgaged, pledged or hypothecated or in which a security
interest is required to be granted, to the Collateral Agent
pursuant to the Security Documents or otherwise; or
(v) to cure any ambiguity, to correct or supplement
any
provision herein which may be inconsistent with any other
provision herein, or to make any other provisions with
respect to
matters or questions arising under this Indenture which
shall not
be inconsistent with the provisions of this Indenture;
provided,
that such action pursuant to this clause (v) shall not
adversely
affect the interests of the Holders; or
(vi) to evidence the full release and discharge of
a
Subsidiary under the Indenture, the Securities and the
Security
Documents upon the sale or other disposition of all of the
Capital
Stock of the Subsidiary or all or substantially all of its
assets;
provided, that such sale or other disposition does not
violate and
occurs in conformity with the terms of this Indenture; or
(vii) to reflect any Permitted Related Acquisition
pursuant to Section 6.15(b) or any transfer of assets
pursuant to
Section 6.12, or any other release or transfer of property
or assets
which is permitted by this Indenture.
SECTION 11.2. Supplemental Indentures with Consent of
Holders.
(a) With the consent of the Holders of not less than a
majority in
principal amount of the Outstanding Securities, by Act of said
Holders
delivered to the Company and the Trustee, the Company, when
authorized by
a Board Resolution, the Recourse Subsidiaries (if a party
thereto), the Collateral
Agent (if a party thereto) and the Trustee from time to time may
enter into an
indenture or indentures supplemental hereto or amendments,
waivers and
modifications to the Security Documents for the purpose of adding
any
provisions to or changing in any manner or eliminating any of the
provisions
of this Indenture, the Securities or the Security Documents or of
modifying in
any manner the rights of the Holders under this Indenture, the
Securities or
the Security Documents; provided, however, that no such
supplemental indenture
shall, without the consent of the Holder of each Outstanding
Security affected
thereby:
(i) extend the Stated Maturity of the principal of, or
any installment of interest on, any Security, or alter the
redemption provisions or reduce the principal amount thereof
or
the rate of interest thereon, or change the time or place of
payment where, or the coin or currency in which, any
Security or
premium or interest thereon is payable, impair the right to
institute suit for the enforcement of any such payment on or
after
the Maturity Date thereof; or
(ii) reduce the percentage in principal amount of
the
Outstanding Securities, the consent of whose Holders is
required
for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with
certain
provisions of this Indenture, the Securities or the Security
Documents or certain defaults hereunder or thereunder and
their
consequences) or the consent of whose Holders is required to
take any action under the Indenture, the Securities or the
Security
Documents; or
(iii) modify the provisions of Section 6.15 or
6.18; or
(iv) modify any of the provisions of this Section
11.2 or
Section 8.8 or 8.13, except to increase any such percentage
or to
provide that certain other provisions of this Indenture
cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby; or
(v) affect the ranking of the Securities, the
Subsidiary
Guarantee or the Liens in favor of the Trustee, the
Collateral
Agent and the Holders in a manner adverse to the Holders or
release all or substantially all of the Collateral.
(b) It shall not be necessary for any Act of Holders
under this
Section to approve the particular form of any proposed
supplemental
indenture, but it shall be sufficient if such Act shall approve
the substance
thereof.
(c) After an amendment, supplement or waiver under
this
Section 11.2 becomes effective, the Company shall mail to the
Holders affected
thereby a notice briefly describing the amendment, supplement or
waiver.
Any failure of the Company to mail such notice, or any defect
therein, shall
not, however, in any way impair or affect the validity of any
such amendment,
supplement or waiver.
SECTION 11.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts
created by, any
supplemental indenture permitted by this Article or the
modifications thereby
of the trusts created by this Indenture, the Trustee shall be
entitled to receive,
and (subject to Section 9.1) shall be fully protected in relying
upon, an Opinion
of Counsel stating that the execution of such supplemental
indenture is
authorized or permitted by this Indenture. The Trustee may, but
shall not be
obligated to, enter into any such supplemental indenture which
affects the
Trustee's own rights, duties or immunities under this Indenture
or otherwise.
SECTION 11.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this
Article, this Indenture shall be modified in accordance
therewith, and such
supplemental indenture shall form a part of this Indenture for
all purposes;
and every Holder of Securities theretofore or thereafter
authenticated and
delivered hereunder shall be bound thereby.
SECTION 11.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 11.6. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the
execution of any
supplemental indenture pursuant to this Article may, and shall if
required by
the Trustee, bear a notation in form approved by the Trustee as
to any matter
provided for in such supplemental indenture. If the Company
shall so
determine, new Securities so modified as to conform, in the
opinion of the
Trustee and the Company, to any such supplemental indenture may
be
prepared and executed by the Company and authenticated and
delivered by
the Trustee in exchange for Outstanding Securities.
ARTICLE XII
COLLATERAL AND SECURITY
SECTION 12.1. Collateral and Security Documents.
(a) In order to secure the due and punctual payment of
the
principal of (and premium, if any) and interest on the Securities
when and as
the same shall be due and payable, whether on an Interest Payment
Date,
Maturity Date, by acceleration, redemption or otherwise, and
interest on the
overdue principal of (and premium, if any) and interest (to the
extent
permitted by law), if any, on the Securities and the performance
of all other
obligations of the Company to the Holders or the Trustee under
this Indenture
and the Securities (the "Company Obligations"), the Company and
the Trustee
have simultaneously with the execution of this Indenture entered
into the
Pledge Agreement pursuant to which the Company has granted to the
Trustee,
in its capacity as Collateral Agent, for the benefit of the
Holders, a first priority
Lien on and security interest in the Collateral described
therein, subject to the
exceptions permitted by Section 6.10. Simultaneously with the
execution of the
Indenture, or if later, the date on which a Person becomes a
Subsidiary of the
Company (with the exception of Non-Recourse Subsidiaries), each
Subsidiary
of the Company shall guarantee the Company Obligations pursuant
to the
Subsidiary Guarantee. On the Issue Date, each of the Steelmaking
Subsidiaries
of the Company shall enter into a Subsidiary Security Agreement
and
Mortgages (if such Subsidiary holds title to real property or
leases real
property material to it operations) to secure its obligations
under the
Subsidiary Guarantee, pursuant to which such Subsidiary shall
grant to the
Trustee for the benefit of the Holders a first priority Lien on
and security
interest in the Collateral described in such Subsidiary Security
Agreement or
Mortgage(s), subject to the exceptions permitted by Section 6.10.
On the Issue
Date, each of the Steelmaking Subsidiaries of the Company shall
enter into an
ICN Security Agreement and an ICN Mortgage(s) (if such Subsidiary
holds
title to real property or leases real property material to its
operations) to secure
its obligations under its executed Intercompany Note, pursuant to
which such
Subsidiary shall grant to the Company a second priority Lien on
and security
interest in the Collateral described in such ICN Security
Agreement or ICN
Mortgage(s), subject to the exceptions permitted by Section 6.10.
Subsequent
to the Issue Date, the Company shall cause newly-formed or
acquired
Recourse Subsidiaries of the Company to execute, as soon as
practicable, a
supplement to the Subsidiary Guarantee to become a party
thereunder and
shall cause all Recourse Subsidiaries (excluding the Excluded
Companies,
provided that such Excluded Companies do not engage in businesses
other
than businesses substantially similar to the respective
businesses of the
Excluded Companies on the Issue Date) including, without
limitation, newly
formed or acquired Recourse Subsidiaries, to execute as soon as
practicable
any further security agreements (substantially in the form of the
Subsidiary
Security Agreement), Mortgages, or other agreements (including
any filings)
necessary to create an effective security interest in the
entirety of their real
property, machinery, equipment (including, without limitation,
(i) furniture,
furnishings, tools, lubricants, spare parts, shelving, displays,
cases, accessories,
motors and engines, (ii) all attachments, components, parts and
accessories
installed thereon or affixed thereto and (iii) equipment and
fixtures, as such
terms are defined in the Uniform Commercial Code as from time to
time is in
effect in the State of New York), and proceeds thereof. In the
event the
Company becomes the owner of the types of assets referred to in
the
immediately preceding the sentence for any reason whatsoever, the
Company
shall execute and deliver as soon as practicable a security
agreement
(substantially in the form of the Subsidiary Security Agreement)
and/or
mortgages (substantially in the form of the Mortgages) or other
agreements
(including any filings) necessary to create an effective security
interest in favor
of the Collateral Agent for the benefit of the Holders to secure
the Company's
obligations arising in connection with the Securities or the
Security Documents.
The Trustee, the Company and the Subsidiaries hereby agree that
the Trustee,
as Collateral Agent, holds the Collateral in trust for the
benefit of the Holders
pursuant to the terms of the Security Documents.
(b) The Trustee is authorized and directed by the
Holders to
enter into and comply with the provisions of the Intercreditor
Agreement.
Compliance with the Intercreditor Agreement shall in no event
serve as the
basis for any claim by the Company or any other party having an
interest in
the Collateral that the Collateral was sold or otherwise disposed
of in a
commercially unreasonable manner. The Trustee is authorized to
execute and
deliver the documents referred to in Section 2 of the
Intercreditor Agreement
upon receipt of such documents and an Officer's Certificate and
an Opinion of
Counsel, each to the effect that such documents comply with the
requirements
of the Intercreditor Agreement and the conditions contained
herein with
respect to the execution of such documents have been complied
with and that
such documents do not release property subject to the Lien of
this Indenture or
the Security Documents in contravention of the provisions of this
Indenture or
such Security Documents.
(c) The Trustee, as Collateral Agent, is authorized
and directed
by the Holders to enter into a reciprocal easement with the
Commonwealth of
Pennsylvania, acting by and through its Department of Commerce,
with
respect to Pennsylvania's security interest in and mortgages on
certain of the
property of Koppel Steel Corporation. The Trustee, as Collateral
Agent, is
authorized and directed by the Holders to enter into a
subordination
agreement with the City of Dayton, Kentucky in which a mortgage
on certain
property and security interests held by Dayton in certain
machinery and
equipment of Newport Steel Corporation will be subordinated to
the Liens in
favor of the Holders.
(d) Each Holder, by accepting a Security, agrees to
all of the
terms and provisions of the Security Documents, as the same may
be amended
from time to time pursuant to the provisions of the Security
Documents and
this Indenture.
SECTION 12.2. Recording and Opinions.
(a) The Company shall, and shall cause its
Subsidiaries, as soon
as practicable to take or cause to be taken all action required
to perfect,
maintain, preserve and protect the Liens on and security
interests in the
Collateral, subject to the exceptions set forth in Section 6.10,
granted by the
Security Documents, including without limitation, the filing of
financing
statements, continuation statements and any instruments of
further assurance,
in such manner and in such places as may be required by law fully
to preserve
and protect the rights of the Holders and the Trustee under this
Indenture and
the Security Documents (and the Company with respect to the ICN
Security
Agreements and ICN Mortgages) to all property comprising the
Collateral.
The Company shall from time to time promptly pay all financing
and
continuation statement recording and/or filing fees, charges and
taxes relating
to this Indenture and the Security Documents, any amendments
thereto and
any other instruments of further assurance required pursuant to
the Security
Documents.
(b) The Company shall furnish to the Trustee promptly
after the
time of execution and delivery of this Indenture, Opinion(s) of
Counsel either
(i) substantially to the effect that, in the opinion of such
Counsel, this
Indenture and the grant of a security interest in the Collateral
intended to be
made by the Security Documents and all other instruments of
further
assurance, including, without limitation, financing statements,
have been
properly recorded and filed to the extent necessary to perfect
the security
interests in the Collateral created by the Security Documents and
reciting the
details of such action, and stating that as to the security
interests created
pursuant to the Security Documents, such recordings and filings
are the only
recordings and filings necessary to give notice thereof and that
no re-
recordings or refilings are necessary to maintain such notice
(other than as
stated in such opinion), or (ii) to the effect that, in the
opinion of such counsel,
no such action is necessary to perfect such security interests.
Promptly after
the execution and delivery of this Indenture, the Company shall
deliver the
opinion(s) required by Section 314(b) of the Trust Indenture Act.
Subsequent
to the Issue Date, at the time of the execution of any Security
Document,
Opinion(s) of Counsel with respect to the identical matters set
forth in this
paragraph (b) and an Opinion of Counsel to the effect that the
Security
Documents executed on such date constitute the legally valid,
binding and
enforceable obligation of the Company or such Subsidiary, as the
case may be,
subject to acceptable bankruptcy and similar exceptions, shall be
delivered to
the Trustee.
(c) The Company shall furnish to the Trustee on July
15 in each
year, beginning with July 15, 1996, an Opinion of Counsel, dated
as of such
date, either (i)(A) stating that, in the opinion of such counsel,
action has been
taken with respect to the recording, filing, re-recording and
refiling of all
supplemental indentures, financing statements and continuation
statements as
is necessary to maintain the Lien of the Security Documents and
reciting with
respect to the security interests in the Collateral the details
of such action or
referring to prior Opinions of Counsel in which such details are
given, and (B)
stating that, based on relevant laws as in effect on the date of
such Opinion of
Counsel, all financing statements and continuation statements
have been
executed and filed that are necessary as of such date and during
the
succeeding 12 months fully to maintain the security interest of
the Holders and
the Trustee hereunder and under the Security Documents (or to
maintain the
security interest of the Company under the ICN Security
Agreements and ICN
Mortgages) with respect to the Collateral, or (ii) stating that,
in the opinion of
such Counsel, no such action is necessary to maintain such Lien.
SECTION 12.3. Release of Collateral.
(a) The Trustee, in its capacity as Collateral Agent
under the
Security Documents, and the Company (with respect to the ICN
Security
Agreements and ICN Mortgages) shall not at any time release
Collateral from
the security interest created by this Indenture and the Security
Documents
unless such release is in accordance with the provisions of this
Indenture and
the Security Documents.
(b) At any time when an Event of Default shall have
occurred
and be continuing, no release of Collateral pursuant to the
provisions of this
Indenture and the Security Documents shall be effective as
against the Holders
of the Securities.
(c) The release of any Collateral from the terms of
the Security
Documents shall not be deemed to impair the security under this
Indenture in
contravention of the provisions hereof if and to the extent the
Collateral is
released in accordance with this Indenture and the Security
Documents. To
the extent applicable, the Company shall cause Section 314(d) of
the Trust
Indenture Act relating to the release of property from the Lien
of the Security
Documents and relating to the substitution therefor of any
property to be
subjected to the Lien of the Security Documents to be complied
with. Any
certificate or opinion required by Section 314(d) of the Trust
Indenture Act
may be made by a Responsible Officer of the Company, except in
cases where
Section 314(d) of the Trust Indenture Act requires that such
certificate or
opinion be made by an independent Person, which Person shall be
an
independent engineer, or other expert selected or approved by the
Trustee in
the exercise of reasonable care.
SECTION 12.4. Possession and Use of Collateral.
Subject to and in accordance with the provisions of
this Indenture
and the Security Documents, so long as no Event of Default shall
have
occurred and be continuing the Company and its Subsidiaries shall
have the
right to remain in possession and retain exclusive control of the
Collateral
(other than Trust Moneys and other personal property held by, or
required to
be deposited or pledged with, the Collateral Agent under the
Indenture or any
Security Document), to freely operate, manage, develop, lease,
use, consume
and enjoy the Collateral (other than Trust Moneys and other
personal property
held by, or required to be deposited or pledged with, the
Collateral Agent
under the Indenture or any Security Document), to alter or repair
any
Collateral consisting of machinery or equipment so long as such
alterations
and repairs do not diminish the value thereof or impair the Lien
of the
Security Documents thereon and to collect, receive, use, invest
and dispose of
the reversions, remainders, interest, rents, lease payments,
issues, profits,
revenues, proceeds and other income thereof.
SECTION 12.5. Specified Releases of Collateral.
(a) Satisfaction and Discharge; Defeasance. The
Company and
its Subsidiaries shall be entitled to obtain a full release of
all of the Collateral
from the Liens of this Indenture and of the Security Documents
upon
compliance with the conditions precedent set forth in Article IV
for satisfaction
and discharge of this Indenture or for legal defeasance pursuant
to Section
14.2. Upon delivery by the Company to the Trustee of an
Officers' Certificate
and Opinion of Counsel, each to the effect that such conditions
precedent have
been complied with (and which may be the same Officers'
Certificate and
Opinion of Counsel required by Section 4.1 or 14.4), the Trustee
shall forthwith
take all necessary action (at the request of and the expense of
the Company) to
release and reconvey to the Company and its Subsidiaries all of
the Collateral,
and shall deliver such Collateral in its possession to the
Company and its
Subsidiaries including, without limitation, the execution and
delivery of
releases and satisfactions whenever required.
(b) Sales of Collateral Permitted by Section 6.15.
The Company
and its Subsidiaries shall be entitled to obtain a release of
items of Collateral
(the "Released Interests") subject to an Asset Sale upon
compliance with the
condition precedent that the Company shall have delivered to the
Trustee the
following:
(i) Company Order. A Company Order requesting release
of
Released Interests, such Company Order (A) specifically
describing the
proposed Released Interests, (B) specifying the fair value
(as determined
in good faith by the Board of Directors) of such Released
Interests on a
date within 60 days of the Company Order (the "Valuation
Date"), (C)
stating that the purchase price received is at least equal
to the fair value
of the Released Interest, (D) confirming the sale of, or an
agreement to
sell, such Released Interests in a bona fide sale to a
Person that is not an
Affiliate of the Company or, in the event that such sale is
to a Person
that is an Affiliate, that such sale is being made in
accordance with
Section 6.14, (E) certifying that such Asset Sale complies
with the terms
and conditions of Section 6.15 hereof and (F) in the event
that there is to
be a substitution of property for the Collateral to be sold,
specifying the
property intended to be substituted for the Collateral to be
sold;
(ii) Officers' Certificate. An Officers'
Certificate certifying that
(A) such Asset Sale covers only the Released Interests and
complies
with the terms and conditions of an Asset Sale pursuant to
Section 6.15,
(B) all Net Available Cash from the sale of any of the
Released Interests
constitutes Collateral and will be deposited in the
Collateral Account for
application in accordance with Section 6.15, (C) there is no
Default or
Event of Default in effect or continuing on the date
thereof, the
Valuation Date or the date of such Asset Sale, (D) the
release of the
Collateral will not result in a Default or Event of Default
hereunder,
(E) stating that the release of such Released Interests will
not interfere
with or impede the Trustee's ability to realize the fair
value (as
determined in good faith by the Board of Directors) of the
remaining
Collateral and will not impair the maintenance and operation
of the
remaining Collateral and (F) all conditions precedent to
such release
have been complied with; and
(iii) Other Documents. All documentation required
by Section
314(d) of the Trust Indenture Act.
(c) Eminent Domain and Other Governmental Takings.
The
Company and its Subsidiaries shall be entitled to obtain a
release of, and the
Trustee shall release, items of Collateral taken by eminent
domain (or sold to a
governmental authority in light of the threat of eminent domain)
or sold
pursuant to the exercise by the United States of America or any
State,
municipality or other governmental authority of any right which
such
authorities may then have to purchase, or to designate a
purchaser or to order
a sale of, all or any part of the Collateral ("Eminent Domain
Collateral"), upon
compliance with the condition precedent that the Company shall
have
delivered to the Trustee the following:
(i) Officer's Certificate. An Officer's Certificate
(A) stating
that such property has been taken by eminent domain (or sold
to a
governmental authority in light of the threat of eminent
domain) and
the amount of the award therefor, or that such property has
been sold
pursuant to a right vested in the United States of America,
or a State,
municipality or other governmental authority to purchase, or
to
designate a purchaser, or order a sale of such property and
the amount
of the proceeds of such sale, and (B) stating that all
conditions precedent
to such release have been complied with;
(ii) Opinion of Counsel. An Opinion of Counsel to
the effect
that (A) such property has been lawfully taken by exercise
of the right
of eminent domain (or sold to a governmental authority in
light of the
threat of eminent domain), or has been sold pursuant to the
exercise of
a right vested in the United States of America or a State,
municipality or
other governmental authority to purchase, or to designate a
purchaser
or order a sale of, such property, (B) in the case of any
such taking by
eminent domain, the award for such property has become final
or an
appeal therefrom is not advisable in the interests of the
Company or the
Holders, and (C) all conditions precedent herein provided
relating to
such release have been complied with; and
(iii) Eminent Domain Award. Subject to the
requirements of
any prior Lien on the Collateral so taken, cash equal to the
amount of
the award for such property or the proceeds of such sale, to
be held as
Trust Moneys subject to the disposition thereof pursuant to
Article XIII
hereof.
(d) Transfers of Collateral Permitted by Section 6.12.
The
Company and its Recourse Subsidiaries shall be entitled to
transfer assets
subject to the Liens of the Security Documents ("Transferred
Collateral")
pursuant to Section 6.12 upon delivery by the Company or the
transferring
Recourse Subsidiary to the Trustee of an Officers' Certificate
setting forth the
details of such transfer or assignment and an Opinion of Counsel
that such
Transferred Collateral upon such transfer or assignment in the
hands of the
transferee Recourse Subsidiary (which shall not be an Excluded
Company)
shall be subject to a perfected Lien in favor of the Collateral
Agent for the
benefit of the Trustee and the Holders. Such transfer shall not
occur if the
Company or the transferee Recourse Subsidiary cannot represent to
the Trustee
that such perfected lien is a first priority Lien. The Company
or the transferee
Recourse Subsidiary, as the case may be, shall perform all acts
required by
Sections 12.1 and 12.2 of the Indenture in connection with such
transfer or
assignment.
(e) Actions of Trustee. Upon compliance by the
Company or its
Subsidiaries as the case may be, with the conditions precedent
set forth above,
and upon delivery by the Company to the Trustee of an Opinion of
Counsel to
the effect that such conditions precedent have been complied
with, the Trustee
shall promptly, but in no event later than five Business Days,
cause to be
released and reconveyed to the Company, or its subsidiaries, as
the case may
be, the Released Interests, Eminent Domain Collateral and
Released Interests.
SECTION 12.6. Disposition of Obsolete Assets.
So long as no Event of Default shall have occurred and
be
continuing, each Subsidiary, collectively, may, upon delivery by
the Company
to the Trustee of an Officer's Certificate stating that the
release of certain
Obsolete Assets owned by such Subsidiary will not interfere with
or impair the
aggregate value of the Collateral or the Trustee's rights
therein, such Obsolete
Assets shall be released, so that such Subsidiary may sell or
otherwise dispose
of such Obsolete Assets subject to the Lien of the Security
Documents, not
exceeding individually, in fair market value, $25,000.
SECTION 12.7. Form and Sufficiency of Release.
In the event that any of the Subsidiaries have sold,
exchanged or
otherwise disposed of or proposes to sell, exchange or otherwise
dispose of
any portion of the Collateral that under the provisions of
Section 12.5 or 12.6
may be sold, exchanged or otherwise disposed of by the
Subsidiary, and the
Subsidiary requests the Trustee to furnish a written disclaimer,
release or quit-
claim of any interest in such property under this Indenture and
the Security
Documents, the Trustee, in its capacity as Collateral Agent under
the Security
Documents, shall execute, acknowledge and deliver to the
Subsidiary (in
proper and recordable form) such an instrument promptly, but in
no event
later than five Business Days, after satisfaction of the
conditions set forth
herein for delivery of any such release. Notwithstanding the
preceding
sentence, all purchasers and grantees of any property or rights
purporting to
be released herefrom shall be entitled to rely upon any release
executed by the
Trustee hereunder as sufficient for the purpose of this Indenture
and as
constituting a good and valid release of the property therein
described from
the Lien of this Indenture or of the Security Documents.
SECTION 12.8. Purchaser Protected.
No purchaser or grantee of any property or rights
purporting to
be released herefrom shall be bound to ascertain the authority of
the Trustee to
execute the release or to inquire as to the existence of any
conditions herein
prescribed for the exercise of such authority; nor shall any
purchaser or
grantee of any property or rights permitted by this Indenture to
be sold or
otherwise disposed of by the Subsidiaries be under any obligation
to ascertain
or inquire into the authority of the Subsidiary to make such sale
or other
disposition.
SECTION 12.9. Authorization of Actions To Be Taken by The
Trustee Under
the Security Documents.
Subject to the provisions of the Security Documents,
(a) the
Trustee may, in its sole discretion and without the consent of
the Holders, take
all actions it deems necessary or appropriate in order to (i)
enforce any of the
terms of the Security Documents and (ii) to collect and receive
any and all
amounts payable in respect of the obligations of the Company
hereunder or of
the Subsidiaries of the Company under the Subsidiary Guarantee
(or under the
Intercompany Note upon the occurrence of an Event of Default
under the
Indenture or the Securities) and (b) the Trustee shall have power
to institute
and to maintain such suits and proceedings as it may deem
expedient to
prevent any impairment of the Collateral by any acts that may be
unlawful or
in violation of any of the Security Documents or this Indenture,
and such suits
and proceedings as the Trustee may deem expedient to preserve or
protect its
interests and the interests of the Holders in the Collateral
(including the power
to institute and maintain suits or proceedings to restrain the
enforcement of or
compliance with any legislative or other governmental enactment,
rule or order
that may be unconstitutional or otherwise invalid if the
enforcement of, or
compliance with, such enactment, rule or order would impair the
security
interest thereunder or be prejudicial to the interests of the
Holders or of the
Trustee).
SECTION 12.10. Authorization of Receipt of Funds by the
Trustee Under the
Security Documents.
The Trustee is authorized to receive any funds for the
benefit of
Holders distributed under the Security Documents, and to make
further
distributions of such funds to the Holders in accordance with the
provisions of
Article XIII and the other provisions of this Indenture.
ARTICLE XIII
APPLICATION OF TRUST MONEYS
SECTION 13.1. Collateral Account.
On the Issue Date there shall be established and, at
all times
hereafter until this Indenture shall have terminated, there shall
be maintained
with, and in the sole dominion and control of, the Trustee an
account or
accounts which shall be entitled the "Collateral Account" (the
"Collateral
Account"). The Collateral Account(s) shall be established and
maintained by
the Trustee at its corporate trust offices. All Trust Moneys
which are received
by the Trustee shall be deposited in the Collateral Account and
thereafter shall
be held, applied and/or disbursed by the Trustee in accordance
with the terms
of this Article. Prior to an Event of Default, the Company shall
have no rights
in the Trust Moneys by virtue of the ICN Mortgages and the ICN
Security
Agreements and upon the occurrence of an Event of Default, any
such rights
of the Company resulting from the ICN Mortgages and Security
Agreements
shall vest in the Collateral Agent.
SECTION 13.2. Withdrawals of Insurance Proceeds and
Condemnation
Awards.
To the extent that any Trust Moneys consist of either
(i) Net
Insurance Proceeds or (ii) Condemnation Awards, such Trust Moneys
may be
withdrawn by the Company (or by a Subsidiary of the Company if
title to the
property damaged or taken was held by such Subsidiary, but only
to the
extent of the Net Insurance Proceeds or Condemnation Proceeds
relating
thereto) and shall be paid by the Trustee upon a Company Order to
reimburse
the Company or its Subsidiary, as the case may be, for
expenditures made, or
to pay costs incurred, by the Company or its Subsidiary to
repair, rebuild or
replace the property destroyed, damaged or taken, upon receipt by
the Trustee
of the following:
(a) an Officers' Certificate of the Company or its
Subsidiary, as
the case may be, dated not more than 30 days prior to the
date of the
application for the withdrawal and payment of such Trust
Moneys
stating:
(i) that expenditures have been made or costs
incurred,
by the Company or its Subsidiary in a specified amount
for the
purpose of making certain repairs, rebuildings and
replacements
of the Collateral, which shall be briefly described,
and stating the
fair value thereof to the Company or its Subsidiary at
the date of
the expenditure or incurrence thereof by the Company or
its
Subsidiary;
(ii) that no part of such expenditures or
costs has been
or is being made the basis for the withdrawal of any
Trust
Moneys in any previous or then pending application
pursuant to
this Section 13.2;
(iii) that there is no outstanding Debt, other
than costs
for which payment is being requested, known to the
Company or
its Subsidiary, after due inquiry, for the purchase
price or
construction of such repairs, rebuildings or
replacements, or for
labor, wages, materials or supplies in connection with
the making
thereof, which, if unpaid, might become the basis of a
vendors',
mechanics', laborers', materialmen's, statutory or
other similar
Lien upon any of such repairs, rebuildings or
replacement, which
Lien might, in the opinion of the signers of such
certificate,
materially impair the security afforded by such
repairs,
rebuildings or replacements;
(iv) that the property to be repaired,
rebuilt or replaced
is necessary or desirable in the conduct of the
Company's or its
Subsidiary's business;
(v) whether any part of such repairs, rebuildings
or
replacements within six months before the date of
acquisition
thereof by the Company or its Subsidiary has been used
or
operated by other than the Company or its Subsidiary in
a
business similar to that in which such property has
been or is to
be used or operated by the Company or its Subsidiary,
and
whether the fair value to the Company or its
Subsidiary, at the
date such expenditures were made or costs incurred to
make or
perform such repairs, rebuildings or replacement, is
less than
$25,000, or 1% of the aggregate principal amount of the
Outstanding Securities;
(vi) that no Default or Event of Default
shall have
occurred and be continuing; and
(vii) that all conditions precedent herein
provided for
relating to such withdrawal and payment have been
complied
with.
(b) all documentation required under Section 314(d) of
the Trust
Indenture Act; and
(c) an Opinion of Counsel substantially stating:
(i) that the instruments that have been or are
therewith
delivered to the Trustee conform to the requirements of
this
Indenture, and the Security Documents and the Trust
Indenture
Act, and that, upon the basis of such request of the
Company or
its Subsidiary and the accompanying documents specified
in this
Section 13.2, all conditions precedent herein provided
for relating
to such withdrawal and payment have been complied with,
and
the Trust Moneys whose withdrawal is then requested may
be
lawfully paid over under this Section 13.2;
(ii) that the Trustee has a valid and
perfected Lien on
such repairs, rebuilding and replacements, that the
same and
every part thereof are subject to no Liens prior to the
Lien of the
Security Documents, except Liens of the type permitted
under the
Security Documents to which the property so destroyed
or
damaged shall have been subject at the time of such
destruction
or damage; and
(iii) that all of the Company's or its
Subsidiary's right,
title and interest in and to said repairs, rebuildings
or
replacements, or combination thereof, are then subject
to the Lien
of the Security Documents.
Upon compliance with the foregoing provisions of this
Section
13.2, the Trustee shall pay on the written request of the Company
or its
Subsidiary an amount of Trust Moneys of the character aforesaid
equal to the
amount of the expenditures or costs stated in the Officers'
Certificate required
by clause (i) of subsection (a) of this Section 13.2, or the fair
value to the
Company or its Subsidiary of such repairs, rebuildings and
replacements
stated in such Officers' Certificate (or in such Independent
Appraiser's or
Independent Financial Advisor's certificate, if required by the
Trust Indenture
Act), whichever is less; provided, however, that notwithstanding
the above, so
long as no Default or Event of Default shall have occurred and be
continuing,
in the event that any Net Insurance Proceeds or Condemnation
Award for
such property or proceeds of such sale does not exceed the lesser
of $25,000 or
1% of the principal amount of the Outstanding Securities, and, in
the good
faith estimate of the Company, such destruction or damage
resulting in such
Net Insurance Proceeds or Condemnation Award does not
detrimentally affect
the value or use of the applicable Collateral in any material
respect, upon
delivery to the Trustee of an Officers' Certificate of the
Company or its
Subsidiary to such effect, the Trustee shall release to the
Company or its
Subsidiary such Net Insurance Proceeds or Condemnation Award for
such
property or proceeds of such sale, free of the Lien hereof and of
the Security
Documents.
SECTION 13.3. Withdrawal of Trust Moneys for Asset Sale
Offer.
Trust Moneys may be withdrawn by the Company and shall
be
paid by the Trustee to the Company (or as otherwise directed by
the
Company) upon a Company Order to the Trustee and upon receipt by
the
Trustee of the following:
(a) an Officers' Certificate, dated not more than five
days prior to
the Asset Sale Payment Date stating:
(i) that no Event of Default exists;
(ii) (A) that pursuant to and in accordance
with Section
6.15, the Company has made an Asset Sale Offer, (B) the
amount
of money to be applied to the repurchase of the
Securities
pursuant to the Asset Sale Offer, and (C) the amount of
money to
be retained by the Company;
(iii) the Asset Sale Payment Date; and
(iv) that all conditions precedent and
covenants herein
provided for relating to such application of Trust
Moneys have
been complied with; and
(b) all documentation required under Section 314(d) of
the Trust
Indenture Act; and
(c) an Opinion of Counsel stating that the documents
that have
been or are therewith delivered to the Trustee in connection
with the
Asset Sale Offer pursuant to this Section 13.3 conform to
the
requirements of this Indenture and the Trust Indenture Act
and that all
conditions precedent herein provided for relating to such
application of
Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this
Section
13.3, the Trustee shall apply the Trust Moneys as directed and
specified by
such Company Order.
SECTION 13.4. Withdrawal of Trust Moneys for Permitted
Related
Acquisitions.
In the event the Company (or a Subsidiary of the
Company if
such Subsidiary has engaged in the Asset Sale) intends to
reinvest Net
Available Cash of an Asset Sale in a manner that would constitute
a Permitted
Related Acquisition (the "Released Trust Moneys"), such Net
Available Cash
constituting Trust Moneys may be withdrawn by the Company (or, to
the
extent that the legal title to the property transferred in an
Asset Sale is held by
a Subsidiary, by such Subsidiary; provided, that the aggregate
cost of the
Permitted Related Acquisitions to be made by such Subsidiary
shall not exceed
the Net Available Cash of such Asset Sale) and shall be paid by
the Trustee to
the Company or its Subsidiary (or as otherwise directed by the
Company or its
Subsidiary) upon a Company Order to the Trustee and upon receipt
by the
Trustee of the following:
(a) A notice (each, a "Trust Moneys Release Notice"),
which shall (i)
refer to this Section 13.4, (ii) contain all documents
referred to below,
(iii) describe with particularity the Released Trust Moneys,
(iv) describe
with particularity the Permitted Related Acquisition to be
made with
respect to the Released Trust Moneys and (v) be accompanied
by a
counterpart of the instruments proposed to give effect to
the release
fully executed and acknowledged (if applicable) by all
parties thereto
other than the Trustee;
(b) An Officer's Certificate certifying that (i) the
release of the
Released Trust Moneys complies with the terms and conditions
of
Section 6.15 of this Indenture, (ii) there is no Default or
Event of Default
in effect or continuing on the date thereof, (iii) the
release of the
Released Trust Moneys will not result in a Default or Event
of Default
hereunder and (iv) all conditions precedent to such release
have been
complied with;
(c) All documentation required under Section 314(d) of
the Trust
Indenture Act; and
(d) An Opinion of Counsel stating that the documents
that have
been or are therewith delivered to the Collateral Agent and
the Trustee
in connection with a Permitted Related Acquisition conform
to the
requirements of this Indenture and the Trust Indenture Act
and that all
conditions precedent herein provided for relating to such
application of
Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this
Indenture,
the Trustee shall apply the Released Trust Moneys as directed and
specified by
the Company or its Subsidiary.
SECTION 13.5. Withdrawal of Trust Moneys for Retention by
the Company
or its Subsidiaries.
To the extent that any Trust Moneys consist of Net
Available
Cash received by the Trustee pursuant to the provisions of
Section 6.15
(including Asset Sales relating to Obsolete Assets), and the
Company (or a
Subsidiary of the Company if such Subsidiary has engaged in an
Asset Sale,
including an Asset Sale relating to Obsolete Assets) intends to
retain, subject to
the limitations set forth in Section 6.15, all or a portion of
such Net Available
Cash (the "Retained Trust Moneys"), such Trust Moneys may be
withdrawn by
the Company or its Subsidiary and shall be paid by the Trustee to
the
Company or its Subsidiary (or as otherwise directed by the
Company or its
Subsidiary) upon a Company Order to the Trustee and upon receipt
by the
Trustee of the following:
(a) A notice (each, a "Withdrawal Notice"), which
shall (i) refer to
this Section 13.5, (ii) contain all documents referred to
below, (iii)
describe with particularity the Retained Trust Moneys and
the Asset
Sale from which such Retained Trust Moneys were held as
Collateral
and (iv) be accompanied by a counterpart of the instruments
proposed
to give effect to the release fully executed and
acknowledged (if
applicable) by all parties thereto other than the Trustee;
(b) An Officer's Certificate certifying that (i) the
release of the
Retained Trust Moneys complies with the terms and conditions
of
Section 6.15 of the Indenture (including, but not limited
to, a specific
statement that (A) the Net Available Cash from the sale of
Obsolete
Assets retained by the Company and its Subsidiaries does not
exceed
$1,000,000 in the aggregate in any given year and (B) from
the Issue
Date, the aggregate of the Net Available Cash of Asset Sales
(other than
from Asset Sales relating to Obsolete Assets and Excluded
Assets)
retained by the Companies and its Subsidiaries does not
exceed
$1,000,000, regardless of whether the funds retained by the
Company
and its Subsidiaries constitute Collateral Proceeds or
Non-Collateral
Proceeds), (ii) there is no Default or Event of Default in
effect or
continuing on the date thereof, (iii) the release of the
Retained Trust
Moneys will not result in a Default or Event of Default
hereunder and
(iv) all conditions precedent to such release have been
complied with;
(c) All documentation required under Section 314(d) of
the Trust
Indenture Act; and
(d) An Opinion of Counsel stating that the documents
that have
been or are therewith delivered to the Collateral Agent and
the Trustee
in connection with a release of Retained Trust Moneys
conform to the
requirements of this Indenture and the Trust Indenture Act
and that all
conditions precedent herein provided for relating to such
application of
Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this
Indenture,
the Trustee shall apply the Retained Trust Moneys as directed and
specified by
the Company or its Subsidiary.
SECTION 13.6. Withdrawal of Trust Moneys on Basis of
Retirement of
Securities.
Trust Moneys may be withdrawn by the Company to be
applied
to the redemption and retirement of the Securities under the
circumstances
permitted by this Indenture and shall be paid by the Trustee to
the Company
(or as otherwise directed by the Company) upon a Company Order to
the
Trustee and upon receipt by the Trustee of the following:
(a) a Board Resolution requesting the withdrawal and
payment
of a specified amount of Trust Moneys for the purpose of
retiring or
redeeming a portion of the Securities under the
circumstances permitted
by this Indenture;
(b) an Officer's Certificate, dated not more than 30
days prior to
the date of the application for the withdrawal and payment
of such
Trust Moneys, certifying that (i) redemption or retirement
of the
Securities complies with the provisions of the Indenture,
(ii) there is no
Default or Event of Default in effect or continuing on the
date thereof,
(iii) the release of the Trust Moneys for the purpose of
retiring or
redeeming Securities will not result in a Default or Event
of Default
hereunder and (iv) all conditions precedent herein provided
relating to
such withdrawal and application have been complied with;
(c) All documentation required under Section 314(d) of
the
Trust Indenture Act; and
(d) an Opinion of Counsel stating that the Trust
Moneys
whose withdrawal and payment is then requested may be
lawfully paid
over under this Section 13.6 and that all conditions
precedent herein
provided relating to such withdrawal have been complied
with.
Upon compliance with the foregoing provisions of this
Indenture,
the Trustee shall apply the Trust Moneys as directed and
specified by such
Company Order.
SECTION 13.7. Investment of Trust Moneys.
All or any part of any Trust Moneys held by the Trustee
shall
from time to time be invested or reinvested by the Trustee in any
Cash
Equivalents pursuant to the written or oral (and confirmed in
writing)
direction of the Company, which shall specify the Cash
Equivalents in which
such Trust Moneys shall be invested. Unless an Event of Default
occurs and is
continuing, any interest in such Cash Equivalents (in excess of
any accrued
interest paid at the time of purchase) that may be received by
the Trustee shall
be forthwith paid to the Company. Such Cash Equivalents shall be
held by the
Trustee as a part of the Collateral, subject to the same
provisions hereof as the
cash used by it to purchase such Cash Equivalents.
The Trustee shall not be liable or responsible for any
loss
resulting from such investments or sales except only for its own
grossly
negligent action, its own grossly negligent failure to act or its
own willful
misconduct in complying with this Section 13.7.
ARTICLE XIV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 14.1. Company's Option to Effect Defeasance or
Covenant
Defeasance.
The Company may at its option by Board Resolution, at
any time,
elect to have either Section 14.2 or Section 14.3 applied to the
Outstanding
Securities upon compliance with the applicable conditions set
forth below in
this Article XIV.
SECTION 14.2. Defeasance and Discharge.
Upon the Company's exercise of the option provided in
Section
14.1 applicable to this Section 14.2, the Company shall be deemed
to have been
discharged from its obligations with respect to the Outstanding
Securities
(other than those specified in the next sentence) on the date the
applicable
conditions set forth below are satisfied (hereinafter,
"defeasance"). For this
purpose, such defeasance means that the Company shall be deemed
to have
paid and discharged the entire indebtedness represented by the
Outstanding
Securities and to have satisfied all its other obligations under
such Securities
and this Indenture insofar as such Securities are concerned (and
the Trustee, at
the expense of the Company, shall execute proper instruments
acknowledging
the same), except for the following which shall survive until
otherwise
terminated or discharged hereunder: (A) the rights of Holders of
such
Securities to receive, solely from the trust fund described in
Section 14.4 and as
more fully set forth in such Section, payments in respect of the
principal of
and interest on such Securities when such payments are due, (B)
the
Company's obligations with respect to such Securities under
Sections 3.4, 3.5,
3.6, 6.2 and 6.26 and with respect to the Trustee under Section
9.7, (C) the
rights, powers, trusts, duties and immunities of the Trustee
hereunder and (D)
this Article XIV. Subject to compliance with the applicable
conditions under
this Article XIV, the Company may exercise its option under this
Section 14.2
notwithstanding the prior exercise of its option under Section
14.3.
SECTION 14.3. Covenant Defeasance.
Upon the Company's exercise of the option provided in
Section
14.1 applicable to this Section 14.3, (i) the Company shall be
released from its
obligations under Sections 6.9 through 6.25 and (ii) the
occurrence of an event
specified in Section 8.1(vi) (with respect to any of Section 6.9
through 6.25),
8.1(vii) and (viii)) shall not be deemed to be an Event of
Default (hereinafter,
"covenant defeasance"). For this purpose, such covenant
defeasance means that
the Company may omit to comply with and shall have no liability
in respect of
any term, condition or limitation set forth in any such Section,
whether
directly, or indirectly by reason of any reference elsewhere
herein to any such
Section or by reason of any reference in any such Section to any
other
provision herein or in any other document, but the remainder of
this Indenture
and such Securities shall be unaffected thereby.
SECTION 14.4. Conditions to Defeasance or Covenant
Defeasance.
Except as otherwise indicated below, the following
shall be the
conditions to application of either Section 14.2 or Section 14.3
to the then
Outstanding Securities:
The Company may exercise its legal defeasance option or
its
covenant defeasance option only if:
(1) the Company shall irrevocably have deposited or
caused to
be deposited in trust with the Trustee (or another trustee
satisfying the
requirements of Section 9.9 who shall agree to comply with
the
provisions of this Article applicable to the Trustee) as
trust funds in
trust for the purpose of making the following payments,
specifically
pledged as security for, and dedicated solely to, the
benefit of the
Holders of such Securities, (A) money in an amount, or (B)
U.S.
Government Obligations which through the scheduled payment
of
principal and interest in respect thereof in accordance with
their terms
will provide, not later than one day before the due date of
any payment,
money in an amount sufficient to pay the principal of and
each
installment of interest on the Securities on the Maturity
Date of such
principal or Interest Payment Date, as the case may be, in
accordance
with the terms of this Indenture and of the Securities, or
(C) a
combination of (A) and (B);
(2) the Company delivers to the Trustee a certificate
from a
nationally recognized firm of independent certified public
accountants
expressing their opinion that the payments of principal and
interest
when due and without reinvestment of the deposited U.S.
Government
Obligations plus any deposited money without investment will
provide
cash at such times and in such amounts as will be sufficient
to pay
principal and interest when due on all the Securities to
maturity or
redemption, as the case may be;
(3) 123 days pass after the deposit is made and during
the 123-
day period no Default relating to bankruptcy and insolvency
events
with respect to the Company occurs which is continuing at
the end of
the period;
(4) no Default has occurred and is continuing on the
date of such
deposit and after giving effect thereto;
(5) the Company delivers to the Trustee an Opinion of
Counsel
to the effect that (i) the trust resulting from the deposit
does not
constitute, or is qualified as, a regulated investment
company under the
Investment Company Act of 1940, (ii) the Holders have a
valid first
priority perfected security interest in the trust funds, and
(iii) after
passage of 123 days following the deposit (except, with
respect to any
trust funds for the account of any Holder who may be deemed
to be an
"insider" for purposes of the Bankruptcy Code, after one
year following
the deposit), the trust funds will not be subject to the
effect of Section
547 of the Bankruptcy Law or Section 15 of the New York
Debtor and
Creditor Law in a case commenced by or against the Company
under
either such statute, and either (A) the trust funds will no
longer remain
the property of the Company (and therefore, will not be
subject to the
effect of any applicable bankruptcy, insolvency,
reorganization or
similar laws affecting creditors' rights generally) or (B)
if a court were to
rule under any such law in any case or proceeding that the
trust funds
remained property of the Company, (x) assuming such trust
funds
remained in the possession of the Trustee prior to such
court ruling to
the extent not paid to Holders, the Trustee will hold, for
the benefit of
the Holders, a valid first priority perfected security
interest in such trust
funds that is not avoidable in bankruptcy or otherwise
except for the
effect of Section 552(b) of the Bankruptcy Law on interest
on the trust
funds accruing after the commencement of a case under such
statute
and (y) the Holders will be entitled to receive adequate
protection of
their interests in such trust funds if such trust funds are
used in such
case or proceeding;
(6) in the case of the legal defeasance option, the
Company shall
have delivered to the Trustee an Opinion of Counsel stating
that (i) the
Company has received from, or there has been published by,
the
Internal Revenue Service a ruling, or (ii) since the date of
the Indenture
there has been a change in the applicable U.S. Federal
income tax law or
a regulation clarifying existing law, in either case to the
effect that, and
based thereon such Opinion of Counsel shall confirm that,
the Holders
will not recognize income, gain or loss for U.S. Federal
income tax
purposes as a result of such defeasance and will be subject
to U.S.
Federal income tax on the same amounts, in the same manner
and at
the same times as would have been the case if such
defeasance had not
occurred;
(7) in the case of the covenant defeasance option, the
Company
shall have delivered to the Trustee an Opinion of Counsel to
the effect
that the Holders will not recognize income, gain or loss for
U.S. Federal
income tax purposes as a result of such covenant defeasance
and will be
subject to U.S. Federal income tax on the same amounts, in
the same
manner and at the same times as would have been the case if
such
covenant defeasance had not occurred; and
(8) the Company shall have delivered to the Trustee an
Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions
precedent to the defeasance and discharge of the Securities
have been
complied with.
SECTION 14.5. Deposited Money and U.S. Government
Obligations to be
held in Trust; Other Miscellaneous
Provisions.
Subject to the provisions of the last paragraph of
Section 6.26, all
money and U.S. Government Obligations (including the proceeds
thereof)
deposited with the Trustee (or other qualifying trustee --
collectively, for
purposes of this Section 14.5 and Section 14.6, the "Trustee")
pursuant to
Section 14.4 in respect of the Securities shall be held in trust
and applied by
the Trustee, in accordance with the provisions of such Securities
and this
Indenture, to the payment, either directly or through any Paying
Agent
(including the Company acting as its own Paying Agent) as the
Trustee may
determine, to the Holders of such Securities, of all sums due and
to become
due thereon in respect of principal and interest.
The Company shall pay and indemnify the Trustee against
any
tax, fee or other charge imposed on or assessed against the U.S.
Government
Obligations deposited pursuant to Section 14.4 or the principal
and interest
received in respect thereof other than any such tax, fee or other
charge which
by law is for the account of the Holders of the Outstanding
Securities.
Anything in this Article XIV to the contrary
notwithstanding, the
Trustee shall deliver or pay to the Company from time to time
upon Company
Request any money or U.S. Government Obligations held by it as
provided in
Section 14.4 which, in the opinion of a nationally recognized
firm of
independent public accountants expressed in a written
certification thereof
delivered to the Trustee, are in excess of the amount thereof
which would then
be required to be deposited to effect an equivalent defeasance or
covenant
defeasance.
The provisions of the last paragraph of Section 6.26
shall apply to
any money held by the Trustee or any Paying Agent under this
Article XIV
that remains unclaimed for two years after the Maturity Date of
any Securities
for which money or Government Obligations have been deposited
pursuant to
Section 14.4.
SECTION 14.6. Reinstatement.
If the Trustee or the Paying Agent is unable to apply
any money
in accordance with Section 14.5 by reason of any order or
judgment of any
court or governmental authority enjoining, restraining or
otherwise prohibiting
such application, then the Company's obligations under this
Indenture and the
Securities shall be revived and reinstated as though no deposit
had occurred
pursuant to this Article until such time as the Trustee or Paying
Agent is
permitted to apply all such money in accordance with Section
14.5; provided,
however, that if the Company makes any payment of principal of or
interest on
any Security following the reinstatement of the Company's
obligations, the
Company shall be subrogated to the rights of the Holders of such
Securities to
receive such payment from the money held by the Trustee or the
Paying
Agent.
SECTION 14.7. Intervention.
The Company's Wholly-Owned Subsidiaries, Erlanger
Tubular
Corporation, Imperial Adhesives, Inc., Koppel Steel Corporation,
Newport
Steel Corporation, Northern Kentucky Air, Inc., and Northern
Kentucky
Management, Inc., hereby intervene in this Indenture in
furtherance of the
purposes hereof and in the Security Documents to which each is a
party.
<PAGE>
______________________
THUS DONE AND PASSED in multiple originals, on the date
first above written, at New York, New York, in the presence of
the
undersigned competent witnesses, and of the undersigned Notary
Public, after
due reading of the whole.
WITNESSES TO ALL NS GROUP, INC.
SIGNATURES:
/S/ DAVID A. GOLDSTEIN By: /S/ J. R. PARKER
Printed Name: Printed Name: John R.
Parker
David A. Goldstein Title: V.P. & Treasurer
THE HUNTINGTON NATIONAL BANK,
as Trustee
/S/ DAVID A. GOLDSTEIN By: /S/ CANDADA J. MOORE
Printed Name: David A. Goldstein Printed Name: Candada J.
Moore
Title: Trust Officer
ACCEPTED TO AND AGREED TO BY:
ERLANGER TUBULAR CORPORATION
By: /S/ J. R. Parker
Printed Name: John R. Parker
Title: V.P. & Treasurer<PAGE>
IMPERIAL ADHESIVES, INC.
By: /S/ J. R. PARKER
Printed Name: John R. Parker
Title: V.P. & Treasurer
KOPPEL STEEL CORPORATION
By: /S/ J. R. PARKER
Printed Name: John R. Parker
Title: V.P. & Treasurer
NEWPORT STEEL CORPORATION
By: /S/ J. R. PARKER
Printed Name: John R. Parker
Title: V.P. & Treasurer
NORTHERN KENTUCKY AIR, INC.
By: /S/ J. R. PARKER
Printed Name: John R. Parker
Title: V.P. & Treasurer
NORTHERN KENTUCKY MANAGEMENT, INC.
By: /S/ J. R. PARKER
Printed Name: John R. Parker
Title: V.P. & Treasurer
/S/ PAUL V. COUGHLIN
NOTARY PUBLIC
Printed Name: Paul V. Coughlin
My Commission is issued for 2 years.
PAUL V. COUGHLIN
NOTARY PUBLIC, State of New York
No. 60-0106500546
Qualified in New York County
Certificate filed in Westchester County
Commission Expires Sept. 8, 1996<PAGE>
NS GROUP, INC.
TO
THE HUNTINGTON NATIONAL BANK, as Trustee
Indenture
Dated July 28, 1995
$131,096,000
13-1/2% Senior Secured Notes due 2003
<PAGE>
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section
Section(s)
. 310(a)(1). . . . . . . . . . . . . . . . . . . 9.9
(a)(2) . . . . . . . . . . . . . . . . . . . 9.9
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . Not
applicable
(a)(4) . . . . . . . . . . . . . . . . . . . Not
applicable
(a)(5) . . . . . . . . . . . . . . . . . . . 9.9
(b) . . . . . . . . . . . . . . . . . . . . 9.8; 9.10
(c) . . . . . . . . . . . . . . . . . . . . Not
applicable
311(a) . . . . . . . . . . . . . . . . . . . . 9.13
(b) . . . . . . . . . . . . . . . . . . . . 9.13
(c) . . . . . . . . . . . . . . . . . . . . Not
applicable
312(a) . . . . . . . . . . . . . . . . . . . . 10.1;
10.2(a)
(b) . . . . . . . . . . . . . . . . . . . . 10.2(b)
(c) . . . . . . . . . . . . . . . . . . . . 10.2(c)
313(a) . . . . . . . . . . . . . . . . . . . . 10.3(a)
(a)(4) . . . . . . . . . . . . . . . . . . . 1.1
(b) . . . . . . . . . . . . . . . . . . . . 10.3(a)
(c) . . . . . . . . . . . . . . . . . . . . 10.3(a)
(d) . . . . . . . . . . . . . . . . . . . . 10.3(b)
314(a) . . . . . . . . . . . . . . . . . . . . 10.4
(a)(4) . . . . . . . . . . . . . . . . . . . 6.5
(b) . . . . . . . . . . . . . . . . . . . . 12.2
(c)(1) . . . . . . . . . . . . . . . . . . . 13.4
(c)(2) . . . . . . . . . . . . . . . . . . . 13.4
(c)(3) . . . . . . . . . . . . . . . . . . . 13.4
(d) . . . . . . . . . . . . . . . . . . . . 12.2;
12.3;
12.4;
12.5;
13.2;
13.3;
13.4; 13.5
(e) . . . . . . . . . . . . . . . . . . . . 13.6
(f) . . . . . . . . . . . . . . . . . . . . Not
applicable
315(a) . . . . . . . . . . . . . . . . . . . . 9.1
(b) . . . . . . . . . . . . . . . . . . . . 9.2
(c) . . . . . . . . . . . . . . . . . . . . 9.1
(d) . . . . . . . . . . . . . . . . . . . . 9.1
(e) . . . . . . . . . . . . . . . . . . . . 8.14
316(a) . . . . . . . . . . . . . . . . . . . . 1.1
(a)(1)(A). . . . . . . . . . . . . . . . . . 8.2; 8.12
(a)(1)(B). . . . . . . . . . . . . . . . . . 8.13
(a)(2) . . . . . . . . . . . . . . . . . . . Not
applicable
(b) . . . . . . . . . . . . . . . . . . . . 8.8
(c) . . . . . . . . . . . . . . . . . . . . 1.4
317(a)(1). . . . . . . . . . . . . . . . . . . 8.3
(a)(2) . . . . . . . . . . . . . . . . . . . 8.4
(b) . . . . . . . . . . . . . . . . . . . . 6.26
318(a) . . . . . . . . . . . . . . . . . . . . 1.7<PAGE>
TABLE OF CONTENTS
Page(s)
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION. . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 1
"Accounts Receivable". . . . . . . . . . . . . . . . . .
. . . 2
"Acquired Debt" . . . . . . . . . . . . . . . . . .
. . . 2
"Act" . . . . . . . . . . . . . . . . . . . . . . .
. . . 2
"Affiliate" . . . . . . . . . . . . . . . . . . . .
. . . 2
"Appraiser" . . . . . . . . . . . . . . . . . . . .
. . . 2
"Asset Acquisition" . . . . . . . . . . . . . . . .
. . . 3
"Asset Disposition" or "Asset Sale" . . . . . . . .
. . . 3
"Average Life". . . . . . . . . . . . . . . . . . .
. . . 3
"Asset Sale Offer". . . . . . . . . . . . . . . . .
. . . 3
"Asset Sale Payment Date" . . . . . . . . . . . . .
. . . 3
"Authenticating Agent". . . . . . . . . . . . . . .
. . . 3
"Available Amount". . . . . . . . . . . . . . . . .
. . . 3
"Bankruptcy Law". . . . . . . . . . . . . . . . . .
. . . 3
"Board of Directors". . . . . . . . . . . . . . . .
. . . 3
"Board Resolution". . . . . . . . . . . . . . . . .
. . . 4
"Business Day". . . . . . . . . . . . . . . . . . .
. . . 4
"Capital Lease Obligations" . . . . . . . . . . . .
. . . 4
"Capital Stock" . . . . . . . . . . . . . . . . . .
. . . 4
"Cash Equivalents". . . . . . . . . . . . . . . . .
. . . 4
"Caster Loan" . . . . . . . . . . . . . . . . . . .
. . . 4
"Change of Control" . . . . . . . . . . . . . . . .
. . . 5
"Change of Control Date". . . . . . . . . . . . . .
. . . 5
"Change of Control Offer" . . . . . . . . . . . . .
. . . 6
"Change of Control Payment Date". . . . . . . . . .
. . . 6
"Collateral". . . . . . . . . . . . . . . . . . . .
. . . 6
"Collateral Account". . . . . . . . . . . . . . . .
. . . 6
"Collateral Agent". . . . . . . . . . . . . . . . .
. . . 6
"Collateral Proceeds" . . . . . . . . . . . . . . .
. . . 6
"Commission". . . . . . . . . . . . . . . . . . . .
. . . 6
"Common Stock". . . . . . . . . . . . . . . . . . .
. . . 6
"Company" . . . . . . . . . . . . . . . . . . . . .
. . . 6
"Company Obligations" . . . . . . . . . . . . . . .
. . . 6
"Company Request" or "Company
Order" . . . . . . . . . . . . . . . . . . . .
. . . 6
"Condemnation Award". . . . . . . . . . . . . . . .
. . . 6
"Consolidated EBITDA Coverage Ratio". . . . . . . .
. . . 7
"Consolidated Income Tax Expense" . . . . . . . . .
. . . 8
"Consolidated Interest Expense" . . . . . . . . . .
. . . 8
"Consolidated Interest Income". . . . . . . . . . .
. . . 8
"Consolidated Net Income" . . . . . . . . . . . . .
. . . 8
"Consolidated Net Worth". . . . . . . . . . . . . .
. . . 9
"Consolidated Recourse Subsidiary". . . . . . . . .
. . . 9
"Corporate Trust Office". . . . . . . . . . . . . .
. . . 10
"Credit Facility" . . . . . . . . . . . . . . . . .
. . . 10
"Custodian" . . . . . . . . . . . . . . . . . . . .
. . . 10
"Debt". . . . . . . . . . . . . . . . . . . . . . .
. . . 10
"Default" . . . . . . . . . . . . . . . . . . . . .
. . . 11
"Defaulted Interest". . . . . . . . . . . . . . . .
. . . 11
"Depositary". . . . . . . . . . . . . . . . . . . .
. . . 11
"Disqualified Stock". . . . . . . . . . . . . . . .
. . . 11
"EBITDA". . . . . . . . . . . . . . . . . . . . . .
. . . 11
"Event of Default". . . . . . . . . . . . . . . . .
. . . 11
"Exchange Act". . . . . . . . . . . . . . . . . . .
. . . 11
"Excluded Assets" . . . . . . . . . . . . . . . . .
. . . 11
"Excluded Company". . . . . . . . . . . . . . . . .
. . . 11
"Financial Advisor" . . . . . . . . . . . . . . . .
. . . 12
"GAAP". . . . . . . . . . . . . . . . . . . . . . .
. . . 12
"GECC Loans". . . . . . . . . . . . . . . . . . . .
. . . 12
"Global Security" . . . . . . . . . . . . . . . . .
. . . 12
"Government Loans". . . . . . . . . . . . . . . . .
. . . 12
"Guarantee" . . . . . . . . . . . . . . . . . . . .
. . . 12
"Hedging Agreement" . . . . . . . . . . . . . . . .
. . . 13
"Holder". . . . . . . . . . . . . . . . . . . . . .
. . . 13
"ICN Mortgage". . . . . . . . . . . . . . . . . . .
. . . 13
"ICN Security Agreement". . . . . . . . . . . . . .
. . . 13
"Indenture" . . . . . . . . . . . . . . . . . . . .
. . . 13
"Independent" . . . . . . . . . . . . . . . . . . .
. . . 13
"Intercompany Note" . . . . . . . . . . . . . . . .
. . . 13
"Intercreditor Agreement" . . . . . . . . . . . . .
. . . 14
"Interest Payment Date" . . . . . . . . . . . . . .
. . . 14
"Interest Rate Protection Agreement". . . . . . . .
. . . 14
"Internal Revenue Code" . . . . . . . . . . . . . .
. . . 14
"Inventory" . . . . . . . . . . . . . . . . . . . .
. . . 14
"Investment". . . . . . . . . . . . . . . . . . . .
. . . 14
"Issue" . . . . . . . . . . . . . . . . . . . . . .
. . . 14
"Issue Date". . . . . . . . . . . . . . . . . . . .
. . . 15
"Joint Venture" . . . . . . . . . . . . . . . . . .
. . . 15
"Lenders" . . . . . . . . . . . . . . . . . . . . .
. . . 15
"Lender Secured Property" . . . . . . . . . . . . .
. . . 15
"Lien". . . . . . . . . . . . . . . . . . . . . . .
. . . 15
"Material Adverse Effect" . . . . . . . . . . . . .
. . . 15
"Maturity Date" . . . . . . . . . . . . . . . . . .
. . . 15
"Mortgage". . . . . . . . . . . . . . . . . . . . .
. . . 15
"Net Available Cash". . . . . . . . . . . . . . . .
. . . 16
"Net Cash Proceeds" . . . . . . . . . . . . . . . .
. . . 16
"Net Income". . . . . . . . . . . . . . . . . . . .
. . . 16
"Net Insurance Proceeds". . . . . . . . . . . . . .
. . . 16
"NK Subsidiaries" . . . . . . . . . . . . . . . . .
. . . 17
"No. 3 Melt Shop" . . . . . . . . . . . . . . . . .
. . . 17
"Non-Collateral Proceeds" . . . . . . . . . . . . .
. . . 17
"Non-Recourse Debt" . . . . . . . . . . . . . . . .
. . . 17
"Non-Recourse Subsidiary" . . . . . . . . . . . . .
. . . 17
"Obsolete Assets" . . . . . . . . . . . . . . . . .
. . . 18
"Officers' Certificate" . . . . . . . . . . . . . .
. . . 18
"Opinion of Counsel". . . . . . . . . . . . . . . .
. . . 18
"Outstanding" . . . . . . . . . . . . . . . . . . .
. . . 18
"Paying Agent". . . . . . . . . . . . . . . . . . .
. . . 19
"Permitted Investments" . . . . . . . . . . . . . .
. . . 19
"Permitted Liens" . . . . . . . . . . . . . . . . .
. . . 19
"Permitted Payments". . . . . . . . . . . . . . . .
. . . 20
"Permitted Related Acquisition" . . . . . . . . . .
. . . 21
"Person". . . . . . . . . . . . . . . . . . . . . .
. . . 21
"Pledge Agreement". . . . . . . . . . . . . . . . .
. . . 21
"Predecessor Security". . . . . . . . . . . . . . .
. . . 21
"Preferred Stock" . . . . . . . . . . . . . . . . .
. . . 21
"Prospectus". . . . . . . . . . . . . . . . . . . .
. . . 21
"Public Equity Offering". . . . . . . . . . . . . .
. . . 21
"Recourse Debt" . . . . . . . . . . . . . . . . . .
. . . 21
"Recourse Subsidiary" . . . . . . . . . . . . . . .
. . . 21
"Reference Period". . . . . . . . . . . . . . . . .
. . . 22
"Regular Record Date" . . . . . . . . . . . . . . .
. . . 22
"Released Interests". . . . . . . . . . . . . . . .
. . . 22
"Released Trust Moneys" . . . . . . . . . . . . . .
. . . 22
"Responsible Officer" . . . . . . . . . . . . . . .
. . . 22
"Restricted Payment". . . . . . . . . . . . . . . .
. . . 22
"Restricted Subsidiary" . . . . . . . . . . . . . .
. . . 22
"Retained Trust Moneys" . . . . . . . . . . . . . .
. . . 22
"Sale and Leaseback Transaction". . . . . . . . . .
. . . 23
"Security Documents". . . . . . . . . . . . . . . .
. . . 23
"Security Register" and "Security
Registrar" . . . . . . . . . . . . . . . . . .
. . . 23
"Separation Date" . . . . . . . . . . . . . . . . .
. . . 23
"Special Record Date" . . . . . . . . . . . . . . .
. . . 23
"Stated Maturity" . . . . . . . . . . . . . . . . .
. . . 23
"Steelmaking Subsidiaries". . . . . . . . . . . . .
. . . 23
"Subsidiary". . . . . . . . . . . . . . . . . . . .
. . . 23
"Subsidiary Guarantee". . . . . . . . . . . . . . .
. . . 23
"Subsidiary Security Agreement" . . . . . . . . . .
. . . 24
"Trade Payables". . . . . . . . . . . . . . . . . .
. . . 24
"Trustee" . . . . . . . . . . . . . . . . . . . . .
. . . 24
"Trust Indenture Act" . . . . . . . . . . . . . . .
. . . 24
"Trust Moneys". . . . . . . . . . . . . . . . . . .
. . . 24
"Trust Moneys Release Notice" . . . . . . . . . . .
. . . 25
"Trust Officer" . . . . . . . . . . . . . . . . . .
. . . 25
"U.S. Government Obligations" . . . . . . . . . . .
. . . 25
"Valuation Date". . . . . . . . . . . . . . . . . .
. . . 25
"Vice President". . . . . . . . . . . . . . . . . .
. . . 25
"Warrant Agreement" . . . . . . . . . . . . . . . .
. . . 25
"Warrants". . . . . . . . . . . . . . . . . . . . .
. . . 25
"Wholly-Owned Recourse Subsidiary". . . . . . . . .
. . . 25
"Wholly-Owned Subsidiary" . . . . . . . . . . . . .
. . . 25
"Withdrawal Notice" . . . . . . . . . . . . . . . .
. . . 26
SECTION 1.2.
Compliance Certificates and
Opinions . . . . . . . . . . . . . . . . . . .
. . . 26
SECTION 1.3.
Form of Documents Delivered to
Trustee. . . . . . . . . . . . . . . . . . . .
. . . 26
SECTION 1.4.
Acts of Holders; Record Dates. . . . . . . . .
. . . 27
SECTION 1.5.
Notices, Etc. to Trustee and
Company . . . . . . . . . . . . . . . . . . . . . .
. . . 28
SECTION 1.6.
Notice to Holders; Waiver. . . . . . . . . . .
. . . 28
SECTION 1.7.
Conflict with Trust Indenture Act. . . . . . .
. . . 29
SECTION 1.8.
Effect of Headings and Table of
Contents . . . . . . . . . . . . . . . . . . .
. . . 29
SECTION 1.9.
Successors and Assigns . . . . . . . . . . . .
. . . 29
SECTION 1.10.
Separability Clause. . . . . . . . . . . . . .
. . . 29
SECTION 1.11.
Benefits of Indenture. . . . . . . . . . . . .
. . . 30
SECTION 1.12.
Governing Law. . . . . . . . . . . . . . . . .
. . . 30
SECTION 1.13.
Legal Holidays. . . . . . . . . . . . . . . . . . .
. . . 30
SECTION 1.14.
Immunity of Incorporators,
Stockholders, Officers and
Directors . . . . . . . . . . . . . . . . . . . . .
. . . 30
ARTICLE II
SECURITY FORMS . . . . . . . . .
. . . 31
SECTION 2.1.
Forms Generally. . . . . . . . . . . . . . . .
. . . 31
SECTION 2.2.
Form of Face of Security . . . . . . . . . . .
. . . 31
SECTION 2.3.
Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . .
. . . 39
ARTICLE III
THE SECURITIES . . . . . . . . .
. . . 40
SECTION 3.1.
Title and Terms. . . . . . . . . . . . . . . .
. . . 40
SECTION 3.2.
Denominations . . . . . . . . . . . . . . . . . . .
. . . 41
SECTION 3.3.
Execution, Authentication, Delivery
and Dating. . . . . . . . . . . . . . . . . . . . .
. . . 41
SECTION 3.4.
Temporary Securities . . . . . . . . . . . . .
. . . 41
SECTION 3.5.
Registration; Registration of Transfer and Exchange
. . . 42
SECTION 3.6.
Mutilated, Destroyed, Lost and
Stolen Securities. . . . . . . . . . . . . . .
. . . 44
SECTION 3.7.
Payment of Interest; Interest Rights
Preserved. . . . . . . . . . . . . . . . . . .
. . . 45
SECTION 3.8.
Persons Deemed Owners. . . . . . . . . . . . .
. . . 46
SECTION 3.9.
Cancellation. . . . . . . . . . . . . . . . . . . .
. . . 46
SECTION 3.10.
Computation of Interest. . . . . . . . . . . .
. . . 47
ARTICLE IV
SATISFACTION AND DISCHARGE . . . . . .
. . . 47
SECTION 4.1.
Satisfaction and Discharge of
Indenture. . . . . . . . . . . . . . . . . . .
. . . 47
SECTION 4.2.
Application of Monies for
Satisfaction and Discharge . . . . . . . . . .
. . . 48
ARTICLE V
REDEMPTION . . . . . . . . . .
. . . 48
SECTION 5.1.
Notices to Trustee. . . . . . . . . . . . . . . . .
. . . 48
SECTION 5.2.
Selection of Securities To Be
Redeemed . . . . . . . . . . . . . . . . . . .
. . . 49
SECTION 5.3.
Notice of Redemption . . . . . . . . . . . . .
. . . 49
SECTION 5.4.
Effect of Notice of Redemption . . . . . . . .
. . . 50
SECTION 5.5.
Deposit of Redemption Price. . . . . . . . . .
. . . 50
SECTION 5.6.
Optional Redemption. . . . . . . . . . . . . .
. . . 51
SECTION 5.7.
Securities Redeemed in Part. . . . . . . . . .
. . . 51
SECTION 5.8.
Public Equity Offering . . . . . . . . . . . .
. . . 51
ARTICLE VI
COVENANTS. . . . . . . . . . .
. . . 52
SECTION 6.1.
Payment of Securities. . . . . . . . . . . . .
. . . 52
SECTION 6.2.
Maintenance of Office or Agency. . . . . . . .
. . . 52
SECTION 6.3.
Corporate Existence. . . . . . . . . . . . . .
. . . 53
SECTION 6.4.
Payment of Taxes and Other Claims; Tax
Consolidation. . . 53
SECTION 6.5.
Compliance Certificates. . . . . . . . . . . .
. . . 53
SECTION 6.6.
SEC Reports. . . . . . . . . . . . . . . . . .
. . . 54
SECTION 6.7.
Waiver of Stay, Extension or Usury
Laws . . . . . . . . . . . . . . . . . . . . .
. . . 55
SECTION 6.8.
Maintenance of Properties; Insurance; Books and
Records;
Compliance with Law . . . . . . . . . . . . . . . .
. . . 56
SECTION 6.9.
Limitations on Debt. . . . . . . . . . . . . .
. . . 56
SECTION 6.10.
Limitation on Liens. . . . . . . . . . . . . .
. . . 58
SECTION 6.11.
Limitation on the Issuance of
Preferred Stock by Subsidiaries . . . . . . . . . .
. . . 60
SECTION 6.12.
Transfer of Assets to Subsidiaries . . . . . .
. . . 61
SECTION 6.13.
Limitations on Restricted Payments. . . . . . . . .
. . . 61
SECTION 6.14.
Limitations on Transactions with Affiliates . . . .
. . . 62
SECTION 6.15.
Restrictions on Assets Sales . . . . . . . . .
. . . 63
SECTION 6.16.
Limitation on Restrictions on Distributions from
Recourse
Subsidiaries. . . . . . . . . . . . . . . . . . . .
. . . 66
SECTION 6.17.
Limitation on Sale and Leaseback Transactions . . .
. . . 67
SECTION 6.18.
Change of Control. . . . . . . . . . . . . . .
. . . 67
SECTION 6.19.
Limitation on Issuance and Sale of
Capital Stock of Recourse
Subsidiaries . . . . . . . . . . . . . . . . .
. . . 69
SECTION 6.20.
Limitations as to Non-Recourse
Subsidiaries . . . . . . . . . . . . . . . . .
. . . 69
SECTION 6.21.
Impairment of Security Interest. . . . . . . .
. . . 70
SECTION 6.22.
Conflicting Agreements . . . . . . . . . . . .
. . . 70
SECTION 6.23.
Amendment to Security Documents. . . . . . . .
. . . 70
SECTION 6.24.
Inspection. . . . . . . . . . . . . . . . . . . . .
. . . 71
SECTION 6.25.
Use of Proceeds. . . . . . . . . . . . . . . .
. . . 71
SECTION 6.26.
Money for Security Payments to Be
Held in Trust. . . . . . . . . . . . . . . . .
. . . 72
ARTICLE VII
SUCCESSOR CORPORATION. . . . . . . .
. . . 73
SECTION 7.1.
When Company May Merge, etc. . . . . . . . . .
. . . 73
SECTION 7.2.
Surviving Person Substituted . . . . . . . . .
. . . 74
ARTICLE VIII
EVENTS OF DEFAULT. . . . . . . . .
. . . 75
SECTION 8.1.
Events of Default. . . . . . . . . . . . . . .
. . . 75
SECTION 8.2.
Acceleration of Maturity; Rescission
and Annulment. . . . . . . . . . . . . . . . .
. . . 77
SECTION 8.3.
Collection of Debt and Suits for
Enforcement by Trustee . . . . . . . . . . . .
. . . 78
SECTION 8.4.
Trustee May File Proofs of Claims. . . . . . .
. . . 79
SECTION 8.5.
Trustee May Enforce Claims
Without Possession of Securities . . . . . . .
. . . 79
SECTION 8.6.
Application of Money Collected . . . . . . . .
. . . 80
SECTION 8.7.
Limitation on Suits. . . . . . . . . . . . . .
. . . 80
SECTION 8.8.
Unconditional Right of Holders to
Receive Principal and Interest . . . . . . . .
. . . 81
SECTION 8.9.
Restoration of Rights and Remedies . . . . . .
. . . 82
SECTION 8.10.
Rights and Remedies Cumulative . . . . . . . .
. . . 82
SECTION 8.11.
Delay or Omission Not Waiver . . . . . . . . .
. . . 82
SECTION 8.12.
Control by Holders . . . . . . . . . . . . . .
. . . 82
SECTION 8.13.
Waiver of Past Defaults. . . . . . . . . . . .
. . . 83
SECTION 8.14.
Undertaking for Costs. . . . . . . . . . . . .
. . . 83
SECTION 8.15.
Collection Suit by Trustee . . . . . . . . . .
. . . 84
ARTICLE IX
THE TRUSTEE . . . . . . . . . .
. . . 84
SECTION 9.1.
Certain Duties and Responsibilities. . . . . .
. . . 84
SECTION 9.2.
Notice of Defaults . . . . . . . . . . . . . .
. . . 84
SECTION 9.3.
Certain Rights of Trustee. . . . . . . . . . .
. . . 85
SECTION 9.4.
Not Responsible for Recitals or
Issuance of Securities . . . . . . . . . . . .
. . . 86
SECTION 9.5.
May Hold Securities. . . . . . . . . . . . . .
. . . 86
SECTION 9.6.
Money Held in Trust. . . . . . . . . . . . . .
. . . 86
SECTION 9.7.
Compensation and Reimbursement . . . . . . . .
. . . 87
SECTION 9.8.
Disqualification; Conflicting
Interests. . . . . . . . . . . . . . . . . . .
. . . 88
SECTION 9.9.
Corporate Trustee Required;
Eligibility. . . . . . . . . . . . . . . . . .
. . . 88
SECTION 9.10.
Resignation and Removal;
Appointment of Successor . . . . . . . . . . .
. . . 88
SECTION 9.11.
Acceptance of Appointment by
Successor. . . . . . . . . . . . . . . . . . .
. . . 90
SECTION 9.12.
Merger, Conversion, Consolidation
or Succession to Business. . . . . . . . . . .
. . . 90
SECTION 9.13.
Preferential Collection of Claims
Against Company. . . . . . . . . . . . . . . .
. . . 90
SECTION 9.14.
Appointment of Authenticating
Agent. . . . . . . . . . . . . . . . . . . . .
. . . 91
ARTICLE X
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY.
. . . 92
SECTION 10.1.
Company to Furnish Trustee
Names and Addresses of Holders . . . . . . . .
. . . 92
SECTION 10.2.
Preservation of Information;
Communications to Holders. . . . . . . . . . .
. . . 93
SECTION 10.3.
Reports by Trustee . . . . . . . . . . . . . .
. . . 93
SECTION 10.4.
Reports by Company . . . . . . . . . . . . . .
. . . 94
ARTICLE XI
SUPPLEMENTAL INDENTURES . . . . . . .
. . . 94
SECTION 11.1.
Supplemental Indentures without
Consent of Holders . . . . . . . . . . . . . .
. . . 94
SECTION 11.2.
Supplemental Indentures with
Consent of Holders . . . . . . . . . . . . . .
. . . 95
SECTION 11.3.
Execution of Supplemental
Indentures . . . . . . . . . . . . . . . . . .
. . . 96
SECTION 11.4.
Effect of Supplemental Indentures. . . . . . .
. . . 97
SECTION 11.5.
Conformity with Trust Indenture
Act. . . . . . . . . . . . . . . . . . . . . .
. . . 97
SECTION 11.6.
Reference in Securities to
Supplemental Indentures. . . . . . . . . . . .
. . . 97
ARTICLE XII
COLLATERAL AND SECURITY . . . . . . .
. . . 97
SECTION 12.1.
Collateral and Security Documents. . . . . . .
. . . 97
SECTION 12.2.
Recording and Opinions . . . . . . . . . . . .
. . . 99
SECTION 12.3.
Release of Collateral. . . . . . . . . . . . .
. . . 100
SECTION 12.4.
Possession and Use of Collateral . . . . . . .
. . . 101
SECTION 12.5.
Specified Releases of Collateral . . . . . . .
. . . 101
SECTION 12.6.
Disposition of Obsolete Assets . . . . . . . .
. . . 104
SECTION 12.7.
Form and Sufficiency of Release. . . . . . . .
. . . 104
SECTION 12.8.
Purchaser Protected. . . . . . . . . . . . . .
. . . 105
SECTION 12.9.
Authorization of Actions To Be
Taken by The Trustee Under the
Security Documents . . . . . . . . . . . . . .
. . . 105
SECTION 12.10.
Authorization of Receipt of Funds
by the Trustee Under the Security
Documents. . . . . . . . . . . . . . . . . . .
. . . 105
ARTICLE XIII
APPLICATION OF TRUST MONEYS . . . . . .
. . . 105
SECTION 13.1.
Collateral Account . . . . . . . . . . . . . .
. . . 106
SECTION 13.2.
Withdrawals of Insurance Proceeds
and Condemnation Awards. . . . . . . . . . . .
. . . 106
SECTION 13.3.
Withdrawal of Trust Moneys for
Asset Sale Offer . . . . . . . . . . . . . . .
. . . 108
SECTION 13.4.
Withdrawal of Trust Moneys for
Permitted Related Acquisitions . . . . . . . .
. . . 109
SECTION 13.5.
Withdrawal of Trust Moneys for
Retention by the Company or its
Subsidiaries . . . . . . . . . . . . . . . . .
. . . 110
SECTION 13.6.
Withdrawal of Trust Moneys on
Basis of Retirement of Securities. . . . . . .
. . . 111
SECTION 13.7.
Investment of Trust Moneys . . . . . . . . . .
. . . 112
ARTICLE XIV
DEFEASANCE AND COVENANT DEFEASANCE . . . .
. . . 112
SECTION 14.1.
Company's Option to Effect
Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . .
. . . 112
SECTION 14.2.
Defeasance and Discharge . . . . . . . . . . .
. . . 112
SECTION 14.3.
Covenant Defeasance. . . . . . . . . . . . . .
. . . 113
SECTION 14.4.
Conditions to Defeasance or
Covenant Defeasance. . . . . . . . . . . . . .
. . . 113
SECTION 14.5.
Deposited Money and U.S. Government Obligations to
be held in Trust; Other Miscellaneous Provisions. .
. . . 115
SECTION 14.6.
Reinstatement. . . . . . . . . . . . . . . . .
. . . 116
SECTION 14.7.
Intervention . . . . . . . . . . . . . . . . .
. . . 116
EXHIBITS
EXHIBIT A Form of Intercompany Note
EXHIBIT B Form of Mortgage
EXHIBIT C Form of ICN Mortgage
EXHIBIT D Form of Pledge and Security Agreement
EXHIBIT E Form of Subsidiary Guarantee
EXHIBIT F Form of Subsidiary Security Agreement
EXHIBIT G Form of ICN Security Agreement
EXHIBIT H Form of Intercreditor Agreement
EXHIBIT I Form of Negative Pledge
LEASEHOLD AND FEE MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
from
NEWPORT STEEL CORPORATION, Mortgagor
to
THE HUNTINGTON NATIONAL BANK,
as Trustee and Collateral Agent, Mortgagee
DATED AS OF JULY 28, 1995
This instrument was prepared by and
after recording should be returned to:
F. Robert Wheeler, Jr., Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
/S/ F. ROBERT WHEELER, JR.
F. Robert Wheeler, Jr., Esq.
TABLE OF CONTENTS
Background . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . 2
1. Warranty of Title . . . . . . . . . . . . . . . . . 7
2. Payment and Performance of Obligations. . . . . . . 8
3. Requirements. . . . . . . . . . . . . . . . . . . . 9
4. Payment of Taxes and Other Impositions. . . . . . . 10
5. Insurance . . . . . . . . . . . . . . . . . . . . . 11
6. Restrictions on Liens, Encumbrances and Sales . . . 15
7. Relationship of Mortgagee and Mortgagor . . . . . . 16
8. Maintenance; No Alteration; Inspection; Utilities . 16
9. Condemnation/Eminent Domain . . . . . . . . . . . . 17
10. Leases. . . . . . . . . . . . . . . . . . . . . . . 17
11. Further Assurances/Estoppel Certificates. . . . . . 19
12. Mortgagee's Right to Perform. . . . . . . . . . . . 19
13. Hazardous Material. . . . . . . . . . . . . . . . . 19
14. Asbestos. . . . . . . . . . . . . . . . . . . . . . 21
15. Event of Default. . . . . . . . . . . . . . . . . . 21
16. Remedies. . . . . . . . . . . . . . . . . . . . . . 21
17. Right of Mortgagee to Credit Sale . . . . . . . . . 24
18. Appointment of Receiver . . . . . . . . . . . . . . 24
19. Extension, Release, etc.. . . . . . . . . . . . . . 24
20. Assignment of Rents . . . . . . . . . . . . . . . . 25
21. Trust Funds . . . . . . . . . . . . . . . . . . . . 26
22. Additional Rights . . . . . . . . . . . . . . . . . 26
23. Changes in Method of Taxation . . . . . . . . . . . 26
24. Notices . . . . . . . . . . . . . . . . . . . . . . 27
25. No Oral Modification. . . . . . . . . . . . . . . . 27
26. Partial Invalidity. . . . . . . . . . . . . . . . . 27
27. Waiver of Right of Redemption and Other Rights. . . 27
28. Remedies Not Exclusive. . . . . . . . . . . . . . . 28
29. Multiple Security . . . . . . . . . . . . . . . . . 29
30. Expenses; Indemnification . . . . . . . . . . . . . 30
31. Successors and Assigns. . . . . . . . . . . . . . . 31
32. No Waivers, etc.. . . . . . . . . . . . . . . . . . 31
33. Governing Law, etc. . . . . . . . . . . . . . . . . 32
34. Waiver of Trial by Jury . . . . . . . . . . . . . . 32
35. Certain Definitions . . . . . . . . . . . . . . . . 32
36. Security Agreement under Uniform Commercial Code . 33
37. Release Upon Payment and Discharge of Mortgagor's
Obligations. . . . . . . . . . . . . . . . . . . . . . . 34
Consistency with Other Documents. . . . . . . . . . 34
40. Mortgaged Lease Provisions. . . . . . . . . . . . . 35
SCHEDULES
Schedule A - Description of Real Property
Schedule A-1 - Description of Leasehold
Improvements Land
Schedule B - Description of Excluded Property
LEASEHOLD AND FEE MORTGAGE, ASSIGNMENT OF RENTS
AND LEASES
AND SECURITY AGREEMENT
THIS LEASEHOLD AND FEE MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES AND SECURITY
AGREEMENT, dated as of July 28, 1995 is made by
NEWPORT STEEL CORPORATION, a Kentucky corporation
("Mortgagor"), whose address is Ninth and Lowell
Streets, Newport, Kentucky 41072, to THE
HUNTINGTON NATIONAL BANK, as Trustee (in such
capacity, the "Trustee") under the Indenture
referred to below, as collateral agent
("Mortgagee"), whose mailing address is 540
Madison Avenue, Covington, Kentucky 41011, Kenton
County, Kentucky. 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. Mortgagor is the owner of fee and leasehold
estates with respect to the real property
described on Schedule A attached hereto (such real
property together with the Leasehold Improvements
referred to below and all other buildings,
improvements, structures and fixtures now or
subsequently located thereon (the "Improvements"),
being collectively referred to as the "Real
Estate"). Mortgagor is the owner of a leasehold
estate in the building, improvements, structures
and fixtures (the "Leasehold Improvements")
located on so much of the real property described
on Schedule A as is set forth in Schedule A-1
attached hereto, pursuant to that certain Sublease
dated April 15, 1981 by and between Interlake,
Inc. and Newport Steel Corporation, a copy of
which was recorded in Misc. Book 95, Page 167 of
the Campbell County, Kentucky public records; as
affected by an Assignment and Assumption Agreement
dated May 24, 1986 by and between Interlake, Inc.
and The Interlake Companies, Inc. and as amended
by an Amendment of Lease Agreement dated as of
July 28, 1995, a copy of which will be recorded
prior to the recording hereof (the "Mortgaged
Lease").
B. Mortgagor is a wholly owned subsidiary of
NS Group, Inc., a Kentucky corporation (the
"Company") and is a Recourse Subsidiary (as
defined in the Indenture referred to below).
C. The Company and Mortgagee are parties to that
Indenture dated as of July 28, 1995 (as the same
may be amended, modified or otherwise supplemented
from time to time, the "Indenture"; capitalized
terms not defined herein shall have the meanings
ascribed thereto in the Indenture) for the benefit
of Holders of 13.5% Senior Secured Notes due 2003
in the aggregate principal amount of
$125,000,000.00 (the "Securities") issued by the
Company, which Securities mature on July 15, 2003.
D. It is a condition precedent to the purchase
of the Securities from the Company that the
Mortgagor shall have (i) executed and delivered
that certain Guaranty of even date herewith in
favor of Mortgagee (the "Guaranty") and (ii)
executed and delivered this Mortgage to Mortgagee
for the ratable benefit of the Holders in order to
secure Mortgagor's obligations under the Guaranty.
References in this Mortgage to the "Default Rate"
shall mean the interest rate payable with respect
to the Securities plus two percent (2%) per annum.
E. It is a condition precedent to the purchase
of the Securities from the Company that the
Mortgagor shall have executed and delivered that
certain Subsidiary Security Agreement (the
"Subsidiary Security Agreement") of even date
herewith in favor of Mortgagee, which Subsidiary
Security Agreement shall grant Mortgagee a
security interest in and to certain personal
property now or subsequently used in connection
with the operation of the Real Estate.
NOW, THEREFORE, in consideration of the premises
and to induce the Mortgagee to enter into the
Indenture and to induce the Holders to purchase
the Securities from the Company, the Mortgagor
hereby agrees with the Mortgagee, for the ratable
benefit of the Holders, as follows:
Granting Clauses
For good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged,
Mortgagor agrees that to secure all of Mortgagor's
obligations and liabilities under the Guaranty and
all other obligations and liabilities of the
Mortgagor to the Trustee, the Mortgagee and the
Holders (including, without limitation, interest
accruing after the maturity of the Securities and
interest accruing after the filing of any petition
in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding,
relating to the Mortgagor, whether or not a claim
for post-filing or post-petition interest is
allowed in such proceeding and interest, to the
extent permitted by law, on the unpaid interest),
whether direct or indirect, absolute or
contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out
of, or in connection with, the Indenture, the
Securities, the Guaranty, this Mortgage, the other
Security Documents or any other document made,
delivered or given in connection therewith, in
each case whether on account of principal,
interest, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees
and disbursements of counsel to the Trustee and
the Mortgagee that are required to be paid by the
Mortgagee pursuant to the terms of the Indenture,
the Guaranty or this Mortgage or any other
Security Document) (collectively, the
"Obligations").
MORTGAGOR BARGAINS, SELLS, MORTGAGES, WARRANTS,
CONVEYS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER
AND BY THESE PRESENTS DOES HEREBY BARGAIN, SELL,
MORTGAGE, WARRANT, CONVEY, GRANT, ASSIGN, TRANSFER
AND SET OVER UNTO MORTGAGEE FOR THE RATABLE
BENEFIT OF THE HOLDERS AND HEREBY GRANTS TO
MORTGAGEE FOR THE RATABLE BENEFIT OF THE HOLDERS A
CONTINUING SECURITY INTEREST IN AND TO ALL OF THE
FOLLOWING:
(A) all right, title and interest of Mortgagor in
and to the leasehold estate created under and by
virtue of the Mortgaged Lease, any interest in any
fee, greater or lesser title to the Real Estate
that Mortgagor may own or hereafter acquire
(whether acquired pursuant to a right or option,
if any, contained in the Mortgaged Lease or
otherwise), all options, privileges and rights of
Mortgagor under the Mortgaged Lease (including all
rights of use, occupancy and enjoyment) and any
amendments, supplements, extensions, renewals,
restatements, replacements and modifications
thereof (including, without limitation, (i) the
right to give consents, (ii) the right, if any, to
renew or extend the Mortgaged Lease for succeeding
term or terms and (iii) the right, if any, to
purchase the Real Estate) (all of the foregoing
being collectively referred to herein as the
"Leasehold Estate");
(B) 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,
gores of land, streets, ways, alleys, passages,
sewer rights, waters, water courses, water and
riparian rights, development rights, air rights,
mineral rights and all estates, rights, titles,
interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging,
relating or appertaining to the Real Estate, and
any reversions and remainders 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 right, title and interest of Mortgagor in
and to all of the fixtures, chattels, business
machines, machinery, apparatus, equipment,
furnishings, fittings 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 or used or usable in
any way in connection with any operation or
letting of 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 mortgage,
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 (other than the
Mortgaged Lease), 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
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) all right, title and interest of Mortgagor in
and to all trade names, trade marks, logos,
copyrights, good will and books and records
relating to or used in connection with the
operation of the Real Estate or the Equipment or
any part thereof; all right, title and interest of
Mortgagor in and to all general intangibles
related to the operation of the Improvements now
existing or hereafter arising;
(H) all right, title and interest of Mortgagor in
and to 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 any such insurance
policies and 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 otherwise
following and during the continuance of an Event
of Default; and all right, title and interest of
Mortgagor in and to 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, subject to the provisions
relating to condemnation generally set forth
below;
(I) 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
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;
(J) all right, title and interest of Mortgagor in
and to any and all monies now or subsequently on
deposit for the payment of real estate taxes or
special assessments against the Real Estate or for
the payment of premiums on insurance policies
covering the foregoing property or otherwise on
deposit with or held by Mortgagee as provided in
this Mortgage; all capital, operating, reserve or
similar accounts held by or on behalf of Mortgagor
and related to the operation of the Mortgaged
Property, whether now existing or hereafter
arising and all monies held in any of the
foregoing accounts and any certificates or
instruments related to or evidencing such
accounts;
(K) all right, title and interest of Mortgagor in
and to all accounts and revenues arising from the
operation of the Improvements including, without
limitation, (i) any right to payment now existing
or hereafter arising for rental of hotel rooms or
other space or for services rendered, whether or
not yet earned by performance, arising from the
operation of the Improvements or any other
facility on the Mortgaged Property and (ii) all
rights to payment from any consumer credit-charge
card organization or entity including, without
limitation, payments arising from the use of the
American Express Card, the Visa Card, the Carte
Blanche Card, the Mastercard or any other credit
card, including those now existing or hereafter
created, substitutions therefor, proceeds thereof
(whether cash or non-cash, movable or immovable,
tangible or intangible) received upon the sale,
exchange, transfer, collection or other
disposition or substitution thereof and any and
all of the foregoing and proceeds therefrom
(collectively, the "Additional Rents"); and
(L) all proceeds, both cash and noncash, of the
foregoing;
excluding, however, notwithstanding any provision
set forth in the foregoing clauses (A) through
(L), the property described on Schedule B attached
hereto and incorporated herein by reference
(collectively, the "Excluded Property") (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 (E), excluding the Excluded Property,
are collectively referred to as the "Premises",
and those described in the foregoing clauses (A)
through (L), excluding the Excluded Property, are
collectively referred to as the "Mortgaged
Property").
PROVIDED, however, that notwithstanding anything
to the contrary contained herein (including,
without limitation, the Granting Clauses set forth
hereinabove), this Mortgage is subject to an
express condition, such that if the terms and
provisions of the Mortgaged Lease and/or the Prime
Lease (as defined in Section 1(b) below) require
that the landlord thereunder consent to the
granting of a deed of trust, mortgage, security
interest or other encumbrance on the tenant's
leasehold interest, then (i) this Mortgage shall
be effective with respect to the Leasehold Estate
and the Leasehold Improvements and the Granting
Clauses set forth hereinabove shall become
operative with respect to the Leasehold Estate and
the Leasehold Improvements only at such time as
the written consent of the landlord under the
Mortgaged Lease and/or the Prime Lease shall have
been procured, and (ii) until such written consent
shall have been procured (if at all), this
Mortgage shall not be effective with respect to
the Leasehold Estate and the Leasehold
Improvements and shall not create any lien,
security interest or other encumbrance with
respect to the Leasehold Estate and the Leasehold
Improvements and the Granting Clauses with respect
to the Leasehold Estate and the Leasehold
Improvements shall be of no force or effect.
All of the Mortgaged Property hereinabove
described, real, personal and mixed, whether
affixed or annexed to the Real Estate or not and
all rights hereby conveyed and mortgaged are
intended so to be as a unit and are hereby
understood, agreed and declared, to the maximum
extent permitted by law, to form a part and parcel
of the Real Estate and to be appropriated to the
use of the Real Estate, and shall be for the
purposes of this Mortgage deemed to be real estate
and conveyed and mortgaged hereby; provided,
however, as to any of the property aforesaid which
does not so form a part and parcel of the Real
Estate or does not constitute a "fixture" (as
defined in the Uniform Commercial Code of Kentucky
(the "Code")), this Mortgage is hereby deemed to
also be a Security Agreement under the Code for
purposes of granting a security interest in such
property, which Mortgagor hereby grants to
Mortgagee, as Secured Party (as defined in the
Code), as more particularly provided below in this
Mortgage.
TO HAVE AND TO HOLD the Mortgaged Property and the
rights and privileges hereby mortgaged, together
with the right to retain possession of the
Mortgaged Property upon and during the continuance
of an Event of Default hereunder, unto Mortgagee,
its successors and assigns for the uses and
purposes set forth, until the Obligations are
fully paid and performed.
Terms and Conditions
Mortgagor further represents, warrants, covenants
and agrees with Mortgagee as follows:
1. Warranty of Title. (a) Mortgagor warrants
that Mortgagor has good title to the Real Estate
(other than to the Leasehold Estate and Leasehold
Improvements) in fee simple and good title to the
rest of the Mortgaged Property (other than to the
Leasehold Estate and Leasehold Improvements),
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 liens permitted pursuant
to subsection 6.10 of the Indenture (collectively,
the "Permitted Exceptions"), and Mortgagor shall
warrant, defend and preserve such title and the
lien of the Mortgage thereon against all claims of
all persons and entities, excepting, however, the
Permitted Exceptions. Mortgagor further warrants
that it has the right to mortgage the Mortgaged
Property (other than the Leasehold Estate).
(b) Mortgagor represents and warrants (i) that
Mortgagor has title to the leasehold estate in the
Leasehold Improvements pursuant to the Mortgaged
Lease, and Mortgagor has a right to mortgage the
same, subject to the obtaining of any consents
required under the Mortgaged Lease and/or the
Prime Lease, (ii) that the Leasehold Improvements
are subject only to matters of record, the
Mortgaged Lease, that certain Lease Agreement
dated as of September 1, 1971 by and between
Campbell County, Kentucky, as lessor, and Enbee
Corporation, as lessee, a copy of which was
recorded on September 14, 1971 in Misc. Book 65,
Page 563 of the Campbell County, Kentucky public
records; as affected by an Assignment dated as of
September 1, 1971 by Campbell County, Kentucky to
National Bank of Westchester, as Trustee, a copy
of which was recorded on September 14, 1971 in
Book 65, Page 602 of said public records; as
further affected by an Assignment of Lease dated
as of September 1, 1971 by Enbee Corporation to
Interlake, Inc., a copy of which was recorded on
September 14, 1971 in Book 65, Page 607 of said
public records; as affected by an Assignment and
Assumption Agreement dated as of May 24, 1986 by
and between Interlake, Inc. and The Interlake
Companies, Inc. (the "Prime Lease"), this
Mortgage, 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 liens permitted pursuant
to subsection 6.10 of the Indenture (collectively,
the "Permitted Exceptions"), (iii) that Mortgagor
shall warrant and defend the lien thereon granted
or intended to be granted by this Mortgage against
all persons and entities, excepting, however, the
Permitted Exceptions, (iv) that the Mortgaged
Lease is in full force and effect and Mortgagor is
the holder of the lessee's or tenant's interest
thereunder, (v) that the Mortgaged Lease has not
been amended, supplemented or otherwise modified,
except as specifically described herein, (vi) that
Mortgagor has paid all rents and other charges to
the extent due and payable, is not in default
under the Mortgaged Lease, has received no notice
of default from the lessor thereunder which
default remains uncured and knows of no material
default by the lessor thereunder, and (vii) that
the granting of this Mortgage does not violate the
terms of the Mortgage Lease, subject to the
obtaining of any consents required under the
Mortgaged Lease and/or the Prime Lease.
2. Payment and Performance of Obligations.
Mortgagor shall pay the Obligations at the times
and places and in the manner specified in the
Guaranty and shall perform all the Obligations.
3. Requirements. (a) Mortgagor shall comply
with, or cause to be complied with, and conform to
all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules,
regulations and requirements, and irrespective of
the nature of the work to be done, of each of the
United States of America, any State and any
municipality, local government or other political
subdivision thereof and any agency, department,
bureau, board, commission or other instrumentality
of any of them, now existing or subsequently
created (collectively, "Governmental Authority")
which has jurisdiction over the Mortgaged
Property, except where the failure to so comply
with any of the foregoing would not have a
Material Adverse Effect on the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, and 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 the
failure to so comply with any of the foregoing
would not adversely affect the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole. All
present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules,
regulations and requirements of every Governmental
Authority applicable to Mortgagor or to any of the
Mortgaged Property and all covenants,
restrictions, and conditions which now or later
may be applicable to any of the Mortgaged Property
are collectively referred to as the "Legal
Requirements".
(b) With respect to the Real Estate (other than
the Leasehold Improvements), from and after the
date of this Mortgage, Mortgagor shall not by act
or omission permit any building or other
improvement on any premises not subject to the
lien of this Mortgage to rely on the Premises or
any part thereof or any interest therein to
fulfill any Legal Requirement and Mortgagor hereby
assigns to Mortgagee any and all rights to give
consent for all or any portion of the Premises or
any interest therein to be so used. Mortgagor
shall not by act or omission impair the integrity
of any of the Real Estate (other than the
Leasehold Improvements) as a single zoning lot
separate and apart from all other premises, and
Mortgagor (as opposed to the lessor under the
Mortgaged Lease or any other party) shall not by
act or omission impair the integrity of any of the
Leasehold Improvements as a single zoning lot
separate and apart from all other premises.
Mortgagor represents that each parcel of the Real
Estate (other than the Leasehold Improvements)
constitutes a legally subdivided lot, in
compliance with all subdivision laws and similar
Legal Requirements, and Mortgagor represents, to
the best of its actual knowledge, that each parcel
of the Leasehold Improvements constitutes a
legally subdivided lot, in compliance with all
subdivision laws and similar Legal Requirements.
Any act or omission by Mortgagor which would
result in a violation of any of the provisions of
this subsection shall be void.
4. Payment of Taxes and Other Impositions. (a)
Promptly when due, Mortgagor shall pay and
discharge all taxes of every kind and nature
(including, without limitation, all real and
personal property, income, franchise, withholding,
transfer, gains, profits and gross receipts
taxes), all charges for any easement or agreement
maintained for the benefit of any of the Mortgaged
Property, all general and special assessments,
levies, permits, inspection and license fees, all
water and sewer rents and charges 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 Mortgaged
Property, 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 as
the "Impositions"). Upon request by Mortgagee,
Mortgagor shall deliver to Mortgagee (i) original
or copies of receipted bills and cancelled checks
evidencing payment of such Imposition if it is a
real estate tax or other public charge and (ii)
evidence acceptable to Mortgagee showing the
payment of any other 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 to 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 Mortgage, and (ii)
payable on demand by Mortgagor to Mortgagee
together with interest at the Default Rate as set
forth above.
(c) Mortgagor shall not claim, demand or be
entitled to receive any credit or credits toward
the satisfaction of this Mortgage or on any
interest payable thereon for any taxes assessed
against the Mortgaged Property or any part
thereof, and shall not claim any deduction from
the taxable value of the Mortgaged Property by
reason of this Mortgage if any such claim would
adversely affect the interest of Mortgagee.
(d) Mortgagor shall have the right before any
delinquency occurs to contest or object in good
faith to the amount or validity of any Imposition
by appropriate legal proceedings, but such right
shall not be deemed or construed in any way as
relieving, modifying, or extending Mortgagor's
covenant to pay any such Imposition at the time
and in the manner provided in this Section unless
(i) Mortgagor has given prior written notice to
Mortgagee of Mortgagor's intent so to contest or
object to an Imposition, (ii) Mortgagor shall
demonstrate to Mortgagee's satisfaction that the
legal proceedings shall operate conclusively to
prevent the sale of the Mortgaged Property, or any
part thereof, to satisfy such Imposition prior to
final determination of such proceedings and (iii)
Mortgagor shall furnish a good and sufficient bond
or surety as requested by and reasonably
satisfactory to Mortgagee in the amount of the
Impositions which are being contested plus any
interest and penalty which may be imposed thereon
and which could become a lien against the Real
Estate or any part of the Mortgaged Property.
(e) Upon written notice to Mortgagor, Mortgagee,
after an Event of Default (as defined below),
shall be entitled to require Mortgagor to pay
monthly in advance to Mortgagee the equivalent of
1/12th of the estimated annual Impositions.
Mortgagee may commingle such funds with its own
funds and Mortgagor shall not be entitled to
interest thereon.
5. Insurance. (a) Mortgagor shall maintain or
cause to be maintained on all of the Premises
(i) property insurance against loss or damage by
(A) fire, lightning, windstorm, tornado, water
damage and by such other further risks and hazards
as now are or subsequently may be covered by an
"all risk" policy or a fire policy covering
"special" causes of loss, which policy shall
include building ordinance law endorsements and
shall be automatically reinstated after each loss,
and (B) flood and earthquake in annual aggregates
of $25,000,000 for flood and $50,000,000 for
earthquake;
(ii) comprehensive general liability insurance
under a policy covering all claims for personal
injury, bodily injury or death, or property damage
occurring on, in or about the Premises in an
amount not less than $10,000,000 combined single
limit with respect to injury and property damage
relating to any one occurrence plus such excess
limits as Mortgagee shall reasonably request from
time to time;
(iii) when and to the extent reasonably required
by Mortgagee, insurance against loss or damage by
any other risk commonly insured against by persons
occupying or using like properties in the locality
or localities in which the Real Estate is
situated;
(iv) insurance against rent loss, extra expense
or business interruption (and/or soft costs, in
the case of new construction), if applicable, in
amounts reasonably satisfactory to Mortgagee, but
not less than one year's gross rent or gross
income;
(v) during the course of any construction or
repair of Improvements, comprehensive general
liability insurance (including coverage for
elevators and escalators, if any). The policy
shall provide coverage for independent contractors
and completed operations. The completed
operations coverage shall stay in effect for two
years after construction of any Improvements has
been completed. The policy shall provide coverage
on an occurrence basis against claims for personal
injury, such insurance to afford immediate minimum
protection to a limit of not less than that
required by Mortgagee with respect to personal
injury, bodily injury or death to any one or more
persons or damage to property;
(v) during the course of any construction or
repair of the Improvements, workers' compensation
insurance (including employer's liability
insurance) for all employees of Mortgagor engaged
on or with respect to the Premises in such amounts
as are reasonably satisfactory to Mortgagee, but
in no event less than the limits established by
law;
(vi) during the course of any construction,
addition, alteration or repair of the
Improvements, builder's risk completed value form
insurance against "all risks of physical loss,"
including collapse, water damage, flood and
earthquake and transit coverage, during
construction or repairs of the Improvements, with
deductibles reasonably approved by Mortgagee, in
nonreporting form, covering the total value of
work performed and equipment, supplies and
materials furnished (with an appropriate limit for
soft costs in the case of construction);
(vii) boiler and machinery property insurance
covering pressure vessels, air tanks, boilers,
machinery, pressure piping, heating, air
conditioning and elevator equipment and escalator
equipment, provided the Improvements contain
equipment of such nature, and insurance against
rent, extra expense, business interruption and
soft costs, if applicable, arising from any such
breakdown, in such amounts as are reasonably
satisfactory to Mortgagee but not less than the
lesser of $1,000,000 or 10% of the value of the
Improvements;
(viii) if any portion of the Premises are located
in an area identified as a special flood hazard
area by the Federal Emergency Management Agency or
other applicable agency, flood insurance in an
amount reasonably satisfactory to Mortgagee, but
in no event less than the maximum limit of
coverage available under the National Flood
Insurance Act of 1968, as amended; and
(ix) such other insurance in such amounts as
Mortgagee may reasonably request from time to
time; provided, however, such insurance is usually
and customarily carried with respect to similar
facilities in the same general area as the
Premises.
Each insurance policy (other than flood insurance
written under the National Flood Insurance Act of
1968, as amended, in which case to the extent
available) shall (i) provide that it shall not be
cancelled without 30 days' prior written notice to
Mortgagee, (ii) with respect to all property
insurance, provide for deductibles in amounts
reasonably satisfactory to Mortgagee (which
deductibles shall not exceed $250,000, with the
exception of the deductible for boiler and
machinery, which deductible shall not exceed a ten
(10) day waiting period deductible), contain a
"Replacement Cost Endorsement" (predicated upon
rebuilding) without any deduction made for
depreciation and with no co-insurance penalty (or
attaching an agreed amount endorsement
satisfactory to Mortgagee), with loss payable to
Mortgagor and Mortgagee with respect to the
Mortgaged Property as their respective interests
may appear, without contribution, under a
"standard" or "New York" mortgagee clause
reasonably acceptable to Mortgagee and be written
by insurance companies having an A.M. Best
Company, Inc. rating of A or higher and a
financial size category of not less than XII, or
otherwise as approved by Mortgagee. Liability
insurance policies shall name Mortgagee as an
additional insured with respect to the Mortgaged
Property and contain a waiver of subrogation
against Mortgagee; all such policies shall
indemnify and hold Mortgagee harmless from all
liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and
passageways. Each policy shall expressly provide
that any proceeds which are payable to Mortgagee
pursuant to the terms hereof shall be paid by
check payable to the order of Mortgagee only and
shall require the endorsement of Mortgagee only.
The amounts of each insurance policy and the form
of each such policy shall at all times be
reasonably satisfactory to Mortgagee. If any
required insurance shall expire, be withdrawn,
become void by breach of any condition thereof by
Mortgagor or by any lessee of any part of the
Mortgaged Property or become void or unsafe by
reason of the failure or impairment of the capital
of any insurer, Mortgagor shall immediately obtain
new or additional insurance satisfactory to
Mortgagee. Mortgagor shall not take out any
separate or additional insurance which is
contributing in the event of loss unless it is
properly endorsed and otherwise reasonably
satisfactory to Mortgagee in all respects.
(b) Mortgagor shall deliver to Mortgagee an
original of each insurance policy required to be
maintained, or a certificate of such insurance
reasonably acceptable to Mortgagee. Mortgagor
shall (i) pay as they become due all premiums for
such insurance, and (ii) not later than 15 days
prior to the expiration of each policy to be
furnished pursuant to the provisions of this
Section, deliver a renewed policy or policies, or
duplicate original or originals thereof, or a
certificate of such insurance reasonably
acceptable to Mortgagee, accompanied by evidence
of payment reasonably satisfactory to Mortgagee.
Upon request of Mortgagee, Mortgagor shall cause
its insurance underwriter or broker to certify to
Mortgagee in writing that all the requirements of
this Mortgage governing insurance have been
satisfied.
(c) If Mortgagor is in default of its obligations
to insure or deliver any such policy or a
certificate thereof under this Section 5, then
Mortgagee, at its option and following written
notice to Mortgagor, may effect such insurance
from year to year, and pay the premium or premiums
therefor, and Mortgagor shall pay to Mortgagee on
demand such premium or premiums so paid by
Mortgagee with interest from the time of payment
at the Default Rate and the same shall be deemed
to be secured by this Mortgage and shall be
collectible in the same manner as the Obligations
secured by this Mortgage.
(d) Mortgagor promptly shall comply with and
conform to (i) all provisions of each such
insurance policy, and (ii) all requirements of the
insurers applicable to Mortgagor or to any of the
Mortgaged Property or to the use, manner of use,
occupancy, possession, operation, maintenance,
alteration or repair of any of the Mortgaged
Property. Mortgagor shall not use or permit the
use of the Mortgaged Property in any manner which
would permit any insurer to cancel any insurance
policy or void coverage required to be maintained
by this Mortgage.
(a) If the Mortgaged Property in its entirety, or
any material part thereof, shall be destroyed or
damaged by fire or any other casualty, whether
insured or uninsured, or in the event any claim in
excess of $5,000,000 is made against Mortgagor for
any personal injury, bodily injury or property
damage incurred on or about the Premises,
Mortgagor shall give prompt notice thereof to
Mortgagee. If the Mortgaged Property is damaged
by fire or other casualty, then provided that no
Event of Default shall have occurred and be
continuing, Mortgagor shall have the right to
adjust such loss. If the Mortgaged Property is
damaged by fire or other casualty, and if an Event
of Default shall have occurred and be continuing,
then Mortgagor authorizes and empowers Mortgagee,
at Mortgagee's option and in Mortgagee's sole
discretion, as attorney-in-fact for Mortgagor, to
make proof of loss, to adjust and compromise any
claim under any insurance policy with respect to
the Mortgaged Property, to appear in and prosecute
any action arising from any policy, and to deduct
from any insurance proceeds Mortgagee's expenses
incurred in the collection process. The insurance
proceeds or any part thereof with respect to the
Mortgaged Property received by Mortgagee and/or
Mortgagor shall constitute Trust Moneys which
shall be paid and/or applied in accordance with
subsection 13.2 of the Indenture.
(f) In the event of foreclosure of this Mortgage
or other transfer of title to the Mortgaged
Property in extinguishment of the Obligations, all
right, title and interest of Mortgagor in and to
any insurance policies then in force with respect
to the Mortgaged Property shall pass to the
purchaser or grantee and Mortgagor hereby appoints
Mortgagee its attorney-in-fact, in Mortgagor's
name, to assign and transfer all such policies and
proceeds to such purchaser or grantee.
(g) Upon written notice to Mortgagor, Mortgagee,
after an Event of Default, shall be entitled to
require Mortgagor to pay monthly in advance to
Mortgagee the equivalent of 1/12th of the
estimated annual premiums due on such insurance.
Mortgagee may commingle such funds with its own
funds and Mortgagor shall not be entitled to
interest thereon.
(h) Mortgagor may maintain insurance required
under this Mortgage by means of one or more
blanket insurance policies maintained by
Mortgagor; provided, however, that (A) any such
policy shall specify, or Mortgagor shall furnish
to Mortgagee a written statement from the insurer
so specifying, the maximum amount of the total
insurance afforded by such blanket policy which
shall be applicable on an occurrence basis and (B)
the protection afforded under any such blanket
policy shall be no less than that which would have
been afforded under a separate policy or policies
relating only to the Mortgaged Property.
6. Restrictions on Liens, Encumbrances and Sales.
Mortgagor acknowledges that any secondary or
junior financing placed on the Mortgaged Property
(a) may divert funds that would otherwise be
available for payment of the Obligations, (b)
could, if foreclosed, force Mortgagee to incur
expenses to protect its security, and (c) would
impair Mortgagee's right to accept a deed in lieu
of foreclosure or otherwise to take actions to
further its economic interest prior to
foreclosure, because a foreclosure by Mortgagee
would be required to clear title to the Mortgaged
Property of any such secondary or junior lien or
encumbrance. In accordance with the foregoing and
for the purpose of (i) protecting Mortgagee's
security, both of repayment and of value in the
Mortgaged Property, (ii) giving Mortgagee the full
benefit of its bargain and contract with
Mortgagor, and (iii) keeping the Mortgaged
Property free of subordinate financing liens,
Mortgagor agrees that if the following provisions
of this paragraph should be deemed a restraint on
alienation, that such provisions are reasonable
restraints.
(1) Except for the lien of this Mortgage, the
Permitted Exceptions and liens permitted pursuant
to subsection 6.10 of the Indenture, 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.
(2) Except as may be permitted pursuant to the
Indenture, including, without limitation,
subsection 6.15 thereof, Mortgagor shall not make
any Asset Sale.
7. Relationship of Mortgagee and Mortgagor.
Mortgagee shall in no event be construed for any
purpose to be a partner, joint venturer, agent or
associate of Mortgagor or of any beneficiary,
tenant, subtenant, operator, concessionaire or
licensee of Mortgagor in the conduct of their
respective businesses, and without limiting the
foregoing, Mortgagee shall not be deemed to be
such partner, joint venturer, agent or associate
on account of Mortgagee becoming a Mortgagee in
possession or exercising any rights pursuant to
this Mortgage, any of the other Security
Documents, or otherwise.
8. Maintenance; No Alteration; Inspection;
Utilities. (a) Mortgagor shall maintain or cause
to be maintained all the Improvements in good
working order and condition, ordinary wear and
tear excepted, and shall cause to be made all
necessary (in the good faith opinion of management
of Mortgagor) repairs, renewals, replacements,
additions, betterments and improvements thereto.
Mortgagor shall not commit any waste of the
Improvements and shall not demolish or materially
alter the Improvements without the prior written
consent of Mortgagee.
(b) Mortgagee and any persons authorized by
Mortgagee, at all reasonable times after
reasonable notice, shall have the right to enter
and inspect the Premises and the right to inspect
all work done, labor performed and materials
furnished in and about the Improvements and the
right to inspect and make copies of all books,
contracts and records of Mortgagor relating to the
Mortgaged Property.
(c) Mortgagor shall pay or cause to be paid when
due all utility charges which are incurred for
gas, electricity, water or sewer services
furnished to the Premises and all other
assessments or charges of a similar nature,
whether public or private, affecting the Premises
or any portion thereof, whether or not such
assessments or charges are liens thereon.
9. Condemnation/Eminent Domain. Promptly upon
obtaining knowledge of the institution of any
proceedings for the condemnation of the Mortgaged
Property in its entirety, or any portion thereof,
Mortgagor will notify Mortgagee of the pendency of
such proceedings. Mortgagor authorizes Mortgagee,
at Mortgagee's option and in Mortgagee's sole
discretion, as attorney-in-fact for Mortgagor, to
commence, appear in and prosecute, in Mortgagee's
or Mortgagor's name, any action or proceeding
relating to any condemnation of the Mortgaged
Property in its entirety, or any portion thereof.
If the Mortgaged Property in its entirety or any
part thereof shall be the subject of condemnation
proceedings, Mortgagee, as attorney-in-fact for
Mortgagor, shall have the right to settle or
compromise any claim in connection with such
condemnation. If Mortgagee elects not to
participate in such condemnation proceeding, then
Mortgagor shall, at its expense, diligently
prosecute any such proceeding and shall consult
with Mortgagee, its attorneys and experts and
cooperate with them in any defense of any such
proceedings. All awards and proceeds of
condemnation received by Mortgagee and/or
Mortgagor shall constitute Trust Moneys which
shall be paid and/or applied in accordance with
Subsection 13.2 of the Indenture.
10. Leases. (a) Mortgagor shall not
(i) 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 with
Mortgagee's prior written consent or (ii) without
the prior written consent of Mortgagee, execute
any Lease of any of the Mortgaged Property.
(b) As to any Lease relating to all or any
portion of the Mortgaged Property, Mortgagor
shall:
(i) promptly perform all of the material
provisions of the Lease on the part of the lessor
thereunder to be performed;
(ii) enforce, in accordance with sound business
practice, all of the material provisions of the
Lease on the part of the lessee thereunder to be
performed;
(iii) appear in and defend, in accordance with
sound business practice, any action or proceeding
arising under or in any manner connected with the
Lease or the obligations of Mortgagor as lessor or
of the lessee thereunder;
(iv) exercise, within 5 days after receipt of
a request by Mortgagee, any right to request from
the lessee a certificate with respect to the
status thereof;
(v) promptly deliver to Mortgagee copies of any
notices of default which Mortgagor may at any time
forward to or receive from the lessee;
(vi) promptly deliver to Mortgagee a fully
executed counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon
Mortgagee's request, an assignment of the
Mortgagor's interest under such Lease.
(c) Mortgagor shall deliver to Mortgagee, within
10 days after receipt of a request by Mortgagee, a
written statement, certified by Mortgagor as being
true, correct and complete, containing the names
of all lessees and other occupants of the
Mortgaged Property, the terms of all Leases and
the spaces occupied and rentals payable
thereunder, and a list of all Leases which are
then in default, including the nature and
magnitude of the default; such statement shall be
accompanied by credit information with respect to
the lessees and such other information as
Mortgagee may request.
(d) All Leases entered into by Mortgagor after
the date hereof, if any, and all rights of any
lessees thereunder shall be subject and
subordinate in all respects to the lien and
provisions of this Mortgage unless Mortgagee shall
otherwise elect in writing.
(e) As to any Lease now in existence or
subsequently consented to by Mortgagee, Mortgagor
shall not, without the prior written consent of
Mortgagee, accept a surrender or terminate,
cancel, rescind, supplement, alter, revise, modify
or amend such Lease or permit any such action to
be taken nor shall Mortgagor accept the payment of
rent more than thirty (30) days in advance of its
due date.
(f) In the event of the enforcement by Mortgagee
of any remedy under this Mortgage, the lessee
under each Lease entered into after the date of
this Mortgage shall, if requested by Mortgagee or
any other person succeeding to the interest of
Mortgagee as a result of such enforcement, attorn
to Mortgagee or to such person and shall recognize
Mortgagee or such successor in interest as lessor
under the Lease without change in the provisions
thereof; provided however, that Mortgagee or such
successor in interest shall not be: (i) bound by
any payment of an installment of rent or
additional rent which may have been made more than
30 days before the due date of such installment;
(ii) bound by any amendment or modification to the
Lease made without the consent of Mortgagee or
such successor in interest; (iii) liable for any
previous act or omission of Mortgagor (or its
predecessors in interest); (iv) responsible for
any monies owing by Mortgagor to the credit of
such lessee or subject to any credits, offsets,
claims, counterclaims, demands or defenses which
the lessee may have against Mortgagor (or its
predecessors in interest); (v) bound by any
covenant to undertake or complete any construction
of the Premises or any portion thereof; or (vi)
obligated to make any payment to such lessee other
than any security deposit actually delivered to
Mortgagee or such successor in interest. Each
lessee or other occupant under each Lease entered
into after the date of this Mortgage, upon request
by Mortgagee or such successor in interest, shall
execute and deliver an instrument or instruments
confirming such attornment. In addition,
Mortgagor agrees that each Lease entered into
after the date of this Mortgage shall include
language to the effect of subsections (d)-(f) of
this Section.
11. Further Assurances/Estoppel Certificates. To
further assure Mortgagee's rights under this
Mortgage, Mortgagor agrees 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 and a separate
assignment of each Lease in recordable form) as
may be required by Mortgagee to confirm the lien
of this Mortgage and all other rights or benefits
conferred on Mortgagee. Mortgagor, within 5
business days after request, shall deliver, in
form and substance satisfactory to Mortgagee, a
written statement, duly acknowledged, setting
forth the amount of the Obligations, and whether
any offsets, claims, counterclaims or defenses
exist against the Obligations and certifying as to
such other matters as Mortgagee shall reasonably
request.
12. Mortgagee's Right to Perform. If Mortgagor
fails to perform any of the covenants or
agreements of Mortgagor hereunder, Mortgagee,
without waiving or releasing Mortgagor from any
obligation or default under this Mortgage, may, at
any time (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. Hazardous Material. (a) Mortgagor shall
comply with any and all applicable Legal
Requirements governing the discharge and removal
of Hazardous Material, shall pay promptly when due
the costs of removal of any Hazardous Material,
and shall keep the Premises free of any lien
imposed pursuant to such Legal Requirements. In
the event Mortgagor fails to do so, after notice
to Mortgagor and the expiration of the earlier of
(i) applicable cure periods hereunder and under
the Indenture, or (ii) the cure period permitted
under the applicable Legal Requirement, Mortgagee
may cause the Premises to be freed from the
Hazardous Material to the extent required by
applicable Legal Requirements, and the cost of the
removal with interest at the Default Rate shall
immediately be due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor further
agrees that any release or disposal of Hazardous
Materials at the Premises (other than the
Leasehold Improvements) shall comply with all
applicable Legal Requirements, and any such
release or disposal at the Leasehold Improvements
by Mortgagor shall comply with all applicable
Legal Requirements. In addition, Mortgagor agrees
not to allow the manufacture, storage,
transmission, presence or disposal of any
Hazardous Material over or upon the Premises in
violation of applicable Legal Requirements.
Mortgagor shall give Mortgagee and its agents and
employees access to the Premises to remove
Hazardous Material if required by applicable Legal
Requirements and if Mortgagor has failed to so
remove after notice. Mortgagor agrees to defend,
indemnify and hold Mortgagee free and harmless
from and against all loss, costs, damage and
expense (including attorneys' fees and costs and
consequential damages) Mortgagee may sustain by
reason of (i) the imposition or recording of a
lien by any Governmental Authority with respect to
the Mortgaged Property pursuant to any Legal
Requirement relating to hazardous or toxic wastes
or substances or the removal thereof ("Hazardous
Material Laws"); (ii) claims of any private
parties regarding violations of Hazardous Material
Laws with respect to the Mortgaged Property; (iii)
costs and expenses (including, without limitation,
attorneys' fees and fees incidental to the
securing of repayment of such costs and expenses)
incurred by Mortgagor or Mortgagee in connection
with the removal of any such lien with respect to
the Mortgaged Property or in connection with
Mortgagor's or Mortgagee's compliance with any
Hazardous Material Laws with respect to the
Mortgaged Property; and (iv) the assertion against
Mortgagee by any party of any claim in connection
with Hazardous Material with respect to the
Mortgaged Property.
(b) For the purposes of this Mortgage, "Hazardous
Material" means and includes any hazardous,
nuclear, toxic or dangerous waste, substance or
material defined as such in (or for purposes of)
the Comprehensive Environmental Response,
Compensation, and Liability Act, any so-called
"Superfund" or "Superlien" law, or any other Legal
Requirement regulating, relating to, or imposing
liability or standards of conduct concerning, any
hazardous, nuclear, toxic or dangerous waste,
substance or material, as now or at any time in
effect.
(c) The foregoing indemnification shall be a
recourse obligation of Mortgagor and shall survive
repayment of the Obligations, notwithstanding any
limitations on recourse which may be contained
herein or in any Security Documents or the
delivery of any satisfaction, release or release
deed, discharge or deed of reconveyance, or the
assignment of this Mortgage by Mortgagee;
provided, however, that the foregoing
indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
14. Asbestos. Mortgagor shall not install or
permit to be installed in the Premises friable
asbestos or any substance containing asbestos and
deemed hazardous by any Legal Requirement
respecting such material, and, with respect to any
such material currently present in the Premises,
shall promptly comply with such Legal
Requirements, at Mortgagor's expense. If
Mortgagor shall fail to so comply, Mortgagee may
do whatever is necessary to comply with the
applicable Legal Requirement, and the costs
thereof, with interest at the Default Rate, shall
be immediately due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor shall give
Mortgagee and its agents and employees, upon prior
notice and at reasonable times, access to the
Premises to remove such asbestos or substances if
required by applicable Legal Requirements and if
Mortgagor has failed to so remove after notice.
Mortgagor shall defend, indemnify, and save
Mortgagee harmless from all loss, costs, damages
and expense (including attorneys' fees and costs
and consequential damages) asserted or proven
against Mortgagee by any party, as a result of the
presence of such substances or any removal or
compliance with such Legal Requirements. The
foregoing indemnification shall be a recourse
obligation of Mortgagor and shall survive
repayment of the Obligations, notwithstanding any
limitation on recourse which may be contained
herein or in any of the Security Documents or the
delivery of any satisfaction, release or release
deed, discharge or deed of reconveyance, or the
assignment of this Mortgage by Mortgagee;
provided, however, that the foregoing
indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
15. Event of Default. The occurrence of an
"Event of Default" (as defined in the Indenture)
shall constitute an Event of Default hereunder.
16. Remedies. (a) Upon the occurrence of any
Event of Default, in addition to any other rights
and remedies Mortgagee may have pursuant to the
Security Documents, or as provided by law, and
without limitation, (a) if such event is an Event
of Default described in subsections 8.1(ix) or
8.1(x) of the Indenture, automatically the
Obligations immediately shall become due and
payable, and (b) if such event is any other Event
of Default, by notice to Mortgagor, Mortgagee may
declare the Obligations to be immediately due and
payable. Except as expressly provided above in
this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly
waived. In addition, upon 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 Guaranty, (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 Security 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.
(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.
(iii) It is further agreed that if default be
made in the payment of any part of the
Obligations, as an alternative to the right of
foreclosure for the full secured Obligations after
acceleration thereof, Mortgagee shall have the
right to institute partial foreclosure proceedings
with respect to the portion of said Obligations so
in default, as if under a full foreclosure, and
without declaring the entire secured Obligations
due (such proceeding being hereinafter referred to
as a "partial foreclosure"), and provided that if
a partial foreclosure sale is consummated as
provided herein, such sale may be made subject to
the continuing lien of this Mortgage for the
unmatured portion of the secured Obligations, but
as to such unmatured part, this Mortgage, and the
lien hereof, shall remain in full force and effect
just as though no partial foreclosure sale had
been made under the provisions of this Section.
Notwithstanding the filing of any partial
foreclosure or entry of a decree of sale therein,
Mortgagee may elect at any time prior to a partial
foreclosure sale pursuant to such decree, to
discontinue such partial foreclosure and to
accelerate the Obligations secured hereby by
reason of any uncured Event of Default upon which
such partial foreclosure was predicated or by
reason of any other Event of Default, and proceed
with full foreclosure proceedings. It is further
agreed that one or more foreclosure sales may be
made pursuant to partial foreclosures without
exhausting the right of full or partial
foreclosure sale for any unmatured part of the
secured Obligations, it being the purpose to
provide for a partial foreclosure sale of the
Obligations secured hereby without exhausting the
power to foreclose for any other part of the
Obligations whether matured at the time or
subsequently maturing, and without exhausting any
right of acceleration and full foreclosure.
(b) The holder of this Mortgage, in any action to
foreclose it, shall be entitled to the appointment
of a receiver. In case of a foreclosure sale,
Mortgagor's estate in 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) In the event of any breach of any of the
covenants, agreements, terms or conditions
contained in this Mortgage, and notwithstanding to
the contrary any exculpatory or non-recourse
language which may be contained herein, 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) The proceeds of any foreclosure or sale of
the Mortgaged Property, or any portion thereof,
shall be distributed and applied in accordance
with all applicable provisions of the Indenture.
17. 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 therefor,
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
Guaranty 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.
18. 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 Property or any
other collateral as security for the Obligations
or the interest of Mortgagor therein, shall have
the right to apply to any court having
jurisdiction to appoint a receiver or receivers or
other manager of the Mortgaged Property, and
Mortgagor hereby irrevocably consents to such
appointment and waives notice of any application
therefor (except as may be required by law). Any
such receiver or receivers 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.
19. 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, from
time to time and without notice, agree to (i)
release any person liable for the Obligations,
(ii) extend the maturity or alter any of the terms
of the Obligations or any 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. 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.
(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, Mortgagor authorizes
Mortgagee at its option to foreclose the lien of
this Mortgage 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 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.
20. Assignment of Rents. Mortgagor hereby
assigns to Mortgagee the Rents and Additional
Rents as further security for the payment of the
Obligations 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 and Additional Rents on account of the
Obligations. The foregoing assignment and grant
is present and absolute and shall continue in
effect until the Obligations are paid in full, but
Mortgagee hereby waives the right to enter the
Mortgaged Property for the purpose of collecting
the Rents and Additional Rents and Mortgagor shall
be entitled to collect, receive, use and retain
the Rents and Additional Rents; such right of
Mortgagor to collect, receive, use and retain the
Rents and Additional Rents may be revoked by
Mortgagee upon 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, 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 the
Mortgaged Property or such part thereof 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).
21. Trust Funds. All lease security deposits of
the Real Estate held by Mortgagor shall be treated
as trust funds not to be commingled with any other
funds of Mortgagor. Within 10 days after request
by Mortgagee, Mortgagor shall furnish Mortgagee
satisfactory evidence of compliance with this
subsection, together with a statement of all lease
security deposits by lessees and copies of all
Leases not previously delivered to Mortgagee,
which statement shall be certified by Mortgagor.
22. Additional Rights. The holder of any
subordinate lien on the Mortgaged Property shall
have no right to terminate any Lease whether or
not such Lease is subordinate to this Mortgage nor
shall any holder of any subordinate lien join 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 are subject to and
notified of this provision, and any action taken
by any such lienholder contrary to this provision
shall be null and void. Upon 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.
23. Changes in Method of Taxation. In the event
of the passage after the date hereof of any law of
any Governmental Authority deducting from the
value of the Premises for the purposes of taxation
any lien thereon, or changing in any way the laws
for the taxation of mortgages or debts secured
thereby for federal, state or local purposes, or
the manner of collection of any such taxes, and
imposing a tax, either directly or indirectly, on
mortgages or debts secured thereby, Mortgagor
shall, if permitted by applicable law, assume as
an Obligation hereunder the payment of any tax so
imposed until full payment of the Obligations.
24. Notices. All notices, requests, demands and
other communications hereunder shall be given in
the manner provided in the Indenture.
25. No Oral Modification. This Mortgage may not
be changed or terminated orally. 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.
26. 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 anything to the contrary contained
in this Mortgage or in any provisions of the
Obligations or Security Documents, the obligations
of Mortgagor and of any other obligor under the
Obligations or Security 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.
27. Waiver of Right of Redemption and Other
Rights. (a) Mortgagor hereby voluntarily and
knowingly releases and waives any and all rights
to retain possession of the Mortgaged Property
upon and during the continuance 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), 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 of 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 the 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 or declare
due the whole of the secured indebtedness and
marshalling in the event of foreclosure of the
liens hereby created.
28. Remedies Not Exclusive. Mortgagee shall be
entitled to enforce payment of the Obligations and
performance of the Obligations and to exercise all
rights and powers under this Mortgage or under any
of the other Security 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
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
right 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 Security Documents to
Mortgagee or to which it may otherwise be
entitled, may be exercised, concurrently or
independently, from time to time and as often as
may be deemed expedient by Mortgagee. 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.
29. 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 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 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 Obligations, 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
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 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
proceedings or exercise of any remedies in such
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
proceedings or any 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.
30. Expenses; Indemnification. (a) Mortgagor
shall pay or reimburse Mortgagee for all expenses
incurred by Mortgagee before and after the date of
this Mortgage with respect to any and all
transactions contemplated by this Mortgage
including without limitation, the preparation of
any document reasonably required hereunder or any
amendment, modification, restatement or supplement
to this Mortgage, the delivery of any consent,
non-disturbance agreement or similar document in
connection with this Mortgage or the enforcement
of any of Mortgagee's rights. Such expenses shall
include, without limitation, all title and
conveyancing charges, recording and filing fees
and taxes, mortgage taxes, intangible personal
property taxes, escrow fees, revenue and tax stamp
expenses, insurance premiums (including title
insurance premiums), title search and title
rundown charges, brokerage commissions, finders'
fees, placement fees, court costs, surveyors',
photographers', appraisers', architects',
engineers', consulting professional's,
accountants' and attorneys' fees and
disbursements. Mortgagor acknowledges that from
time to time Mortgagor may receive statements for
such expenses, including without limitation
attorneys' fees and disbursements. Mortgagor
shall pay such statements promptly upon receipt.
(b) If (i) any action or proceeding shall be
commenced by Mortgagee (including but not limited
to any action to foreclose this Mortgage or to
collect the Obligations), or any action or
proceeding is commenced to which Mortgagee is made
a party, or in which it becomes necessary to
defend or uphold the lien of this Mortgage
(including, without limitation, any proceeding or
other action relating to the bankruptcy,
insolvency or reorganization of Mortgagor and/or
any Subsidiary), or in which Mortgagee is served
with any legal process, discovery notice or
subpoena and (ii) in each of the foregoing
instances such action or proceeding in any manner
relates to or arises out of this Mortgage or
Mortgagee's acceptance of the Guaranty, then
Mortgagor will promptly reimburse or pay to
Mortgagee all of the expenses which have been
incurred by Mortgagee with respect to the
foregoing (including reasonable counsel fees and
disbursements), together with interest thereon at
the Default Rate, and any such sum and the
interest thereon shall be a lien on the Mortgaged
Property, prior to any right, or title to,
interest in or claim upon the Mortgaged Property
attaching or accruing subsequent to the lien of
this Mortgage, and shall be deemed to be secured
by this Mortgage. In any action or proceeding to
foreclose this Mortgage, or to recover or collect
the Obligations, the provisions of law respecting
the recovering of costs, disbursements and
allowances shall prevail unaffected by this
covenant.
(c) Mortgagor shall indemnify and hold harmless
Mortgagee and Mortgagee's affiliates, and the
respective directors, officers, agents and
employees of Mortgagee and its affiliates from and
against all claims, damages, losses and
liabilities (including, without limitation,
reasonable attorneys' fees and expenses) arising
out of or based upon any matter related to this
Mortgage, the Mortgaged Property or the occupancy,
ownership, maintenance or management of the
Mortgaged Property by Mortgagor, including,
without limitation, any claims based on the
alleged acts or omissions of any employee or agent
of Mortgagor; provided, however, that the
foregoing indemnification shall not apply to
claims, damages and the like arising from the
gross negligence or wilful misconduct of the party
seeking indemnification. This indemnification
shall be in addition to any other liability which
Mortgagor may otherwise have to Mortgagee.
31. 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 its sole discretion it
deems such waiver 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, 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.
32. 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 anywise
impairing or affecting the lien of this Mortgage
or the priority of such lien over any subordinate
lien.
33. Governing Law, etc. This Mortgage shall be
governed by and construed in accordance with the
laws of the State where the Real Estate is
located, except that Mortgagor expressly
acknowledges that by its terms the Indenture and
the Guaranty shall be governed and construed in
accordance with the laws of the State of New York,
without regard to principles of conflict of law,
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, without regard to principles of
conflict of law.
34. Waiver of Trial by Jury. Mortgagor and
Mortgagee each hereby irrevocably and
unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this
Mortgage and for any counterclaim brought therein.
Mortgagor hereby waives all rights to interpose
any counterclaim in any suit brought by Mortgagee
hereunder (other than compulsory counterclaims and
other counterclaims that must be interposed in
connection with such suit under applicable law)
and all rights to have any such suit consolidated
with any separate suit, action or proceeding (it
being understood and agreed, however, that
Mortgagor shall have the right to raise any such
claim in a separate suit, action or proceeding).
35. 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 collateral
agent to the Mortgagee," the word "person" shall
include any individual, corporation, partnership,
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 of reference
only and in no way limit or amplify the provisions
hereof.
36. 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 the Code.
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 five 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; and (iii) the addresses of
Mortgagor and Mortgagee are as set forth on the
first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee from time
to time, shall execute, acknowledge and deliver to
Mortgagee one or more separate security
agreements, in form satisfactory to Mortgagee,
covering all or any part of the Mortgaged Property
and will further execute, acknowledge and deliver,
or cause to be executed, acknowledged and
delivered, any financing statement, affidavit,
continuation statement or certificate or other
document as Mortgagee may request in order to
perfect, preserve, maintain, continue or extend
the security interest under and the priority of
this Mortgage and such security instrument.
Mortgagor further agrees to pay to Mortgagee on
demand all costs and expenses incurred by
Mortgagee in connection with the preparation,
execution, recording, filing and re-filing of any
such document and all reasonable costs and
expenses of any record searches for financing
statements Mortgagee shall reasonably require.
Mortgagor shall from time to time, on request of
Mortgagee, deliver to Mortgagee an inventory in
reasonable detail of any of the Mortgaged Property
which constitutes personal property. If Mortgagor
shall fail to furnish any financing or
continuation statement within 10 days after
request by Mortgagee, then pursuant to the
provisions of the Code, Mortgagor hereby
authorizes Mortgagee, without the signature of
Mortgagor, to execute and file any such financing
and continuation statements. The filing of any
financing or continuation statements in the
records relating to personal property or chattels
shall not be construed as in any way impairing the
right of Mortgagee to proceed against any personal
property encumbered by this Mortgage as real
property, as set forth above.
37. Release Upon Payment and Discharge of
Mortgagor's Obligations. Mortgagee shall release
this Mortgage and the lien hereof by proper
instrument upon payment and discharge of all
Obligations secured hereby (including payment of
reasonable expenses incurred by Mortgagee in
connection with the execution of such release) and
upon full and complete performance of all of the
Obligations. Mortgagee shall otherwise release
this Mortgage and the lien hereof in accordance
with the terms of Article XII of the Indenture.
38. Maximum Additional Indebtedness. This
Mortgage secures not only said indebtedness 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
referring to this Mortgage, or which is evidenced
by any instrument stating that said indebtedness
is secured by this Mortgage, shall be defined as a
"Future Advance". The maximum additional
indebtedness which may be secured hereby shall not
exceed $50,000,000.00. 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.
39. Consistency with Other Documents. If any
provision hereof conflicts with any provisions of
the Indenture, then the terms of the Indenture
shall control to the extent of such conflict.
40. Mortgaged Lease Provisions. (a) Mortgagor
shall pay or cause to be paid all rent and other
charges required under the Mortgaged Lease as and
when the same are due and shall promptly and
faithfully perform or cause to be performed, all
other material obligations, covenants, agreements,
indemnities, representations, warranties or
liabilities required of Mortgagor under the
Mortgaged Lease. Mortgagor shall not, without the
consent of Mortgagee, (i) either orally or in
writing, modify, amend or permit any modification
or amendment of any of the terms of the Mortgaged
Lease in any material respect, (ii) in any manner,
cancel, terminate or surrender, or permit the
cancellation, termination or surrender of the
Mortgaged Lease, in whole or in part, except,
subject to Section 40(i) hereof, any expiration of
the Mortgaged Lease pursuant to its terms, or
(iii) permit the subordination thereof to any
mortgage; and any attempt to do the foregoing
shall be null and void and of no effect.
(b) Mortgagor shall do, or cause to be done, all
things reasonably necessary to preserve and keep
unimpaired all material rights of Mortgagor as
lessee under the Mortgaged Lease, and to prevent
any material default by Mortgagor under the
Mortgaged Lease, or any termination, surrender,
cancellation, forfeiture or impairment thereof,
except, subject to Section 40(i) hereof, any
expiration of the Mortgaged Lease pursuant to its
terms. Mortgagor hereby authorizes and
irrevocably appoints and constitutes Mortgagee as
its true and lawful attorney-in-fact, which
appointment is coupled with an interest, in its
name, place and stead, upon the occurrence and
continuance of an Event of Default hereunder, to
take any and all actions deemed necessary or
desirable by Mortgagee to perform and comply with
all the obligations of Mortgagor under the
Mortgaged Lease, and to do and take, but without
any obligation so to do, any action which
Mortgagee deems necessary or desirable to cure any
default by Mortgagor under the Mortgaged Lease, to
enter into and upon the Premises or any part
thereof to such extent and as often as Mortgagee,
in its sole reasonable discretion, deems necessary
or desirable in order to cure any default of
Mortgagor pursuant thereto, to the end that the
rights of Mortgagor in and to the leasehold estate
created by the Mortgaged Lease shall be kept
unimpaired and free from default, and all sums so
expended by Mortgagee, with interest thereon at
the Default Rate from the date of each such
expenditure, shall be paid by Mortgagor to
Mortgagee promptly upon demand by Mortgagee.
Mortgagor shall, within five (5) business days
after written request by Mortgagee, execute and
deliver to Mortgagee, or to any person designated
by Mortgagee, such further instruments,
agreements, powers, assignments, conveyances or
the like as may be reasonably necessary to
complete or perfect the interest, rights or powers
of Mortgagee pursuant to this paragraph (b).
(c) Mortgagor shall enforce the material
obligations of the lessor under the Mortgaged
Lease, and shall promptly notify Mortgagee in
writing of any material default by either the
lessor (if known by Mortgagor) or by Mortgagor in
the performance or observance of any of the terms,
covenants and conditions contained in the
Mortgaged Lease. Mortgagor shall deliver to
Mortgagee, within ten (10) business days after
receipt, a copy of any material notice, demand,
complaint or request for compliance made by the
lessor under the Mortgaged Lease. If the lessor
shall deliver to Mortgagee a copy of any notice of
default given to Mortgagor, such notice shall
constitute full authority and protection to
Mortgagee for any actions taken or omitted to be
taken in good faith pursuant to the provisions of
this Mortgage in reliance thereon.
(d) If any action or proceeding shall be
instituted to evict Mortgagor or to recover
possession of the Mortgaged Property from
Mortgagor or any part thereof or interest therein
or any action or proceeding otherwise affecting
the Mortgaged Lease or this Mortgage shall be
instituted, then Mortgagor shall, promptly after
receipt, deliver to Mortgagee a true and complete
copy of each petition, summons, complaint, notice
of motion, order to show cause and all other
provisions, pleadings, and papers, however
designated, served in any such action or
proceeding.
(e) Mortgagor covenants and agrees that the fee
title to the Real Estate and the leasehold estate
created under the Mortgaged Lease shall not merge
but shall always remain separate and distinct,
notwithstanding the union of said estates either
in Mortgagor or a third party by purchase or
otherwise; and in case Mortgagor acquires the fee
title or any other estate, title or interest in
and to the Real Estate, the lien of this Mortgage
shall, without further conveyance, simultaneously
with such acquisition, be spread to cover and
attach to such acquired estate and as so spread
and attached shall be prior to the lien of any
mortgage placed on the acquired estate after the
date of this Mortgage.
(f) No release or forbearance of any of
Mortgagor's obligations under the Mortgaged Lease,
pursuant to the Mortgaged Lease or otherwise,
shall release Mortgagor from any of its
obligations under this Mortgage.
(g) So long as no Event of Default shall have
occurred and be continuing hereunder, Mortgagor
may, without the consent of Mortgagee, make any
election or give any consent or approval under the
Mortgaged Lease. Upon the occurrence and
continuance of any Event of Default hereunder, all
such rights, together with the right of
termination, cancellation, modification, change,
supplement, alteration or amendment of the
Mortgaged Lease, all of which are hereby assigned
for collateral purposes to Mortgagee, shall
automatically vest exclusively in and be
exercisable solely by Mortgagee.
(h) Mortgagor will give Mortgagee prompt written
notice of the commencement of any arbitration or
appraisal proceeding under and pursuant to the
provisions of the Mortgaged Lease involving
amounts in excess of $1,000,000 on a present value
basis. So long as no Event of Default shall have
occurred and be continuing hereunder, Mortgagor
may conduct the proceeding provided that
(i) Mortgagee shall have the right to intervene
and participate in any such proceeding,
(ii) Mortgagor shall confer with Mortgagee,
(iii) Mortgagor shall exercise all reasonable
rights of arbitration conferred upon it by the
Mortgaged Lease and (iv) Mortgagor's selection of
an arbitrator shall be subject to prior written
approval by Mortgagee; provided, however, upon the
occurrence and continuance of an Event of Default
hereunder, Mortgagee shall have sole authority to
conduct the proceeding and Mortgagor hereby
irrevocably appoints and constitutes Mortgagee as
its true and lawful attorney-in-fact, which
appointment is coupled with any interest, in its
name, place and stead, to exercise, at the expense
of Mortgagor, all right, title and interest of
Mortgagor in connection with such arbitration,
including the right to appoint arbitrators and to
conduct arbitration proceedings on behalf of
Mortgagor. Nothing contained herein shall
obligate Mortgagee to participate in such
arbitration.
(i) Mortgagor shall not fail to exercise any
option or right to renew or extend the term of the
Mortgaged Lease without the prior written consent
of Mortgagee, which consent shall not be
unreasonably withheld. Mortgagor shall give
Mortgagee simultaneous written notice of any such
exercise, together with a copy of the notice or
other document given to the lessor, and shall
promptly deliver to Mortgagee a copy of any
acknowledgment by such lessor with respect to the
exercise of such option or right. Upon the
occurrence and continuance of any Event of Default
hereunder, Mortgagee may act in its stead and
Mortgagor hereby irrevocably authorizes and
appoints Mortgagee as its true and lawful
attorney-in-fact, which appointment is coupled
with an interest, in its name, place and stead, to
execute and deliver, for and in the name of
Mortgagor, all of the instruments and agreements
necessary under the Mortgaged Lease or otherwise
to cause any extension of the term of the
Mortgaged Lease. Nothing contained herein shall
affect or limit any rights of Mortgagor or
Mortgagee granted under the Mortgaged Lease.
(j) Mortgagor shall, within ten (10) days after
written demand from Mortgagee, deliver to
Mortgagee proof of payment of all items that are
required to be paid by Mortgagor under the
Mortgaged Lease, including, without limitation,
rent.
(k) (i) The lien of this Mortgage shall attach
to all of Mortgagor's rights and remedies at any
time arising under or pursuant to Subsection
365(h) of the Bankruptcy Code, 11 U.S.C. 365(h),
as the same may hereafter be amended (the
"Bankruptcy Code"), including, without limitation,
all of Mortgagor's rights to remain in possession
of the Real Estate. Mortgagor shall not, without
Mortgagee's prior written consent, elect to treat
the Mortgaged Lease as terminated under Subsection
365(h)(1) of the Bankruptcy Code. Any such
election made without Mortgagee's consent shall be
void.
(ii) Mortgagor hereby unconditionally assigns,
transfers and sets over to Mortgagee all of
Mortgagor's claims and rights to the payment of
damages arising under the Bankruptcy Code from any
rejection of the Mortgaged Lease by the lessor or
any fee owner of the Real Estate or any part
thereof. Upon and during the continuance of an
Event of Default hereunder, Mortgagee shall have
the right to proceed in its own name or in the
name of Mortgagor in respect of any claim, suit,
action or proceeding relating to the rejection of
the Mortgaged Lease, including, without
limitation, the right to file and prosecute under
the Bankruptcy Code, without joining or the
joinder of Mortgagor, any proofs of claim,
complaints, motions, applications, notices and
other documents, in any case with respect to the
lessor or any fee owner of the Real Estate or any
part thereof. Any amounts received by Mortgagee
as damages arising out of the rejection of the
Mortgaged Lease as aforesaid shall be applied
first to all costs and expenses of Mortgagee
(including, without limitation, attorneys' fees)
incurred in connection with the exercise of any of
its rights or remedies under this paragraph.
Mortgagor shall, at the request of Mortgagee,
promptly make, execute, acknowledge and deliver,
in form and substance satisfactory to Mortgagee, a
UCC Financing Statement (Form UCC-1) and all such
additional instruments, agreements and other
documents, as may at any time hereafter be
required by Mortgagee to carry out the assignment
pursuant to this paragraph.
(iii) If pursuant to Subsection 365(h)(2) of the
Bankruptcy Code, Mortgagor shall seek to offset
against the rent reserved in the Mortgaged Lease
the amount of any damages caused by the
nonperformance by the lessor of any of its
obligations under such Mortgaged Lease after the
rejection by the lessor of such Mortgaged Lease
under the Bankruptcy Code, then, upon and during
the continuance of an Event of Default hereunder,
Mortgagor shall, prior to effecting such offset,
notify Mortgagee of its intent to do so, setting
forth the amount proposed to be so offset and the
basis therefor. Upon and during the continuance
of an Event of Default hereunder, Mortgagee shall
have the right to object to all or any part of
such offset that, in the reasonable judgment of
Mortgagee, would constitute a breach of such
Mortgaged Lease, and in the event of such
objection, Mortgagor shall not effect any offset
of the amounts so objected to by Mortgagee.
Neither Mortgagee's failure to object as aforesaid
nor any objection relating to such offset shall
constitute an approval of any such offset by
Mortgagee.
(iv) If any action, proceeding, motion or notice
shall be commenced or filed in respect of the
lessor or any other fee owner of the Real Estate,
or any portion thereof or interest therein, or the
Mortgaged Lease in connection with any case under
the Bankruptcy Code, then, upon and during the
continuance of an Event of Default hereunder,
Mortgagee shall have the option, exercisable upon
notice from Mortgagee to Mortgagor, to conduct and
control any such litigation with counsel of
Mortgagee's choice. Upon and during the
continuance of an Event of Default hereunder,
Mortgagee may proceed in its own name or in the
name of Mortgagor in connection with any such
litigation, and Mortgagor agrees to execute any
and all powers, authorizations, consents or other
documents reasonably required by Mortgagee in
connection therewith. Mortgagor shall, upon
demand, pay to Mortgagee all costs and expenses
(including attorneys' fees) paid or incurred by
Mortgagee in connection with the prosecution or
conduct of any such proceedings. Upon and during
the continuance of an Event of Default hereunder,
Mortgagor shall not commence any action, suit,
proceeding or case, or file any application or
make any motion, in respect of the Mortgaged Lease
in any such case under the Bankruptcy Code without
the prior written consent of Mortgagee.
(v) Mortgagor shall, after obtaining knowledge
thereof, promptly notify Mortgagee of any filing
by or against the lessor or fee owner of the Real
Estate of a petition under the Bankruptcy Code.
Mortgagor shall promptly deliver to Mortgagee,
following receipt, copies of any and all notices,
summonses, pleadings, applications and other
documents received by Mortgagor in connection with
any such petition and any proceedings relating
thereto.
(vi) If there shall be filed by or against
Mortgagor a petition under the Bankruptcy Code and
Mortgagor, as lessee under the Mortgaged Lease,
shall determine to reject the Mortgaged Lease
pursuant to Section 365(a) of the Bankruptcy Code,
then Mortgagor shall give Mortgagee not less than
twenty (20) days' prior notice of the date on
which Mortgagor shall apply to the Bankruptcy
Court for authority to reject the Mortgaged Lease.
Mortgagee shall have the right, but not the
obligation, to serve upon Mortgagor within such
twenty (20) day period a notice stating that
Mortgagee demands that Mortgagor assume and assign
the Mortgaged Lease to Mortgagee pursuant to
Section 365 of the Bankruptcy Code. If Mortgagee
shall serve upon Mortgagor the notice described in
the preceding sentence, Mortgagor shall not seek
to reject such Mortgaged Lease and shall comply
with the demand provided for in the preceding
sentence; provided, however, that in connection
with any such assumption and assignment, Mortgagee
shall provide Mortgagor with the funds necessary
to comply with the cure obligations and other
monetary obligations described under subsection
365(b) of the Bankruptcy Code, and the amount of
any such sums so provided shall be secured hereby
and shall be included as claims against Mortgagor
in the bankruptcy proceeding. In addition,
effective upon the entry of an order for relief
with respect to Mortgagor under the Bankruptcy
Code, Mortgagor hereby assigns and transfers to
Mortgagee a non-exclusive right to apply to the
Bankruptcy Court under subsection 365(d)(4) of the
Bankruptcy Code for an order extending the period
during which the Mortgaged Lease may be rejected
or assumed.
(l) If the Mortgaged Lease shall be terminated
prior to the natural expiration of its term, and
if, pursuant to any provision of the Mortgaged
Lease or otherwise, Mortgagee or its designee
shall acquire from the lessor under such Mortgaged
Lease a new lease of the Real Estate or any part
hereof, Mortgagor shall have no right, title or
interest in or to such new lease or the leasehold
estate created thereby, or renewal privileges
therein contained.
(m) Notwithstanding anything contained herein to
the contrary, the terms and provisions of this
Section 40 shall be effective only from and after
the date (if ever) on which the Leasehold Consent
shall have been obtained and recorded in
accordance with the terms hereinabove provided.
This Mortgage has been duly executed by Mortgagor
on the date first above written.
ATTEST:
By: /S/ ELIZABETH B. KELLY
Name: Elizabeth B. Kelly
Title: [Assistant] Secretary
NEWPORT STEEL CORPORATION
By: /S/ J. R. PARKER
Name: John R. Parker
Title: [Vice] President
[SEAL]
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
The foregoing instrument was acknowledged before
me this 26th day of July, 1995, by John R. Parker
and Elizabeth B. Kelly, [Vice] President and
[Assistant] Secretary, respectively, of Newport
Steel Corporation, a Kentucky corporation, on
behalf of said corporation.
/S/ STEVEN MAHER
Notary Public
[Notarial Seal]
My Commission Expires:
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
10/15/96
Qualified in New York County
Certificate Filed in
New York County
Commission Expires October 15, 1996
SCHEDULE A
WILDER WORKS
PARCEL A (OVERALL PARCEL):
A parcel of land lying on the southwesterly side
of Licking Pike (KY 9) in Wilder, Campbell County,
Kentucky, and being more particularly described as
follows:
Beginning at a point said point being 30.5 feet
left of Licking Pike Station 50+47, said point
also being North 0 degree 57' 44" East 460.00 feet from
the northwesterly right of way line of North
Street, and running thence; North 85degree 34' 40" West
648.25 feet; thence South 05degree 35' 23" West 250.00
feet; thence North 85degree 34' 40" West 530.00 feet;
thence North 84degree 24' 37" West 45.00 feet to a
point in the westerly right of way line of the L &
N Railroad property and the TRUE POINT OF
BEGINNING of the parcel herein described thence
continuing along said westerly right of way of the
L & N Railroad property the next twenty-one (21)
courses:
1) South 14degree 43' 41" West 330.77 feet;
2) South 84degree 24' 37" East 78.00 feet;
3) South 05degree 35' 23" West 800.00 feet;
4) South 09degree 18' 31" West 100.21 feet;
5) South 05degree 35' 23" West 200.00 feet;
6) South 84degree 24' 37" West 17.00 feet;
7) South 05degree 35' 23" West 73.97 feet;
8) South 84degree 24' 37" East 8.00 feet;
9) South 05' 35' 23" West 164.00 feet;
10) North 84degree 24' 37" West 8.00 feet;
11) South 05degree 35' 23" West 126.00 feet;
12) South 84degree 24' 37" West 19.50 feet;
13) South 05degree 35' 23" West 84.00 feet;
14) North 84degree 24' 37" West 19.50 feet;
15) South 05degree 35' 23" West 91.17 feet to
16) a point of curvature of a 907.84 foot radius
to the right (chord bears South 09degree 34' 22" West
126.12 feet) thence southwesterly along the arc of
said curve 126.22 feet to
17) a point of compound curvature to the right
(chord bears South 24degree 04' 46" West 237.61 feet)
thence southwesterly along the arc of said curve
238.30 feet to
18) a point of compound curvature to the right
(chord bears South 44degree 50' 26" West 410.88 feet)
thence southwesterly along the arc of said curve
426.23 feet; thence
19) South 58degree 01' 23" West 175.71 feet;
20) North 80degree 37' 45" West 333.02 feet;
21) South 58degree 01' 23" West 132.49 feet to a point
of intersection of the westerly right of way line
of the L & N Railroad property and the centerline
of the Licking River; thence along the centerline
of said River the next nine (9) courses:
(1) North 37degree 07' 46" West 682.89 feet;
(2) North 22degree 35' 30" West 678.77 feet;
(3) North 10degree 33' 32" West 650.94 feet;
(4) North 13degree 39' 07" East 1015.11 feet;
(5) North 21degree 14' 11" East 986.30 feet;
(6) North 16degree 12' 13" East 1039.41 feet;
(7) North 14degree 29' 45" East 1308.22 feet;
(8) North 11degree 13' 44" East 872.36 feet;
(9) North 20degree 21' 59" East 414.26 feet;
thence leaving said centerline of Licking River
and continuing North 67degree 25' 56" East 274.83 feet
to the westerly right of way of the L & N Railroad
property thence along said westerly right of way
line the next eight (8) courses:
(1) South 27degree 01' 43" East 290.00 feet;
(2) South 25degree 25' 20" West 831.25 feet;
(3) South 15degree 13' 54" East 597.60 feet;
(4) South 03degree 00' 57" East 266.00 feet;
(5) South 86degree 59' 03" West 5.00 feet;
(6) South 03degree 00' 57" East 567.23 feet;
(7) South 01degree 20' 23" West 436.40 feet;
(8) South 05degree 35' 23" West 1743.44 feet;
to the TRUE POINT OF BEGINNING. Contains 216.998
acres. Less and excepting the parcel of land deed
to Sanitation District No. 1 of Campbell and
Kenton Counties of record at Deed Book 375, Page
323 of the Campbell County Recorder's Office.
Contains 0.0344 Acres. Overall parcel total:
216.964 Acres.
PARCEL B (ENTRANCE PARCEL) (EASEMENT ONLY):
A parcel of land lying on the southwesterly side
of Licking Pike (KY 9) in Wilder, Campbell County,
Kentucky, and being more particularly described as
follows:
Beginning at point, said point being 30.5 feet
left of Licking Pike Station 50+47, said point
also being North 0degree 57' 44" East 460.00 feet from
the northwesterly right of way line of North
Street, and running thence North 85degree 34' 40" West
648.25 feet; thence South 05degree 35' 23" West 250.00
feet; thence North 85degree 34' 40" West 530.00 feet;
thence North 84degree 24' 37" West 45.00 feet to a
point in the westerly right of way line of the L &
N Railroad; thence North 05degree 35' 23" East along
said westerly right of way line 7.65 feet to the
TRUE POINT OF BEGINNING of the tract herein
described; thence North 05degree 35' 23" East along
said westerly right of way line 34.93 feet; thence
North 74degree 05' 23" East 258.43 feet to a point
curvature of a 457.69 foot radius curve to the
left (chord bears North 64degree 49' 53" East 147.27
feet) thence northeasterly along the arc of said
curve 147.91 feet; thence North 55degree 34' 23" East
100.88 feet; thence North 54degree 32' 08" East 280.23
feet; thence North 45degree 59' 00" East 149.80 feet;
thence North 42degree 40' 00" East 209.82 feet; thence
North 35degree 41' 42" East 95.78 feet; thence North
18degree 44' 12" East 94.69 feet; thence North 06degree 33'
27" East 533.11 feet; thence North 12degree 42' 47"
East 182.67 feet; thence North 03degree 34' 17" East
96.27 feet; thence North 08degree 18' 35" West 97.12
feet; thence North 12degree 54' 23" West 216.84 feet;
thence North 05degree 10' 53" West 102.43 feet; thence
South 00' 54' 07" east 81.51 feet; thence South
13degree 03' 52" East 55.62 feet; thence North 27degree 02'
44" East 58.19 feet to the westerly right of way
line of Licking Pike (KY route 9); thence South
19degree 55' 52" East along said westerly right of way
line 44.46 feet; thence South 27degree 02' 44" West
23.88 feet; thence South 13degree 03' 52" West 48.18
feet; thence South 00degree 54' 07" West 76.33 feet;
thence South 05degree 10' 53" East 98.52; thence South
12degree 54' 23" East 216.05 feet; thence South 08degree 18'
35" West 101.67 feet; thence South 03degree 34' 17"
West 102.25 feet; thence South 12degree 42' 47" West
183.52 feet; thence South 06degree 33' 27" West 534.83
feet; thence South 18degree 44' 12" West 103.00 feet;
thence South 35degree 41' 42" West 102.60 feet; thence
South 42degree 40' 00" West 212.74 feet; thence South
45degree 59' 00" West 153.17 feet; thence South 54degree 32'
08" West 282.96 feet; thence South 55degree 34' 23"
West 101.17 feet to a point of curvature of a
490.19 foot radius curve to the left (chord bears
South 64degree 49' 53" West 157.73 feet) thence
southwesterly along the arc of said curve 158.42
feet; thence South 74degree 05' 23" West 271.23 feet to
a point on the aforementioned westerly right of
way line of the L & N Railroad property and the
TRUE POINT OF BEGINNING. Contains 2.064 Acres.
Groups: 1372
1533
PARCEL C (AKA PARCEL 38) (EASEMENT ONLY):
A perpetual easement, right-of-way or servitude
approximately 38 feet in width for the purpose of
constructing, maintaining, repairing and using a
vehicular grade crossing, a pedestrian overpass or
a pedestrian and vehicular overpass or a
combination thereof, and in the event of the use
of any overpass for the future purposes of
erecting, maintaining and using the necessary
foundations and supports for spans four tracts in
width and having a vertical clearance of not less
than 23 feet and a horizontal clearance of not
less than 8 feet. Said easement is for the
further purpose of installing, maintaining,
repairing and using underground, grade or overhead
water, gas and electric lines, which lies if
overhead and not affixed to a structure, shall
have a vertical clearance of not less than 30 feet
and a horizontal clearance of not less than 8
feet. Said easement being over, upon and across a
certain tract or parcel of land situated in the
Town of Wilder, Campbell County, Kentucky, and
beginning at a point North 5 degrees 21 minutes 16
seconds East 109.41 feet distant from the South
line of the lands conveyed to Andrews Steel
Company by James C. Wright, Trustee, October 23,
1918 and recorded in Deed Book 129, page 400, of
the records in the County Clerk's office at
Newport, Kentucky, where same intersects the East
line of the L & N right of way; thence North 84
degrees 38 minutes 44 seconds West a distance of
75 feet to a point in the west line of the L & N
right of way; thence North 5 degrees 21 minutes 16
seconds East along said West line of said right of
way a distance of 38 feet to a point; thence South
84 degrees 38 minutes 44 seconds East a distance
of 75 feet to a point in the East line of said
right of way; thence South 5 degrees 21 minutes 16
seconds West along said East line of said right of
way a distance of 38 feet to the point of
beginning.
Group: 1372
PARCEL D (AKA PARCEL 50) (EASEMENT ONLY)
The rights and easements granted to Interlake,
Inc. in the Easement Agreement dated March 16,
1976, recorded May 14, 1976 in Miscellaneous Book
78, page 225, in Campbell County, Kentucky, made
by and among Interlake, Inc., Louisville, and
Nashville Railroad Company and Licking River
Terminal Company.
PARCEL E - LEASEHOLD ESTATE:
Leasehold Estate created by Sublease from
Interlake, Inc. to Newport Steel Corporation dated
4/15/81 and recorded at Misc. Book 95, page 167,
leasing for a term of years beginning 4/15/81 and
continuing until September 1, 1996, and any
greater estate acquired by Mortgagor hereafter,
the following described property (2 PARTS):
GROUP: 760, 768, 1372 AND 1533
PART 1: LEASEHOLD ESTATE
Situate in the City of Wilder, Campbell County,
Kentucky and being more particularly described as
follows:
Commencing at the point of intersection of the
center line of North Street and the center line of
Elm Street as shown on the plat of Maple Park
Subdivision and recorded in Plat Book 12, Page 4B
in the Campbell County Recorder's Office at
Newport, Kentucky; thence with the center line of
North Street N. 82degree 17' W. 869.94 feet to a point
in the easterly right-of-way line of the
Louisville and Nashville Railroad; thence with the
easterly right-of-way line of said Railroad N. 5degree
21' 16" E., 1065.98 feet to the real POINT OF
BEGINNING; thence continuing with the said
railroad right-of-way line N. 5degree 21' 16" E., 150.0
feet to a point; thence S. 84degree 38' 44" E., 240.00
feet to a point; thence S. 5degree 21' 16" W., 150.0
feet to a point; thence N. 84degree 38' 44" W., 240.00
feet to the PLACE OF BEGINNING.
Containing 0.826 acres, more or less.
PART 2: II-EASEMENT AND RIGHTS OF WAY - A
Leasehold only as described above, created on the
following Easement and Right of Way:
An EASEMENT for ingress and egress to the herein
described tract. Said easement to extend from the
intersection of the existing access drive to the
Interlake Steel Corporation Plant with State Route
9 (Licking Pike), thence with said access drive
south westwardly 2004.34 feet, more or less, to a
point; thence with an easement or right-of-way, 25
feet in width, 960 feet, more or less to a point
in the southerly line of the tract described
herein; the center line of said easement being
more particularly described as follows: Beginning
at the point of intersection of the center line of
said existing access drive to the Interlake Steel
Corporation Plant with the center line of State
Route 9 (Licking Pike); thence S. 43degree 04' W.,
79.72 feet to a point; thence curving to the left
along the arc of a circle having a radius of 125
feet a distance of 51.12 feet said arc being
subtended by a chord bearing S. 31degree 21' W., and
50.77 feet long; thence continuing with the center
line of said existing drive, S. 19degree 38' W., 78.38
feet; thence 12degree 31' W., 100.00 feet; thence S. 5degree
53' W., 216.64 feet; thence S. 9degree 44' W., 100.00
feet; thence S. 20degree 50' W., 100.00 feet; thence S.
31degree 11' W., 182.86 feet; thence S. 25degree 14' W.,
533.83 feet; thence S. 36degree 33' W., 100.00 feet;
thence S. 53degree 01' W., 100.00 feet and S. 62degree 28'
W., 361.80 feet to a point in the center of the
said 25 foot easement or right-of-way; thence with
the center line of said 25 foot easement N. 81degree
54' 15" W., 532.40 feet; thence N. 1degree 57' 45" E.,
300.25 feet and N. 8degree 15' 45" E., 130.51 feet to a
point in the southerly line of the herein above
described tract, said point being S. 84degree 38' 44"
E., and 55.84 feet from the southwesterly corner
of said tract.
PARCEL F:
A parcel of land lying on the Southwesterly side
of Licking Pike (KY 9) in Wilder, Campbell County,
Kentucky also a portion of property as described
as "Parcel D" recorded at Deed Book 465, page 282
in the Campbell County recorder's office and being
more particularly described as follows:
Beginning at a point, said point being 30.5 feet
left of Licking Pike station 87+23 said point also
being South 32degree 11' 40" East 308.00 feet from the
center of Huling Street and running thence South
72degree 46' 00" West 92.36 feet; thence South 17degree 14'
00" East 466.88 feet; thence South 05degree 06' 20"
East 330.85 feet; thence South 69degree 37' 40" West
200.71 feet; thence South 06degree 12' 20" East 759.76
feet; thence South 06degree 47' 00" West 768.02 feet;
thence South 83degree 13' 00" East 202.29 feet; thence
South 05degree 03' 00" West 325.20 feet to the TRUE
POINT OF BEGINNING of the tract herein described
and running thence a South 84degree 57' 00" East 12.90
feet; thence South 05degree 03' 00" West 70.00 feet;
thence North 84degree 57' 00" West 185.00 feet; thence
North 05degree 03' 00" East 70.00 feet; thence South
84degree 57' 00" East 172.10 feet to the TRUE POINT OF
BEGINNING. Contains 0.2973 acres. Together with
a thirty (30) foot wide access easement described
as follows:
Beginning at the southwest most corner of the
above described tract and running thence South 84degree
57' 00" East 30.00 feet; thence South 05degree 03' 00"
West 315.19 feet; thence South 85degree 54' 40" East
506.53 feet to the westerly line of Steel Plant
Road thence South 45degree 59' 00" West along said
westerly line 40.30 feet; thence North 85degree 54' 40"
West 510.13 feet; thence North 05degree 03' 00" East
345.70 feet to the point of beginning of the
access easement herein described.
SCHEDULE A
NEWPORT WORKS
GROUP: 41202/A1 41205/A1
41202/A2 41205/Z
41202/A3
41202/A4 41476/A1
41202/A5 41476/Z
41202/Z
41480/A1
41203/A1 41480/Z
41203/A2
41203/A3 41527/A1
41203/A4 41527/A2
41203/A5 41527/Z
41203/Z
41528/A1
41204/A1 41528/A2
41204/A2 41528/A3
41204/A3
41204/A4
41204/A5
41204/Z
PARCEL 1:
A parcel of land lying on the easterly side of the
Licking River between 6th Street and 10th Street
in Newport, Campbell County, Kentucky and being
more particularly described as follows:
Beginning at a point in the southerly right of way
line of Sixth Street at its intersection with the
centerline of Lowell Street (now closed) said
point being South 55degree 18' 00" West 25.00 feet from
the northwesterly corner of Lot 138, Southern
Subdivision Plat Book 5, Page 31 Campbell County
Records, Newport, Kentucky and running thence
South 35degree 00' 00" East along said centerline of
closed Lowell Street 718.27 feet to the centerline
of 8th Street; thence North 55degree 11' 00" East along
said centerline 28.36 feet; thence South 46degree 00'
09" East 249.86 feet; thence South 34degree 49' 00"
East 12.50 feet to the centerline of closed Powell
Street; thence North 55degree 11' 00" East along said
centerline of Powell Street 114.09 feet; to the
centerline of closed Mill Street; thence South 35degree
00' 00" East along said centerline 361.61 feet to
the northerly right of way line of 9th Street;
thence South 55degree 03' 00" West along said right of
line 212.09 feet to the westerly right of way line
of Lowell Street; thence South 34degree 52' 00" East
along said westerly right of line of Lowell Street
531.03 feet; thence North 44degree 28' 49" West 101.77
feet; thence South 56degree 23' 49" West 632.38 feet to
the centerline of the Licking River; thence along
the centerline of said river the next three
courses:
1) North 35degree 24' 07" West 889.48 feet
2) North 25degree 59' 02" West 759.37 feet
3) North 18degree 29' 00" West 247.25 feet
thence North 55degree 00' 00" East 466.80 feet; thence
South 35degree 18' 00" East 140.50 feet to the
aforementioned southerly right of way line of 6th
Street; thence North 55degree 18' 00" East along said
right of way line 25.00 feet to the point of
beginning. Contains 29.090 Acres more or less.
GROUP: 41433/A2
GROUP: 41433/A3
PARCEL 2:
Situated in City of Newport, Campbell County,
State of Kentucky, and more particularly described
as follows: Lots 244, 245, 246, 247, 248 and 249
and the westerly 22 1/2 feet off of Lot 243 in the
Trustees' Addition to the said City of Newport.
Said lot number Two Hundred Forty-Nine (249) being
located at the Southeast corner of Ninth and
Lowell Streets, fronting thirty-five (35) feet on
Lowell Street by one hundred (100) feet deep.
Lots Numbers Two Hundred Forty-Four (244) to Two
Hundred Forty-Eight (248) each fronting thirty
(30) feet on the southerly side of ninth Street;
and the westerly twenty-two and one-half (22 1/2)
feet off of Lot Number Two Hundred Forty-Three
(243) is described as follows: Beginning at a
point in the southerly line of Ninth Street,
between Brighton and Lowell Streets at the
dividing line between Lots Number Two Hundred
Forty-Three (243) and Two Hundred Forty-Four (244)
in said addition; thence eastwardly with the
southerly line of Ninth Street twenty-two and one
half (22 1/2) feet, and from these two points
extending back southwardly, in rectangular shape,
one hundred (100) feet deep to an alley.
Also being described as follows: beginning at a
point where the east right of way line of Lowell
Street intersects the southerly right of way line
of 9th Street and running thence North 55degree 03' 00"
East along said southerly right of way line 207.50
feet; thence South 34degree 52' 00" East 100.00 feet;
thence South 55degree 03' 00" West 207.50 feet to the
easterly right of way line of the aforementioned
east right of way line of Lowell Street; thence
North 34degree 52' 00" West along said right of way
line 100.00 feet to the point of beginning.
Contains 0.4764 Acres.
GROUP: 41434/A1
PARCEL 3:
Lying and being in the City of Newport, Campbell
County, Kentucky, and known and designated as Lot
Number Two Hundred Fifty (250) in the Trustees'
Addition to the City of Newport, Campbell County,
Kentucky, said lot being situated on the Northeast
corner of Lindsey and Lowell Streets in said City
and situated in the City of Newport, County of
Campbell, and State of Kentucky, and being all of
Lot Numbered Two Hundred and Fifty-One (251) in
the Trustees' Addition to said City. Said Lot
No. 251 is bounded as follows: Beginning at a
point in the northerly line of Lindsey Street,
which point is 35 feet eastwardly from the
northeasterly corner of Lindsey and Lowell
Streets; thence it runs eastwardly, in said
northerly line of Lindsey Street, thirty (3) feet
to a point; and from such two points extends back
northwardly, between parallel lines, and lines
which are parallel with Lowell Street aforesaid,
one hundred (100) feet to the southerly line of a
16-foot wide alley.
Also being described as follows: Beginning at a
point where the easterly right of way line of
Lowell Street intersects with the northerly right
of way line of Lindsey Street and running thence;
North 34degree 52' 00" West along said easterly right
of way line of Lowell Street 100.00 feet; thence
North 55degree 03' 00" East 65.00 feet; thence South
34degree 52' 00" East 100.00 feet to the aforementioned
northerly right of way of Lindsey Street thence;
South 55degree 03' 00" West along the northerly right
of way line 65.00 feet to the point of beginning.
Contains 0.1492 Acres.
SCHEDULE A-1
WILDER WORKS
PARCEL E - LEASEHOLD ESTATE:
Leasehold Estate created by Sublease from
Interlake, Inc. to Newport Steel Corporation dated
4/15/81 and recorded at Misc. Book 95, page 167,
leasing for a term of years beginning 4/15/81 and
continuing until September 1, 1996, and any
greater estate acquired by Mortgagor hereafter,
the following described property (2 PARTS):
GROUP: 760, 768, 1372 AND 1533
PART 1: LEASEHOLD ESTATE
Situate in the City of Wilder, Campbell County,
Kentucky and being more particularly described as
follows:
Commencing at the point of intersection of the
center line of North Street and the center line of
Elm Street as shown on the plat of Maple Park
Subdivision and recorded in Plat Book 12, Page 4B
in the Campbell County Recorder's Office at
Newport, Kentucky; thence with the center line of
North Street N. 82 17' W. 869.94 feet to a point
in the easterly right-of-way line of the
Louisville and Nashville Railroad; thence with the
easterly right-of-way line of said Railroad N. 5
21' 16" E., 1065.98 feet to the real POINT OF
BEGINNING; thence continuing with the said
railroad right-of-way line N. 5 21' 16" E., 150.0
feet to a point; thence S. 84 38' 44" E., 240.00
feet to a point; thence S. 5 21' 16" W., 150.0
feet to a point; thence N. 84 38' 44" W., 240.00
feet to the PLACE OF BEGINNING.
Containing 0.826 acres, more or less.
PART 2: II-EASEMENT AND RIGHTS OF WAY - A
Leasehold only as described above, created on the
following Easement and Right of Way:
An EASEMENT for ingress and egress to the herein
described tract. Said easement to extend from the
intersection fo the existing access drive to the
Interlake Steel Corporation Plan with State Route
9 (Licking Pike), thence with said access drive
south westwardly 2004.34 feet, more or less, to a
point; thence with an easement or right-of-way, 25
feet in width, 960 feet, more or less to a point
in the southerly line of the tract described
herein; the center line of said easement beign
more particularly described as follows: Beginning
at the point of intersection fothe center line of
said existing access drive to the Interlake Steel
Corporation Plan with the center line of State
Route 9 (Licking Pike); thence S. 43 04' W.,
79.72 feet to a point; thence curving to the left
along the arc of a circle having a radius of 125
feet a distance of 51.12 feet said arc being
subtended by a chord bearing S. 31 21' W., and
50.77 feet long; thence continuing with the center
line of said existing drive, S. 19 38' W., 78.38
feet; thence 12 31' W., 100.00 feet; thence S. 5
53' W., 216.64 feet; thence S. 9 44' W., 100.00
feet; thence S. 20 50' W., 100.00 feet; thence S.
31 11' W., 182.86 feet; thence S. 25 14' W.,
533.83 feet; thence S. 36 33' W., 100.00 feet;
thence S. 53 01' W., 100.00 feet and S. 62 23'
W., 361.80 feet to a point in the center of the
said 25 foot easement or right-of-way; thence with
the center line of said 25 foot easement N. 81
54' 15" W., 532.40 feet; thence N. 1 57' 45" E.,
300.25 feet and N. 8 15' 45" E., 130.51 feet to a
point in the southerly line of the herein above
described tract, said point being S. 84 38' 44"
E., and 55.84 feet from the southwesterly corner
of said tract.
SCHEDULE B
EXCLUDED PROPERTY
a) Any and all Collateral (as defined in that
certain Revolving Credit, Guaranty and Security
Agreement dated as of July 28, 1995 by and between
Newport Steel Corporation, Koppel Steel
Corporation and Imperial Adhesives, Inc., as
borrowers, NS Group, Inc., Erlanger Tubular
Corporation, Northern Kentucky Air, Inc. and
Northern Kentucky Management, Inc., as guarantors,
The Bank of New York Commercial Corporation, as
Lender, as ACM Agent and as Co-Agent, and PNC Bank
Ohio, National Association, as Lender and as Co-
Agent, and other lenders parties thereto).
b) Any and all intellectual property rights and
interests, including, without limitation, any and
all trade names, trade marks, copyrights, trade
secrets and patents.
c) Any and all vehicles and rolling stock.
d) Any and all leased Equipment if and to the
extent the terms and conditions of the applicable
lease documentation prohibit, restrict or require
consent in connection with the creation of liens
and security interests with respect to such
Equipment.
e) Any and all general intangibles.
f) Stripper Crane subject to Contract for Lease
and Rent dated September 6, 1977 between City of
Wilder, Kentucky and Interlake, Inc., recorded at
Misc. Book 82, page 401, and Sublease dated April
15, 1981 between Interlake, Inc. and Newport Steel
Corporation, recorded at Misc. Book 95, page 101,
provided, however, that such Stripper Crane shall
case to be Excluded Property at such time (if
ever) as all consents required in connection with
the granting of liens and security interests with
respect to such Stripper Crane under such Lease
and Sublease have been obtained.
g) Any and all Equipment described in a certain
Security Agreement, dated as of February 13, 1992,
together with all exhibits, supplements, addenda
and amendments thereto in existence or effect on
the date hereof or hereafter.
Recording requested by, and
when recorded return to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
ATTN: F. Robert Wheeler, Jr., Esq.
OPEN-END MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
from
KOPPEL STEEL CORPORATION, Mortgagor
to
THE HUNTINGTON NATIONAL BANK,
as Trustee and Collateral Agent, Mortgagee
DATED AS OF JULY 28, 1995
THIS MORTGAGE SECURES FUTURE ADVANCES
(All notices to be given to Mortgagee pursuant to 42
PA.C.S.A. section 8143 shall be given as set forth in Section 24
of
this Mortgage.)
TABLE OF CONTENTS
Background . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . . . . 2
1. Warranty of Title . . . . . . . . . . . . . . . . . . . . 7
2. Payment and Performance of Obligations. . . . . . . . . . 7
3. Requirements. . . . . . . . . . . . . . . . . . . . . . . 7
4. Payment of Taxes and Other Impositions. . . . . . . . . . 8
5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Restrictions on Liens, Encumbrances and
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. Relationship of Mortgagee and Mortgagor . . . . . . . . . 14
8. Maintenance; No Alteration; Inspection;
Utilities . . . . . . . . . . . . . . . . . . . . . . . . 14
9. Condemnation/Eminent Domain . . . . . . . . . . . . . . . 15
10. Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 15
11. Further Assurances/Estoppel Certificates. . . . . . . . . 17
12. Mortgagee's Right to Perform. . . . . . . . . . . . . . . 18
13. Hazardous Material. . . . . . . . . . . . . . . . . . . . 18
14. Asbestos. . . . . . . . . . . . . . . . . . . . . . . . . 19
15. Event of Default. . . . . . . . . . . . . . . . . . . . . 20
16. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 20
17. Right of Mortgagee to Credit Sale . . . . . . . . . . . . 23
18. Appointment of Receiver . . . . . . . . . . . . . . . . . 23
19. Extension, Release, etc.. . . . . . . . . . . . . . . . . 24
20. Assignment of Rents . . . . . . . . . . . . . . . . . . . 24
21. Trust Funds . . . . . . . . . . . . . . . . . . . . . . . 25
22. Additional Rights . . . . . . . . . . . . . . . . . . . . 25
23. Changes in Method of Taxation . . . . . . . . . . . . . . 26
24. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 26
25. No Oral Modification. . . . . . . . . . . . . . . . . . . 26
26. Partial Invalidity. . . . . . . . . . . . . . . . . . . . 26
27. Waiver of Right of Redemption and Other
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 26
28. Remedies Not Exclusive. . . . . . . . . . . . . . . . . . 27
29. Multiple Security . . . . . . . . . . . . . . . . . . . . 28
30. Expenses; Indemnification . . . . . . . . . . . . . . . . 29
31. Successors and Assigns. . . . . . . . . . . . . . . . . . 30
32. No Waivers, etc.. . . . . . . . . . . . . . . . . . . . . 31
33. Governing Law, etc. . . . . . . . . . . . . . . . . . . . 31
34. Waiver of Trial by Jury . . . . . . . . . . . . . . . . . 31
35. Certain Definitions . . . . . . . . . . . . . . . . . . . 32
36. Security Agreement under Uniform Commercial
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
37. Release Upon Payment and Discharge of
Mortgagor's Obligations . . . . . . . . . . . . . . . . . 33
38. Industrial Plant Mortgage . . . . . . . . . . . . . . . . 34
39. Open-End Mortgage . . . . . . . . . . . . . . . . . . . . 34
40. Consistency with Other Documents. . . . . . . . . . . . . 34
SCHEDULES
Schedule A - Description of Real Property
Schedule B - Description of Excluded Property
<PAGE>
OPEN-END MORTGAGE, ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
THIS MORTGAGE SECURES FUTURE ADVANCES
(All notices to be given to Mortgagee pursuant to 42
PA.C.S.A. section 8143 shall be given as set forth in Section
24 of this Mortgage.)
THIS OPEN-END MORTGAGE, ASSIGNMENT OF RENTS
AND LEASES AND SECURITY AGREEMENT, dated as of July 28,
1995 is made by KOPPEL STEEL CORPORATION, a
Pennsylvania corporation ("Mortgagor"), whose address
is Sixth Avenue and Mount, P.O. Box 750, Beaver Falls,
Pennsylvania 15010, to THE HUNTINGTON NATIONAL BANK, as
Trustee (in such capacity, the "Trustee") under the
Indenture referred to below, as collateral agent
("Mortgagee"), whose mailing address is 540 Madison
Avenue, Covington, Kentucky 41011. 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. Mortgagor is the owner of the parcel(s)
of real property described on Schedule A attached (such
real property, together with all of the buildings,
improvements, structures and fixtures now or
subsequently located thereon (the "Improvements"),
being collectively referred to as the "Real Estate").
B. Mortgagor is a wholly owned subsidiary
of NS Group, Inc., a Kentucky corporation (the
"Company") and is a Recourse Subsidiary (as defined in
the Indenture referred to below).
C. The Company and Mortgagee are parties to
that Indenture dated as of July 28, 1995 (as the same
may be amended, modified or otherwise supplemented from
time to time, the "Indenture"; capitalized terms not
defined herein shall have the meanings ascribed thereto
in the Indenture) for the benefit of Holders of 13.5%
Senior Secured Notes due 2003 in the aggregate
principal amount of $125,000,000.00 (the "Securities")
issued by the Company.
D. It is a condition precedent to the
purchase of the Securities from the Company that the
Mortgagor shall have (i) executed and delivered that
certain Guaranty of even date herewith in favor of
Mortgagee (the "Guaranty") and (ii) executed and
delivered this Mortgage to Mortgagee for the ratable
benefit of the Holders in order to secure Mortgagor's
obligations under the Guaranty. References in this
Mortgage to the "Default Rate" shall mean the interest
rate payable with respect to the Securities plus two
percent (2%) per annum.
E. It is a condition precedent to the
purchase of the Securities from the Company that the
Mortgagor shall have executed and delivered that
certain Subsidiary Security Agreement (the "Subsidiary
Security Agreement") of even date herewith in favor of
Mortgagee, which Subsidiary Security Agreement shall
grant Mortgagee a security interest in and to certain
personal property now or subsequently used in
connection with the operation of the Real Estate.
NOW, THEREFORE, in consideration of the
premises and to induce the Mortgagee to enter into the
Indenture and to induce the Holders to purchase the
Securities from the Company, the Mortgagor hereby
agrees with the Mortgagee, for the ratable benefit of
the Holders, as follows:
Granting Clauses
For good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, Mortgagor agrees that to secure all of
Mortgagor's obligations and liabilities under the
Guaranty and all other obligations and liabilities of
the Mortgagor to the Trustee, the Mortgagee and the
Holders (including, without limitation, interest
accruing after the maturity of the Securities and
interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the
Mortgagor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding
and interest, to the extent permitted by law, on the
unpaid interest), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or
in connection with, the Indenture, the Securities, the
Guaranty, this Mortgage, the other Security Documents
or any other document made, delivered or given in
connection therewith, in each case whether on account
of principal, interest, fees, indemnities, costs,
expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Trustee
and the Mortgagee that are required to be paid by the
Mortgagee pursuant to the terms of the Indenture, the
Guaranty or this Mortgage or any other Security
Document) (collectively, the "Obligations").
MORTGAGOR BARGAINS, SELLS, MORTGAGES, WARRANTS,
CONVEYS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER AND
BY THESE PRESENTS DOES HEREBY BARGAIN, SELL, MORTGAGE,
WARRANT, CONVEY, GRANT, ASSIGN, TRANSFER AND SET OVER
UNTO MORTGAGEE FOR THE RATABLE BENEFIT OF THE HOLDERS
AND HEREBY GRANTS TO MORTGAGEE FOR THE RATABLE BENEFIT
OF THE HOLDERS A CONTINUING SECURITY INTEREST IN AND TO
ALL OF THE FOLLOWING:
(A) all right, title and interest of
Mortgagor in and to the Real Estate;
(B) 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, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses,
water and riparian rights, development rights, air
rights, mineral rights and all estates, rights,
titles, interests, privileges, licenses,
tenements, hereditaments and appurtenances
belonging, relating or appertaining to the Real
Estate, and any reversions and remainders 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 right, title and interest of
Mortgagor in and to all of the fixtures, chattels,
business machines, machinery, apparatus,
equipment, furnishings, fittings 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 or used
or usable in any way in connection with any
operation or letting of 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 mortgage,
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 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) all right, title and interest of
Mortgagor in and to all trade names, trade marks,
logos, copyrights, good will and books and records
relating to or used in connection with the
operation of the Real Estate or the Equipment or
any part thereof; all right, title and interest of
Mortgagor in and to all general intangibles
related to the operation of the Improvements now
existing or hereafter arising;
(H) all right, title and interest of
Mortgagor in and to 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 any such
insurance policies and 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 otherwise following and during the continuance
of an Event of Default; and all right, title and
interest of Mortgagor in and to 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, subject to the provisions
relating to condemnation generally set forth
below;
(I) 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
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;
(J) all right, title and interest of
Mortgagor in and to any and all monies now or
subsequently on deposit for the payment of real
estate taxes or special assessments against the
Real Estate or for the payment of premiums on
insurance policies covering the foregoing property
or otherwise on deposit with or held by Mortgagee
as provided in this Mortgage; all capital,
operating, reserve or similar accounts held by or
on behalf of Mortgagor and related to the
operation of the Mortgaged Property, whether now
existing or hereafter arising and all monies held
in any of the foregoing accounts and any
certificates or instruments related to or
evidencing such accounts;
(K) all right, title and interest of
Mortgagor in and to all accounts and revenues
arising from the operation of the Improvements
including, without limitation, (i) any right to
payment now existing or hereafter arising for
rental of hotel rooms or other space or for
services rendered, whether or not yet earned by
performance, arising from the operation of the
Improvements or any other facility on the
Mortgaged Property and (ii) all rights to payment
from any consumer credit-charge card organization
or entity including, without limitation, payments
arising from the use of the American Express Card,
the Visa Card, the Carte Blanche Card, the
Mastercard or any other credit card, including
those now existing or hereafter created,
substitutions therefor, proceeds thereof (whether
cash or non-cash, movable or immovable, tangible
or intangible) received upon the sale, exchange,
transfer, collection or other disposition or
substitution thereof and any and all of the
foregoing and proceeds therefrom (collectively,
the "Additional Rents"); and
(L) all proceeds, both cash and noncash, of
the foregoing;
excluding, however, notwithstanding any
provision set forth in the foregoing clauses (A)
through (L), the property described on Schedule B
attached hereto and incorporated herein by reference
(collectively, the "Excluded Property") (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 (E),
excluding the Excluded Property, are collectively
referred to as the "Premises", and those described in
the foregoing clauses (A) through (L), excluding the
Excluded Property, are collectively referred to as the
"Mortgaged Property").
All of the Mortgaged Property hereinabove
described, real, personal and mixed, whether affixed or
annexed to the Real Estate or not and all rights hereby
conveyed and mortgaged are intended so to be as a unit
and are hereby understood, agreed and declared, to the
maximum extent permitted by law, to form a part and
parcel of the Real Estate and to be appropriated to the
use of the Real Estate, and shall be for the purposes
of this Mortgage deemed to be real estate and conveyed
and mortgaged hereby; provided, however, as to any of
the property aforesaid which does not so form a part
and parcel of the Real Estate or does not constitute a
"fixture" (as defined in the Uniform Commercial Code of
Pennsylvania (the "Code")), this Mortgage is hereby
deemed to also be a Security Agreement under the Code
for purposes of granting a security interest in such
property, which Mortgagor hereby grants to Mortgagee,
as Secured Party (as defined in the Code), as more
particularly provided below in this Mortgage.
TO HAVE AND TO HOLD the Mortgaged Property
and the rights and privileges hereby mortgaged,
together with the right to retain possession of the
Mortgaged Property upon and during the continuance of
an Event of Default hereunder, unto Mortgagee, its
successors and assigns for the uses and purposes set
forth, until the Obligations are fully paid and
performed.
Terms and Conditions
Mortgagor further represents, warrants,
covenants and agrees with Mortgagee as follows:
1. Warranty of Title. Mortgagor warrants
that Mortgagor has good title to the Real Estate in fee
simple and good title to the rest of the Mortgaged
Property, 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 liens permitted pursuant to
subsection 6.10 of the Indenture (collectively, the
"Permitted Exceptions"), and Mortgagor shall warrant,
defend and preserve such title and the lien of the
Mortgage thereon against all claims of all persons and
entities, excepting, however, the Permitted Exceptions.
Mortgagor further warrants that it has the right to
mortgage the Mortgaged Property.
2. Payment and Performance of Obligations.
Mortgagor shall pay the Obligations at the times and
places and in the manner specified in the Guaranty and
shall perform all the Obligations.
3. Requirements. (a) Mortgagor shall
comply with, or cause to be complied with, and conform
to all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules,
regulations and requirements, and irrespective of the
nature of the work to be done, of each of the United
States of America, any State and any municipality,
local government or other political subdivision thereof
and any agency, department, bureau, board, commission
or other instrumentality of any of them, now existing
or subsequently created (collectively, "Governmental
Authority") which has jurisdiction over the Mortgaged
Property, except where the failure to so comply with
any of the foregoing would not have a Material Adverse
Effect on the business, prospects, earnings,
properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as
a whole, and 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 the failure to so
comply with any of the foregoing would not adversely
affect the business, prospects, earnings, properties,
assets or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole. All
present and future laws, statutes, codes, ordinances,
orders, judgments, decrees, rules, regulations and
requirements of every Governmental Authority applicable
to Mortgagor or to any of the Mortgaged Property and
all covenants, restrictions, and conditions which now
or later may be applicable to any of the Mortgaged
Property are collectively referred to as the "Legal
Requirements".
(b) From and after the date of this
Mortgage, Mortgagor shall not by act or omission permit
any building or other improvement on any premises not
subject to the lien of this Mortgage to rely on the
Premises or any part thereof or any interest therein to
fulfill any Legal Requirement and Mortgagor hereby
assigns to Mortgagee any and all rights to give consent
for all or any portion of the Premises or any interest
therein to be so used. Mortgagor shall not by act or
omission impair the integrity of any of the Real Estate
as a single zoning lot separate and apart from all
other premises. Mortgagor represents that each parcel
of the Real Estate constitutes a legally subdivided
lot, in compliance with all subdivision laws and
similar Legal Requirements. Any act or omission by
Mortgagor which would result in a violation of any of
the provisions of this subsection shall be void.
4. Payment of Taxes and Other Impositions.
(a) Promptly when due, Mortgagor shall pay and
discharge all taxes of every kind and nature
(including, without limitation, all real and personal
property, income, franchise, withholding, transfer,
gains, profits and gross receipts taxes), all charges
for any easement or agreement maintained for the
benefit of any of the Mortgaged Property, all general
and special assessments, levies, permits, inspection
and license fees, all water and sewer rents and charges
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 Mortgaged
Property, 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 as the "Impositions").
Upon request by Mortgagee, Mortgagor shall deliver to
Mortgagee (i) original or copies of receipted bills and
cancelled checks evidencing payment of such Imposition
if it is a real estate tax or other public charge and
(ii) evidence acceptable to Mortgagee showing the
payment of any other 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 to 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 Mortgage, and (ii) payable on demand
by Mortgagor to Mortgagee together with interest at the
Default Rate as set forth above.
(c) Mortgagor shall not claim, demand or be
entitled to receive any credit or credits toward the
satisfaction of this Mortgage or on any interest
payable thereon for any taxes assessed against the
Mortgaged Property or any part thereof, and shall not
claim any deduction from the taxable value of the
Mortgaged Property by reason of this Mortgage if any
such claim would adversely affect the interest of
Mortgagee.
(d) Mortgagor shall have the right before
any delinquency occurs to contest or object in good
faith to the amount or validity of any Imposition by
appropriate legal proceedings, but such right shall not
be deemed or construed in any way as relieving,
modifying, or extending Mortgagor's covenant to pay any
such Imposition at the time and in the manner provided
in this Section unless (i) Mortgagor has given prior
written notice to Mortgagee of Mortgagor's intent so to
contest or object to an Imposition, (ii) Mortgagor
shall demonstrate to Mortgagee's satisfaction that the
legal proceedings shall operate conclusively to prevent
the sale of the Mortgaged Property, or any part
thereof, to satisfy such Imposition prior to final
determination of such proceedings and (iii) Mortgagor
shall furnish a good and sufficient bond or surety as
requested by and reasonably satisfactory to Mortgagee
in the amount of the Impositions which are being
contested plus any interest and penalty which may be
imposed thereon and which could become a lien against
the Real Estate or any part of the Mortgaged Property.
(e) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default (as defined
below), shall be entitled to require Mortgagor to pay
monthly in advance to Mortgagee the equivalent of
1/12th of the estimated annual Impositions. Mortgagee
may commingle such funds with its own funds and
Mortgagor shall not be entitled to interest thereon.
5. Insurance. (a) Mortgagor shall
maintain or cause to be maintained on all of the
Premises
(i) property insurance against loss or
damage by (A) fire, lightning, windstorm, tornado,
water damage and by such other further risks and
hazards as now are or subsequently may be covered
by an "all risk" policy or a fire policy covering
"special" causes of loss, which policy shall
include building ordinance law endorsements and
shall be automatically reinstated after each loss,
and (B) flood and earthquake in annual aggregates
of $25,000,000 for flood and $50,000,000 for
earthquake;
(ii) comprehensive general liability
insurance under a policy covering all claims for
personal injury, bodily injury or death, or
property damage occurring on, in or about the
Premises in an amount not less than $10,000,000
combined single limit with respect to injury and
property damage relating to any one occurrence
plus such excess limits as Mortgagee shall
reasonably request from time to time;
(iii) when and to the extent reasonably
required by Mortgagee, insurance against loss or
damage by any other risk commonly insured against
by persons occupying or using like properties in
the locality or localities in which the Real
Estate is situated;
(iv) insurance against rent loss, extra
expense or business interruption (and/or soft
costs, in the case of new construction), if
applicable, in amounts reasonably satisfactory to
Mortgagee, but not less than one year's gross rent
or gross income;
(v) during the course of any construction or
repair of Improvements, comprehensive general
liability insurance (including coverage for
elevators and escalators, if any). The policy
shall provide coverage for independent contractors
and completed operations. The completed
operations coverage shall stay in effect for two
years after construction of any Improvements has
been completed. The policy shall provide coverage
on an occurrence basis against claims for personal
injury, such insurance to afford immediate minimum
protection to a limit of not less than that
required by Mortgagee with respect to personal
injury, bodily injury or death to any one or more
persons or damage to property;
(vi) during the course of any construction or
repair of the Improvements, workers' compensation
insurance (including employer's liability
insurance) for all employees of Mortgagor engaged
on or with respect to the Premises in such amounts
as are reasonably satisfactory to Mortgagee, but
in no event less than the limits established by
law;
(vii) during the course of any construction,
addition, alteration or repair of the
Improvements, builder's risk completed value form
insurance against "all risks of physical loss,"
including collapse, water damage, flood and
earthquake and transit coverage, during
construction or repairs of the Improvements, with
deductibles reasonably approved by Mortgagee, in
nonreporting form, covering the total value of
work performed and equipment, supplies and
materials furnished (with an appropriate limit for
soft costs in the case of construction);
(viii) boiler and machinery property insurance
covering pressure vessels, air tanks, boilers,
machinery, pressure piping, heating, air
conditioning and elevator equipment and escalator
equipment, provided the Improvements contain
equipment of such nature, and insurance against
rent, extra expense, business interruption and
soft costs, if applicable, arising from any such
breakdown, in such amounts as are reasonably
satisfactory to Mortgagee but not less than the
lesser of $1,000,000 or 10% of the value of the
Improvements;
(ix) if any portion of the Premises are
located in an area identified as a special flood
hazard area by the Federal Emergency Management
Agency or other applicable agency, flood insurance
in an amount reasonably satisfactory to Mortgagee,
but in no event less than the maximum limit of
coverage available under the National Flood
Insurance Act of 1968, as amended; and
(x) such other insurance in such amounts as
Mortgagee may reasonably request from time to
time; provided, however, such insurance is usually
and customarily carried with respect to similar
facilities in the same general area as the
Premises.
Each insurance policy (other than flood insurance
written under the National Flood Insurance Act of 1968,
as amended, in which case to the extent available)
shall (i) provide that it shall not be cancelled
without 30 days' prior written notice to Mortgagee,
(ii) with respect to all property insurance, provide
for deductibles in amounts reasonably satisfactory to
Mortgagee (which deductibles shall not exceed $250,000,
with the exception of the deductible for boiler and
machinery, which deductible shall not exceed a ten (10)
day waiting period deductible), contain a "Replacement
Cost Endorsement" (predicated upon rebuilding) without
any deduction made for depreciation and with no co-
insurance penalty (or attaching an agreed amount
endorsement satisfactory to Mortgagee), with loss
payable to Mortgagor and Mortgagee with respect to the
Mortgaged Property as their respective interests may
appear, without contribution, under a "standard" or
"New York" mortgagee clause reasonably acceptable to
Mortgagee and be written by insurance companies having
an A.M. Best Company, Inc. rating of A or higher and a
financial size category of not less than XII, or
otherwise as approved by Mortgagee. Liability
insurance policies shall name Mortgagee as an
additional insured with respect to the Mortgaged
Property and contain a waiver of subrogation against
Mortgagee; all such policies shall indemnify and hold
Mortgagee harmless from all liability claims occurring
on, in or about the Premises and the adjoining streets,
sidewalks and passageways. Each policy shall expressly
provide that any proceeds which are payable to
Mortgagee pursuant to the terms hereof shall be paid by
check payable to the order of Mortgagee only and shall
require the endorsement of Mortgagee only. The amounts
of each insurance policy and the form of each such
policy shall at all times be reasonably satisfactory to
Mortgagee. If any required insurance shall expire, be
withdrawn, become void by breach of any condition
thereof by Mortgagor or by any lessee of any part of
the Mortgaged Property or become void or unsafe by
reason of the failure or impairment of the capital of
any insurer, Mortgagor shall immediately obtain new or
additional insurance satisfactory to Mortgagee.
Mortgagor shall not take out any separate or additional
insurance which is contributing in the event of loss
unless it is properly endorsed and otherwise reasonably
satisfactory to Mortgagee in all respects.
(b) Mortgagor shall deliver to Mortgagee an
original of each insurance policy required to be
maintained, or a certificate of such insurance
reasonably acceptable to Mortgagee. Mortgagor shall
(i) pay as they become due all premiums for such
insurance, and (ii) not later than 15 days prior to the
expiration of each policy to be furnished pursuant to
the provisions of this Section, deliver a renewed
policy or policies, or duplicate original or originals
thereof, or a certificate of such insurance reasonably
acceptable to Mortgagee, accompanied by evidence of
payment reasonably satisfactory to Mortgagee. Upon
request of Mortgagee, Mortgagor shall cause its
insurance underwriter or broker to certify to Mortgagee
in writing that all the requirements of this Mortgage
governing insurance have been satisfied.
(c) If Mortgagor is in default of its
obligations to insure or deliver any such policy or a
certificate thereof under this Section 5, then
Mortgagee, at its option and following written notice
to Mortgagor, may effect such insurance from year to
year, and pay the premium or premiums therefor, and
Mortgagor shall pay to Mortgagee on demand such premium
or premiums so paid by Mortgagee with interest from the
time of payment at the Default Rate and the same shall
be deemed to be secured by this Mortgage and shall be
collectible in the same manner as the Obligations
secured by this Mortgage.
(d) Mortgagor promptly shall comply with and
conform to (i) all provisions of each such insurance
policy, and (ii) all requirements of the insurers
applicable to Mortgagor or to any of the Mortgaged
Property or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration or
repair of any of the Mortgaged Property. Mortgagor
shall not use or permit the use of the Mortgaged
Property in any manner which would permit any insurer
to cancel any insurance policy or void coverage
required to be maintained by this Mortgage.
(e) If the Mortgaged Property in its
entirety, or any material part thereof, shall be
destroyed or damaged by fire or any other casualty,
whether insured or uninsured, or in the event any claim
in excess of $5,000,000 is made against Mortgagor for
any personal injury, bodily injury or property damage
incurred on or about the Premises, Mortgagor shall give
prompt notice thereof to Mortgagee. If the Mortgaged
Property is damaged by fire or other casualty, then
provided that no Event of Default shall have occurred
and be continuing, Mortgagor shall have the right to
adjust such loss. If the Mortgaged Property is damaged
by fire or other casualty, and if an Event of Default
shall have occurred and be continuing, then Mortgagor
authorizes and empowers Mortgagee, at Mortgagee's
option and in Mortgagee's sole discretion, as attorney-
in-fact for Mortgagor, to make proof of loss, to adjust
and compromise any claim under any insurance policy
with respect to the Mortgaged Property, to appear in
and prosecute any action arising from any policy, and
to deduct from any insurance proceeds Mortgagee's
expenses incurred in the collection process. The
insurance proceeds or any part thereof with respect to
the Mortgaged Property received by Mortgagee and/or
Mortgagor shall constitute Trust Moneys which shall be
paid and/or applied in accordance with subsection 13.2
of the Indenture.
(f) In the event of foreclosure of this
Mortgage or other transfer of title to the Mortgaged
Property in extinguishment of the Obligations, all
right, title and interest of Mortgagor in and to any
insurance policies then in force with respect to the
Mortgaged Property shall pass to the purchaser or
grantee and Mortgagor hereby appoints Mortgagee its
attorney-in-fact, in Mortgagor's name, to assign and
transfer all such policies and proceeds to such
purchaser or grantee.
(g) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default, shall be entitled
to require Mortgagor to pay monthly in advance to
Mortgagee the equivalent of 1/12th of the estimated
annual premiums due on such insurance. Mortgagee may
commingle such funds with its own funds and Mortgagor
shall not be entitled to interest thereon.
(h) Mortgagor may maintain insurance
required under this Mortgage by means of one or more
blanket insurance policies maintained by Mortgagor;
provided, however, that (A) any such policy shall
specify, or Mortgagor shall furnish to Mortgagee a
written statement from the insurer so specifying, the
maximum amount of the total insurance afforded by such
blanket policy which shall be applicable on an
occurrence basis and (B) the protection afforded under
any such blanket policy shall be no less than that
which would have been afforded under a separate policy
or policies relating only to the Mortgaged Property.
6. Restrictions on Liens, Encumbrances and
Sales. Mortgagor acknowledges that any secondary or
junior financing placed on the Mortgaged Property (a)
may divert funds that would otherwise be available for
payment of the Obligations, (b) could, if foreclosed,
force Mortgagee to incur expenses to protect its
security, and (c) would impair Mortgagee's right to
accept a deed in lieu of foreclosure or otherwise to
take actions to further its economic interest prior to
foreclosure, because a foreclosure by Mortgagee would
be required to clear title to the Mortgaged Property of
any such secondary or junior lien or encumbrance. In
accordance with the foregoing and for the purpose of
(i) protecting Mortgagee's security, both of repayment
and of value in the Mortgaged Property, (ii) giving
Mortgagee the full benefit of its bargain and contract
with Mortgagor, and (iii) keeping the Mortgaged
Property free of subordinate financing liens, Mortgagor
agrees that if the following provisions of this
paragraph should be deemed a restraint on alienation,
that such provisions are reasonable restraints.
(1) Except for the lien of this Mortgage,
the Permitted Exceptions and liens permitted pursuant
to subsection 6.10 of the Indenture, 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.
(2) Except as may be permitted pursuant to
the Indenture, including, without limitation,
subsection 6.15 thereof, Mortgagor shall not make any
Asset Sale.
7. Relationship of Mortgagee and Mortgagor.
Mortgagee shall in no event be construed for any
purpose to be a partner, joint venturer, agent or
associate of Mortgagor or of any beneficiary, tenant,
subtenant, operator, concessionaire or licensee of
Mortgagor in the conduct of their respective
businesses, and without limiting the foregoing,
Mortgagee shall not be deemed to be such partner, joint
venturer, agent or associate on account of Mortgagee
becoming a Mortgagee in possession or exercising any
rights pursuant to this Mortgage, any of the other
Security Documents, or otherwise.
8. Maintenance; No Alteration; Inspection;
Utilities. (a) Mortgagor shall maintain or cause to
be maintained all the Improvements in good working
order and condition, ordinary wear and tear excepted,
and shall cause to be made all necessary (in the good
faith opinion of management of Mortgagor) repairs,
renewals, replacements, additions, betterments and
improvements thereto. Mortgagor shall not commit any
waste of the Improvements and shall not demolish or
materially alter the Improvements without the prior
written consent of Mortgagee.
(b) Mortgagee and any persons authorized by
Mortgagee, at all reasonable times after reasonable
notice, shall have the right to enter and inspect the
Premises and the right to inspect all work done, labor
performed and materials furnished in and about the
Improvements and the right to inspect and make copies
of all books, contracts and records of Mortgagor
relating to the Mortgaged Property.
(c) Mortgagor shall pay or cause to be paid
when due all utility charges which are incurred for
gas, electricity, water or sewer services furnished to
the Premises and all other assessments or charges of a
similar nature, whether public or private, affecting
the Premises or any portion thereof, whether or not
such assessments or charges are liens thereon.
9. Condemnation/Eminent Domain. Promptly
upon obtaining knowledge of the institution of any
proceedings for the condemnation of the Mortgaged
Property in its entirety, or any portion thereof,
Mortgagor will notify Mortgagee of the pendency of such
proceedings. Mortgagor authorizes Mortgagee, at
Mortgagee's option and in Mortgagee's sole discretion,
as attorney-in-fact for Mortgagor, to commence, appear
in and prosecute, in Mortgagee's or Mortgagor's name,
any action or proceeding relating to any condemnation
of the Mortgaged Property in its entirety, or any
portion thereof. If the Mortgaged Property in its
entirety or any part thereof shall be the subject of
condemnation proceedings, Mortgagee, as attorney-in-
fact for Mortgagor, shall have the right to settle or
compromise any claim in connection with such
condemnation. If Mortgagee elects not to participate
in such condemnation proceeding, then Mortgagor shall,
at its expense, diligently prosecute any such
proceeding and shall consult with Mortgagee, its
attorneys and experts and cooperate with them in any
defense of any such proceedings. All awards and
proceeds of condemnation received by Mortgagee and/or
Mortgagor shall constitute Trust Moneys which shall be
paid and/or applied in accordance with Subsection 13.2
of the Indenture.
10. Leases. (a) Mortgagor shall not
(i) 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 with
Mortgagee's prior written consent or (ii) without the
prior written consent of Mortgagee, execute any Lease
of any of the Mortgaged Property.
(b) As to any Lease relating to all or any
portion of the Mortgaged Property, Mortgagor shall:
(i) promptly perform all of the material
provisions of the Lease on the part of the lessor
thereunder to be performed;
(ii) enforce, in accordance with sound
business practice, all of the material provisions
of the Lease on the part of the lessee thereunder
to be performed;
(iii) appear in and defend, in accordance with
sound business practice, any action or proceeding
arising under or in any manner connected with the
Lease or the obligations of Mortgagor as lessor or
of the lessee thereunder;
(iv) exercise, within 5 days after receipt of
a request by Mortgagee, any right to request from
the lessee a certificate with respect to the
status thereof;
(v) promptly deliver to Mortgagee copies of
any notices of default which Mortgagor may at any
time forward to or receive from the lessee;
(vi) promptly deliver to Mortgagee a fully
executed counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon
Mortgagee's request, an assignment of the
Mortgagor's interest under such Lease.
(c) Mortgagor shall deliver to Mortgagee,
within 10 days after receipt of a request by Mortgagee,
a written statement, certified by Mortgagor as being
true, correct and complete, containing the names of all
lessees and other occupants of the Mortgaged Property,
the terms of all Leases and the spaces occupied and
rentals payable thereunder, and a list of all Leases
which are then in default, including the nature and
magnitude of the default; such statement shall be
accompanied by credit information with respect to the
lessees and such other information as Mortgagee may
request.
(d) All Leases entered into by Mortgagor
after the date hereof, if any, and all rights of any
lessees thereunder shall be subject and subordinate in
all respects to the lien and provisions of this
Mortgage unless Mortgagee shall otherwise elect in
writing.
(e) As to any Lease now in existence or
subsequently consented to by Mortgagee, Mortgagor shall
not, without the prior written consent of Mortgagee,
accept a surrender or terminate, cancel, rescind,
supplement, alter, revise, modify or amend such Lease
or permit any such action to be taken nor shall
Mortgagor accept the payment of rent more than thirty
(30) days in advance of its due date.
(f) In the event of the enforcement by
Mortgagee of any remedy under this Mortgage, the lessee
under each Lease entered into after the date of this
Mortgage shall, if requested by Mortgagee or any other
person succeeding to the interest of Mortgagee as a
result of such enforcement, attorn to Mortgagee or to
such person and shall recognize Mortgagee or such
successor in interest as lessor under the Lease without
change in the provisions thereof; provided however,
that Mortgagee or such successor in interest shall not
be: (i) bound by any payment of an installment of rent
or additional rent which may have been made more than
30 days before the due date of such installment; (ii)
bound by any amendment or modification to the Lease
made without the consent of Mortgagee or such successor
in interest; (iii) liable for any previous act or
omission of Mortgagor (or its predecessors in
interest); (iv) responsible for any monies owing by
Mortgagor to the credit of such lessee or subject to
any credits, offsets, claims, counterclaims, demands or
defenses which the lessee may have against Mortgagor
(or its predecessors in interest); (v) bound by any
covenant to undertake or complete any construction of
the Premises or any portion thereof; or (vi) obligated
to make any payment to such lessee other than any
security deposit actually delivered to Mortgagee or
such successor in interest. Each lessee or other
occupant under each Lease entered into after the date
of this Mortgage, upon request by Mortgagee or such
successor in interest, shall execute and deliver an
instrument or instruments confirming such attornment.
In addition, Mortgagor agrees that each Lease entered
into after the date of this Mortgage shall include
language to the effect of subsections (d)-(f) of this
Section.
11. Further Assurances/Estoppel
Certificates. To further assure Mortgagee's rights
under this Mortgage, Mortgagor agrees 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 and a separate assignment of
each Lease in recordable form) as may be required by
Mortgagee to confirm the lien of this Mortgage and all
other rights or benefits conferred on Mortgagee.
Mortgagor, within 5 business days after request, shall
deliver, in form and substance satisfactory to
Mortgagee, a written statement, duly acknowledged,
setting forth the amount of the Obligations, and
whether any offsets, claims, counterclaims or defenses
exist against the Obligations and certifying as to such
other matters as Mortgagee shall reasonably request.
12. Mortgagee's Right to Perform. If
Mortgagor fails to perform any of the covenants or
agreements of Mortgagor hereunder, Mortgagee, without
waiving or releasing Mortgagor from any obligation or
default under this Mortgage, may, at any time (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. Hazardous Material. (a) Mortgagor shall
comply with any and all applicable Legal Requirements
governing the discharge and removal of Hazardous
Material, shall pay promptly when due the costs of
removal of any Hazardous Material, and shall keep the
Premises free of any lien imposed pursuant to such
Legal Requirements. In the event Mortgagor fails to do
so, after notice to Mortgagor and the expiration of the
earlier of (i) applicable cure periods hereunder and
under the Indenture, or (ii) the cure period permitted
under the applicable Legal Requirement, Mortgagee may
cause the Premises to be freed from the Hazardous
Material to the extent required by applicable Legal
Requirements, and the cost of the removal with interest
at the Default Rate shall immediately be due from
Mortgagor to Mortgagee and the same shall be added to
the Obligations and be secured by this Mortgage.
Mortgagor further agrees that any release or disposal
of Hazardous Materials at the Premises shall comply
with all applicable Legal Requirements. In addition,
Mortgagor agrees not to allow the manufacture, storage,
transmission, presence or disposal of any Hazardous
Material over or upon the Premises in violation of
applicable Legal Requirements. Mortgagor shall give
Mortgagee and its agents and employees access to the
Premises to remove Hazardous Material if required by
applicable Legal Requirements and if Mortgagor has
failed to so remove after notice. Mortgagor agrees to
defend, indemnify and hold Mortgagee free and harmless
from and against all loss, costs, damage and expense
(including attorneys' fees and costs and consequential
damages) Mortgagee may sustain by reason of (i) the
imposition or recording of a lien by any Governmental
Authority with respect to the Mortgaged Property
pursuant to any Legal Requirement relating to hazardous
or toxic wastes or substances or the removal thereof
("Hazardous Material Laws"); (ii) claims of any private
parties regarding violations of Hazardous Material Laws
with respect to the Mortgaged Property; (iii) costs and
expenses (including, without limitation, attorneys'
fees and fees incidental to the securing of repayment
of such costs and expenses) incurred by Mortgagor or
Mortgagee in connection with the removal of any such
lien with respect to the Mortgaged Property or in
connection with Mortgagor's or Mortgagee's compliance
with any Hazardous Material Laws with respect to the
Mortgaged Property; and (iv) the assertion against
Mortgagee by any party of any claim in connection with
Hazardous Material with respect to the Mortgaged
Property.
(b) For the purposes of this Mortgage,
"Hazardous Material" means and includes any hazardous,
nuclear, toxic or dangerous waste, substance or
material defined as such in (or for purposes of) the
Comprehensive Environmental Response, Compensation, and
Liability Act, any so-called "Superfund" or "Superlien"
law, or any other Legal Requirement regulating,
relating to, or imposing liability or standards of
conduct concerning, any hazardous, nuclear, toxic or
dangerous waste, substance or material, as now or at
any time in effect.
(c) The foregoing indemnification shall be a
recourse obligation of Mortgagor and shall survive
repayment of the Obligations, notwithstanding any
limitations on recourse which may be contained herein
or in any Security Documents or the delivery of any
satisfaction, release or release deed, discharge or
deed of reconveyance, or the assignment of this
Mortgage by Mortgagee; provided, however, that the
foregoing indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Mortgagee or any other person succeeding to
the interest of Mortgagee pursuant to the terms hereof;
further provided, that the foregoing indemnification
shall not apply to loss, costs and the like arising
from the gross negligence or wilful misconduct of the
party seeking indemnification.
14. Asbestos. Mortgagor shall not install
or permit to be installed in the Premises friable
asbestos or any substance containing asbestos and
deemed hazardous by any Legal Requirement respecting
such material, and, with respect to any such material
currently present in the Premises, shall promptly
comply with such Legal Requirements, at Mortgagor's
expense. If Mortgagor shall fail to so comply,
Mortgagee may do whatever is necessary to comply with
the applicable Legal Requirement, and the costs
thereof, with interest at the Default Rate, shall be
immediately due from Mortgagor to Mortgagee and the
same shall be added to the Obligations and be secured
by this Mortgage. Mortgagor shall give Mortgagee and
its agents and employees, upon prior notice and at
reasonable times, access to the Premises to remove such
asbestos or substances if required by applicable Legal
Requirements and if Mortgagor has failed to so remove
after notice. Mortgagor shall defend, indemnify, and
save Mortgagee harmless from all loss, costs, damages
and expense (including attorneys' fees and costs and
consequential damages) asserted or proven against
Mortgagee by any party, as a result of the presence of
such substances or any removal or compliance with such
Legal Requirements. The foregoing indemnification
shall be a recourse obligation of Mortgagor and shall
survive repayment of the Obligations, notwithstanding
any limitation on recourse which may be contained
herein or in any of the Security Documents or the
delivery of any satisfaction, release or release deed,
discharge or deed of reconveyance, or the assignment of
this Mortgage by Mortgagee; provided, however, that the
foregoing indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Mortgagee or any other person succeeding to
the interest of Mortgagee pursuant to the terms hereof;
further provided, that the foregoing indemnification
shall not apply to loss, costs and the like arising
from the gross negligence or wilful misconduct of the
party seeking indemnification.
15. Event of Default. The occurrence of an
"Event of Default" (as defined in the Indenture) shall
constitute an Event of Default hereunder.
16. Remedies. (a) Upon the occurrence of
any Event of Default, in addition to any other rights
and remedies Mortgagee may have pursuant to the
Security Documents, or as provided by law, and without
limitation, (a) if such event is an Event of Default
described in subsections 8.1(ix) or 8.1(x) of the
Indenture, automatically the Obligations immediately
shall become due and payable, and (b) if such event is
any other Event of Default, by notice to Mortgagor,
Mortgagee may declare the Obligations to be immediately
due and payable. Except as expressly provided above in
this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
In addition, upon 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 Guaranty, (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 Security 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.
(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.
(iii) It is further agreed that if default
be made in the payment of any part of the
Obligations, as an alternative to the right of
foreclosure for the full secured Obligations after
acceleration thereof, Mortgagee shall have the
right to institute partial foreclosure proceedings
with respect to the portion of said Obligations so
in default, as if under a full foreclosure, and
without declaring the entire secured Obligations
due (such proceeding being hereinafter referred to
as a "partial foreclosure"), and provided that if
a partial foreclosure sale is consummated as
provided herein, such sale may be made subject to
the continuing lien of this Mortgage for the
unmatured portion of the secured Obligations, but
as to such unmatured part, this Mortgage, and the
lien hereof, shall remain in full force and effect
just as though no partial foreclosure sale had
been made under the provisions of this Section.
Notwithstanding the filing of any partial
foreclosure or entry of a decree of sale therein,
Mortgagee may elect at any time prior to a partial
foreclosure sale pursuant to such decree, to
discontinue such partial foreclosure and to
accelerate the Obligations secured hereby by
reason of any uncured Event of Default upon which
such partial foreclosure was predicated or by
reason of any other Event of Default, and proceed
with full foreclosure proceedings. It is further
agreed that one or more foreclosure sales may be
made pursuant to partial foreclosures without
exhausting the right of full or partial
foreclosure sale for any unmatured part of the
secured Obligations, it being the purpose to
provide for a partial foreclosure sale of the
Obligations secured hereby without exhausting the
power to foreclose for any other part of the
Obligations whether matured at the time or
subsequently maturing, and without exhausting any
right of acceleration and full foreclosure.
(b) The holder of this Mortgage, in any
action to foreclose it, shall be entitled to the
appointment of a receiver. 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) In the event of any breach of any of the
covenants, agreements, terms or conditions contained in
this Mortgage, and notwithstanding to the contrary any
exculpatory or non-recourse language which may be
contained herein, 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) The proceeds of any foreclosure or sale
of the Mortgaged Property, or any portion thereof,
shall be distributed and applied in accordance with all
applicable provisions of the Indenture.
(e) MORTGAGOR AUTHORIZES AND EMPOWERS ANY
ATTORNEY OF ANY COURT OF RECORD OF THE COMMONWEALTH OF
PENNSYLVANIA TO APPEAR FOR AND TO CONFESS JUDGMENT IN
EJECTMENT AGAINST MORTGAGOR (AND, AT THE ELECTION OF
SAID ATTORNEY, AGAINST ANY PERSON CLAIMING UNDER, BY OR
THROUGH MORTGAGOR) FOR THE RECOVERY BY MORTGAGEE OF
POSSESSION OF THE ENTIRE PREMISES OR, AT THE ELECTION
OF SAID ATTORNEY, ANY PORTION OR PORTIONS OF THE
PREMISES. THE FOREGOING AUTHORITY TO CONFESS JUDGMENT
SHALL NOT BE EXHAUSTED BY ANY EXERCISE THEREOF BUT
SHALL CONTINUE FROM TIME TO TIME UNTIL MORTGAGEE IS
FULLY AND FINALLY VESTED WITH POSSESSION OF THE ENTIRE
PREMISES. MORTGAGOR EXPRESSLY AGREES THAT ANY JUDGMENT
ENTERED PURSUANT TO THE FOREGOING AUTHORITY SHALL BE
FINAL AND RELEASES TO MORTGAGEE, AND TO ANY ATTORNEY
APPEARING FOR MORTGAGOR OR MORTGAGEE, ALL ERRORS IN
SAID PROCEEDINGS AND ALL LIABILITY THEREFOR. UPON
CONFESSION OF JUDGMENT IN EJECTMENT PURSUANT TO THE
FOREGOING AUTHORITY, A WRIT OF POSSESSION (OR LIKE WRIT
APPROPRIATE UNDER THEN APPLICABLE LAW) MAY ISSUE
FORTHWITH WITHOUT ANY PRIOR PROCEEDINGS AND MAY INCLUDE
THE COSTS OF MORTGAGEE. JUDGMENT MAY BE ENTERED
PURSUANT TO THE FOREGOING AUTHORITY ON THE BASIS OF AN
AFFIDAVIT MADE ON MORTGAGEE'S BEHALF AND SETTING FORTH
THE RELEVANT FACTS, OF WHICH FACTS SUCH AFFIDAVIT SHALL
BE CONCLUSIVE EVIDENCE, AND IF A TRUE COPY OF THIS
MORTGAGE IS FILED IN ANY ACTION FOR SUCH JUDGMENT IT
SHALL
NOT BE NECESSARY TO FILE THE ORIGINAL OF THIS
MORTGAGE. JRP
_______
17. 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 therefor, 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 Guaranty 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.
18. 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 Property or any other collateral as security
for the Obligations or the interest of Mortgagor
therein, shall have the right to apply to any court
having jurisdiction to appoint a receiver or receivers
or other manager of the Mortgaged Property, and
Mortgagor hereby irrevocably consents to such
appointment and waives notice of any application
therefor (except as may be required by law). Any such
receiver or receivers 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.
19. 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, from time to time and
without notice, agree to (i) release any person liable
for the Obligations, (ii) extend the maturity or alter
any of the terms of the Obligations or any 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. 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.
(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, Mortgagor authorizes Mortgagee
at its option to foreclose the lien of this Mortgage
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 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.
20. Assignment of Rents. Mortgagor hereby
assigns to Mortgagee the Rents and Additional Rents as
further security for the payment of the Obligations 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 and Additional Rents on account of the
Obligations. The foregoing assignment and grant is
present and absolute and shall continue in effect until
the Obligations are paid in full, but Mortgagee hereby
waives the right to enter the Mortgaged Property for
the purpose of collecting the Rents and Additional
Rents and Mortgagor shall be entitled to collect,
receive, use and retain the Rents and Additional Rents;
such right of Mortgagor to collect, receive, use and
retain the Rents and Additional Rents may be revoked by
Mortgagee upon 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, 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 the Mortgaged Property or such part
thereof 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).
21. Trust Funds. All lease security
deposits of the Real Estate held by Mortgagor shall be
treated as trust funds not to be commingled with any
other funds of Mortgagor. Within 10 days after request
by Mortgagee, Mortgagor shall furnish Mortgagee
satisfactory evidence of compliance with this
subsection, together with a statement of all lease
security deposits by lessees and copies of all Leases
not previously delivered to Mortgagee, which statement
shall be certified by Mortgagor.
22. Additional Rights. The holder of any
subordinate lien on the Mortgaged Property shall have
no right to terminate any Lease whether or not such
Lease is subordinate to this Mortgage nor shall any
holder of any subordinate lien join 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 are subject to and
notified of this provision, and any action taken by any
such lienholder contrary to this provision shall be
null and void. Upon 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.
23. Changes in Method of Taxation. In the
event of the passage after the date hereof of any law
of any Governmental Authority deducting from the value
of the Premises for the purposes of taxation any lien
thereon, or changing in any way the laws for the
taxation of mortgages or debts secured thereby for
federal, state or local purposes, or the manner of
collection of any such taxes, and imposing a tax,
either directly or indirectly, on mortgages or debts
secured thereby, Mortgagor shall, if permitted by
applicable law, assume as an Obligation hereunder the
payment of any tax so imposed until full payment of the
Obligations.
24. Notices. All notices, requests, demands
and other communications hereunder shall be given in
the manner provided in the Indenture.
25. No Oral Modification. This Mortgage may
not be changed or terminated orally. 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.
26. 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
anything to the contrary contained in this Mortgage or
in any provisions of the Obligations or Security
Documents, the obligations of Mortgagor and of any
other obligor under the Obligations or Security
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.
27. Waiver of Right of Redemption and Other
Rights. (a) Mortgagor hereby voluntarily and
knowingly releases and waives any and all rights to
retain possession of the Mortgaged Property upon and
during the continuance 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), 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 of 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 the
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 or declare due the whole of the
secured indebtedness and marshalling in the event of
foreclosure of the liens hereby created.
28. Remedies Not Exclusive. Mortgagee shall
be entitled to enforce payment of the Obligations and
performance of the Obligations and to exercise all
rights and powers under this Mortgage or under any of
the other Security 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 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 right 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 Security Documents to Mortgagee or to which
it may otherwise be entitled, may be exercised,
concurrently or independently, from time to time and as
often as may be deemed expedient by Mortgagee. 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.
29. 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 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 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 Obligations, 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 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 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 proceedings or
exercise of any remedies in such 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
proceedings or any 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.
30. Expenses; Indemnification. (a)
Mortgagor shall pay or reimburse Mortgagee for all
expenses incurred by Mortgagee before and after the
date of this Mortgage with respect to any and all
transactions contemplated by this Mortgage including
without limitation, the preparation of any document
reasonably required hereunder or any amendment,
modification, restatement or supplement to this
Mortgage, the delivery of any consent, non-disturbance
agreement or similar document in connection with this
Mortgage or the enforcement of any of Mortgagee's
rights. Such expenses shall include, without
limitation, all title and conveyancing charges,
recording and filing fees and taxes, mortgage taxes,
intangible personal property taxes, escrow fees,
revenue and tax stamp expenses, insurance premiums
(including title insurance premiums), title search and
title rundown charges, brokerage commissions, finders'
fees, placement fees, court costs, surveyors',
photographers', appraisers', architects', engineers',
consulting professional's, accountants' and attorneys'
fees and disbursements. Mortgagor acknowledges that
from time to time Mortgagor may receive statements for
such expenses, including without limitation attorneys'
fees and disbursements. Mortgagor shall pay such
statements promptly upon receipt.
(b) If (i) any action or proceeding shall be
commenced by Mortgagee (including but not limited to
any action to foreclose this Mortgage or to collect the
Obligations), or any action or proceeding is commenced
to which Mortgagee is made a party, or in which it
becomes necessary to defend or uphold the lien of this
Mortgage (including, without limitation, any proceeding
or other action relating to the bankruptcy, insolvency
or reorganization of Mortgagor and/or any Subsidiary),
or in which Mortgagee is served with any legal process,
discovery notice or subpoena and (ii) in each of the
foregoing instances such action or proceeding in any
manner relates to or arises out of this Mortgage or
Mortgagee's acceptance of the Guaranty, then Mortgagor
will promptly reimburse or pay to Mortgagee all of the
expenses which have been incurred by Mortgagee with
respect to the foregoing (including reasonable counsel
fees and disbursements), together with interest thereon
at the Default Rate, and any such sum and the interest
thereon shall be a lien on the Mortgaged Property,
prior to any right, or title to, interest in or claim
upon the Mortgaged Property attaching or accruing
subsequent to the lien of this Mortgage, and shall be
deemed to be secured by this Mortgage. In any action
or proceeding to foreclose this Mortgage, or to recover
or collect the Obligations, the provisions of law
respecting the recovering of costs, disbursements and
allowances shall prevail unaffected by this covenant.
(c) Mortgagor shall indemnify and hold
harmless Mortgagee and Mortgagee's affiliates, and the
respective directors, officers, agents and employees of
Mortgagee and its affiliates from and against all
claims, damages, losses and liabilities (including,
without limitation, reasonable attorneys' fees and
expenses) arising out of or based upon any matter
related to this Mortgage, the Mortgaged Property or the
occupancy, ownership, maintenance or management of the
Mortgaged Property by Mortgagor, including, without
limitation, any claims based on the alleged acts or
omissions of any employee or agent of Mortgagor;
provided, however, that the foregoing indemnification
shall not apply to claims, damages and the like arising
from the gross negligence or wilful misconduct of the
party seeking indemnification. This indemnification
shall be in addition to any other liability which
Mortgagor may otherwise have to Mortgagee.
31. 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 its sole discretion it
deems such waiver 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, 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.
32. 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 anywise impairing or
affecting the lien of this Mortgage or the priority of
such lien over any subordinate lien.
33. Governing Law, etc. This Mortgage shall
be governed by and construed in accordance with the
laws of the State where the Real Estate is located,
except that Mortgagor expressly acknowledges that by
its terms the Indenture and the Guaranty shall be
governed and construed in accordance with the laws of
the State of New York, without regard to principles of
conflict of law, 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, without regard to principles of conflict of law.
34. Waiver of Trial by Jury. Mortgagor and
Mortgagee each hereby irrevocably and unconditionally
waive trial by jury in any action, claim, suit or
proceeding relating to this Mortgage and for any
counterclaim brought therein. Mortgagor hereby waives
all rights to interpose any counterclaim in any suit
brought by Mortgagee hereunder (other than compulsory
counterclaims and other counterclaims that must be
interposed in connection with such suit under
applicable law) and all rights to have any such suit
consolidated with any separate suit, action or
proceeding (it being understood and agreed, however,
that Mortgagor shall have the right to raise any such
claim in a separate suit, action or proceeding).
35. 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 collateral agent to the Mortgagee," the
word "person" shall include any individual,
corporation, partnership, 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 of reference only and in
no way limit or amplify the provisions hereof.
36. 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 the Code. 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 five 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; and (iii) the
addresses of Mortgagor and Mortgagee are as set forth
on the first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee from
time to time, shall execute, acknowledge and deliver to
Mortgagee one or more separate security agreements, in
form satisfactory to Mortgagee, covering all or any
part of the Mortgaged Property and will further
execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any financing
statement, affidavit, continuation statement or
certificate or other document as Mortgagee may request
in order to perfect, preserve, maintain, continue or
extend the security interest under and the priority of
this Mortgage and such security instrument. Mortgagor
further agrees to pay to Mortgagee on demand all costs
and expenses incurred by Mortgagee in connection with
the preparation, execution, recording, filing and re-
filing of any such document and all reasonable costs
and expenses of any record searches for financing
statements Mortgagee shall reasonably require.
Mortgagor shall from time to time, on request of
Mortgagee, deliver to Mortgagee an inventory in
reasonable detail of any of the Mortgaged Property
which constitutes personal property. If Mortgagor
shall fail to furnish any financing or continuation
statement within 10 days after request by Mortgagee,
then pursuant to the provisions of the Code, Mortgagor
hereby authorizes Mortgagee, without the signature of
Mortgagor, to execute and file any such financing and
continuation statements. The filing of any financing
or continuation statements in the records relating to
personal property or chattels shall not be construed as
in any way impairing the right of Mortgagee to proceed
against any personal property encumbered by this
Mortgage as real property, as set forth above.
37. Release Upon Payment and Discharge of
Mortgagor's Obligations. Mortgagee shall release this
Mortgage and the lien hereof by proper instrument upon
payment and discharge of all Obligations secured hereby
(including payment of reasonable expenses incurred by
Mortgagee in connection with the execution of such
release) and upon full and complete performance of all
of the Obligations. Mortgagee shall otherwise release
this Mortgage and the lien hereof in accordance with
the terms of Article XII of the Indenture.
38. Industrial Plant Mortgage. This
Mortgage is an industrial plant mortgage within the
broadest interpretation of the "industrial plant
mortgage doctrine" under the laws of the Commonwealth
of Pennsylvania.
39. Open-End Mortgage. This Mortgage is an
"Open-End Mortgage" as set forth in 42 PA.C.S.A. section 8143
and secures advances plus accrued and unpaid interest,
advances for the payment of Obligations, maintenance
charges, insurance premiums or costs incurred for the
protection of the Mortgaged Property or the lien of
this Mortgage and expenses incurred by Mortgagee by
reason of default by the Mortgagor under this Mortgage,
together with all other sums due hereunder or secured
hereby.
40. Consistency with Other Documents. If
any provision hereof conflicts with any provisions of
the Indenture, then the terms of the Indenture shall
control to the extent of such conflict.
This Mortgage has been duly executed by
Mortgagor on the date first above written.
ATTEST:
KOPPEL STEEL CORPORATION
By: /S/ ELIZABETH B. KELLY
Name: Elizabeth B. Kelly
-----------------------------
Title: [Assistant] Secretary
By: /S/ J. R. PARKER
Name: John R. Parker
------------------------
Title: [Vice] President
[SEAL]
The address of the within-named Mortgagee is: 540
Madison Avenue, Covington, Kentucky 41011.
For the Mortgagee:
/S/ F. ROBERT WHEELER, JR.
Name: F. Robert Wheeler, Jr.STATE OF NEW
YORK )
) SS.
COUNTY OF NEW YORK )
On this, the 26th day of July, 1995, before
me, a Notary Public in and for the State and County
aforesaid, the undersigned officer, personally appeared
John R. Parker and Elizabeth B. Kelly, who acknowledged
themselves to be the [Vice] President and [Assistant]
Secretary, respectively, of Koppel Steel Corporation, a
Pennsylvania corporation and that they, as such
officers, being authorized to do so, executed the
foregoing instrument for the purposes therein
contained, by signing the name of the corporation by
themselves as such officers.
IN WITNESS WHEREOF, I hereunto set my hand
and official seal.
/S/ STEVEN MAHER
Notary Public
[Notarial Seal]
My Commission Expires: STEVEN MAHER
NOTARY PUBLIC, State of
New York
No. 31-4973136
10/15/96 Qualified in New York
County
Certificate Filed
in New York County
Commission Expires
October 15, 1996
SCHEDULE A
KOPPEL STEEL PLANT
PLANT PARCEL
ALL THAT CERTAIN Residue Parcel of the South
Koppel Industrial Plan of Lots in the Borough of
Koppel, County of Beaver, Commonwealth of Pennsylvania,
as per plan recorded in Plan Book Volume 24, Page 23,
in the Office of the Beaver County Recorder, and
Residue Parcel of the Big Beaver Turnpike Industrial
Plan of Lots, in the Borough of Big Beaver, County of
Beaver, Commonwealth of Pennsylvania, as per plan
recorded in Plan Book Volume 24, Page 28-29, in the
Office of the Beaver County Recorder, bounded and
described as follows:
BEGINNING at an iron pin (found) at the
northeasterly corner of the terminus of Sixth Avenue;
thence, S 88degree 43' 44" W, a distance of 47.01 feet to a
concrete monument (found) on an easterly line of lands
now or formerly of Bruce F. and Irene M. Stacy; thence,
along said easterly line of Bruce F. and Irene M. Stacy
and other lands now or formerly of Michael Lasky, N 02degree
08' 24" E, a distance of 172.04 feet to an iron pin
(found) on a southerly right-of-way line of Legislative
Route 04017 (State Route 351) and being the
northwesterly corner of the herein described parcel;
thence, along said southerly right-of-way line the
following four bearings and distances: first, by a
non-tangent curve to the right having a radius
380.00 feet, an arc distance of 177.75 feet and a chord
of N 83degree 44' 41" E, a distance of 176.14 feet to an
iron pin (found); thence, S 82degree 51' 17" E, a distance
of 28.34 feet to an iron pin (found); thence, by a
curve to the left having a radius 736.34 feet, an arc
distance of 758.03 feet and a chord of N 67degree 39' 13" E,
a distance of 725.00 feet to an iron pin (found);
thence, N 38degree 09' 42" E a distance of 9.22 feet to an
iron pin (found); the same being a northwesterly corner
of lands of the Borough of Koppel; thence, along said
Borough of Koppel lands the following four bearings and
distances: first, S 31degree 09' 29" E, a distance of
221.21 feet to an iron pin (found); thence, N 58degree 50'
31" E, a distance of 140.00 feet to an iron pin
(found); thence, S 31degree 09' 29" E, a distance of
75.00 feet to an iron pin (found); thence, N 58degree 50'
31" E, a distance of 160.00 feet to an iron pin (found)
in a westerly right-of-way line of lands now or
formerly of the Pittsburgh and Lake Erie Railroad;
thence, along said westerly right-of-way line the
following sixteen bearings and distances: first, S 31degree
09' 21" E a distance of 421.38 feet to a point; thence
N 89degree 40' 31" E, a distance of 8.45 feet to a point;
thence, S 25degree 53' 49" E, a distance of 292.80 feet to a
point; thence, by a curve to the right having a radius
of 1402.69 feet and an arc distance of 445.90 feet and
a chord of S 16degree 47' 46" E, a distance of 444.12 feet
to a point; thence, N 76degree 00' 54" E, a distance of
34.32 feet to a point; thence, S 13degree 51' 28" E, a
distance of 181.45 feet to a point; thence, S 11degree 00'
28" E, a distance of 1,116.57 feet to a point in the
line dividing the Borough of Koppel and the Borough of
Big Beaver; thence, S 11degree 00' 28" E, a distance of
16.24 feet to a point; thence, S 09degree 42' 13" E, a
distance of 168.99 feet to a point; thence, S 11degree 22'
13" E, a distance of 109.81 feet to a point; thence,
S 15degree 31' 13" E, a distance of 180.00 feet to a point;
thence, S 08degree 01' 28" E, a distance of 423.55 feet to a
point; thence, S 10degree 03' 51" E, a distance of
635.05 feet to a point; thence, S 39degree 42' 40" E, a
distance of 7.50 feet to a point; thence, S 10degree 29' 12"
E, a distance of 337.77 feet to a point; thence, S 04degree
37' 08" E, a distance of 296.81 feet to an intersecting
point with the northerly line of a 100 foot
right-of-way now or formerly of the Pennsylvania Power
Company, the same being the northeasterly corner of
Parcel No. 3 of the aforesaid Big Beaver Turnpike
Industrial Plan of Lots, and being further described as
the southeasterly corner of the Residue Parcel of the
aforesaid South Koppel Industrial Plan of Lots; thence,
along a line dividing said Parcel No. 3 and the said
Residue Parcel the following two bearings and
distances: first, S 62degree 23' 54" W, a distance of
428.23 feet to an iron pin (set); thence, S 89degree 16' 24"
W, a distance of 1459.84 feet to an iron pin (set);
thence, along a line dividing this parcel and Parcel
No. 2 of the said Big Beaver Turnpike Industrial Plan
of Lots, the following six bearings and distances:
first, N 00degree 58' 56" W, a distance of 400.00 feet to an
iron pin (set); thence, N 89degree 16' 24" E, a distance of
120.00 feet to an angle point; thence, N 00degree 58' 56" W,
a distance of 680.00 feet to an iron pin (set); thence,
N 28degree 48' 44" E, a distance of 340.13 feet to an iron
pin (set); thence, N 87degree 51' 36" W, a distance of
567.95 feet to an iron pin (set); thence, S 49degree 03' 04"
W, a distance of 30.32 feet to an iron pin (set), said
point being the northeast corner of Parcel No. 1 of the
South Koppel Industrial Plan of Lots and in the line
dividing the Boroughs of Big Beaver and Koppel; thence,
along said Parcel No. 1 the following three bearings
and distances: first, S 49degree 03' 04" W, a distance of
264.68 feet to an iron pin (set); thence, by a curve to
the left having a chord of S 24degree 02' 04" W, a distance
of 143.78 feet and a radius of 170.00 feet and an arc
of 148.45 feet to an iron pin (set); thence, S 00degree 58'
56" E, a distance of 1083.27 feet to an iron pin (set),
the same being a point on the aforesaid Borough line;
thence, along said Borough line, S 89degree 16' 24" W, a
distance of 85.00 feet to an iron pin (set); thence,
along a line dividing this parcel and Parcel No. 2 of
the aforesaid South Koppel Industrial Plan of Lots,
N 00degree 58' 56" W, along said line and passing through an
iron pin (set) a distance of 1,422.96 feet to a point
on the southerly line of lands now or formerly of
Glenn H. Marshall; thence, along said lands now or
formerly of Glenn H. Marshall, S 87degree 51' 36" E, a
distance of 188.73 feet to a point; thence, along an
easterly line of lands now or formerly of Glenn H.
Marshall and Norma A. Marshall, N 00degree 58' 56" W, a
distance of 235.31 feet to a point; thence, along lands
now or formerly of Robert R. Berkebile, S 87degree 51' 36"
E, a distance of 120.39 feet to a point; thence,
continuing along lands now or formerly of Robert R.
Berkebile, N 00degree 58' 56" W, a distance of 658.10 feet
to a concrete monument (found); thence, along lands now
or formerly of the Right Reverend Hugh C. Boyle and the
easterly terminus of Arthur Street, N 08degree 26' 40" W, a
distance of 505.88 feet to a concrete monument (found);
thence, continuing along lands of said Right Reverend
Hugh C. Boyle and lands now or formerly of the Koppel
Realty Company, N 02degree 18' 41" W; a distance of
406.27 feet to an iron pin (found); thence, continuing
along lands of said Koppel Realty Company, N 87degree 51'
36" W, a distance of 116.00 feet to an iron pin (found)
in the easterly right-of-way line of Sixth Avenue;
thence, along said easterly right-of-way line, N 02degree
08' 24" E, a distance of 400.00 feet to an iron pin
(found); thence, along lands now or formerly of George
and Anne Tita and lands now or formerly of Helen M.
Tita the following three bearings and distances:
first, S 87degree 51' 36" E, a distance of 84.47 feet to an
iron pin (found); thence, N 02degree 18' 41" W, a distance
of 100.30 feet to an iron pin (found); thence, N 87degree
51' 31" W, a distance of 77.09 feet to an iron pin
(found) in the easterly right-of-way line of the
aforesaid Sixth Avenue; thence, along said easterly
right-of-way line, N 02degree 08' 24" E, a distance of
588.90 feet to the point of beginning containing
187.011 acres, more or less.
EXCEPTING THEREFROM AND THEREOUT all those two
parcels of land bounded and described as follows:
(1) ALL THAT CERTAIN Parcel No. 1 of the Big Beaver
Turnpike Industrial Plan of Lots, in the Borough of Big
Beaver, County of Beaver, Commonwealth of Pennsylvania,
as per plan recorded in Plan Book Volume 24,
Pages 28-29, in the Office of the Beaver County
Recorder, bounded and described as follows:
COMMENCING in the centerline of Arthur Street
(60 feet) at its terminus on a westerly line of the
South Koppel Industrial Plan of Lots as recorded in
Plan Book Volume 24, Page 23, in the Office of the
Beaver County Recorder; thence, along the centerline of
an access road the following six bearings and
distances: first, S 88degree 30' 53" E, a distance of
76.20 feet to a point; thence, S 53degree 08' 46" E, a
distance of 275.00 feet to a point; thence, S 06degree 55'
09" E, a distance of 100.00 feet to a point; thence,
S 48degree 07' 27" E, a distance of 248.00 feet to a point;
thence, N 88degree 14' 28" E, a distance of 768.00 feet to a
point; thence, S 30degree 19' 18" E, a distance of
235.29 feet, to an iron pin (set) and being the TRUE
POINT OF BEGINNING of the herein described Parcel
No. 1; thence, along said parcel's boundary line by the
following eighteen bearings and distances: first,
S 25degree 00' 24" E, a distance of 238.45 feet to an iron
pin (set); thence, S 15degree 54' 57" E, a distance of
133.10 feet, to an iron pin (set); thence, Due South a
distance of 51.40 feet to an iron pin (set); thence,
S 11degree 26' 42" W, a distance of 274.66 feet to an iron
pin (set); thence, Due West, a distance of 196.00 feet
to an iron pin (set); thence, Due North, a distance of
224.60 feet to an iron pin (set); thence, N 57degree 50' 06"
W, a distance of 175.07 feet to an iron pin (set);
thence, Due West, a distance of 84.80 feet, to an iron
pin (set); thence, N 08degree 38' 44" E, a distance of
177.62 feet to an iron pin (set); thence, N 52degree 56' 06"
W, a distance of 99.88 feet to an iron pin (set);
thence, N 83degree 51' 46" W, a distance of 37.41 feet to an
iron pin (set); thence, N 42degree 34' 03" W, a distance of
141.62 feet to an iron pin (set); thence, Due North, a
distance of 63.20 feet to an iron pin (set); thence,
N 40degree 17' 18" E, a distance of 129.13 feet to an iron
pin (set); thence, N 88degree 05' 27" E, a distance of
234.13 feet to an iron pin (set); thence, S 29degree 55' 25"
E, a distance of 115.27 feet to an iron pin (set);
thence, S 60degree 48' 54" E, a distance of 46.96 feet, to
an iron pin (set); thence, S 69degree 18' 13" E, a distance
of 124.22 feet to the point of beginning containing
6.846 acres.
(2) ALL THAT CERTAIN Parcel No. 4 of Revised South
Koppel Industrial Plan of Lots in the Borough of
Koppel, County of Beaver, Commonwealth of Pennsylvania,
as per plan recorded in Plan Book Volume 25, Page 64,
in the Office of The Beaver County Recorder, bounded
and described as follows:
COMMENCING at an iron pin in an angle point of
said Revised South Koppel Industrial Plan of Lots, said
iron pin being on the easterly right-of-way of Sixth
Avenue at a point 75.00 feet southerly of the south
line of Mount Street extended 50 feet easterly to said
Sixth Avenue right-of-way; thence, from said iron pin
N 02degree 08' 24" E along said Sixth Avenue's easterly
right-of-way a distance of 98.00 feet to a point;
thence, N 88degree 26' 22" E along a line in the residue
parcel of the said Revised South Koppel Industrial Plan
of Lots, a distance of 707.79 feet to an angle point;
thence, S 02degree 19' 20" E, a distance of 535.31 feet to
an angle point; thence, N 87degree 41' 24" E, a distance of
15.13 feet to a point 5 plus/minus feet from the west curb wall
of the included building of the herein described Parcel
No. 4 and being on the centerline of Column "B" and
being further described as the TRUE POINT OF BEGINNING
of the herein described Parcel No. 4; thence, N 02degree 18'
36" W, along the westerly side of and 5plus/minus feet distant
from the curb wall, a distance of 371.00 feet to a
point 16 feet north of the centerline of Column "FX";
thence, N 87degree 41' 24" E, along said line 16 feet
distant from said centerline of Column "FX"; a distance
of 274.35 feet to a point of intersection with the
centerline of Column "G"; thence, N 02degree 18' 36" W,
along said centerline of Column "G" a distance of
298.00 feet to a point of intersection with the
centerline of Column "K"; thence, N 87degree 41' 24" E along
said Column "K" line, a distance of 130.00 feet to a
point of intersection with the centerline of
Column "J"; thence, S 02degree 18' 36" E along said
centerline of Column "J", a distance of 291.39 feet to
a point; thence, N 87degree 41' 24" E, a distance of
49.32 feet to a point; thence, N 02degree 18' 36" W, a
distance of 25.69 feet to a point 5plus/minus feet south of the
face of the Maintenance Shop's southerly wall; thence,
N 87degree 41' 24" E, along the southerly side and 5plus/minus
feet
distant from the curb wall, a distance of 78.68 feet to
a point; thence, N 02degree 18' 35" W along a line 5plus/minus
feet
east of the face of the east wall of the said
Maintenance Shop, a distance of 10.10 feet to a point;
thence, N 87degree 41' 24" E, a distance of 145.50 feet to a
point; thence, S 02degree 18' 36" E, a distance of
53.76 feet to a point; thence, S 87degree 41' 24" W, a
distance of 15.93 feet to a point; 5 plus/minus feet east of the
east curb wall; thence, by the following seven courses
and distances along the easterly side of and 5 plus/minus feet
distant from the curb walls, first, S 02degree 18' 35" E, a
distance of 114.45 feet to a point; thence, N 87degree 41'
24" E, a distance of 26.09 feet to a point; thence,
S 02degree 18' 36" E, a distance of 93.46 feet to a point;
thence, S 87degree 41' 24" W, a distance of 52.70 feet to a
point; thence, S 02degree 18' 35" E, a distance of
50.00 feet to a point; thence, N 87degree 41' 24" E, a
distance of 26.95 feet to a point; thence, S 02degree 18'
36" E, a distance of 101.73 feet to a point on the
said centerline of Column "B"; thence, S 87degree 41' 24" W
along said centerline of Column "B", a distance of
662.66 feet to the point of beginning, containing
6.768 acres, more or less.
NON EXCLUSIVE ACCESS to the above-described parcel
is provided by the following:
COMMENCING at the iron pin in an angle point of
said Revised South Koppel Industrial Plan of Lots, said
iron pin being on the easterly right-of-way of Sixth
Avenue at a point 75.00 feet southerly of the south
line of Mount Street extended 50 feet easterly to said
Sixth Avenue right-of-way; thence, from said iron pin
N 02degree 08' 24" E along said Sixth Avenue's easterly
right-of-way a distance of 98.00 feet to a point, said
point being on a westerly line of said revised South
Koppel Industrial Plan of Lots and being the point of
beginning of the herein described Non-Exclusive Access;
thence, along the centerline of the non-exclusive
access road, the following two courses and distances:
first, N 88degree 26' 22" E, a distance of 707.79 feet to a
point; thence, S 02degree 19' 20" E, a distance of
535.31 feet to a point; thence, to Parcel No. 4 parcel
line N 87degree 41' 24" E, a distance of 16.13 feet to the
southwesterly corner of said parcel and there
terminate.
KOPPEL STEEL PLANT
DISPATCH PARCEL
ALL THAT CERTAIN Parcel No. 3 also known as the
"Dispatch Parcel" in the Borough of Big Beaver, County
of Beaver, Commonwealth of Pennsylvania, and bounded
and described as follows:
COMMENCING at the intersection of the
centerline of Mary Street of the Borough of Koppel and
the centerline of State Route No. 18, Legislative Route
No. 77; thence, along a survey line, the following
three bearings and distances to the herein described
parcel: first, S 03degree 33' 06" W, a distance of 419.56
feet to a point; thence, S 11degree 30' 19" W, a distance of
2,720.46 feet to a point; thence, S 05degree 52' 38" E, a
distance of 681.04 feet to a drill hole (found) in the
concrete median of the aforesaid State Route No. 18,
Legislative Route No. 77, the same being the TRUE POINT
OF BEGINNING; thence, along lands now or formerly of
Lawrence E. Ferrigno, N 73degree 25' 00" E, a distance of
167.22 feet to a railroad spike (found) on a westerly
right-of-way line of the Consolidated Rail Corporation,
the same being the northeasterly corner of the herein
described parcel; thence, along said westerly right-of-
way line, S 05degree 57' 36" E, a distance of 70.75 feet to
an iron pin (found); thence, continuing along said
westerly right-of-way by a curve to the right, having a
radius of 1,518.80 feet and an arc of 142.88 feet and a
chord of S 03degree 18' 15" E, a distance of 142.86 feet to
an iron pin (found); thence, by lands now or formerly
of Daniel and Shirley A. Gisondi, S 88degree 55' 55" W, a
distance of 161.63 feet to a drill hole (found) in the
concrete median of L.R. 77 (S.R. 18); thence, along the
centerline of said L.R. 77 by a curve to the left,
having a radius of 6,875.55 feet and an arc distance of
168.90 feet and a chord of N 04degree 50' 17" W, a distance
of 168.90 feet to the point of beginning, containing
0.721 acres, more or less.
KOPPEL STEEL PLANT
NORTH PARCEL
ALL THOSE CERTAIN Lots No. 1 and 2 of the North
Plant Industrial Plan of Lots in the Borough Big
Beaver, County of Beaver, Commonwealth of Pennsylvania,
as per Plan Book Volume 23, Page 60, in the Office of
the Beaver County Recorder and Residue Parcel of the
North Plant Industrial Plan of Lots No. 2 in the
Borough of Koppel, County of Beaver, Commonwealth of
Pennsylvania as per Plan recorded in Plan Book Volume
24, Page 52, in the Office of the Beaver County
Recorder, bounded and described as follows:
BEGINNING at a concrete monument (found) as the
northwesterly corner of the herein described parcel and
being the northwesterly corner of the aforesaid Lot No.
2, the same being a point on the easterly right-of-way
line of the Consolidated Rail Corporation; thence, N
89degree 22' 55" E, along a northerly line of the herein
described parcel, the same being a southerly line of
lands now or formerly of John E. and Harriet J. Mulroy,
at 633.00 feet, passing through a concrete monument
(found), a total distance of 755.82 feet to an iron pin
(found) a westerly right-of-way line of the Pittsburgh
and Lake Erie Railroad (switch-back); thence, along
said westerly right-of-way line the following six
bearings and distances: first, S 45degree 04' 36" E, a
distance of 278.10 feet to an iron pin (found) at a
point of curve; thence, along said curve to the right,
having a radius of 553.47 feet and an arc or 354.68
feet and having a chord of S 26degree 42' 48" E, a distance
of 348.63 feet to an iron pin (found) at a point of
tangency; thence, S 08degree 21' 36" E, a distance of 235.43
feet to the Borough Line separating the Borough of Big
Beaver and the Borough of Koppel, to an iron pin (set);
thence, S 08degree 21' 36" E, a distance of 165.00 feet to
an iron pin (found) at a point of curve; thence, by a
curve to the right having a radius of 1,890.08 feet and
an arc of 223.84 and having a chord of S 04degree 58' 06" E,
a distance of 223.74 feet to an iron pin (found) at a
point of tangency, thence, S 01degree 34' 36" E, a distance
of 230.58 feet to an iron pin (found) at the terminal
line of said right-of-way line of the Pittsburgh and
Lake Erie Railroad (switch-back); thence, along said
terminal line, N 88degree 54' 52" E, a distance of 40.00
feet, to an iron pin (found); thence, along an easterly
right-of-way line of said Pittsburgh and Lake Erie
Railroad (switchback), the following four bearings and
distances: first, N 01degree 34' 36" W, a distance of
230.92 feet to an iron pin (found) at a point of curve;
thence, by said curve to the left having a radius of
1,930.08 feet and an arc of 228.47 feet and having a
chord of N 04degree 58' 06" W, a distance of 228.36 feet to
an iron pin (found) at a point of tangency; thence, N
08degree 21' 36" W, a distance of 161.19 feet to an iron pin
(set) at the aforesaid Borough Line separating the
Borough of Big Beaver and the Borough of Koppel;
thence, N 08degree 21' 36" W, a distance of 239.24 feet to
an iron pin (found) at an angle point in the said
Pittsburgh and Lake Erie Railroads right-of-way;
thence, N 81degree 39' 56" E, along said right-of-way, a
distance of 220.50 feet to an iron pin (found) on a
westerly right-of-way line of said Pittsburgh and Lake
Erie Railroad; thence, S 40degree 38' 13" E, along said
westerly right-of-way line, a distance of 328.84 feet
to a point on the aforesaid Borough line; thence,
continuing along said westerly right-of-way line, a
distance of 818.21 feet to an iron pin (found); thence,
S 31degree 09' 29" E, continuing along said westerly right-
of-way line, a distance of 165.26 feet to an iron pin
(found) on a northerly line of a 40 foot right-of-way
line of S.R. 351 (L.R. 04017); thence, along said
northerly right-of-way line by the following four
bearings and distances: first, S 38degree 09' 42" W, a
distance of 344.96 feet to a hub (found); thence, by a
curve to the right having a radius of 696.34 feet and
an arc of 716.86 feet and having a chord of S 67degree 39'
13" W, a distance of 685.62 feet to an iron pin (found)
at a point of tangency; thence, N 82degree 51' 17" W, a
distance of 28.34 feet to an iron pin (found); thence,
by a curve to the left having a radius of 420.00 feet
and an arc of 167.08 feet and having a chord of S 85degree
44' 55" W, a distance of 165.98 feet to an iron pin
(set) at a point of intersection of the said northerly
right-of-way line and a line dividing the herein
described property and Parcel No. 1 of the aforesaid
North Plant Industrial Plan of Lots No. 2; thence,
along said dividing line by the following five bearings
and distances: first, N 02degree 08' 35" E, a distance of
411.82 feet to an iron pin (set); thence, N 16degree 13' 57"
W, a distance of 94.69 feet to an iron pin (set);
thence, N 13degree 26' 33" W, a distance of 167.38 feet to
an iron pin (set); thence, N 48degree 22' 32" W, a distance
of 788.34 feet to an iron pin (set); thence, S 67degree 19'
41" W, a distance of 29.66 feet, to an iron pin (set)
in an easterly right-of-way line of the Consolidated
Rail Corporation; thence, along said easterly right-of-
way by the following four bearings and distances:
first, by a curve to the left having a radius of
1,595.88 feet and an arc of 78.46 feet and having a
chord of N 24degree 04' 56" W, a distance of 78.46 feet to
an angle point in the aforesaid Borough Line separating
the Borough of Big Beaver and the Borough of Koppel;
thence, continuing along said right-of-way line by said
curve to the left having a radius of 1,595.88 feet and
an arc of 121.51 feet and having a chord of N 27degree 40'
13" W, a distance of 121.48 feet to a concrete monument
(found); thence, N 29degree 51' 06" W, a distance of 409.60
feet to an iron pin (found); thence, by a curve to the
left having a radius of 2,897.93 feet and arc of 362.89
feet and having a chord of N 33degree 26' 21" W, a distance
of 362.64 feet to the point of beginning, containing
43.085 acres, more or less.
TOGETHER with easements: created in favor of
Koppel Steel Corporation by Easement Agreement among
the Babcock & Wilcox Company, PMAC, Ltd. and Koppel
Steel Corporation dated May 7, 1991 and recorded in
Miscellaneous Book Volume 1441, page 569.
SCHEDULE A
AMBRIDGE PLANT
PARCEL NO. 1:
ALL THAT CERTAIN piece or parcel of land situated
in both the Borough of Ambridge and the Township of
Harmony, County of Beaver, Commonwealth of Pennsylvania
shown on and described according to that certain Land
Title Survey entitled "Property of The Babcock & Wilcox
Company" prepared by Michael Baker, Jr., Inc. (Charles
F. Coe, Pennsylvania Surveyor No. 19314-E), dated
July 15, 1988, last revised September 25, 1990, which
survey is incorporated herein by this reference and
made a part of the description herein, and being more
particularly described as follows:
COMMENCING at a hub (found), said point being at
the intersection of the northerly right-of-way line of
21st Street (Plan) and the easterly right-of-way line
of Oak Alley and being the southwesterly corner of Lot
#27 as shown of the Charles A. Dickson Plan #10 of lots
recorded in Plan Book Volume 2, Page 147; thence, along
a projection of said northerly right-of-way line of
21st Street, S 89degree 34' 38" W, a distance of 32.00 feet
to a point on the westerly right-of-way of the Penn
Central Transportation Company, (Economy Belt of
Conrail); thence, following the said westerly right-of-
way, S 00degree 25' 22" E, a distance of 580.78 feet to an
iron pin (set) and being the TRUE POINT OF BEGINNING,
said point being the most southeasterly corner of the
herein described parcel and also being the
northeasterly corner of lands now or formerly of
Wyckoff Drawn Steel Company; thence, departing from the
said westerly right-of-way of the Penn Central
Transportation Company, (Economy Belt of Conrail), and
along the line dividing lands now or formerly of said
Wyckoff Drawn Steel Company and the herein described
parcel by the following twelve bearings and distances:
first, S 68degree 53' 38" W, a distance of 445.62 feet to an
iron pin (set); thence, S 68degree 51' 53" W, a distance of
186.54 feet to an iron pin (set); thence, N 87degree 37' 05"
W, a distance of 59.91 feet to an iron pin (set);
thence, S 81degree 44' 05" W, a distance of 25.18 feet to an
iron pin (set); thence, S 81degree 22' 25" W, a distance of
84.27 feet to an iron pin (set); thence, S 62degree 14' 33"
W, a distance of 20.85 feet to an iron pin (set);
thence, S 72degree 04' 40" W, a distance of 69.22 feet to an
iron pin (set); thence, S 67degree 45' 20" W, a distance of
43.97 feet to a point; thence, S 67degree 45' 20" W, a
distance of 24.66 feet to an iron pin (set); thence, S
40degree 30' 20" W, a distance of 318.40 feet to an iron pin
(set); thence, S 23degree 26' 14" W; a distance of 84.47
feet to an iron pin (set); thence, N 70degree 36' 45" W, a
distance of 50.00 feet to an iron pin (set) on the
easterly line of the lands now or formerly of
Consolidated Rail Corporation; thence, continuing along
said easterly line, by the following six bearings and
distances: first, N 05degree 01' 00" W, a distance of
209.53 feet to an iron pin (set); thence, N 08degree 53' 25"
E, a distance of 133.43 feet to an iron pin (set);
thence, N 01degree 14' 10" W, a distance of 152.03 feet to
an iron pin (set); thence, N 02degree 07' 05" W, a distance
of 121.49 feet to an iron pin (set); thence, passing
through the line dividing the Borough of Ambridge from
the Township of Harmony, N 00degree 34' 18" W, a distance of
435.85 feet to an iron pin (set); thence, S 89degree 25' 42"
W, a distance of 25.00 feet to an iron pin (set) on the
easterly right-of-way line of the State of
Pennsylvania, Department of Highways, Route 65, known
as Ohio River Boulevard; thence, departing from said
railroad right-of-way and along said easterly right-of-
way line of Pennsylvania State Route 65 by the
following fourteen bearings and distances: first, N
00degree 34' 18" W, a distance of 665.78 feet to an iron pin
(set); thence, S 89degree 25' 42" W, a distance of 24.00
feet to an iron pin (set); thence, N 00degree 34' 18" W, a
distance of 130.00 feet to an iron pin (set); thence, N
89degree 25' 42" E, a distance of 14.00 feet to an iron pin
(set); thence, N 00degree 34' 18" W, a distance of 901.32
feet to an iron pin (set); thence, along a curve to the
left having a radius of 11,509.20 feet and an arc
length of 202.60 feet, and having a chord of N 01degree 04'
33" W, a distance of 202.58 feet to an iron pin (set);
thence, N 31degree 09' 00" E, a distance of 18.48 feet to an
iron pin (set); thence, along a curve to the left
having a radius of 11,519.20 feet and an arc length of
117.84 feet, and having a chord of N 01degree 57' 02" W, a
distance of 117.84 feet to an iron pin (set); thence N
02degree 14' 37" W, a distance of 1007.60 feet to an iron
pin (set) and being perpendicular to and 136.21 feet
from a State Route 65 right-of-way monument (found)
76.21 feet left of P.C. Station 139 + 15.47 feet;
thence, along a curve to the right said point having a
radius of 11,399.20 feet and an arc length of 84.16
feet, and having a chord of N 02degree 01' 56" W, a distance
of 84.16 feet to a P.K. Nail; thence, S 88degree 10' 44" W,
a distance of 20.00 feet to an iron pin (set); thence,
along a curve to the right, having a radius of
11,419.20 feet and an arc length of 49.83 feet, and
having a chord of N 01degree 41' 46" W, a distance of 49.83
feet to an iron pin (set); thence, N 88degree 25' 44" E, a
distance of 20.00 feet to an "X" cut in concrete;
thence along a curve to the right, having a radius of
11,399.20 feet and an arc length of 600.00 feet, and
having a chord of N 00degree 03' 47" W, a distance of 599.93
feet to an iron pin (set); thence, departing from said
easterly right of way of said State Route 65 and along
the dividing lines of lands now or formerly of Value
Ambridge Association and the herein described tract by
the following fifteen bearings and distances: first, S
24degree 54' 12" E, a distance of 792.94 feet to an iron pin
(found); thence, S 64degree 26' 44" E, a distance of 222.30
feet to an iron pin (found); thence, S 32degree 19' 58" E, a
distance of 138.39 feet to a concrete monument (found),
thence, S 31degree 09' 00" W, a distance of 792.61 feet to
an iron pin (set); thence, S 58degree 56' 13" E, a distance
of 355.55 feet to an iron pin (set); thence S 23degree 46'
46" W, a distance of 161.74 feet to an iron pin (set);
thence, along a line parallel to and 19.00 feet
perpendicular from building #70 located in the
aforesaid tract, S 00degree 24' 00" E, a distance of 341.25
feet to an iron pin (set); thence, N 89degree 36' 00" E, a
distance of 46.00 feet to a point; thence, S 00degree 24'
00" E, a distance of 125.63 feet to a point; thence, S
89degree 36' 00" W, a distance of 46.00 feet to an iron pin
(set); thence, along said line parallel to and 19.00
feet perpendicular from building #70, S 00degree 24' 00" E,
a distance of 1957.93 feet to an iron pin (set);
thence, leaving said parallel line, N 74degree 00' 10" E, a
distance of 214.59 feet to a P.K. nail (set) in
concrete - at a fence post; thence, N 71degree 43' 12" E, a
distance of 231.68 feet to a P.K. nail (set) in
concrete at a fence post; thence S 00degree 24' 00" E, a
distance of 121.00 feet to an iron pin (set); thence, N
68degree 53' 38" E, a distance of 445.63 feet to an iron pin
(set) on the aforesaid westerly right-of-way line of
the Penn Central Transportation Company, (Economy Belt
Line of Conrail); thence, departing from said dividing
line and along said westerly line, S 00degree 25' 22" E, a
distance of 26.38 feet to the point of beginning, said
parcel of land containing 39.308 acres, more or less.
The portion situated in Borough of Ambridge contains
6.646 acres, more or less and remaining parcel in the
Township of Harmony contains 32.662 acres, more or
less.
Parcel No. 2
ALL THAT CERTAIN piece of parcel of land situated
in the Borough of Ambridge, Beaver County,
Pennsylvania, bounded and more particularly described
as follows:
COMMENCING at a hub (found), said point being at
the intersection of the northerly right-of-way line of
21st Street (Plan) and the easterly right-of-way line
of Oak Alley and being the southwesterly corner of Lot
#27 as shown on the Charles A. Dickson Plan #10 of lots
recorded in Plan Book 2, Page 147; thence, along said
easterly line of the Oak Alley, S 00degree 25' 22" E, a
distance of 540.00 feet to a P.K. nail (set) at a fence
post, being the northwesterly corner of Lot #8 of said
plan and also being the TRUE POINT OF BEGINNING;
thence, departing from said easterly line of Oak Alley,
and along the dividing line of Lot #9 and Lot #8 of
said plan, N 89degree 34' 38" E, a distance of 120.00 feet
to an "X" cut in the sidewalk on the westerly line of
Duss Avenue; thence, departing from said dividing line,
and along the westerly line of Duss Avenue, S 00degree 25'
22" E, a distance of 50.00 feet to an "X" cut in the
sidewalk; thence, departing from said westerly line of
Duss Avenue, and along a dividing line between Lot #6
and Lot #7 of said plan, S 89degree 34' 38" W a distance of
120.00 feet to an "X" cut in the sidewalk on the
easterly line of Oak Alley; thence, along the easterly
line of Oak Alley, N 00degree 25' 22" W, a distance of 50.00
feet to the point of beginning, said parcel contains
0.138 acre, more or less.
TOGETHER WITH any right, title and interest in and to
that certain right-of-way easement for electric lines
as described in Agreement between Armco Steel
Corporation and The Babcock & Wilcox Company, dated
January 4, 1972 (the "1972 Agreement") and recorded in
Deed Book Volume 985, page 299, Section 3, Paragraph G,
and pursuant to the Agreement between Armco Steel
Corporation and The Babcock & Wilcox Company dated
May 26, 1987 (the "1987 Agreement") and recorded
June 23, 1987 in Deed Book Volume 1301, page 384,
Section 3.05.
AND FURTHER TOGETHER WITH an easement and right-of-way
for Duquesne Light Company for poles, lines, etc.
across Value Ambridge Association property to a
substation in the Township of Harmony, County of Beaver
and Commonwealth of Pennsylvania, said lines being
described as follows:
BEGINNING at a point on the north line of the
substation property where the same is intersected by
the electric tower centerline; thence, along said
centerline N 06degree 54' 58" E, a distance of 184.43 feet
to Tower #390; thence, N 21degree 13' 09" E, a distance of
650.60 feet to Tower #389; thence, N 21degree 11' 38" E, a
distance of 629.40 feet to Tower #388 where the
electric lines on the West and East side of the tower
go in different directions; thence, first continuing
along said centerline but following the west side
electric line toward Tower #385 N 73degree 14' 44" W, a
distance of 642.44 feet to an intersection with a line
common to the aforementioned Parcel No. 1 and lands now
or formerly of Value Ambridge Association and the
terminus of the westerly portion of this easement;
second, beginning again at said Tower #388 and
following the centerline of the eastside electric line
toward Tower #386, N 51degree 19' 07" E, a distance of
287.18 feet to said Tower #386 and being the terminus
of the easterly electric line easement and being in an
85-foot right-of-way recorded in the Recorder of Deeds
Office in Beaver County.
AND FURTHER TOGETHER WITH any right, title and interest
in and to that certain right-of-way easement for free
and unimpeded use of railroad track Nos. 29, 41 and 99
as created by Paragraph 3B of the 1972 Agreement.
AND FURTHER TOGETHER WITH any right, title and interest
in and to that certain non-exclusive easement for
vehicular access across Armco's south parking lot as
created by Paragraph 3.02 of the 1987 Agreement.
AND FURTHER TOGETHER WITH any right, title and interest
in and to that certain non-exclusive right-of-way
easement for free and unimpeded use of railroad track
Nos. 35 and 39 and a temporary non-exclusive access
easement for the purpose of installing a new turnout
for railroad track Nos. 99 and 17 as referred to in
Paragraph 3.03 of the 1987 Agreement.
AND FURTHER TOGETHER WITH any and all easements,
rights-of-way, privileges and benefits granted in favor
of The Babcock & Wilcox Company in (a) the 1972
Agreement, (b) the 1987 Agreement, (c) Deed from Armco,
Inc. to The Babcock & Wilcox Company, dated March 31,
1988 and recorded on April 7, 1988, in Deed Book Volume
1335, page 623, and (d) Deed from The Babcock & Wilcox
Company to Armco, Inc., dated April 5, 1988 and
recorded April 7, 1988 in Deed Book Volume 1335, page
630.
AND FURTHER TOGETHER WITH the right of ingress, egress
and regress between Parcel No. 1 and Parcel No. 2 and
to and from Duss Avenue and Ohio River Boulevard.
SCHEDULE A
KOPPEL STEEL PLANT
QUENCH & TEMPER
ALL THAT CERTAIN Parcel being designated as Parcel
No. 1 of the North Plant Industrial Plan of Lots No. 2
in the Borough of Koppel, County of Beaver,
Commonwealth of Pennsylvania, as per Plan recorded in
Plan Book Volume 24, Page 52, in the Office of the
Beaver County Recorder, bounded and described as
follows:
BEGINNING at an iron pin at the northwesterly
corner of the terminus of Fourth Avenue and being a
point on an easterly right-of-way line of the
Consolidated Rail Corporation, as shown on the Plan of
Koppel, as recorded in Plan Book Volume 1, Page 308;
thence, along said easterly right-of-way line the
following four bearings and distances: first, N 02degree
08' 24" E, a distance of 862.53 feet to a concrete
monument (found); thence, by a curve to the left having
a radius of 1,592.88 and an arc distance of 150.73 feet
and a chord of N 00degree 35' 00" W, a distance of 150.56
feet to an iron pin (found); thence, N 88degree 54' 52" E, a
distance of 3.00 feet to an iron pin (found); thence,
by a curve to the left having a radius of 1,595.88 feet
and an arc distance of 540.13 feet and a chord of N 12degree
58' 33" W, a distance of 537.56 feet to an iron pin
(set); thence, leaving said Consolidated Rail
Corporation right-of-way and along the following five
bearings and distances dividing the herein described
Parcel No. 1 and the Residue Parcel of the aforesaid
North Plant Industrial Plan of Lots No. 2: first, N
67degree 19' 41" E, a distance of 29.66 feet to an iron pin
(set); thence, S 48degree 22' 32" E. a distance of 788.34
feet to an iron pin (set); thence, S 13degree 26' 33" E, a
distance of 167.38 feet to an iron pin (set); thence, S
16degree 13' 57" E, a distance of 94.69 feet to an iron pin
(set); thence, S 02degree 08' 35" W, a distance of 411.82
feet to an iron pin (set) on a northerly right-of-way
line of L.R. 04017, (S.R. 351); thence, along said
northerly right-of-way line the following three
bearings and distances: first, by a curve to the left
having radius of 420.00 feet and an arc of 358.45 feet
and a chord of S 49degree 54' 10" W, a distance of 347.67
feet to an iron pin (found); thence, S 88degree 43' 44" W, a
distance of 48.55 feet to an iron pin (found); thence,
S 02degree 08' 24" W, a distance of 143.64 feet to an iron
pin (found); thence, along lands now or formerly of
Mark T. & Sharon Langhel, the north end of Lemon Drive,
lands now or formerly of Lloyd J. and Mary L. Siecker
and the north end of said Fourth Avenue, N 87degree 51' 36"
W, a distance of 260.00 feet to the point of beginning
containing 14.297 acres, more or less.
SCHEDULE B
EXCLUDED PROPERTY
a) Any and all Collateral (as defined in
that certain Revolving Credit, Guaranty and Security
Agreement dated as of July 28, 1995 by and between
Newport Steel Corporation, Koppel Steel Corporation and
Imperial Adhesives, Inc., as borrowers, NS Group, Inc.,
Erlanger Tubular Corporation, Northern Kentucky Air,
Inc. and Northern Kentucky Management, Inc., as
guarantors, The Bank of New York Commercial
Corporation, as Lender, as ACM Agent and as Co-Agent,
and PNC Bank Ohio, National Association, as Lender and
as Co-Agent, and other lenders parties thereto).
b) Any and all intellectual property rights
and interests, including, without limitation, any and
all trade names, trade marks, copyrights, trade secrets
and patents.
c) Any and all vehicles and rolling stock.
d) Any and all leased Equipment if and to
the extent the terms and conditions of the applicable
lease documentation prohibit, restrict or require
consent in connection with the creation of liens and
security interests with respect to such Equipment.
e) Any and all general intangibles.
f) Stripper Crane subject to Contract for
Lease and Rent dated September 6, 1977 between City of
Wilder, Kentucky and Interlake, Inc., recorded at Misc.
Book 82, page 401, and Sublease dated April 15, 1981
between Interlake, Inc. and Newport Steel Corporation,
recorded at Misc. Book 95, page 101, provided, however,
that such Stripper Crane shall case to be Excluded
Property at such time (if ever) as all consents
required in connection with the granting of liens and
security interests with respect to such Stripper Crane
under such Lease and Sublease have been obtained.
g) Any and all Equipment described in a
certain Security Agreement, dated as of February 13,
1992, together with all exhibits, supplements, addenda
and amendments thereto in existence or effect on the
date hereof or hereafter.
Recording requested by, and
when recorded return to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
ATTN: F. Robert Wheeler, Jr., Esq.
DEED OF TRUST,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
from
KOPPEL STEEL CORPORATION, Grantor
to
William D. Cleveland, Trustee
for the use and benefit of
THE HUNTINGTON NATIONAL BANK,
as Trustee and Collateral Agent, Beneficiary
DATED AS OF JULY 28, 1995
TABLE OF CONTENTS
Background . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . 2
1. Warranty of Title . . . . . . . . . . . . . . . . . 6
2. Payment and Performance of Obligations. . . . . . . 7
3. Requirements. . . . . . . . . . . . . . . . . . . . 7
4. Payment of Taxes and Other Impositions. . . . . . . 8
5. Insurance . . . . . . . . . . . . . . . . . . . . . 9
6. Restrictions on Liens, Encumbrances and
Sales . . . . . . . . . . . . . . . . . . . . . . . 13
7. Relationship of Beneficiary and Grantor . . . . . . 14
8. Maintenance; No Alteration; Inspection;
Utilities . . . . . . . . . . . . . . . . . . . . . 14
9. Condemnation/Eminent Domain . . . . . . . . . . . . 15
10. Leases. . . . . . . . . . . . . . . . . . . . . . . 15
11. Further Assurances/Estoppel
Certificates. . . . . . . . . . . . . . . . . . . . 17
12. Beneficiary's Right to Perform. . . . . . . . . . . 17
13. Hazardous Material. . . . . . . . . . . . . . . . . 18
14. Asbestos. . . . . . . . . . . . . . . . . . . . . . 19
15. Event of Default. . . . . . . . . . . . . . . . . . 20
16. Remedies. . . . . . . . . . . . . . . . . . . . . . 20
17. Right of Beneficiary to Credit Sale . . . . . . . . 24
18. Appointment of Receiver . . . . . . . . . . . . . . 25
19. Extension, Release, etc.. . . . . . . . . . . . . . 25
20. Assignment of Rents . . . . . . . . . . . . . . . . 26
21. Trust Funds . . . . . . . . . . . . . . . . . . . . 26
22. Additional Rights . . . . . . . . . . . . . . . . . 27
23. Changes in Method of Taxation . . . . . . . . . . . 27
24. Notices . . . . . . . . . . . . . . . . . . . . . . 27
25. No Oral Modification. . . . . . . . . . . . . . . . 27
26. Partial Invalidity. . . . . . . . . . . . . . . . . 27
27. Waiver of Right of Redemption and Other
Rights. . . . . . . . . . . . . . . . . . . . . . . 28
28. Remedies Not Exclusive. . . . . . . . . . . . . . . 29
29. Multiple Security . . . . . . . . . . . . . . . . . 29
30. Expenses; Indemnification . . . . . . . . . . . . . 31
31. Successors and Assigns. . . . . . . . . . . . . . . 32
32. No Waivers, etc.. . . . . . . . . . . . . . . . . . 32
33. GOVERNING LAW, ETC. . . . . . . . . . . . . . . . . 33
34. Waiver of Trial by Jury . . . . . . . . . . . . . . 33
35. Certain Definitions . . . . . . . . . . . . . . . . 33
36. Security Agreement under Uniform
Commercial Code . . . . . . . . . . . . . . . . . . 33
37. Release Upon Payment and Discharge of
Grantor's Obligations . . . . . . . . . . . . . . . 35
38. Enforceability; Usury . . . . . . . . . . . . . . . 35
39. Homestead . . . . . . . . . . . . . . . . . . . . . 36
40. Substitute Trustee. . . . . . . . . . . . . . . . . 36
41. Indemnification of Trustee. . . . . . . . . . . . . 37
42. Business or Commercial Purpose. . . . . . . . . . . 37
43. Final Agreement . . . . . . . . . . . . . . . . . . 37
44. Consistency with Other Documents. . . . . . . . . . 38
45. THIS WRITTEN LOAN AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. . . . . . . . . . . 38
SCHEDULES
Schedule A - Description of Real Property
Schedule B - Description of Excluded Property
DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
THIS DEED OF TRUST, ASSIGNMENT OF RENTS
AND LEASES AND SECURITY AGREEMENT, dated as of
July 28, 1995 is made by KOPPEL STEEL CORPORATION,
a Pennsylvania corporation ("Grantor"), to William
D. Cleveland, an individual ("Trustee"), whose
address is 909 Fannin Street, Suite 100, Houston,
Texas 77001, for the use and benefit of THE
HUNTINGTON NATIONAL BANK, as trustee (in such
capacity, the "Indenture Trustee") under the
Indenture referred to below, as collateral agent
("Beneficiary"), whose mailing address is 540
Madison Avenue, Covington, Kentucky 41011.
References to this "Deed of Trust" shall mean this
instrument and any and all renewals,
modifications, amendments, supplements,
extensions, consolidations, substitutions,
spreaders and replacements of this instrument.
Background
A. Grantor is the owner of the
parcel(s) of real property described on Schedule A
attached (such real property, together with all of
the buildings, improvements, structures and
fixtures now or subsequently located thereon (the
"Improvements"), being collectively referred to as
the "Real Estate").
B. Grantor is a wholly owned
subsidiary of NS Group, Inc., a Kentucky
corporation (the "Company") and is a Recourse
Subsidiary (as defined in the Indenture referred
to below).
C. The Company and Beneficiary are
parties to that Indenture dated as of July 28,
1995 (as the same may be amended, modified or
otherwise supplemented from time to time, the
"Indenture"; capitalized terms not defined herein
shall have the meanings ascribed thereto in the
Indenture) for the benefit of Holders of 13.5%
Senior Secured Notes due 2003 in the aggregate
principal amount of $125,000,000.00 (the
"Securities") issued by the Company.
D. It is a condition precedent to the
purchase of the Securities from the Company that
the Grantor shall have (i) executed and delivered
that certain Guaranty of even date herewith in
favor of Beneficiary (the "Guaranty") and (ii)
executed and delivered this Deed of Trust to
Beneficiary for the ratable benefit of the Holders
in order to secure Grantor's obligations under the
Guaranty. References in this Deed of Trust to the
"Default Rate" shall mean the interest rate
payable with respect to the Securities plus two
percent (2%) per annum.
E. It is a condition precedent to the
purchase of the Securities from the Company that
the Grantor shall have executed and delivered that
certain Subsidiary Security Agreement (the
"Subsidiary Security Agreement") of even date
herewith in favor of Beneficiary, which Subsidiary
Security Agreement shall grant Beneficiary a
security interest in and to certain personal
property now or subsequently used in connection
with the operation of the Real Estate.
NOW, THEREFORE, in consideration of the
premises and to induce the Beneficiary to enter
into the Indenture and to induce the Holders to
purchase the Securities from the Company, the
Grantor hereby agrees with the Beneficiary, for
the ratable benefit of the Holders, as follows:
Granting Clauses
For good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, Grantor agrees that to secure all of
Grantor's obligations and liabilities under the
Guaranty and all other obligations and liabilities
of the Grantor to the Indenture Trustee, the
Beneficiary and the Holders (including, without
limitation, interest accruing after the maturity
of the Securities and interest accruing after the
filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or
like proceeding, relating to the Grantor, whether
or not a claim for post-filing or post-petition
interest is allowed in such proceeding and
interest, to the extent permitted by law, on the
unpaid interest), whether direct or indirect,
absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may
arise under, out of, or in connection with, the
Indenture, the Securities, the Guaranty, this Deed
of Trust, the other Security Documents or any
other document made, delivered or given in
connection therewith, in each case whether on
account of principal, interest, fees, indemnities,
costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel
to the Indenture Trustee and the Beneficiary that
are required to be paid by the Beneficiary
pursuant to the terms of the Indenture, the
Guaranty or this Deed of Trust or any other
Security Document) (collectively, the
"Obligations").
GRANTOR HEREBY CONVEYS TO TRUSTEE AND HEREBY
MORTGAGES, GRANTS, ASSIGNS, TRANSFERS AND SETS
OVER TO TRUSTEE AND ALSO TO SUBSTITUTE TRUSTEE (AS
DEFINED BELOW), IN TRUST WITH POWER OF SALE FOR
THE USE AND BENEFIT OF BENEFICIARY, AND GRANTS
BENEFICIARY AND TRUSTEE A SECURITY INTEREST IN:
(A) all right, title and interest of
Grantor in and to the Real Estate;
(B) all the estate, right, title, claim
or demand whatsoever of Grantor, in
possession or expectancy, in and to the Real
Estate or any part thereof;
(C) all right, title and interest of
Grantor in, to and under all easements,
rights of way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water
courses, water and riparian rights,
development rights, air rights, mineral
rights and all estates, rights, titles,
interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging,
relating or appertaining to the Real Estate,
and any reversions and remainders 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 right, title and interest of
Grantor in and to all of the fixtures,
chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings
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 Grantor and
now or subsequently attached to, or contained
in or used or usable in any way in connection
with any operation or letting of 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
Grantor 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 Grantor or constructed, assembled
or placed by Grantor 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 mortgage, conveyance,
assignment or other act by Grantor;
(F) all right, title and interest of
Grantor 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 Grantor 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
Grantor 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 Trust
Property (as defined below) (collectively,
the "Rents");
(G) all right, title and interest of
Grantor in and to all trade names, trade
marks, logos, copyrights, good will and books
and records relating to or used in connection
with the operation of the Real Estate or the
Equipment or any part thereof; all right,
title and interest of Grantor in and to all
general intangibles related to the operation
of the Improvements now existing or hereafter
arising;
(H) all right, title and interest of
Grantor in and to all unearned premiums under
insurance policies now or subsequently
obtained by Grantor relating to the Real
Estate or Equipment and Grantor's interest in
and to any such insurance policies and 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 otherwise following and during the
continuance of an Event of Default; and all
right, title and interest of Grantor in and
to 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, subject to the provisions relating
to condemnation generally set forth below;
(I) all right, title and interest of
Grantor in and to (i) all contracts from time
to time executed by Grantor 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 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;
(J) all right, title and interest of
Grantor in and to any and all monies now or
subsequently on deposit for the payment of
real estate taxes or special assessments
against the Real Estate or for the payment of
premiums on insurance policies covering the
foregoing property or otherwise on deposit
with or held by Beneficiary as provided in
this Deed of Trust; all capital, operating,
reserve or similar accounts held by or on
behalf of Grantor and related to the
operation of the Trust Property, whether now
existing or hereafter arising and all monies
held in any of the foregoing accounts and any
certificates or instruments related to or
evidencing such accounts;
(K) all right, title and interest of
Grantor in and to all accounts and revenues
arising from the operation of the
Improvements including, without limitation,
(i) any right to payment now existing or
hereafter arising for rental of hotel rooms
or other space or for services rendered,
whether or not yet earned by performance,
arising from the operation of the
Improvements or any other facility on the
Trust Property and (ii) all rights to payment
from any consumer credit-charge card
organization or entity including, without
limitation, payments arising from the use of
the American Express Card, the Visa Card, the
Carte Blanche Card, the Mastercard or any
other credit card, including those now
existing or hereafter created, substitutions
therefor, proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange,
transfer, collection or other disposition or
substitution thereof and any and all of the
foregoing and proceeds therefrom
(collectively, the "Additional Rents"); and
(L) all proceeds, both cash and
noncash, of the foregoing;
excluding, however, notwithstanding any
provision set forth in the foregoing clauses (A)
through (L), the property described on Schedule B
attached hereto and incorporated herein by
reference (collectively, the "Excluded Property")
(all of the foregoing property and rights and
interests now owned or held or subsequently
acquired by Grantor and described in the foregoing
clauses (A) through (E), excluding the Excluded
Property, are collectively referred to as the
"Premises", and those described in the foregoing
clauses (A) through (L), excluding the Excluded
Property, are collectively referred to as the
"Trust Property").
All of the Trust Property hereinabove
described, real, personal and mixed, whether
affixed or annexed to the Real Estate or not and
all rights hereby conveyed and mortgaged are
intended so to be as a unit and are hereby
understood, agreed and declared, to the maximum
extent permitted by law, to form a part and parcel
of the Real Estate and to be appropriated to the
use of the Real Estate, and shall be for the
purposes of this Deed of Trust deemed to be real
estate and conveyed and mortgaged hereby;
provided, however, as to any of the property
aforesaid which does not so form a part and parcel
of the Real Estate or does not constitute a
"fixture" (as defined in the Texas Business and
Commerce Code (the "Code")), this Deed of Trust is
hereby deemed to also be a Security Agreement
under the Code for purposes of granting a security
interest in such property, which Grantor hereby
grants to Beneficiary, as Secured Party (as
defined in the Code), as more particularly
provided below in this Deed of Trust.
TO HAVE AND TO HOLD the Trust Property
and the rights and privileges hereby granted unto
Trustee, Substitute Trustee, their successors and
assigns, for the uses and purposes set forth,
together with the right to retain possession of
the Trust Property upon and during the continuance
of an Event of Default hereunder, until the
Obligations are fully paid and performed.
Terms and Conditions
Grantor further represents, warrants,
covenants and agrees with Beneficiary as follows:
1. Warranty of Title. Grantor
warrants that Grantor has good title to the Real
Estate in fee simple and good title to the rest of
the Trust Property, subject only to the matters
that are set forth in Schedule B of the title
insurance policy or policies being issued to
Beneficiary to insure the lien of this Deed of
Trust and liens permitted pursuant to subsection
6.10 of the Indenture (collectively, the
"Permitted Exceptions"), and Grantor shall
warrant, defend and preserve such title and the
lien of the Deed of Trust thereon against all
claims of all persons and entities, excepting,
however, the Permitted Exceptions. Grantor
further warrants that it has the right to mortgage
the Trust Property.
2. Payment and Performance of
Obligations. Grantor shall pay the Obligations at
the times and places and in the manner specified
in the Guaranty and shall perform all the
Obligations.
3. Requirements. (a) Grantor shall
comply with, or cause to be complied with, and
conform to all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees,
rules, regulations and requirements, and
irrespective of the nature of the work to be done,
of each of the United States of America, any State
and any municipality, local government or other
political subdivision thereof and any agency,
department, bureau, board, commission or other
instrumentality of any of them, now existing or
subsequently created (collectively, "Governmental
Authority") which has jurisdiction over the Trust
Property, except where the failure to so comply
with any of the foregoing would not have a
Material Adverse Effect on the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, and all
covenants, restrictions and conditions now or
later of record which may be applicable to any of
the Trust Property, or to the use, manner of use,
occupancy, possession, operation, maintenance,
alteration, repair or reconstruction of any of the
Trust Property, except where the failure to so
comply with any of the foregoing would not
adversely affect the business, prospects,
earnings, properties, assets or condition
(financial or otherwise) of the Company and its
Subsidiaries taken as a whole. All present and
future laws, statutes, codes, ordinances, orders,
judgments, decrees, rules, regulations and
requirements of every Governmental Authority
applicable to Grantor or to any of the Trust
Property and all covenants, restrictions, and
conditions which now or later may be applicable to
any of the Trust Property are collectively
referred to as the "Legal Requirements".
(b) From and after the date of this
Deed of Trust, Grantor shall not by act or
omission permit any building or other improvement
on any premises not subject to the lien of this
Deed of Trust to rely on the Premises or any part
thereof or any interest therein to fulfill any
Legal Requirement and Grantor hereby assigns to
Beneficiary any and all rights to give consent for
all or any portion of the Premises or any interest
therein to be so used. Grantor shall not by act
or omission impair the integrity of any of the
Real Estate as a single zoning lot separate and
apart from all other premises. Grantor represents
that each parcel of the Real Estate constitutes a
legally subdivided lot, in compliance with all
subdivision laws and similar Legal Requirements.
Any act or omission by Grantor which would result
in a violation of any of the provisions of this
subsection shall be void.
4. Payment of Taxes and Other
Impositions. (a) Promptly when due, Grantor
shall pay and discharge all taxes of every kind
and nature (including, without limitation, all
real and personal property, income, franchise,
withholding, transfer, gains, profits and gross
receipts taxes), all charges for any easement or
agreement maintained for the benefit of any of the
Trust Property, all general and special
assessments, levies, permits, inspection and
license fees, all water and sewer rents and
charges 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 Trust Property, 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 as the "Impositions"). Upon request
by Beneficiary, Grantor shall deliver to
Beneficiary (i) original or copies of receipted
bills and cancelled checks evidencing payment of
such Imposition if it is a real estate tax or
other public charge and (ii) evidence acceptable
to Beneficiary showing the payment of any other
such Imposition. If by law any Imposition, at
Grantor's option, may be paid in installments
(whether or not interest shall accrue on the
unpaid balance of such Imposition), Grantor 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 Beneficiary under this Deed of
Trust or otherwise, without notice or demand to
Grantor, to pay any Imposition after the date such
Imposition shall have become due, and to add to
the Obligations the amount so paid, together with
interest from the time of payment at the Default
Rate. Any sums paid by Beneficiary 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 Deed of Trust, and
(ii) payable on demand by Grantor to Beneficiary
together with interest at the Default Rate as set
forth above.
(c) Grantor shall not claim, demand or
be entitled to receive any credit or credits
toward the satisfaction of this Deed of Trust or
on any interest payable thereon for any taxes
assessed against the Trust Property or any part
thereof, and shall not claim any deduction from
the taxable value of the Trust Property by reason
of this Deed of Trust if any such claim would
adversely affect the interest of Beneficiary.
(d) Grantor shall have the right before
any delinquency occurs to contest or object in
good faith to the amount or validity of any
Imposition by appropriate legal proceedings, but
such right shall not be deemed or construed in any
way as relieving, modifying, or extending
Grantor's covenant to pay any such Imposition at
the time and in the manner provided in this
Section unless (i) Grantor has given prior written
notice to Beneficiary of Grantor's intent so to
contest or object to an Imposition, (ii) Grantor
shall demonstrate to Beneficiary's satisfaction
that the legal proceedings shall operate
conclusively to prevent the sale of the Trust
Property, or any part thereof, to satisfy such
Imposition prior to final determination of such
proceedings and (iii) Grantor shall furnish a good
and sufficient bond or surety as requested by and
reasonably satisfactory to Beneficiary in the
amount of the Impositions which are being
contested plus any interest and penalty which may
be imposed thereon and which could become a lien
against the Real Estate or any part of the Trust
Property.
(e) Upon written notice to Grantor,
Beneficiary, after an Event of Default (as defined
below), shall be entitled to require Grantor to
pay monthly in advance to Beneficiary the
equivalent of 1/12th of the estimated annual
Impositions. Beneficiary may commingle such funds
with its own funds and Grantor shall not be
entitled to interest thereon.
5. Insurance. (a) Grantor shall
maintain or cause to be maintained on all of the
Premises
(i) property insurance against loss or
damage by (A) fire, lightning, windstorm,
tornado, water damage and by such other
further risks and hazards as now are or
subsequently may be covered by an "all risk"
policy or a fire policy covering "special"
causes of loss, which policy shall include
building ordinance law endorsements and shall
be automatically reinstated after each loss,
and (B) flood and earthquake in annual
aggregates of $25,000,000 for flood and
$50,000,000 for earthquake;
(ii) comprehensive general liability
insurance under a policy covering all claims
for personal injury, bodily injury or death,
or property damage occurring on, in or about
the Premises in an amount not less than
$10,000,000 combined single limit with
respect to injury and property damage
relating to any one occurrence plus such
excess limits as Beneficiary shall reasonably
request from time to time;
(iii) when and to the extent reasonably
required by Beneficiary, insurance against
loss or damage by any other risk commonly
insured against by persons occupying or using
like properties in the locality or localities
in which the Real Estate is situated;
(iv) insurance against rent loss, extra
expense or business interruption (and/or soft
costs, in the case of new construction), if
applicable, in amounts reasonably
satisfactory to Beneficiary, but not less
than one year's gross rent or gross income;
(v) during the course of any
construction or repair of Improvements,
comprehensive general liability insurance
(including coverage for elevators and
escalators, if any). The policy shall
provide coverage for independent contractors
and completed operations. The completed
operations coverage shall stay in effect for
two years after construction of any
Improvements has been completed. The policy
shall provide coverage on an occurrence basis
against claims for personal injury, such
insurance to afford immediate minimum
protection to a limit of not less than that
required by Beneficiary with respect to
personal injury, bodily injury or death to
any one or more persons or damage to
property;
(vi) during the course of any
construction or repair of the Improvements,
workers' compensation insurance (including
employer's liability insurance) for all
employees of Grantor engaged on or with
respect to the Premises in such amounts as
are reasonably satisfactory to Beneficiary,
but in no event less than the limits
established by law;
(vii) during the course of any
construction, addition, alteration or repair
of the Improvements, builder's risk completed
value form insurance against "all risks of
physical loss," including collapse, water
damage, flood and earthquake and transit
coverage, during construction or repairs of
the Improvements, with deductibles reasonably
approved by Beneficiary, in nonreporting
form, covering the total value of work
performed and equipment, supplies and
materials furnished (with an appropriate
limit for soft costs in the case of
construction);
(viii) boiler and machinery property
insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator
equipment and escalator equipment, provided
the Improvements contain equipment of such
nature, and insurance against rent, extra
expense, business interruption and soft
costs, if applicable, arising from any such
breakdown, in such amounts as are reasonably
satisfactory to Beneficiary but not less than
the lesser of $1,000,000 or 10% of the value
of the Improvements;
(ix) if any portion of the Premises are
located in an area identified as a special
flood hazard area by the Federal Emergency
Management Agency or other applicable agency,
flood insurance in an amount reasonably
satisfactory to Beneficiary, but in no event
less than the maximum limit of coverage
available under the National Flood Insurance
Act of 1968, as amended; and
(x) such other insurance in such
amounts as Beneficiary may reasonably request
from time to time; provided, however, such
insurance is usually and customarily carried
with respect to similar facilities in the
same general area as the Premises.
Each insurance policy (other than flood insurance
written under the National Flood Insurance Act of
1968, as amended, in which case to the extent
available) shall (i) provide that it shall not be
cancelled without 30 days' prior written notice to
Beneficiary, (ii) with respect to all property
insurance, provide for deductibles in amounts
reasonably satisfactory to Beneficiary (which
deductibles shall not exceed $250,000, with the
exception of the deductible for boiler and
machinery, which deductible shall not exceed a ten
(10) day waiting period deductible), contain a
"Replacement Cost Endorsement" (predicated upon
rebuilding) without any deduction made for
depreciation and with no co-insurance penalty (or
attaching an agreed amount endorsement
satisfactory to Beneficiary), with loss payable to
Grantor and Beneficiary with respect to the Trust
Property as their respective interests may appear,
without contribution, under a "standard" or "New
York" mortgagee clause reasonably acceptable to
Beneficiary and be written by insurance companies
having an A.M. Best Company, Inc. rating of A or
higher and a financial size category of not less
than XII, or otherwise as approved by Beneficiary.
Liability insurance policies shall name
Beneficiary as an additional insured with respect
to the Trust Property and contain a waiver of
subrogation against Beneficiary; all such policies
shall indemnify and hold Beneficiary harmless from
all liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and
passageways. Each policy shall expressly provide
that any proceeds which are payable to Beneficiary
pursuant to the terms hereof shall be paid by
check payable to the order of Beneficiary only and
shall require the endorsement of Beneficiary only.
The amounts of each insurance policy and the form
of each such policy shall at all times be
reasonably satisfactory to Beneficiary. If any
required insurance shall expire, be withdrawn,
become void by breach of any condition thereof by
Grantor or by any lessee of any part of the Trust
Property or become void or unsafe by reason of the
failure or impairment of the capital of any
insurer, Grantor shall immediately obtain new or
additional insurance satisfactory to Beneficiary.
Grantor shall not take out any separate or
additional insurance which is contributing in the
event of loss unless it is properly endorsed and
otherwise reasonably satisfactory to Beneficiary
in all respects.
(b) Grantor shall deliver to
Beneficiary an original of each insurance policy
required to be maintained, or a certificate of
such insurance reasonably acceptable to
Beneficiary. Grantor shall (i) pay as they become
due all premiums for such insurance, and (ii) not
later than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions
of this Section, deliver a renewed policy or
policies, or duplicate original or originals
thereof, or a certificate of such insurance
reasonably acceptable to Beneficiary, accompanied
by evidence of payment reasonably satisfactory to
Beneficiary. Upon request of Beneficiary, Grantor
shall cause its insurance underwriter or broker to
certify to Beneficiary in writing that all the
requirements of this Deed of Trust governing
insurance have been satisfied.
(c) If Grantor is in default of its
obligations to insure or deliver any such policy
or a certificate thereof under this Section 5,
then Beneficiary, at its option and following
written notice to Grantor, may effect such
insurance from year to year, and pay the premium
or premiums therefor, and Grantor shall pay to
Beneficiary on demand such premium or premiums so
paid by Beneficiary with interest from the time of
payment at the Default Rate and the same shall be
deemed to be secured by this Deed of Trust and
shall be collectible in the same manner as the
Obligations secured by this Deed of Trust.
(d) Grantor promptly shall comply with
and conform to (i) all provisions of each such
insurance policy, and (ii) all requirements of the
insurers applicable to Grantor or to any of the
Trust Property or to the use, manner of use,
occupancy, possession, operation, maintenance,
alteration or repair of any of the Trust Property.
Grantor shall not use or permit the use of the
Trust Property in any manner which would permit
any insurer to cancel any insurance policy or void
coverage required to be maintained by this Deed of
Trust.
(e) If the Trust Property in its
entirety, or any material part thereof, shall be
destroyed or damaged by fire or any other
casualty, whether insured or uninsured, or in the
event any claim in excess of $5,000,000 is made
against Grantor for any personal injury, bodily
injury or property damage incurred on or about the
Premises, Grantor shall give prompt notice thereof
to Beneficiary. If the Trust Property is damaged
by fire or other casualty, then provided that no
Event of Default shall have occurred and be
continuing, Grantor shall have the right to adjust
such loss. If the Trust Property is damaged by
fire or other casualty, and if an Event of Default
shall have occurred and be continuing, then
Grantor authorizes and empowers Beneficiary, at
Beneficiary's option and in Beneficiary's sole
discretion, as attorney-in-fact for Grantor, to
make proof of loss, to adjust and compromise any
claim under any insurance policy with respect to
the Trust Property, to appear in and prosecute any
action arising from any policy, and to deduct from
any insurance proceeds Beneficiary's expenses
incurred in the collection process. The insurance
proceeds or any part thereof with respect to the
Trust Property received by Beneficiary and/or
Grantor shall constitute Trust Moneys which shall
be paid and/or applied in accordance with
subsection 13.2 of the Indenture.
(f) In the event of foreclosure of this
Deed of Trust or other transfer of title to the
Trust Property in extinguishment of the
Obligations, all right, title and interest of
Grantor in and to any insurance policies then in
force with respect to the Trust Property shall
pass to the purchaser or grantee and Grantor
hereby appoints Beneficiary its attorney-in-fact,
in Grantor's name, to assign and transfer all such
policies and proceeds to such purchaser or
grantee.
(g) Upon written notice to Grantor,
Beneficiary, after an Event of Default, shall be
entitled to require Grantor to pay monthly in
advance to Beneficiary the equivalent of 1/12th of
the estimated annual premiums due on such
insurance. Beneficiary may commingle such funds
with its own funds and Grantor shall not be
entitled to interest thereon.
(h) Grantor may maintain insurance
required under this Deed of Trust by means of one
or more blanket insurance policies maintained by
Grantor; provided, however, that (A) any such
policy shall specify, or Grantor shall furnish to
Beneficiary a written statement from the insurer
so specifying, the maximum amount of the total
insurance afforded by such blanket policy which
shall be applicable on an occurrence basis and (B)
the protection afforded under any such blanket
policy shall be no less than that which would have
been afforded under a separate policy or policies
relating only to the Trust Property.
6. Restrictions on Liens, Encumbrances
and Sales. Grantor acknowledges that any
secondary or junior financing placed on the Trust
Property (a) may divert funds that would otherwise
be available for payment of the Obligations, (b)
could, if foreclosed, force Beneficiary to incur
expenses to protect its security, and (c) would
impair Beneficiary's right to accept a deed in
lieu of foreclosure or otherwise to take actions
to further its economic interest prior to
foreclosure, because a foreclosure by Beneficiary
would be required to clear title to the Trust
Property of any such secondary or junior lien or
encumbrance. In accordance with the foregoing and
for the purpose of (i) protecting Beneficiary's
security, both of repayment and of value in the
Trust Property, (ii) giving Beneficiary the full
benefit of its bargain and contract with Grantor,
and (iii) keeping the Trust Property free of
subordinate financing liens, Grantor agrees that
if the following provisions of this paragraph
should be deemed a restraint on alienation, that
such provisions are reasonable restraints.
(1) Except for the lien of this Deed of
Trust, the Permitted Exceptions and liens
permitted pursuant to subsection 6.10 of the
Indenture, Grantor shall not further mortgage, nor
otherwise encumber the Trust Property nor create
or suffer to exist any lien, charge or encumbrance
on the Trust Property, or any part thereof,
whether superior or subordinate to the lien of
this Deed of Trust and whether recourse or non-
recourse.
(2) Except as may be permitted pursuant
to the Indenture, including, without limitation,
subsection 6.15 thereof, Grantor shall not make
any Asset Sale.
7. Relationship of Beneficiary and
Grantor. Beneficiary shall in no event be
construed for any purpose to be a partner, joint
venturer, agent or associate of Grantor or of any
beneficiary, tenant, subtenant, operator,
concessionaire or licensee of Grantor in the
conduct of their respective businesses, and
without limiting the foregoing, Beneficiary shall
not be deemed to be such partner, joint venturer,
agent or associate on account of Beneficiary
becoming a mortgagee in possession or exercising
any rights pursuant to this Deed of Trust, any of
the other Security Documents, or otherwise.
8. Maintenance; No Alteration;
Inspection; Utilities. (a) Grantor shall
maintain or cause to be maintained all the
Improvements in good working order and condition,
ordinary wear and tear excepted, and shall cause
to be made all necessary (in the good faith
opinion of management of Grantor) repairs,
renewals, replacements, additions, betterments and
improvements thereto. Grantor shall not commit
any waste of the Improvements and shall not
demolish or materially alter the Improvements
without the prior written consent of Beneficiary.
(b) Beneficiary and any persons
authorized by Beneficiary, at all reasonable times
after reasonable notice, shall have the right to
enter and inspect the Premises and the right to
inspect all work done, labor performed and
materials furnished in and about the Improvements
and the right to inspect and make copies of all
books, contracts and records of Grantor relating
to the Trust Property.
(c) Grantor shall pay or cause to be
paid when due all utility charges which are
incurred for gas, electricity, water or sewer
services furnished to the Premises and all other
assessments or charges of a similar nature,
whether public or private, affecting the Premises
or any portion thereof, whether or not such
assessments or charges are liens thereon.
9. Condemnation/Eminent Domain.
Promptly upon obtaining knowledge of the
institution of any proceedings for the
condemnation of the Trust Property in its
entirety, or any portion thereof, Grantor will
notify Beneficiary of the pendency of such
proceedings. Grantor authorizes Beneficiary, at
Beneficiary's option and in Beneficiary's sole
discretion, as attorney-in-fact for Grantor, to
commence, appear in and prosecute, in
Beneficiary's or Grantor's name, any action or
proceeding relating to any condemnation of the
Trust Property in its entirety, or any portion
thereof. If the Trust Property in its entirety or
any part thereof shall be the subject of
condemnation proceedings, Beneficiary, as
attorney-in-fact for Grantor, shall have the right
to settle or compromise any claim in connection
with such condemnation. If Beneficiary elects not
to participate in such condemnation proceeding,
then Grantor shall, at its expense, diligently
prosecute any such proceeding and shall consult
with Beneficiary, its attorneys and experts and
cooperate with them in any defense of any such
proceedings. All awards and proceeds of
condemnation received by Beneficiary and/or
Grantor shall constitute Trust Moneys which shall
be paid and/or applied in accordance with
Subsection 13.2 of the Indenture.
10. Leases. (a) Grantor shall not
(i) execute an assignment or pledge of any Lease
relating to all or any portion of the Trust
Property other than in favor of Beneficiary or
with Beneficiary's prior written consent or
(ii) without the prior written consent of
Beneficiary, execute any Lease of any of the Trust
Property.
(b) As to any Lease relating to all or
any portion of the Trust Property, Grantor shall:
(i) promptly perform all of the
material provisions of the Lease on the part
of the lessor thereunder to be performed;
(ii) enforce, in accordance with sound
business practice, all of the material
provisions of the Lease on the part of the
lessee thereunder to be performed;
(iii) appear in and defend, in accordance
with sound business practice, any action or
proceeding arising under or in any manner
connected with the Lease or the obligations
of Grantor as lessor or of the lessee
thereunder;
(iv) exercise, within 5 days after
receipt of a request by Beneficiary, any
right to request from the lessee a
certificate with respect to the status
thereof;
(v) promptly deliver to Beneficiary
copies of any notices of default which
Grantor may at any time forward to or receive
from the lessee;
(vi) promptly deliver to Beneficiary a
fully executed counterpart of the Lease; and
(vii) promptly deliver to Beneficiary,
upon Beneficiary's request, an assignment of
the Grantor's interest under such Lease.
(c) Grantor shall deliver to
Beneficiary, within 10 days after receipt of a
request by Beneficiary, a written statement,
certified by Grantor as being true, correct and
complete, containing the names of all lessees and
other occupants of the Trust Property, the terms
of all Leases and the spaces occupied and rentals
payable thereunder, and a list of all Leases which
are then in default, including the nature and
magnitude of the default; such statement shall be
accompanied by credit information with respect to
the lessees and such other information as
Beneficiary may request.
(d) All Leases entered into by Grantor
after the date hereof, if any, and all rights of
any lessees thereunder shall be subject and
subordinate in all respects to the lien and
provisions of this Deed of Trust unless
Beneficiary shall otherwise elect in writing.
(e) As to any Lease now in existence or
subsequently consented to by Beneficiary, Grantor
shall not, without the prior written consent of
Beneficiary, accept a surrender or terminate,
cancel, rescind, supplement, alter, revise, modify
or amend such Lease or permit any such action to
be taken nor shall Grantor accept the payment of
rent more than thirty (30) days in advance of its
due date.
(f) In the event of the enforcement by
Beneficiary of any remedy under this Deed of
Trust, the lessee under each Lease entered into
after the date of this Deed of Trust shall, if
requested by Beneficiary or any other person
succeeding to the interest of Beneficiary as a
result of such enforcement, attorn to Beneficiary
or to such person and shall recognize Beneficiary
or such successor in interest as lessor under the
Lease without change in the provisions thereof;
provided however, that Beneficiary or such
successor in interest shall not be: (i) bound by
any payment of an installment of rent or
additional rent which may have been made more than
30 days before the due date of such installment;
(ii) bound by any amendment or modification to the
Lease made without the consent of Beneficiary or
such successor in interest; (iii) liable for any
previous act or omission of Grantor (or its
predecessors in interest); (iv) responsible for
any monies owing by Grantor to the credit of such
lessee or subject to any credits, offsets, claims,
counterclaims, demands or defenses which the
lessee may have against Grantor (or its
predecessors in interest); (v) bound by any
covenant to undertake or complete any construction
of the Premises or any portion thereof; or (vi)
obligated to make any payment to such lessee other
than any security deposit actually delivered to
Beneficiary or such successor in interest. Each
lessee or other occupant under each Lease entered
into after the date of this Deed of Trust, upon
request by Beneficiary or such successor in
interest, shall execute and deliver an instrument
or instruments confirming such attornment. In
addition, Grantor agrees that each Lease entered
into after the date of this Deed of Trust shall
include language to the effect of subsections (d)-
(f) of this Section.
11. Further Assurances/Estoppel
Certificates. To further assure Beneficiary's
rights under this Deed of Trust, Grantor agrees
upon demand of Beneficiary 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 Trust
Property and a separate assignment of each Lease
in recordable form) as may be required by
Beneficiary to confirm the lien of this Deed of
Trust and all other rights or benefits conferred
on Beneficiary. Grantor, within 5 business days
after request, shall deliver, in form and
substance satisfactory to Beneficiary, a written
statement, duly acknowledged, setting forth the
amount of the Obligations, and whether any
offsets, claims, counterclaims or defenses exist
against the Obligations and certifying as to such
other matters as Beneficiary shall reasonably
request.
12. Beneficiary's Right to Perform. If
Grantor fails to perform any of the covenants or
agreements of Grantor hereunder, Beneficiary,
without waiving or releasing Grantor from any
obligation or default under this Deed of Trust,
may, at any time (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 Grantor to
Beneficiary and the same shall be secured by this
Deed of Trust and shall be a lien on the Trust
Property prior to any right, title to, interest in
or claim upon the Trust Property attaching
subsequent to the lien of this Deed of Trust. No
payment or advance of money by Beneficiary under
this Section shall be deemed or construed to cure
Grantor's default or waive any right or remedy of
Beneficiary.
13. Hazardous Material. (a) Grantor
shall comply with any and all applicable Legal
Requirements governing the discharge and removal
of Hazardous Material, shall pay promptly when due
the costs of removal of any Hazardous Material,
and shall keep the Premises free of any lien
imposed pursuant to such Legal Requirements. In
the event Grantor fails to do so, after notice to
Grantor and the expiration of the earlier of
(i) applicable cure periods hereunder and under
the Indenture, or (ii) the cure period permitted
under the applicable Legal Requirement,
Beneficiary may cause the Premises to be freed
from the Hazardous Material to the extent required
by applicable Legal Requirements, and the cost of
the removal with interest at the Default Rate
shall immediately be due from Grantor to
Beneficiary and the same shall be added to the
Obligations and be secured by this Deed of Trust.
Grantor further agrees that any release or
disposal of Hazardous Materials at the Premises
shall comply with all applicable Legal
Requirements. In addition, Grantor agrees not to
allow the manufacture, storage, transmission,
presence or disposal of any Hazardous Material
over or upon the Premises in violation of
applicable Legal Requirements. Grantor shall give
Beneficiary and its agents and employees access to
the Premises to remove Hazardous Material if
required by applicable Legal Requirements and if
Grantor has failed to so remove after notice.
Grantor agrees to defend, indemnify and hold
Beneficiary free and harmless from and against all
loss, costs, damage and expense (including
attorneys' fees and costs and consequential
damages) Beneficiary may sustain by reason of (i)
the imposition or recording of a lien by any
Governmental Authority with respect to the Trust
Property pursuant to any Legal Requirement
relating to hazardous or toxic wastes or
substances or the removal thereof ("Hazardous
Material Laws"); (ii) claims of any private
parties regarding violations of Hazardous Material
Laws with respect to the Trust Property; (iii)
costs and expenses (including, without limitation,
attorneys' fees and fees incidental to the
securing of repayment of such costs and expenses)
incurred by Grantor or Beneficiary in connection
with the removal of any such lien with respect to
the Trust Property or in connection with Grantor's
or Beneficiary's compliance with any Hazardous
Material Laws with respect to the Trust Property;
and (iv) the assertion against Beneficiary by any
party of any claim in connection with Hazardous
Material with respect to the Trust Property.
(b) For the purposes of this Deed of
Trust, "Hazardous Material" means and includes any
hazardous, nuclear, toxic or dangerous waste,
substance or material defined as such in (or for
purposes of) the Comprehensive Environmental
Response, Compensation, and Liability Act, any so-
called "Superfund" or "Superlien" law, or any
other Legal Requirement regulating, relating to,
or imposing liability or standards of conduct
concerning, any hazardous, nuclear, toxic or
dangerous waste, substance or material, as now or
at any time in effect.
(c) The foregoing indemnification shall
be a recourse obligation of Grantor and shall
survive repayment of the Obligations,
notwithstanding any limitations on recourse which
may be contained herein or in any Security
Documents or the delivery of any satisfaction,
release or release deed, discharge or deed of
reconveyance, or the assignment of this Deed of
Trust by Beneficiary; provided, however, that the
foregoing indemnification shall apply only to
matters arising prior to any taking of possession
of the Premises by Beneficiary or any other person
succeeding to the interest of Beneficiary pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
14. Asbestos. Grantor shall not
install or permit to be installed in the Premises
friable asbestos or any substance containing
asbestos and deemed hazardous by any Legal
Requirement respecting such material, and, with
respect to any such material currently present in
the Premises, shall promptly comply with such
Legal Requirements, at Grantor's expense. If
Grantor shall fail to so comply, Beneficiary may
do whatever is necessary to comply with the
applicable Legal Requirement, and the costs
thereof, with interest at the Default Rate, shall
be immediately due from Grantor to Beneficiary and
the same shall be added to the Obligations and be
secured by this Deed of Trust. Grantor shall give
Beneficiary and its agents and employees, upon
prior notice and at reasonable times, access to
the Premises to remove such asbestos or substances
if required by applicable Legal Requirements and
if Grantor has failed to so remove after notice.
Grantor shall defend, indemnify, and save
Beneficiary harmless from all loss, costs, damages
and expense (including attorneys' fees and costs
and consequential damages) asserted or proven
against Beneficiary by any party, as a result of
the presence of such substances or any removal or
compliance with such Legal Requirements. The
foregoing indemnification shall be a recourse
obligation of Grantor and shall survive repayment
of the Obligations, notwithstanding any limitation
on recourse which may be contained herein or in
any of the Security Documents or the delivery of
any satisfaction, release or release deed,
discharge or deed of reconveyance, or the
assignment of this Deed of Trust by Beneficiary;
provided, however, that the foregoing
indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Beneficiary or any other person
succeeding to the interest of Beneficiary pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
15. Event of Default. The occurrence
of an "Event of Default" (as defined in the
Indenture) shall constitute an Event of Default
hereunder.
16. Remedies. (a) Upon the occurrence
of any Event of Default, in addition to any other
rights and remedies Beneficiary may have pursuant
to the Security Documents, or as provided by law,
and without limitation, (a) if such event is an
Event of Default described in subsections 8.1(ix)
or 8.1(x) of the Indenture, automatically the
Obligations immediately shall become due and
payable, and (b) if such event is any other Event
of Default, by notice to Grantor, Beneficiary may
declare the Obligations to be immediately due and
payable. Except as expressly provided above in
this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly
waived. In addition, upon and during the
continuance of any Event of Default, Beneficiary
may immediately take such action, without notice
or demand, as it deems advisable to protect and
enforce its rights against Grantor and in and to
the Trust 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 Beneficiary may determine,
in its sole discretion, without impairing or
otherwise affecting the other rights and remedies
of Beneficiary:
(i) Beneficiary may, to the extent
permitted by applicable law, (A) institute
and maintain an action of mortgage
foreclosure against all or any part of the
Trust Property, (B) institute and maintain an
action on the Guaranty, (C) sell all or part
of the Trust Property (Grantor expressly
granting to Beneficiary the power of sale),
or (D) take such other action at law or in
equity for the enforcement of this Deed of
Trust or any of the Security Documents as the
law may allow. Beneficiary 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 Beneficiary from the date of
judgment until actual payment is made of the
full amount of the judgment.
(ii) Beneficiary may personally, or by
its agents, attorneys and employees and
without regard to the adequacy or inadequacy
of the Trust Property or any other collateral
as security for the Obligations, enter into
and upon the Trust Property and each and
every part thereof and exclude Grantor and
its agents and employees therefrom without
liability for trespass, damage or otherwise
(Grantor hereby agreeing to surrender
possession of the Trust Property to
Beneficiary upon demand at any such time) and
use, operate, manage, maintain and control
the Trust Property and every part thereof.
Following such entry and taking of
possession, Beneficiary shall be entitled,
without limitation, (x) to lease all or any
part or parts of the Trust Property for such
periods of time and upon such conditions as
Beneficiary 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 Trust Property as Beneficiary
shall deem appropriate as fully as Grantor
might do.
(iii) It is further agreed that if
default be made in the payment of any part of
the Obligations, as an alternative to the
right of foreclosure for the full secured
Obligations after acceleration thereof,
Beneficiary shall have the right to institute
partial foreclosure proceedings with respect
to the portion of said Obligations so in
default, as if under a full foreclosure, and
without declaring the entire secured
Obligations due (such proceeding being
hereinafter referred to as a "partial
foreclosure"), and provided that if a partial
foreclosure sale is consummated as provided
herein, such sale may be made subject to the
continuing lien of this Deed of Trust for the
unmatured portion of the secured Obligations,
but as to such unmatured part, this Deed of
Trust, and the lien hereof, shall remain in
full force and effect just as though no
partial foreclosure sale had been made under
the provisions of this Section.
Notwithstanding the filing of any partial
foreclosure or entry of a decree of sale
therein, Beneficiary may elect at any time
prior to a partial foreclosure sale pursuant
to such decree, to discontinue such partial
foreclosure and to accelerate the Obligations
secured hereby by reason of any uncured Event
of Default upon which such partial
foreclosure was predicated or by reason of
any other Event of Default, and proceed with
full foreclosure proceedings. It is further
agreed that one or more foreclosure sales may
be made pursuant to partial foreclosures
without exhausting the right of full or
partial foreclosure sale for any unmatured
part of the secured Obligations, it being the
purpose to provide for a partial foreclosure
sale of the Obligations secured hereby
without exhausting the power to foreclose for
any other part of the Obligations whether
matured at the time or subsequently maturing,
and without exhausting any right of
acceleration and full foreclosure.
(iv) Beneficiary may direct Trustee to
sell or offer for sale the Trust Property in
such portions, order and parcels as
Beneficiary may determine, with or without
having first taken possession of the same, to
the highest bidder for cash at public
auction. Such sale shall be made at the
courthouse door of the County wherein the
Real Estate (or any of that portion thereof
to be sold) is situated (whether the parts or
parcels thereof, if any, in different
counties are contiguous or not, and without
the necessity of having any personal property
hereby mortgaged present at such sale) on the
first Tuesday of any month between the hours
of 10:00 a.m. and 4:00 p.m. after posting a
written or printed notice or notices of the
place, time and terms of the sale of the
Trust Property for twenty-one (21) days prior
to the date of the sale at the courthouse
door of the county in which the sale is to be
made and at the courthouse door of any other
county in which a portion of the Trust
Property may be situated and filing a copy of
such notice(s) in the office of the county
clerk in each of such counties, and by
serving written notice of the proposed sale
at least twenty-one (21) days preceding the
date of sale by certified mail on Grantor and
on each debtor obligated to pay the
Obligations according to the records of the
Beneficiary. It is agreed that the posting
and transmittal of notices may be performed
by the Trustee, Beneficiary, or by any person
acting for them. The sale shall be
accomplished by following the procedures
permitted or required by Tex. Prop. Code Ann.
51.002 (Vernon 1984), as same may be amended
from time to time, relating to the sale of
real estate and/or by Chapter 9 of the Texas
Uniform Commercial Code relating to the sale
of personal property collateral after default
by a debtor (as said Section and Chapter may
now exist or may hereafter be amended or
succeeded), or by any other present or
subsequent articles or enactments relating to
the same. Nothing contained in this
subsection (iv) shall be construed to limit
in any way Trustee's rights to sell the Trust
Property by private sale if, and to the
extent, that such private sale is permitted
under the laws of the State of Texas or by
public or private sale after entry of
judgment by any court of competent
jurisdiction ordering the same. At any such
sale (i) whether made under power herein
contained, the aforesaid 51.002, the Texas
Uniform Commercial Code, any other legal
requirement or by virtue of any judicial
procedure or any other legal right, remedy or
recourse, it shall not be necessary for
Trustee to have physically present, or to
have constructive possession of, the Trust
Property (Grantor hereby covenanting and
agreeing to deliver to Trustee any portion of
the Trust Property not actually or
constructively possessed by Trustee
immediately upon demand by Trustee), and the
title to and right of possession of any such
property shall pass to the purchaser thereof
as completely as if the same had been
actually present and delivered to purchaser
at such sale, (ii) each instrument of
conveyance executed by Trustee shall contain
a special warranty of title, subject to
Permitted Exceptions, binding upon Grantor,
(iii) each and every recital contained in any
instrument of conveyance made by Trustee
shall be prima facie proof of the truth and
accuracy of the matters recited therein,
including, without limitation, nonpayment of
the Obligations, advertisement and conduct of
such sale in the manner provided herein and
otherwise by law and appointment of any
Substitute Trustee hereunder, (iv) there
shall be a prima facie presumption that any
and all prerequisites to the validity thereof
shall have been performed, (v) the receipt of
Trustee or of such other party or officer
making the sale shall be a sufficient
discharge to the purchaser or purchasers for
his or their purchase money and no such
purchaser or purchasers, or his or their
assigns or personal representatives, shall
thereafter be obligated to see to the
application of such purchase money or be in
any way answerable for any loss,
misapplication or nonapplication thereof,
(vi) to the fullest extent permitted by law,
Grantor shall be completely and irrevocably
divested of all of its right, title,
interest, claim and demand whatsoever, either
at law or in equity, in and to the property
sold and such sale shall be a perpetual bar,
both at law and in equity, against Grantor,
and against any and all other persons
claiming or to claim the property sold or any
part thereof, by, through or under Grantor,
and (vii) to the extent and under such
circumstances as are permitted by law,
Beneficiary may be a purchaser at any such
sale;
(b) The holder of this Deed of Trust,
in any action to foreclose it, shall be entitled
to the appointment of a receiver. In case of a
foreclosure sale, the Real Estate may be sold, at
Beneficiary's election, in one parcel or in more
than one parcel and Beneficiary is specifically
empowered, (without being required to do so, and
in its sole and absolute discretion) to cause
successive sales of portions of the Trust Property
to be held.
(c) In the event of any breach of any
of the covenants, agreements, terms or conditions
contained in this Deed of Trust, and
notwithstanding to the contrary any exculpatory or
non-recourse language which may be contained
herein, Beneficiary shall be entitled to enjoin
such breach and obtain specific performance of any
covenant, agreement, term or condition and
Beneficiary shall have the right to invoke any
equitable right or remedy as though other remedies
were not provided for in this Deed of Trust.
(d) The proceeds of any foreclosure or
sale of the Trust Property, or any portion
thereof, shall be distributed and applied in
accordance with all applicable provisions of the
Indenture.
(e) Following any sale of the Trust
Property, or any part hereof, under the provisions
of this instrument, all persons and parties in
possession of the property sold shall be divested
of any and all interest in and claim to the Trust
Property, and shall be obligated to immediately
vacate the premises, and prior to such vacation
shall be tenants at sufferance of the purchaser of
the property sold and shall be subject to eviction
in an action of forcible detainer; provided, the
provisions of this subparagraph shall be subject
to any agreements made in writing by Beneficiary
with reference to any existing and/or future
leases; provided, further, the purchaser at any
foreclosure sale shall have the option but not the
obligation to affirm any then existing leases or
tenancies or otherwise succeed to the rights of
Grantor thereunder.
17. Right of Beneficiary to Credit
Sale. Upon the occurrence of any sale made under
this Deed of Trust, whether made under the power
of sale or by virtue of judicial proceedings or of
a judgment or decree of foreclosure and sale,
Beneficiary may bid for and acquire the Trust
Property or any part thereof. In lieu of paying
cash therefor, Beneficiary may make settlement for
the purchase price by crediting upon the
Obligations or other sums secured by this Deed of
Trust the net sales price after deducting
therefrom the expenses of sale and the cost of the
action and any other sums which Beneficiary is
authorized to deduct under this Deed of Trust. In
such event, this Deed of Trust, the Guaranty 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.
18. Appointment of Receiver. If an
Event of Default shall have occurred and be
continuing, Beneficiary as a matter of right and
without notice to Grantor, unless otherwise
required by applicable law, and without regard to
the adequacy or inadequacy of the Trust Property
or any other collateral as security for the
Obligations or the interest of Grantor therein,
shall have the right to apply to any court having
jurisdiction to appoint a receiver or receivers or
other manager of the Trust Property, and Grantor
hereby irrevocably consents to such appointment
and waives notice of any application therefor
(except as may be required by law). Any such
receiver or receivers shall have all the usual
powers and duties of receivers in like or similar
cases and all the powers and duties of Beneficiary
in case of entry as provided in this Deed of
Trust, including, without limitation and to the
extent permitted by law, the right to enter into
leases of all or any part of the Trust Property,
and shall continue as such and exercise all such
powers until the date of confirmation of sale of
the Trust Property unless such receivership is
sooner terminated.
19. Extension, Release, etc. (a)
Without affecting the lien or charge of this Deed
of Trust upon any portion of the Trust Property
not then or theretofore released as security for
the full amount of the Obligations, Beneficiary
may, from time to time and without notice, agree
to (i) release any person liable for the
Obligations, (ii) extend the maturity or alter any
of the terms of the Obligations or any guaranty
thereof, (iii) grant other indulgences, (iv)
release or reconvey, or cause to be released or
reconveyed at any time at Beneficiary's option any
parcel, portion or all of the Trust 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. If at any time this Deed of
Trust 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 Deed of Trust until the lien amount
shall equal the principal amount of the
Obligations outstanding.
(b) No recovery of any judgment by
Beneficiary and no levy of an execution under any
judgment upon the Trust Property or upon any other
property of Grantor shall affect the lien of this
Deed of Trust or any liens, rights, powers or
remedies of Beneficiary hereunder, and such liens,
rights, powers and remedies shall continue
unimpaired.
(c) If Beneficiary shall have the right
to foreclose this Deed of Trust, Grantor
authorizes Beneficiary at its option to foreclose
the lien of this Deed of Trust subject to the
rights of any tenants of the Trust Property. The
failure to make any such tenants parties defendant
to any such foreclosure proceeding and to
foreclose their rights will not be asserted by
Grantor as a defense to any proceeding instituted
by Beneficiary to collect the Obligations or to
foreclose the lien of this Deed of Trust.
(d) Unless expressly provided
otherwise, in the event that ownership of this
Deed of Trust and title to the Trust Property or
any estate therein shall become vested in the same
person or entity, this Deed of Trust shall not
merge in such title but shall continue as a valid
lien on the Trust Property for the amount secured
hereby.
20. Assignment of Rents. Grantor
hereby assigns to Beneficiary the Rents and
Additional Rents as further security for the
payment of the Obligations and performance of the
Obligations, and Grantor grants to Beneficiary the
right to enter the Trust Property for the purpose
of collecting the same and to let the Trust
Property or any part thereof, and to apply the
Rents and Additional Rents on account of the
Obligations. The foregoing assignment and grant
is present and absolute and shall continue in
effect until the Obligations are paid in full, but
Beneficiary hereby waives the right to enter the
Trust Property for the purpose of collecting the
Rents and Additional Rents and Grantor shall be
entitled to collect, receive, use and retain the
Rents and Additional Rents; such right of Grantor
to collect, receive, use and retain the Rents and
Additional Rents may be revoked by Beneficiary
upon and during the continuance of any Event of
Default under this Deed of Trust by giving not
less than five days' written notice of such
revocation to Grantor; in the event such notice is
given, Grantor shall pay over to Beneficiary, or
to any receiver appointed to collect the Rents,
any lease security deposits, shall pay monthly in
advance to Beneficiary, or to any such receiver,
the fair and reasonable rental value as determined
by Beneficiary for the use and occupancy of the
Trust Property or such part thereof as may be in
the possession of Grantor or any affiliate of
Grantor, and upon default in any such payment
Grantor and any such affiliate will vacate and
surrender the possession of the Trust Property to
Beneficiary or to such receiver, and in default
thereof may be evicted by summary proceedings or
otherwise. Grantor 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).
21. Trust Funds. All lease security
deposits of the Real Estate held by Grantor shall
be treated as trust funds not to be commingled
with any other funds of Grantor. Within 10 days
after request by Beneficiary, Grantor shall
furnish Beneficiary satisfactory evidence of
compliance with this subsection, together with a
statement of all lease security deposits by
lessees and copies of all Leases not previously
delivered to Beneficiary, which statement shall be
certified by Grantor.
22. Additional Rights. The holder of
any subordinate lien on the Trust Property shall
have no right to terminate any Lease whether or
not such Lease is subordinate to this Deed of
Trust nor shall any holder of any subordinate lien
join 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 Deed of
Trust all subordinate lienholders are subject to
and notified of this provision, and any action
taken by any such lienholder contrary to this
provision shall be null and void. Upon and during
the continuance of any Event of Default,
Beneficiary may, in its sole discretion and
without regard to the adequacy of its security
under this Deed of Trust, apply all or any part of
any amounts on deposit with Beneficiary under this
Deed of Trust 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 Beneficiary
on account of such Default or Event of Default.
23. Changes in Method of Taxation. In
the event of the passage after the date hereof of
any law of any Governmental Authority deducting
from the value of the Premises for the purposes of
taxation any lien thereon, or changing in any way
the laws for the taxation of mortgages or debts
secured thereby for federal, state or local
purposes, or the manner of collection of any such
taxes, and imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby,
Grantor shall, if permitted by applicable law,
assume as an Obligation hereunder the payment of
any tax so imposed until full payment of the
Obligations.
24. Notices. All notices, requests,
demands and other communications hereunder shall
be given in the manner provided in the Indenture.
25. No Oral Modification. This Deed of
Trust may not be changed or terminated orally.
Any agreement made by Grantor and Beneficiary
after the date of this Deed of Trust relating to
this Deed of Trust shall be superior to the rights
of the holder of any intervening or subordinate
lien or encumbrance.
26. Partial Invalidity. In the event
any one or more of the provisions contained in
this Deed of Trust 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 anything to the contrary contained
in this Deed of Trust or in any provisions of the
Obligations or Security Documents, the obligations
of Grantor and of any other obligor under the
Obligations or Security Documents shall be subject
to the limitation that Beneficiary shall not
charge, take or receive, nor shall Grantor or any
other obligor be obligated to pay to Beneficiary,
any amounts constituting interest in excess of the
maximum rate permitted by law to be charged by
Beneficiary.
27. Waiver of Right of Redemption and
Other Rights. (a) Grantor hereby voluntarily and
knowingly releases and waives any and all rights
to retain possession of the Trust Property upon
and during the continuance 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), on its own behalf, on
behalf of all persons claiming or having an
interest (direct or indirectly) by, through or
under each constituent of Grantor and on behalf of
each and every person acquiring any interest in
the Trust Property subsequent to the date hereof,
it being the intent hereof that any and all such
rights of redemption of each constituent of
Grantor 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 Grantor 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 the Beneficiary, 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, Grantor 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 Trust 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 Trust Property from attachment, levy or
sale under execution or exemption from civil
process. To the full extent Grantor may do so,
Grantor agrees that Grantor 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 Deed of Trust before
exercising any other remedy granted hereunder and
Grantor, for Grantor and its successors and
assigns, and for any and all persons ever claiming
any interest in the Trust 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 or
declare due the whole of the secured indebtedness
and marshalling in the event of foreclosure of the
liens hereby created.
28. Remedies Not Exclusive.
Beneficiary shall be entitled to enforce payment
of the Obligations and performance of the
Obligations and to exercise all rights and powers
under this Deed of Trust or under any of the other
Security 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 mortgage, security
agreement, pledge, lien, assignment or otherwise.
Neither the acceptance of this Deed of Trust nor
its enforcement, shall prejudice or in any manner
affect Beneficiary's right to realize upon or
enforce any other security now or hereafter held
by Beneficiary, it being agreed that Beneficiary
shall be entitled to enforce this Deed of Trust
and any other security now or hereafter held by
Beneficiary in such order and manner as
Beneficiary may determine in its absolute
discretion. No remedy herein conferred upon or
reserved to Beneficiary 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 Security
Documents to Beneficiary or to which it may
otherwise be entitled, may be exercised,
concurrently or independently, from time to time
and as often as may be deemed expedient by
Beneficiary. In no event shall Beneficiary, in
the exercise of the remedies provided in this Deed
of Trust (including, without limitation, in
connection with the assignment of Rents to
Beneficiary, or the appointment of a receiver and
the entry of such receiver on to all or any part
of the Trust Property), be deemed a "mortgagee in
possession," and Beneficiary shall not in any way
be made liable for any act, either of commission
or omission, in connection with the exercise of
such remedies.
29. 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 Deed of Trust, Beneficiary shall now or
hereafter hold 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
Grantor 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, Beneficiary may, at its
election, commence or consolidate in a single
foreclosure action all foreclosure proceedings
against all such collateral securing the
Obligations (including the Trust Property), which
action may be brought or consolidated in the
courts of any county in which any of such
collateral is located. Grantor acknowledges that
the right to maintain a consolidated foreclosure
action is a specific inducement to Beneficiary to
extend the Obligations, and Grantor 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. Grantor further agrees that if Beneficiary
shall be prosecuting one or more foreclosure or
other proceedings against a portion of the Trust
Property or against any collateral other than the
Trust Property, which collateral directly or
indirectly secures the Obligations, or if
Beneficiary 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, Beneficiary may commence or
continue foreclosure proceedings and exercise its
other remedies granted in this Deed of Trust
against all or any part of the Trust Property and
Grantor waives any objections to the commencement
or continuation of a foreclosure of this Deed of
Trust 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 Deed of Trust or such other proceedings on
such basis. Neither the commencement nor
continuation of proceedings to foreclose this Deed
of Trust nor the exercise of any other rights
hereunder nor the recovery of any judgment by
Beneficiary in any such proceedings shall
prejudice, limit or preclude Beneficiary'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 Grantor
expressly waives any objections to the
commencement of, continuation of, or entry of a
judgment in such other proceedings or exercise of
any remedies in such proceedings based upon any
action or judgment connected to this Deed of
Trust, and Grantor also waives any right to seek
to dismiss, stay, remove, transfer or consolidate
either such other proceedings or any action under
this Deed of Trust on such basis. It is expressly
understood and agreed that to the fullest extent
permitted by law, Beneficiary 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.
30. Expenses; Indemnification. (a)
Grantor shall pay or reimburse Beneficiary for all
expenses incurred by Beneficiary before and after
the date of this Deed of Trust with respect to any
and all transactions contemplated by this Deed of
Trust including without limitation, the
preparation of any document reasonably required
hereunder or any amendment, modification,
restatement or supplement to this Deed of Trust,
the delivery of any consent, non-disturbance
agreement or similar document in connection with
this Deed of Trust or the enforcement of any of
Beneficiary's rights. Such expenses shall
include, without limitation, all title and
conveyancing charges, recording and filing fees
and taxes, mortgage taxes, intangible personal
property taxes, escrow fees, revenue and tax stamp
expenses, insurance premiums (including title
insurance premiums), title search and title
rundown charges, brokerage commissions, finders'
fees, placement fees, court costs, surveyors',
photographers', appraisers', architects',
engineers', consulting professional's,
accountants' and attorneys' fees and
disbursements. Grantor acknowledges that from
time to time Grantor may receive statements for
such expenses, including without limitation
attorneys' fees and disbursements. Grantor shall
pay such statements promptly upon receipt.
(b) If (i) any action or proceeding
shall be commenced by Beneficiary (including but
not limited to any action to foreclose this Deed
of Trust or to collect the Obligations), or any
action or proceeding is commenced to which
Beneficiary is made a party, or in which it
becomes necessary to defend or uphold the lien of
this Deed of Trust (including, without limitation,
any proceeding or other action relating to the
bankruptcy, insolvency or reorganization of
Grantor and/or any Subsidiary), or in which
Beneficiary is served with any legal process,
discovery notice or subpoena and (ii) in each of
the foregoing instances such action or proceeding
in any manner relates to or arises out of this
Deed of Trust or Beneficiary's acceptance of the
Guaranty, then Grantor will promptly reimburse or
pay to Beneficiary all of the expenses which have
been incurred by Beneficiary with respect to the
foregoing (including reasonable counsel fees and
disbursements), together with interest thereon at
the Default Rate, and any such sum and the
interest thereon shall be a lien on the Trust
Property, prior to any right, or title to,
interest in or claim upon the Trust Property
attaching or accruing subsequent to the lien of
this Deed of Trust, and shall be deemed to be
secured by this Deed of Trust. In any action or
proceeding to foreclose this Deed of Trust, or to
recover or collect the Obligations, the provisions
of law respecting the recovering of costs,
disbursements and allowances shall prevail
unaffected by this covenant.
(c) Grantor shall indemnify and hold
harmless Beneficiary and Beneficiary's affiliates,
and the respective directors, officers, agents and
employees of Beneficiary and its affiliates from
and against all claims, damages, losses and
liabilities (including, without limitation,
reasonable attorneys' fees and expenses) arising
out of or based upon any matter related to this
Deed of Trust, the Trust Property or the
occupancy, ownership, maintenance or management of
the Trust Property by Grantor, including, without
limitation, any claims based on the alleged acts
or omissions of any employee or agent of Grantor;
provided, however, that the foregoing
indemnification shall not apply to claims, damages
and the like arising from the gross negligence or
wilful misconduct of the party seeking
indemnification. This indemnification shall be in
addition to any other liability which Grantor may
otherwise have to Beneficiary.
31. Successors and Assigns. All
covenants of Grantor contained in this Deed of
Trust are imposed solely and exclusively for the
benefit of Beneficiary 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
Beneficiary at any time if in its sole discretion
it deems such waiver advisable. All such
covenants of Grantor shall run with the land and
bind Grantor, the successors and assigns of
Grantor (and each of them) and all subsequent
owners, encumbrances and tenants of the Trust
Property, and shall inure to the benefit of
Beneficiary, its successors and assigns. The word
"Grantor" shall be construed as if it read
"Grantors" whenever the sense of this Deed of
Trust so requires and if there shall be more than
one Grantor, the obligations of the Grantors shall
be joint and several.
32. No Waivers, etc. Any failure by
Beneficiary to insist upon the strict performance
by Grantor of any of the terms and provisions of
this Deed of Trust shall not be deemed to be a
waiver of any of the terms and provisions hereof,
and Beneficiary, notwithstanding any such failure,
shall have the right thereafter to insist upon the
strict performance by Grantor of any and all of
the terms and provisions of this Deed of Trust to
be performed by Grantor. Beneficiary may release,
regardless of consideration and without the
necessity for any notice to or consent by the
holder of any subordinate lien on the Trust
Property, any part of the security held for the
Obligations secured by this Deed of Trust without,
as to the remainder of the security, in anywise
impairing or affecting the lien of this Deed of
Trust or the priority of such lien over any
subordinate lien.
33. GOVERNING LAW, ETC. THIS DEED OF
TRUST SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE
REAL ESTATE IS LOCATED, EXCEPT THAT GRANTOR
EXPRESSLY ACKNOWLEDGES THAT BY ITS TERMS THE
INDENTURE AND THE GUARANTY SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAW, AND FOR PURPOSES OF CONSISTENCY,
GRANTOR AGREES THAT IN ANY IN PERSONAM PROCEEDING
RELATED TO THIS DEED OF TRUST THE RIGHTS OF THE
PARTIES TO THIS DEED OF TRUST 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, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAW.
34. Waiver of Trial by Jury. Grantor
and Beneficiary each hereby irrevocably and
unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this Deed of
Trust and for any counterclaim brought therein.
Grantor hereby waives all rights to interpose any
counterclaim in any suit brought by Beneficiary
hereunder (other than compulsory counterclaims and
other counterclaims that must be interposed in
connection with such suit under applicable law)
and all rights to have any such suit consolidated
with any separate suit, action or proceeding (it
being understood and agreed, however, that Grantor
shall have the right to raise any such claim in a
separate suit, action or proceeding).
35. Certain Definitions. Unless the
context clearly indicates a contrary intent or
unless otherwise specifically provided herein,
words used in this Deed of Trust shall be used
interchangeably in singular or plural form and the
word "Grantor" shall mean "each Grantor or any
subsequent owner or owners of the Trust Property
or any part thereof or interest therein," the word
"Beneficiary" shall mean "Beneficiary or any
successor collateral agent to the Beneficiary,"
the word "person" shall include any individual,
corporation, partnership, trust, unincorporated
association, government, governmental authority,
or other entity, and the words "Trust Property"
shall include any portion of the Trust 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 Deed of Trust are for convenience
of reference only and in no way limit or amplify
the provisions hereof.
36. Security Agreement under Uniform
Commercial Code. (a) It is the intention of the
parties hereto that this Deed of Trust shall
constitute a Security Agreement within the meaning
of the Code. If an Event of Default shall occur
and be continuing under this Deed of Trust, then
in addition to having any other right or remedy
available at law or in equity, Beneficiary 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 Trust
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 Trust Property in accordance with
Beneficiary's rights, powers and remedies with
respect to the real property (in which event the
default provisions of the Code shall not apply).
If Beneficiary shall elect to proceed under the
Code, then five 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 Beneficiary shall include, but not be
limited to, attorneys' fees and legal expenses.
At Beneficiary's request, Grantor shall assemble
the personal property and make it available to
Beneficiary at a place designated by Beneficiary
which is reasonably convenient to both parties.
(b) Grantor and Beneficiary 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 Deed of Trust 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; and (iii) the
addresses of Grantor and Beneficiary are as set
forth on the first page of this Deed of Trust.
(c) Grantor, upon request by Beneficiary
from time to time, shall execute, acknowledge and
deliver to Beneficiary one or more separate
security agreements, in form satisfactory to
Beneficiary, covering all or any part of the Trust
Property and will further execute, acknowledge and
deliver, or cause to be executed, acknowledged and
delivered, any financing statement, affidavit,
continuation statement or certificate or other
document as Beneficiary may request in order to
perfect, preserve, maintain, continue or extend
the security interest under and the priority of
this Deed of Trust and such security instrument.
Grantor further agrees to pay to Beneficiary on
demand all costs and expenses incurred by
Beneficiary in connection with the preparation,
execution, recording, filing and re-filing of any
such document and all reasonable costs and
expenses of any record searches for financing
statements Beneficiary shall reasonably require.
Grantor shall from time to time, on request of
Beneficiary, deliver to Beneficiary an inventory
in reasonable detail of any of the Trust Property
which constitutes personal property. If Grantor
shall fail to furnish any financing or
continuation statement within 10 days after
request by Beneficiary, then pursuant to the
provisions of the Code, Grantor hereby authorizes
Beneficiary, without the signature of Grantor, to
execute and file any such financing and
continuation statements. The filing of any
financing or continuation statements in the
records relating to personal property or chattels
shall not be construed as in any way impairing the
right of Beneficiary to proceed against any
personal property encumbered by this Deed of Trust
as real property, as set forth above.
37. Release Upon Payment and Discharge
of Grantor's Obligations. Beneficiary shall
release this Deed of Trust and the lien hereof by
proper instrument upon payment and discharge of
all Obligations secured hereby (including payment
of reasonable expenses incurred by Beneficiary in
connection with the execution of such release) and
upon full and complete performance of all of the
Obligations. Beneficiary shall otherwise release
this Deed of Trust and the lien hereof in
accordance with the terms of Article XII of the
Indenture.
38. Enforceability; Usury. In no event
shall any provision of this Deed of Trust or any
other instrument evidencing or securing the
Obligations ever obligate Grantor to pay or allow
Beneficiary to collect interest on the Obligations
secured hereby at a rate greater than the maximum
non-usurious rate permitted by applicable law
(herein referred to as the "Highest Lawful Rate"),
or obligate Grantor to pay any taxes, assessments,
charges, insurance premiums or other amounts to
the extent that such payments, when added to the
interest payable on the Obligations, would be held
to constitute the payment by Grantor of interest
at a rate greater than the Highest Lawful Rate;
and this provision shall control over any
provision to the contrary. To the extent the
Highest Lawful Rate is determined by reference to
the laws of the State of Texas, same shall be
determined by reference to the indicated (weekly)
rate ceiling (as defined and described in Texas
Revised Civil Statutes Article 5069-1.04, as
amended) at the applicable time in effect.
Without limiting the generality of the
foregoing, in the event the maturity of all or any
part of the principal amount of the Obligations
shall be accelerated for any reason, then such
principal amount so accelerated shall be credited
with any interest theretofore paid thereon in
advance and remaining unearned at the time of such
acceleration. If, pursuant to the terms of this
instrument or the Obligations, any funds are
applied to the payment of any part of the
principal amount of the Obligations prior to the
maturity thereof, then (a) any interest which
would otherwise thereafter accrue on the principal
amount so paid by such application shall be
canceled, and (b) the Obligations remaining unpaid
after such application shall be credited with the
amount of all interest, if any, theretofore
collected on the principal amount so paid by such
application and remaining unearned at the date of
said application; and if the funds so applied
shall be sufficient to pay in full all the
Obligations, then Beneficiary shall refund to
Grantor all interest theretofore paid thereon in
advance and remaining unearned at the time of such
acceleration. Regardless of any other provision
in this instrument, or in any of the written
evidences of the Obligations, Grantor shall never
be required to pay any unearned interest on the
Obligations or any portion thereof, and shall
never be required to pay interest thereon at a
rate in excess of the Highest Lawful Rate
construed by courts having competent jurisdiction
thereof.
39. Homestead. Grantor represents and
covenants that the Trust Property forms no part
any property owned, used or claimed by Grantor as
a business or residential homestead, or as exempt
from forced sale under the laws of the State of
Texas, and disclaims and renounces all and every
such claim thereto.
40. Substitute Trustee. In case of the
resignation of the Trustee, or the inability
(through death or otherwise), refusal or failure
of the Trustee to act, or at the option of
Beneficiary or the holder(s) of a majority of the
Obligations for any other reason (which reason
need not be stated), a Substitute Trustee may be
named, constituted and appointed by Beneficiary or
the holder(s) of a majority of the Obligations,
without other formality than an appointment and
designation in writing, which appointment and
designation shall be full evidence of the right
and authority to make the same and of all facts
therein recited, and this conveyance shall vest in
the Substitute Trustee the title, powers and
duties herein conferred on the Trustee originally
named herein, and the conveyance of the Substitute
Trustee to the purchaser(s) at any sale of the
Trust Property of any part thereof shall be
equally valid and effective. The right to appoint
a Substitute Trustee shall exist as often and
whenever from any of said causes, the Trustee,
original or Substitute, resigns or cannot, will
not or does not act, or Beneficiary or the
holder(s) of a majority of the Obligations desires
to appoint a new Trustee. No bond shall ever be
required of the Trustee, original or Substitute.
The recitals in any conveyance made by the
Trustee, original or Substitute, shall be accepted
and construed in court and elsewhere as prima
facie evidence and proof of the facts recited, and
no other proof shall be required as to the request
by Beneficiary or the holder(s) of a majority of
the Obligations to the Trustee to enforce this
Deed of Trust, or as to the notice of or holding
of the sale, or as to any particulars thereof, or
as to the resignation of the Trustee, original or
Substitute, or as to the inability, refusal or
failure of the Trustee, original or Substitute, to
act, or as to the election of Beneficiary or the
holder(s) of a majority of the Obligations to
appoint a new Trustee, or as to appointment of a
Substitute Trustee, and all prerequisites of said
sale shall be presumed to have been performed; and
each sale made under the powers herein granted
shall be a perpetual bar against Grantor and the
heirs, personal representatives, successors and
assigns of Grantor. Trustee, original or
substitute, is hereby authorized and empowered to
appoint any one or more persons as attorney-in-
fact to act as Trustee under him and in his name,
place and stead in order to take any actions that
Trustee is authorized and empowered to do
hereunder, such appointment to be evidenced by an
instrument signed and acknowledged by said
Trustee, original or Substitute; and all acts done
by said attorney-in-fact shall be valid, lawful
and binding as if done by said Trustee, original
or Substitute, in person.
41. Indemnification of Trustee. Except
for gross negligence or willful misconduct,
Trustee shall not be liable for any act or
omission or error of judgment. Trustee may rely
on any document believed by him in good faith to
be genuine. All money received by Trustee shall,
until used or applied as herein provided, be held
in trust, and Trustee shall not be liable for
interest thereon. Grantor shall indemnify Trustee
against all liability and expenses that he may
incur in the performance of his duties hereunder
except for gross negligence or willful misconduct.
42. Business or Commercial Purpose.
Grantor warrants that the extension of credit
evidenced by the Obligations secured hereby is
solely for business or commercial purposes, other
than agricultural purposes. Grantor further
warrants that the credit transaction evidenced by
the Obligations is specifically exempted under
Section 226.3(a) of Regulation Z issued by the
Board of Governors of the Federal Reserve System
and Title 12 (Truth in Lending Act) and Section
1603 of Title 15 (General Provisions) of the
Consumer Credit Protection Act and that no
disclosures are required to be given under such
regulations and federal laws in connection with
the above transaction.
43. Final Agreement. In consideration
of the premises and other good and valuable
consideration, the receipt and sufficiency of
which are hereby acknowledged, Grantor hereby
confirms and agrees that this Deed of Trust
(including the schedules hereto), the Securities,
any guarantees of the Securities executed by any
guarantors and all other Loan Documents and loan
papers together constitute a written "loan
agreement" as defined in Section 26.02(a) of the
Texas Business and Commerce Code.
44. Consistency with Other Documents.
If any provision hereof conflicts with any
provisions of the Indenture, then the terms of the
Indenture shall control to the extent of such
conflict.
45. THIS WRITTEN LOAN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES.
This Deed of Trust has been duly
executed by Grantor on the date first above
written.
ATTEST:
KOPPEL STEEL CORPORATION
By: /S/ ELIZABETH B. KELLY
Name: Elizabeth B. Kelly
----------------------------
Title: [Assistant] Secretary
By: /S/ J. R. PARKER
------------------------
Name: John R. Parker
Title: [Vice] President
[SEAL]
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On this 26th day of July, 1995,
personally came John R. Parker and Elizabeth B.
Kelly, to be duly sworn by me, and did depose and
say they executed the foregoing instrument in the
firm name of Koppel Steel Corporation, the
corporation therein mentioned for the purposes
therein mentioned.
STEVEN MAHER
/S/ STEVEN MAHER
NOTARY PUBLIC, State of New York
Notary Public
No. 31-4973136
Qualified in New York County
[Notarial Stamp]
Certificate Filed in New York County
Commission Expires October 15, 1996
SCHEDULE A
DESCRIPTION
PARCEL I:
TRACT 1:
FIELD NOTES of a 39.743 acre tract of land
situated in the John Steele Survey, Abstract No.
227, Chambers County, Texas, and being out of and
a part of a 357.611 acre tract of land called
Tract No. One in a deed dated March 2, 1967, from
Theo Wilburn, et al, to United States Steel
Corporation and recorded in Volume 283 at Page
205, of the Deed Records of Chambers County,
Texas, and being the same tract of land called
40.000 acres in a deed dated February 18, 1982,
from United States Steel Corporation to Hoesch
Tubular Products Company and recorded in Volume
495 at Page 296, of the Deed Records of Chambers
County, Texas. Said 39.743 acre tract of land is
more particularly described by metes and bounds as
follows, to-wit:
NOTE: All bearings are Lambert Grid bearings and
all coordinates refer to the State Plane
Coordinate System, South Central Zone, 1927 Datum,
as defined by Article 5300A of the Revised Civil
Statutes of the State of Texas.
BEGINNING at a 1/2 inch iron rod found for the
Northeast corner of this tract of land, the
Northeast corner of said 40.000 tract of land, and
in the South line of the Continental Oil Company
10 foot right-of-way as described in a deed dated
February 5, 1979, from United States Steel
Corporation to continental Oil Company and
recorded in Volume 432 at Page 328, of the Deed
Records of Chambers County, Texas. From this
BEGINNING corner the Southeast corner of said
357.611 acre tract of land bears South 62 deg. 45
min. 15 sec. East, a distance of 4117.30
3,292,544.95.
THENCE South with the East line of this tract of
land and the East line of said 40.000 acre tract
of land, a distance of 1100.00 feet to a 1/2 inch
iron rod set for the Southeast corner of this
tract of land and the Southeast corner of said
40.000 acre tract of land;
THENCE West with the South line of this tract of
land and the South line of said 40.000 acre tract
of land, at 1267.68 feet the East line of the City
of Baytown City Limits as described in an
Industrial District Agreement dated December 31,
1990, between Hoesch Tubular Products Company and
the City of Baytown, in all a total distance of
1272.47 feet to a 1/2 inch iron rod set for a
corner of this tract of land, a corner of said
40.000 acre tract of land, and a corner of the
said City of Baytown City Limits;
THENCE South 45 deg. 58 min. 03 sec. West, with
the South or Southeast line of this tract of land,
the South or Southeast line of said 40.000 acre
tract of land, and the South or Southeast line of
the City of Baytown City Limits, at 255.89 feet
the East line of said Continental Oil Co. 10 foot
right-of-way, at 269.80 feet the West line of said
Continental Oil Co. 10 foot right-of-way, at
408.00 feet set a 1/2 inch iron rod on line, in
all a total distance of 439.14 feet to a point for
a corner of this tract of land. Said point being
in the North or Northeast edge of water of Cedar
Bayou;
THENCE in a Northwesterly direction with the South
or Southwest line of this tract of land and the
North or Northeast edge of water of Cedar Bayou
the following courses:
North 64 deg. 49 min. 20 sec. West, 113.96
feet;
North 54 deg. 21 min. 07 sec. West, 90.49 feet;
North 63 deg. 08 min. 15 sec. West,
110.51 feet to a point for a corner of
this tract of land. Said point being in
the Northwest line of the City of
Baytown City Limits;
THENCE North 45 deg. 58 min. 03 sec. East, with
the West or Southwest line of this tract of land,
the West or Southwest line of said 40.000 acre
tract of land, and the Northwest line of said City
of Baytown City Limits, at 20.00 feet set a 1/2
inch iron rod on line, at 552.21 feet the West
line of said Continental Oil Co. 10 foot right-of-
way, in all a total distance of 566.12 feet to an
"X" cut in concrete for a corner of this tract of
land, a corner of said 40.000 acre tract of land,
and a corner of said City of Baytown City Limits;
THENCE North with the West line of this tract of
land, the West line of said 40.000 acre tract of
land, the East line of said Continental Oil Co. 10
foot right-of-way, and the West line of said City
of Baytown City Limits, a distance of 860.59 feet
to a 1/2 inch iron rod set for the Northwest
corner of this tract of land, the Northwest corner
of said 40.000 acre tract of land, a corner of
said Continental Oil Co. 10 foot right-of-way, and
the Northwest corner of said City of Baytown City
Limits;
THENCE East with the North line of this tract of
land, the North line of said 40.000 acre tract of
land, the South line of said Continental Oil Co.
10 foot right-of-way, and the North line of said
City of Baytown City Limits, at 24.65 feet set a
1/2 inch iron rod for the West right-of-way line
of a 1.777 acre tract of land conveyed for a 100
foot wide road easement and right of way to Hoesch
Tubular Products by USX Corporation, as amended
July 2, 1990 and recorded in Volume 116 at Page
488 and Volume 116, at Page 493 of the Official
Public Records of Chambers County, Texas, at 80.00
feet the centerline of said 100 foot road right-
of-way, at 135.35 feet set a 1/2 inch iron rod for
the East right-of-way line of said 100 foot road
right-of-way, at 188.75 feet the Northeast corner
of said City of Baytown City Limits, in all a
total distance of 1456.44 feet to the PLACE OF
BEGINNING, containing within said boundaries
39.743 acres of land.
TRACTS 2 and 3: EASEMENT ESTATE
FIELD NOTES of a 1.777 acre tract of land situated
in the John Steele Survey, Abstract No. 227,
Chambers County, Texas, and being out of and a
part of a 357.611 acre tract of land called Tract
No. One, conveyed to United States Steel
Corporation by Theo Wilburn, et al, by deed dated
March 2, 1967 and recorded in Volume 283 at Page
205 of the Deed Records of Chambers County, Texas,
and being that same 1.777 acre tract of land
conveyed for a 100 foot wide road easement right-
of-way to Hoesch Tubular Products Company by USX
Corporation, created by instrument recorded in
Volume 116 at Page 488 as amended July 2, 1990
Volume 116 at Page 493 of the Official Public
Records of Chambers County, Texas. This 1.777
acre tract of land is more particularly described
by metes and bounds as follow, to-wit:
NOTE: All bearings are Lambert Grid bearings and
all coordinates refer to the State Plane
Coordinate System, South Central Zone, 1927 Datum,
as defined by Article 5300A of the Revised Civil
Statutes of the State of Texas.
BEGINNING at a 1/2 inch iron rod set for the
Southwest corner of this tract of land, in the
North line of a called 40 acre tract of land that
was conveyed to Hoesch Tubular Products Company by
United States Steel Corporation by deed dated
February 18, 1982 and recorded in Volume 495 at
Page 296 of the Deed Records of Chambers County,
Texas and in the South line of a 10 foot wide
right-of-way conveyed to Continental Oil Company
by United States Steel Corporation by deed dated
February 5, 1979 and recorded in Volume 432 at
Page 328 of the Deed Records of Chambers County,
Texas, with certain rights assigned to Hoesch
Tubular Products Company by instrument dated
February 18, 1982 and recorded in Volume 496 at
Page 199 of the Deed Records of Chambers County,
Texas. From this BEGINNING corner a 1/2 inch iron
rod found for the Northwest corner of said 40 acre
tract of land bears West a distance of 24.65
3,291.113.33;
THENCE North 25 deg. 25 min. 20 sec. West, with
the West line of this tract of land a distance of
746.42 feet to a 1/2 inch iron rod set for the
Northwest corner of this tract of land and in the
South right-of-way line of Spur No. 55, a State
Highway 240 feet wide;
THENCE in a Northeasterly direction with the North
line of this tract of land and the South right-of-
way line of Spur No. 55, a curve to the left
(concave to the Northwest) having a central angle
of 01 deg. 55 min. 37 sec., a radius of 2984.86
feet, an arc length of 100.39 feet and a chord of
North 59 deg. 26 min. 41 sec. East, 100.38 feet to
a 1/2 inch iron rod set for the Northeast corner
of this tract of land and in the South right-of-
way line of Spur No. 55;
THENCE South 25 deg. 25 min. 20 sec. East, with
the East line of this tract of land a distance of
802.92 feet to a 1/2 inch iron rod set for the
Southeast corner of this tract of land, in the
North line of said 40 acre tract of land and in
the South line of said Continental Oil Company
right-of-way;
THENCE West with the South line of this tract of
land, the North line of said 40 acre tract of land
and the South line of said Continental Oil Company
right-of-way a distance of 110.70 feet to the
PLACE OF BEGINNING, containing with said
boundaries 1.777 acres of land.
Tract 4: Easement Estate created by that certain
Rail Use and Easement Agreement dated December 22,
1981 (Effective February 25, 1982), recorded in
Volume 495, Page 312, of the Deed Records of
Chambers County, Texas, executed by and between
United States Steel Corporation and Hoesch Tubular
Products Company.
Tract 5: Easement Estate created by that certain
Electric Power and Easement Agreement dated
December 22, 1981 (Effective February 25, 1982),
recorded in Volume 495, Page 318, of the Deed
Records of Chambers County, Texas, executed by and
between United States Steel Corporation, USS
Realty Development Division and Hoesch Tubular
Products Company.
Tract 6: Easement Estate created by that certain
Gas, Industrial Waste Disposal and Sewer Line
Easement Agreement dated December 22, 1981
(Effective February 25, 1982), recorded in Volume
495, Page 324, of the Deed Records of Chambers
County, Texas, executed by and between United
States Steel Corporation, USS Realty Development
Division and Hoesch Tubular Products Company.
PARCEL II:
FEE SIMPLE - TRACT NO. 1
FIELD NOTES of a 14.964 acre tract of land
surveyed for NS Group Inc., and situated in the
John Steele Survey, Abstract No. 227, Chambers
County, Texas. This 14.964 acre tract of land is
out of and a part of a 357.611 acre tract of land
described as Tract No. One in a deed dated
March 2, 1967, from Theo Wilburn, et al, to United
States Steel Corporation and recorded in Volume
283 at Page 205 of the Deed Records of Chambers
County, Texas. This 14.964 acre tract of land is
more particularly described by metes and bounds as
follows, to-wit:
NOTE: ALL BEARINGS ARE LAMBERT GRID BEARINGS AND
ALL COORDINATES REFER TO THE STATE PLANE
COORDINATE SYSTEM, SOUTH CENTRAL ZONE, AS DEFINED
BY ARTICLE 5300A OF THE REVISED CIVIL STATUTES OF
THE STATE OF TEXAS, 1927 DATUM. ALL DISTANCES ARE
ACTUAL DISTANCES.
BEGINNING at 3/4 inch iron rod found for the
Northeast corner of this tract of land in the
South line of a 39.743 acre tract of land called
40 acres in a deed dated February 18, 1982, from
United States Steel Corporation to Hoesch Tubular
Products and recorded in Volume 495 at Page 296 of
the Deed Records of Chambers County, Texas. From
this corner an iron rod found for the Southeast
corner of said 40 acre tract bears EAST 673.04
feet. This BEGINNING corner has a State Plane
3,291,871.99;
THENCE SOUTH with the East line of this tract of
land a distance of 850.87 feet to a 5/8 inch iron
rod found for the Southeast corner of this tract
of land in the South line of said 357.611 acre
tract of land and in the North line of a 126.322
acre tract of land conveyed to United States Steel
Corporation by McDonough Co. by deed dated June
30, 1967, and recorded in Volume 288 at Page 394
of the Deed Records of Chambers County, Texas.
From this corner an iron rod found for the
Northeast corner of said 126.322 acre tract of
land bears North 88 deg. 12 min. 00 sec. East,
1318.29 feet;
THENCE South 88 deg. 12 min. 00 sec. West, with
the South line of this tract, the South line of
said 357.611 acre tract and the North line of said
126.322 acre tract of land, at 642.53 feet set a
1/2 inch iron rod in line, in all a total distance
of 662.53 feet to a point for the Southwest corner
of this tract of land on the East bank of Cedar
Bayou;
THENCE in a Northerly direction with the West line
of this tract and the East bank of Cedar Bayou the
following courses:
North 14 deg. 05 min. 17 sec. West, 114.24
feet;
North 03 deg. 06 min. 42 sec. East, 24.34
feet;
North 14 deg. 34 min. 01 sec. East, 37.54
feet;
North 28 deg. 23 min. 23 sec. West, 53.66
feet;
North 27 deg. 42 min. 31 sec. West, 219.82
feet;
North 55 deg. 09 min. 34 sec. East, 11.27
feet;
North 31 deg. 25 min. 43 sec. West, 70.24
feet;
South 62 deg. 57 min. 57 sec. West, 13.86
feet;
North 56 deg. 13 min. 12 sec. West, 43.99
feet;
North 12 deg. 38 min. 29 sec. West, 48.54
feet;
North 45 deg. 10 min. 35 sec. West, 30.09
feet to a point for the Northwest corner of
this tract of land and the Southwest corner
of the Hoesch 40 acre tract of land;
THENCE North 45 deg. 58 min. 03 sec. East, with
the Northwest line of this tract and the Southeast
line of said 40 acre tract, at 30.52 feet found a
1/2 inch iron rod in line, in all a total distance
of 439.24 feet to a 5/8 inch iron rod found for
the most Northern Northwest corner of this tract
of land and a corner of said 40 acre tract of
land;
THENCE EAST with the North line of this tract and
the South line of said 40 acre tract, a distance
of 599.43 feet to the PLACE OF BEGINNING,
containing within said boundaries 14.964 acres of
land.
EASEMENT ESTATE: TRACT NO. 2
FIELD NOTES of the centerline of an existing road
surveyed for NS Group, Inc., and situated in the
John Steele Survey, Abstract No. 227, Chambers
County, Texas. This road is out of and a part of
a 357.611 acre tract called Tract No. One that was
conveyed to United Steel Corporation by Theo
Wilburn, et al by deed dated March 2, 1967, and
recorded in Volume 283 at Page 205 of the Deed
Records of Chambers County, Texas, and being out
of and a part of a 126.322 tract of land conveyed
to United States Steel Corporation by McDonough
Co., by deed dated June 30, 1967, and recorded in
Volume 288 at Page 394 of the Deed Records of
Chambers County, Texas. This centerline is more
particularly described by metes and bounds as
follows, to-wit:
NOTE: ALL BEARINGS ARE LAMBERT GRID BEARINGS AND
ALL COORDINATES REFER TO THE STATE PLANE
COORDINATE SYSTEM, SOUTH CENTRAL ZONE, AS DEFINED
BY ARTICLE 5300A OF THE REVISED CIVIL STATUTES OF
THE STATE OF TEXAS, 1927 DATUM. ALL DISTANCES ARE
ACTUAL DISTANCES.
BEGINNING at a point in the center of this
existing road and in the West right-of-way line of
f.M Highway No. 1405, 300 foot right-of-way. From
this point a 1-1/4 inch galvanized iron pipe found
at the intersection of the West right-of-way line
of Highway No. 1405 with the South line of said
357.611 acre tract of land bears South 03 deg. 09
min. 06 sec. East, 26.49 feet. This BEGINNING
point has a State Plane Coordinate Value
3,296,043.92;
THENCE South 85 deg. 32 min. 52 sec. West, with
the centerline of this existing road, at 2856.95
feet cross the West line of said 357.611 acre
tract and the East line of said 126.322 acre tract
of land, in all a total distance of 3659.65 feet
to a point for a PI in the centerline of this
road;
THENCE with the centerline of this road the
following courses:
South 86 deg. 25 min. 19 sec. West, 100.97
feet;
North 78 deg. 44 min. 28 sec. West, 98.37
feet;
North 60 deg. 13 min. 09 sec. West, 97.07
feet;
North 41 deg. 24 min. 14 sec. West, 98.23
feet;
North 38 deg. 52 min. 18 sec. West, at 93.33
feet cross the North line of said 126.322
acre tract and the South line of said 357.611
acre tract, in all a total distance of 99.24
feet;
North 54 deg. 55 min. 05 sec. West, 96.98
feet;
South 87 deg. 45 min. 01 sec. West, 35.71
feet to a point for the END of this
centerline in the East line of a 14.964 acre
tract of land surveyed this day. A 5/8 inch
iron rod found for the Southeast corner of
said 14.964 acre tract of land bears SOUTH
62.85 feet.
SCHEDULE B
EXCLUDED PROPERTY
a) Any and all Collateral (as defined
in that certain Revolving Credit, Guaranty and
Security Agreement dated as of July 28, 1995 by
and between Newport Steel Corporation, Koppel
Steel Corporation and Imperial Adhesives, Inc., as
borrowers, NS Group, Inc., Erlanger Tubular
Corporation, Northern Kentucky Air, Inc. and
Northern Kentucky Management, Inc., as guarantors,
The Bank of New York Commercial Corporation, as
Lender, as ACM Agent and as Co-Agent, and PNC Bank
Ohio, National Association, as Lender and as Co-
Agent, and other lenders parties thereto).
b) Any and all intellectual property
rights and interests, including, without
limitation, any and all trade names, trade marks,
copyrights, trade secrets and patents.
c) Any and all vehicles and rolling
stock.
d) Any and all leased Equipment if and
to the extent the terms and conditions of the
applicable lease documentation prohibit, restrict
or require consent in connection with the creation
of liens and security interests with respect to
such Equipment.
e) Any and all general intangibles.
f) Stripper Crane subject to Contract
for Lease and Rent dated September 6, 1977 between
City of Wilder, Kentucky and Interlake, Inc.,
recorded at Misc. Book 82, page 401, and Sublease
dated April 15, 1981 between Interlake, Inc. and
Newport Steel Corporation, recorded at Misc. Book
95, page 101, provided, however, that such
Stripper Crane shall case to be Excluded Property
at such time (if ever) as all consents required in
connection with the granting of liens and security
interests with respect to such Stripper Crane
under such Lease and Sublease have been obtained.
g) Any and all Equipment described in
a certain Security Agreement, dated as of February
13, 1992, together with all exhibits, supplements,
addenda and amendments thereto in existence or
effect on the date hereof or hereafter.
Recording requested by, and
when recorded return to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
ATTN: F. Robert Wheeler, Jr., Esq.
LEASEHOLD MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
from
ERLANGER TUBULAR CORPORATION, Mortgagor
to
THE HUNTINGTON NATIONAL BANK,
as Trustee and Collateral Agent, Mortgagee
DATED AS OF JULY 28, 1995
TABLE OF CONTENTS
Background . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . 2
1. Warranty of Title . . . . . . . . . . . . . . . . . 7
2. Payment and Performance of Obligations. . . . . . . 8
3. Requirements. . . . . . . . . . . . . . . . . . . . 8
4. Payment of Taxes and Other Impositions. . . . . . . 9
5. Insurance . . . . . . . . . . . . . . . . . . . . . 11
6. Restrictions on Liens, Encumbrances and
Sales . . . . . . . . . . . . . . . . . . . . . . . 15
7. Relationship of Mortgagee and Mortgagor . . . . . . 16
8. Maintenance; No Alteration; Inspection;
Utilities . . . . . . . . . . . . . . . . . . . . . 16
9. Condemnation/Eminent Domain . . . . . . . . . . . . 16
10. Leases. . . . . . . . . . . . . . . . . . . . . . . 17
11. Further Assurances/Estoppel
Certificates. . . . . . . . . . . . . . . . . . . . 19
12. Mortgagee's Right to Perform. . . . . . . . . . . . 19
13. Hazardous Material. . . . . . . . . . . . . . . . . 19
14. Asbestos. . . . . . . . . . . . . . . . . . . . . . 21
15. Event of Default. . . . . . . . . . . . . . . . . . 21
16. Remedies. . . . . . . . . . . . . . . . . . . . . . 22
17. Right of Mortgagee to Credit Sale . . . . . . . . . 25
18. Appointment of Receiver . . . . . . . . . . . . . . 26
19. Extension, Release, etc.. . . . . . . . . . . . . . 26
20. Assignment of Rents . . . . . . . . . . . . . . . . 27
21. Trust Funds . . . . . . . . . . . . . . . . . . . . 28
22. Additional Rights . . . . . . . . . . . . . . . . . 28
23. Changes in Method of Taxation . . . . . . . . . . . 28
24. Notices . . . . . . . . . . . . . . . . . . . . . . 28
25. No Oral Modification. . . . . . . . . . . . . . . . 29
26. Partial Invalidity. . . . . . . . . . . . . . . . . 29
27. Waiver of Right of Redemption and Other
Rights. . . . . . . . . . . . . . . . . . . . . . . 29
28. Remedies Not Exclusive. . . . . . . . . . . . . . . 30
29. Multiple Security . . . . . . . . . . . . . . . . . 31
30. Expenses; Indemnification . . . . . . . . . . . . . 32
31. Successors and Assigns. . . . . . . . . . . . . . . 33
32. No Waivers, etc.. . . . . . . . . . . . . . . . . . 34
33. Governing Law, etc. . . . . . . . . . . . . . . . . 34
34. Waiver of Trial by Jury . . . . . . . . . . . . . . 34
35. Certain Definitions . . . . . . . . . . . . . . . . 34
36. Security Agreement under Uniform
Commercial Code . . . . . . . . . . . . . . . . . . 35
37. Release Upon Payment and Discharge of
Mortgagor's Obligations . . . . . . . . . . . . . . 36
38. Consistency with Other Documents. . . . . . . . . . 36
39. Mortgaged Lease Provisions. . . . . . . . . . . . . 36
SCHEDULES
Schedule A - Description of Real Property
Schedule B - Description of Exluded Property
LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
THIS LEASEHOLD MORTGAGE, ASSIGNMENT OF
RENTS AND LEASES AND SECURITY AGREEMENT, dated as
of July 28, 1995 is made by ERLANGER TUBULAR
CORPORATION, an Oklahoma corporation
("Mortgagor"), whose address is 5610 Bird Creek
Avenue, Catoosa, Oklahoma 74015, to THE HUNTINGTON
NATIONAL BANK, as Trustee (in such capacity, the
"Trustee") under the Indenture referred to below,
as collateral agent ("Mortgagee"), whose mailing
address is 540 Madison Avenue, Covington, Kentucky
41011. 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. Mortgagor is the owner of a
leasehold estate affecting the parcel(s) of real
property described on Schedule A attached (such
real property, together with all of the buildings,
improvements, structures and fixtures now or
subsequently located thereon (the "Improvements"),
being collectively referred to as the "Real
Estate") pursuant to that certain Lease Agreement
dated as of December 1, 1980 by and between the
City of Tulsa - Rogers County Port Authority, as
lessor, and Erlanger & Company, Inc., as lessee, a
memorandum of which was recorded on January 27,
1981 in Book 593, Page 610 of the Rogers County,
Oklahoma public records; as amended by a First
Amendment to Lease Agreement dated July 1, 1981, a
memorandum of which was recorded on June 16, 1982
in Book 625, Page 73 of said public records; as
affected by an Assignment of Lease dated as of
June 30, 1986 by and between Erlanger and Company,
Inc. and Newport Steel Corporation, a copy of
which was recorded on July 18, 1986 in Book 736,
Page 287 of said public records; as further
amended by an Amendment of Lease Agreement dated
as of October 5, 1994, a copy of which was
recorded on , in Book , Page
of said public records; as further affected by
an Assignment of Lease as of July 28, 1995 by and
between NS Group, Inc. (f/k/a Newport Steel
Corporation) and Mortgagor, a copy of which will
be recorded prior to the recording hereof and as
further amended by a Third Amendment of Lease
Agreement dated as of July 28, 1995, a copy of
which will be recorded prior to the recording
hereof (the "Mortgaged Lease").
B. Mortgagor is a wholly owned
subsidiary of NS Group, Inc., a Kentucky
corporation (the "Company") and is a Recourse
Subsidiary (as defined in the Indenture referred
to below).
C. The Company and Mortgagee are
parties to that Indenture dated as of July 28,
1995 (as the same may be amended, modified or
otherwise supplemented from time to time, the
"Indenture"; capitalized terms not defined herein
shall have the meanings ascribed thereto in the
Indenture) for the benefit of Holders of 13.5%
Senior Secured Notes due 2003 in the aggregate
principal amount of $125,000,000.00 (the
"Securities") issued by the Company.
D. It is a condition precedent to the
purchase of the Securities from the Company that
the Mortgagor shall have (i) executed and
delivered that certain Guaranty of even date
herewith in favor of Mortgagee (the "Guaranty")
and (ii) executed and delivered this Mortgage to
Mortgagee for the ratable benefit of the Holders
in order to secure Mortgagor's obligations under
the Guaranty. References in this Mortgage to the
"Default Rate" shall mean the interest rate
payable with respect to the Securities plus two
percent (2%) per annum.
E. It is a condition precedent to the
purchase of the Securities from the Company that
the Mortgagor shall have executed and delivered
that certain Subsidiary Security Agreement (the
"Subsidiary Security Agreement") of even date
herewith in favor of Mortgagee, which Subsidiary
Security Agreement shall grant Mortgagee a
security interest in and to certain personal
property now or subsequently used in connection
with the operation of the Real Estate.
NOW, THEREFORE, in consideration of the
premises and to induce the Mortgagee to enter into
the Indenture and to induce the Holders to
purchase the Securities from the Company, the
Mortgagor hereby agrees with the Mortgagee, for
the ratable benefit of the Holders, as follows:
Granting Clauses
For good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, Mortgagor agrees that to secure all
of Mortgagor's obligations and liabilities under
the Guaranty and all other obligations and
liabilities of the Mortgagor to the Trustee, the
Mortgagee and the Holders (including, without
limitation, interest accruing after the maturity
of the Securities and interest accruing after the
filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or
like proceeding, relating to the Mortgagor,
whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding
and interest, to the extent permitted by law, on
the unpaid interest), whether direct or indirect,
absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may
arise under, out of, or in connection with, the
Indenture, the Securities, the Guaranty, this
Mortgage, the other Security Documents or any
other document made, delivered or given in
connection therewith, in each case whether on
account of principal, interest, fees, indemnities,
costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel
to the Trustee and the Mortgagee that are required
to be paid by the Mortgagee pursuant to the terms
of the Indenture, the Guaranty or this Mortgage or
any other Security Document) (collectively, the
"Obligations").
MORTGAGOR BARGAINS, SELLS, MORTGAGES, WARRANTS,
CONVEYS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER
AND BY THESE PRESENTS DOES HEREBY BARGAIN, SELL,
MORTGAGE, WARRANT, CONVEY, GRANT, ASSIGN, TRANSFER
AND SET OVER UNTO MORTGAGEE FOR THE RATABLE
BENEFIT OF THE HOLDERS AND HEREBY GRANTS TO
MORTGAGEE FOR THE RATABLE BENEFIT OF THE HOLDERS A
CONTINUING SECURITY INTEREST IN AND TO ALL OF THE
FOLLOWING:
(A) all right, title and interest of
Mortgagor in and to the leasehold estate
created under and by virtue of the Mortgaged
Lease, any interest in any fee, greater or
lesser title to the Real Estate that
Mortgagor may own or hereafter acquire
(whether acquired pursuant to a right or
option, if any, contained in the Mortgaged
Lease or otherwise), all options, privileges
and rights of Mortgagor under the Mortgaged
Lease (including all rights of use, occupancy
and enjoyment) and any amendments,
supplements, extensions, renewals,
restatements, replacements and modifications
thereof (including, without limitation,
(i) the right to give consents, (ii) the
right, if any, to renew or extend the
Mortgaged Lease for succeeding term or terms
and (iii) the right, if any, to purchase the
Real Estate);
(B) all right, title and interest
Mortgagor now has or may hereafter acquire in
and to the Improvements or any part thereof
(whether owned in fee by Mortgagor or held
pursuant to the Mortgaged Lease or otherwise)
and all the estate, right, title, claim or
demand whatsoever to Mortgagor, in possession
or expecting, 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, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water
courses, water and riparian rights,
development rights, air rights, mineral
rights and all estates, rights, titles,
interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging,
relating or appertaining to the Real Estate,
and any reversions and remainders 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 right, title and interest of
Mortgagor in and to all of the fixtures,
chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings
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 or used or usable in any way in
connection with any operation or letting of
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 mortgage,
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 (other than the Mortgaged
Lease), 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 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) all right, title and interest of
Mortgagor in and to all trade names, trade
marks, logos, copyrights, good will and books
and records relating to or used in connection
with the operation of the Real Estate or the
Equipment or any part thereof; all right,
title and interest of Mortgagor in and to all
general intangibles related to the operation
of the Improvements now existing or hereafter
arising;
(H) all right, title and interest of
Mortgagor in and to 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 any such insurance policies and 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 otherwise following and during the
continuance of an Event of Default; and all
right, title and interest of Mortgagor in and
to 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, subject to the provisions relating
to condemnation generally set forth below;
(I) 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 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;
(J) all right, title and interest of
Mortgagor in and to any and all monies now or
subsequently on deposit for the payment of
real estate taxes or special assessments
against the Real Estate or for the payment of
premiums on insurance policies covering the
foregoing property or otherwise on deposit
with or held by Mortgagee as provided in this
Mortgage; all capital, operating, reserve or
similar accounts held by or on behalf of
Mortgagor and related to the operation of the
Mortgaged Property, whether now existing or
hereafter arising and all monies held in any
of the foregoing accounts and any
certificates or instruments related to or
evidencing such accounts;
(K) all right, title and interest of
Mortgagor in and to all accounts and revenues
arising from the operation of the
Improvements including, without limitation,
(i) any right to payment now existing or
hereafter arising for rental of hotel rooms
or other space or for services rendered,
whether or not yet earned by performance,
arising from the operation of the
Improvements or any other facility on the
Mortgaged Property and (ii) all rights to
payment from any consumer credit-charge card
organization or entity including, without
limitation, payments arising from the use of
the American Express Card, the Visa Card, the
Carte Blanche Card, the Mastercard or any
other credit card, including those now
existing or hereafter created, substitutions
therefor, proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange,
transfer, collection or other disposition or
substitution thereof and any and all of the
foregoing and proceeds therefrom
(collectively, the "Additional Rents"); and
(L) all proceeds, both cash and
noncash, of the foregoing;
excluding, however, notwithstanding any
provision set forth in the foregoing clauses (A)
through (L), the property described on Schedule B
attached hereto and incorporated herein by
reference (collectively, the "Excluded Property")
(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 (E), excluding the
Excluded Property, are collectively referred to as
the "Premises", and those described in the
foregoing clauses (A) through (L), excluding the
Excluded Property, are collectively referred to as
the "Mortgaged Property").
All of the Mortgaged Property
hereinabove described, real, personal and mixed,
whether affixed or annexed to the Real Estate or
not and all rights hereby conveyed and mortgaged
are intended so to be as a unit and are hereby
understood, agreed and declared, to the maximum
extent permitted by law, to form a part and parcel
of the Real Estate and to be appropriated to the
use of the Real Estate, and shall be for the
purposes of this Mortgage deemed to be real estate
and conveyed and mortgaged hereby; provided,
however, as to any of the property aforesaid which
does not so form a part and parcel of the Real
Estate or does not constitute a "fixture" (as
defined in the Uniform Commercial Code of Oklahoma
(the "Code")), this Mortgage is hereby deemed to
also be a Security Agreement under the Code for
purposes of granting a security interest in such
property, which Mortgagor hereby grants to
Mortgagee, as Secured Party (as defined in the
Code), as more particularly provided below in this
Mortgage.
TO HAVE AND TO HOLD the Mortgaged
Property and the rights and privileges hereby
mortgaged, together with the right to retain
possession of the Mortgaged Property upon and
during the continuance of an Event of Default
hereunder, unto Mortgagee, its successors and
assigns for the uses and purposes set forth, until
the Obligations are fully paid and performed. The
maximum aggregate principal amount secured hereby
shall not exceed at any one time $1,300,000.00.
Terms and Conditions
Mortgagor further represents, warrants,
covenants and agrees with Mortgagee as follows:
1. Warranty of Title. Mortgagor
represents and warrants (i) that Mortgagor has
title to the leasehold estate in the Real Estate
pursuant to the Mortgaged Lease, Mortgagor has
good title to the rest of the Mortgaged Property,
and Mortgagor has a right to mortgage the same,
(ii) that the Mortgaged Property is subject only
to matters of record, the Mortgaged Lease, that
certain Lease Agreement dated as of June 9, 1967
by and between the City of Tulsa, as lessor, and
the City of Tulsa - Rogers County Port Authority,
as lessee, a copy of which was recorded on April
5, 1977 in Book 514, Page 387 of the Rogers
County, Oklahoma public records; as amended by an
Amended Lease Agreement dated of September 26,
1969, a copy of which was recorded on April 15,
1971 in Book 440, Page 587 of said public records;
as further amended by an Amended Lease Agreement
dated as of June 22, 1971, a copy of which was
recorded on November 28, 1973 in Book 472, Page
284 of said public records and as further amended
by a Third Amendment to Lease dated as of May 20,
1976, a copy of which was recorded on August 26,
1976 in Book 505, Page 1 of said public records
(the "Prime Lease"), this Mortgage, 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
liens permitted pursuant to subsection 6.10 of the
Indenture (collectively, the "Permitted
Exceptions"), (iii) that Mortgagor shall warrant
and defend the lien thereon granted or intended to
be granted by this Mortgage against all persons
and entities, excepting, however, the Permitted
Exceptions, (iv) that the Mortgaged Lease is in
full force and effect and Mortgagor is the holder
of the lessee's or tenant's interest thereunder,
(v) that the Mortgaged Lease has not been amended,
supplemented or otherwise modified, except as
specifically described herein, (vi) that Mortgagor
has paid all rents and other charges to the extent
due and payable, is not in default under the
Mortgaged Lease, has received no notice of default
from the lessor thereunder which default remains
uncured and knows of no material default by the
lessor thereunder, and (vii) that the granting of
this Mortgage does not violate the terms of the
Mortgage Lease nor is any consent of the lessor
under the Mortgaged Lease required to be obtained
in connection with the granting of this Mortgage
unless such consent has been obtained.
2. Payment and Performance of
Obligations. Mortgagor shall pay the Obligations
at the times and places and in the manner
specified in the Guaranty and shall perform all
the Obligations.
3. Requirements. (a) Mortgagor shall
comply with, or cause to be complied with, and
conform to all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees,
rules, regulations and requirements, and
irrespective of the nature of the work to be done,
of each of the United States of America, any State
and any municipality, local government or other
political subdivision thereof and any agency,
department, bureau, board, commission or other
instrumentality of any of them, now existing or
subsequently created (collectively, "Governmental
Authority") which has jurisdiction over the
Mortgaged Property, except where the failure to so
comply with any of the foregoing would not have a
Material Adverse Effect on the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, and 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 the
failure to so comply with any of the foregoing
would not adversely affect the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole. All
present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules,
regulations and requirements of every Governmental
Authority applicable to Mortgagor or to any of the
Mortgaged Property and all covenants,
restrictions, and conditions which now or later
may be applicable to any of the Mortgaged Property
are collectively referred to as the "Legal
Requirements".
(b) Mortgagor (as opposed to the lessor
under the Mortgaged Lease or any other party)
shall not by act or omission impair the integrity
of any of the Real Estate as a single zoning lot
separate and apart from all other premises.
Mortgagor represents, to the best of its actual
knowledge, that each parcel of the Real Estate
constitutes a legally subdivided lot, in
compliance with all subdivision laws and similar
Legal Requirements. Any act or omission by
Mortgagor which would result in a violation of any
of the provisions of this subsection shall be
void.
4. Payment of Taxes and Other
Impositions. (a) Promptly when due, Mortgagor
shall pay and discharge all taxes of every kind
and nature (including, without limitation, all
real and personal property, income, franchise,
withholding, transfer, gains, profits and gross
receipts taxes), all charges for any easement or
agreement maintained for the benefit of any of the
Mortgaged Property, all general and special
assessments, levies, permits, inspection and
license fees, all water and sewer rents and
charges 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 Mortgaged Property, 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 as the "Impositions").
Upon request by Mortgagee, Mortgagor shall deliver
to Mortgagee (i) original or copies of receipted
bills and cancelled checks evidencing payment of
such Imposition if it is a real estate tax or
other public charge and (ii) evidence acceptable
to Mortgagee showing the payment of any other 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 to 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 Mortgage,
and (ii) payable on demand by Mortgagor to
Mortgagee together with interest at the Default
Rate as set forth above.
(c) Mortgagor shall not claim, demand
or be entitled to receive any credit or credits
toward the satisfaction of this Mortgage or on any
interest payable thereon for any taxes assessed
against the Mortgaged Property or any part
thereof, and shall not claim any deduction from
the taxable value of the Mortgaged Property by
reason of this Mortgage if any such claim would
adversely affect the interest of Mortgagee.
(d) Mortgagor shall have the right
before any delinquency occurs to contest or object
in good faith to the amount or validity of any
Imposition by appropriate legal proceedings, but
such right shall not be deemed or construed in any
way as relieving, modifying, or extending
Mortgagor's covenant to pay any such Imposition at
the time and in the manner provided in this
Section unless (i) Mortgagor has given prior
written notice to Mortgagee of Mortgagor's intent
so to contest or object to an Imposition,
(ii) Mortgagor shall demonstrate to Mortgagee's
satisfaction that the legal proceedings shall
operate conclusively to prevent the sale of the
Mortgaged Property, or any part thereof, to
satisfy such Imposition prior to final
determination of such proceedings and (iii)
Mortgagor shall furnish a good and sufficient bond
or surety as requested by and reasonably
satisfactory to Mortgagee in the amount of the
Impositions which are being contested plus any
interest and penalty which may be imposed thereon
and which could become a lien against the Real
Estate or any part of the Mortgaged Property.
(e) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default (as defined
below), shall be entitled to require Mortgagor to
pay monthly in advance to Mortgagee the equivalent
of 1/12th of the estimated annual Impositions.
Mortgagee may commingle such funds with its own
funds and Mortgagor shall not be entitled to
interest thereon.
5. Insurance. (a) Mortgagor shall
maintain or cause to be maintained on all of the
Premises
(i) property insurance against loss or
damage by (A) fire, lightning, windstorm,
tornado, water damage and by such other
further risks and hazards as now are or
subsequently may be covered by an "all risk"
policy or a fire policy covering "special"
causes of loss, which policy shall include
building ordinance law endorsements and shall
be automatically reinstated after each loss,
and (B) flood and earthquake in annual
aggregates of $25,000,000 for flood and
$50,000,000 for earthquake;
(ii) comprehensive general liability
insurance under a policy covering all claims
for personal injury, bodily injury or death,
or property damage occurring on, in or about
the Premises in an amount not less than
$10,000,000 combined single limit with
respect to injury and property damage
relating to any one occurrence plus such
excess limits as Mortgagee shall reasonably
request from time to time;
(iii) when and to the extent reasonably
required by Mortgagee, insurance against loss
or damage by any other risk commonly insured
against by persons occupying or using like
properties in the locality or localities in
which the Real Estate is situated;
(iv) insurance against rent loss, extra
expense or business interruption (and/or soft
costs, in the case of new construction), if
applicable, in amounts reasonably
satisfactory to Mortgagee, but not less than
one year's gross rent or gross income;
(v) during the course of any
construction or repair of Improvements,
comprehensive general liability insurance
(including coverage for elevators and
escalators, if any). The policy shall
provide coverage for independent contractors
and completed operations. The completed
operations coverage shall stay in effect for
two years after construction of any
Improvements has been completed. The policy
shall provide coverage on an occurrence basis
against claims for personal injury, such
insurance to afford immediate minimum
protection to a limit of not less than that
required by Mortgagee with respect to
personal injury, bodily injury or death to
any one or more persons or damage to
property;
(vi) during the course of any
construction or repair of the Improvements,
workers' compensation insurance (including
employer's liability insurance) for all
employees of Mortgagor engaged on or with
respect to the Premises in such amounts as
are reasonably satisfactory to Mortgagee, but
in no event less than the limits established
by law;
(vii) during the course of any
construction, addition, alteration or repair
of the Improvements, builder's risk completed
value form insurance against "all risks of
physical loss," including collapse, water
damage, flood and earthquake and transit
coverage, during construction or repairs of
the Improvements, with deductibles reasonably
approved by Mortgagee, in nonreporting form,
covering the total value of work performed
and equipment, supplies and materials
furnished (with an appropriate limit for soft
costs in the case of construction);
(viii) boiler and machinery property
insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator
equipment and escalator equipment, provided
the Improvements contain equipment of such
nature, and insurance against rent, extra
expense, business interruption and soft
costs, if applicable, arising from any such
breakdown, in such amounts as are reasonably
satisfactory to Mortgagee but not less than
the lesser of $1,000,000 or 10% of the value
of the Improvements;
(ix) if any portion of the Premises are
located in an area identified as a special
flood hazard area by the Federal Emergency
Management Agency or other applicable agency,
flood insurance in an amount reasonably
satisfactory to Mortgagee, but in no event
less than the maximum limit of coverage
available under the National Flood Insurance
Act of 1968, as amended; and
(x) such other insurance in such
amounts as Mortgagee may reasonably request
from time to time; provided, however, such
insurance is usually and customarily carried
with respect to similar facilities in the
same general area as the Premises.
Each insurance policy (other than flood insurance
written under the National Flood Insurance Act of
1968, as amended, in which case to the extent
available) shall (i) provide that it shall not be
cancelled without 30 days' prior written notice to
Mortgagee, (ii) with respect to all property
insurance, provide for deductibles in amounts
reasonably satisfactory to Mortgagee (which
deductibles shall not exceed $250,000, with the
exception of the deductible for boiler and
machinery, which deductible shall not exceed a ten
(10) day waiting period deductible), contain a
"Replacement Cost Endorsement" (predicated upon
rebuilding) without any deduction made for
depreciation and with no co-insurance penalty (or
attaching an agreed amount endorsement
satisfactory to Mortgagee), with loss payable to
Mortgagor and Mortgagee with respect to the
Mortgaged Property as their respective interests
may appear, without contribution, under a
"standard" or "New York" mortgagee clause
reasonably acceptable to Mortgagee and be written
by insurance companies having an A.M. Best
Company, Inc. rating of A or higher and a
financial size category of not less than XII, or
otherwise as approved by Mortgagee. Liability
insurance policies shall name Mortgagee as an
additional insured with respect to the Mortgaged
Property and contain a waiver of subrogation
against Mortgagee; all such policies shall
indemnify and hold Mortgagee harmless from all
liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and
passageways. Each policy shall expressly provide
that any proceeds which are payable to Mortgagee
pursuant to the terms hereof shall be paid by
check payable to the order of Mortgagee only and
shall require the endorsement of Mortgagee only.
The amounts of each insurance policy and the form
of each such policy shall at all times be
reasonably satisfactory to Mortgagee. If any
required insurance shall expire, be withdrawn,
become void by breach of any condition thereof by
Mortgagor or by any lessee of any part of the
Mortgaged Property or become void or unsafe by
reason of the failure or impairment of the capital
of any insurer, Mortgagor shall immediately obtain
new or additional insurance satisfactory to
Mortgagee. Mortgagor shall not take out any
separate or additional insurance which is
contributing in the event of loss unless it is
properly endorsed and otherwise reasonably
satisfactory to Mortgagee in all respects.
(b) Mortgagor shall deliver to
Mortgagee an original of each insurance policy
required to be maintained, or a certificate of
such insurance reasonably acceptable to Mortgagee.
Mortgagor shall (i) pay as they become due all
premiums for such insurance, and (ii) not later
than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions
of this Section, deliver a renewed policy or
policies, or duplicate original or originals
thereof, or a certificate of such insurance
reasonably acceptable to Mortgagee, accompanied by
evidence of payment reasonably satisfactory to
Mortgagee. Upon request of Mortgagee, Mortgagor
shall cause its insurance underwriter or broker to
certify to Mortgagee in writing that all the
requirements of this Mortgage governing insurance
have been satisfied.
(c) If Mortgagor is in default of its
obligations to insure or deliver any such policy
or a certificate thereof under this Section 5,
then Mortgagee, at its option and following
written notice to Mortgagor, may effect such
insurance from year to year, and pay the premium
or premiums therefor, and Mortgagor shall pay to
Mortgagee on demand such premium or premiums so
paid by Mortgagee with interest from the time of
payment at the Default Rate and the same shall be
deemed to be secured by this Mortgage and shall be
collectible in the same manner as the Obligations
secured by this Mortgage.
(d) Mortgagor promptly shall comply
with and conform to (i) all provisions of each
such insurance policy, and (ii) all requirements
of the insurers applicable to Mortgagor or to any
of the Mortgaged Property or to the use, manner of
use, occupancy, possession, operation,
maintenance, alteration or repair of any of the
Mortgaged Property. Mortgagor shall not use or
permit the use of the Mortgaged Property in any
manner which would permit any insurer to cancel
any insurance policy or void coverage required to
be maintained by this Mortgage.
(e) If the Mortgaged Property in its
entirety, or any material part thereof, shall be
destroyed or damaged by fire or any other
casualty, whether insured or uninsured, or in the
event any claim in excess of $5,000,000 is made
against Mortgagor for any personal injury, bodily
injury or property damage incurred on or about the
Premises, Mortgagor shall give prompt notice
thereof to Mortgagee. If the Mortgaged Property
is damaged by fire or other casualty, then
provided that no Event of Default shall have
occurred and be continuing, Mortgagor shall have
the right to adjust such loss. If the Mortgaged
Property is damaged by fire or other casualty, and
if an Event of Default shall have occurred and be
continuing, then Mortgagor authorizes and empowers
Mortgagee, at Mortgagee's option and in
Mortgagee's sole discretion, as attorney-in-fact
for Mortgagor, to make proof of loss, to adjust
and compromise any claim under any insurance
policy with respect to the Mortgaged Property, to
appear in and prosecute any action arising from
any policy, and to deduct from any insurance
proceeds Mortgagee's expenses incurred in the
collection process. The insurance proceeds or any
part thereof with respect to the Mortgaged
Property received by Mortgagee and/or Mortgagor
shall constitute Trust Moneys which shall be paid
and/or applied in accordance with subsection 13.2
of the Indenture.
(f) In the event of foreclosure of this
Mortgage or other transfer of title to the
Mortgaged Property in extinguishment of the
Obligations, all right, title and interest of
Mortgagor in and to any insurance policies then in
force with respect to the Mortgaged Property shall
pass to the purchaser or grantee and Mortgagor
hereby appoints Mortgagee its attorney-in-fact, in
Mortgagor's name, to assign and transfer all such
policies and proceeds to such purchaser or
grantee.
(g) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default, shall be
entitled to require Mortgagor to pay monthly in
advance to Mortgagee the equivalent of 1/12th of
the estimated annual premiums due on such
insurance. Mortgagee may commingle such funds
with its own funds and Mortgagor shall not be
entitled to interest thereon.
(h) Mortgagor may maintain insurance
required under this Mortgage by means of one or
more blanket insurance policies maintained by
Mortgagor; provided, however, that (A) any such
policy shall specify, or Mortgagor shall furnish
to Mortgagee a written statement from the insurer
so specifying, the maximum amount of the total
insurance afforded by such blanket policy which
shall be applicable on an occurrence basis and (B)
the protection afforded under any such blanket
policy shall be no less than that which would have
been afforded under a separate policy or policies
relating only to the Mortgaged Property.
6. Restrictions on Liens, Encumbrances
and Sales. Mortgagor acknowledges that any
secondary or junior financing placed on the
Mortgaged Property (a) may divert funds that would
otherwise be available for payment of the
Obligations, (b) could, if foreclosed, force
Mortgagee to incur expenses to protect its
security, and (c) would impair Mortgagee's right
to accept a deed in lieu of foreclosure or
otherwise to take actions to further its economic
interest prior to foreclosure, because a
foreclosure by Mortgagee would be required to
clear title to the Mortgaged Property of any such
secondary or junior lien or encumbrance. In
accordance with the foregoing and for the purpose
of (i) protecting Mortgagee's security, both of
repayment and of value in the Mortgaged Property,
(ii) giving Mortgagee the full benefit of its
bargain and contract with Mortgagor, and (iii)
keeping the Mortgaged Property free of subordinate
financing liens, Mortgagor agrees that if the
following provisions of this paragraph should be
deemed a restraint on alienation, that such
provisions are reasonable restraints.
(1) Except for the lien of this
Mortgage, the Permitted Exceptions and liens
permitted pursuant to subsection 6.10 of the
Indenture, 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.
(2) Except as may be permitted pursuant
to the Indenture, including, without limitation,
subsection 6.15 thereof, Mortgagor shall not make
any Asset Sale.
7. Relationship of Mortgagee and
Mortgagor. Mortgagee shall in no event be
construed for any purpose to be a partner, joint
venturer, agent or associate of Mortgagor or of
any beneficiary, tenant, subtenant, operator,
concessionaire or licensee of Mortgagor in the
conduct of their respective businesses, and
without limiting the foregoing, Mortgagee shall
not be deemed to be such partner, joint venturer,
agent or associate on account of Mortgagee
becoming a Mortgagee in possession or exercising
any rights pursuant to this Mortgage, any of the
other Security Documents, or otherwise.
8. Maintenance; No Alteration;
Inspection; Utilities. (a) Mortgagor shall
maintain or cause to be maintained all the
Improvements in good working order and condition,
ordinary wear and tear excepted, and shall cause
to be made all necessary (in the good faith
opinion of management of Mortgagor) repairs,
renewals, replacements, additions, betterments and
improvements thereto. Mortgagor shall not commit
any waste of the Improvements and shall not
demolish or materially alter the Improvements
without the prior written consent of Mortgagee.
(b) Mortgagee and any persons
authorized by Mortgagee, at all reasonable times
after reasonable notice, shall have the right to
enter and inspect the Premises and the right to
inspect all work done, labor performed and
materials furnished in and about the Improvements
and the right to inspect and make copies of all
books, contracts and records of Mortgagor relating
to the Mortgaged Property.
(c) Mortgagor shall pay or cause to be
paid when due all utility charges which are
incurred for gas, electricity, water or sewer
services furnished to the Premises and all other
assessments or charges of a similar nature,
whether public or private, affecting the Premises
or any portion thereof, whether or not such
assessments or charges are liens thereon.
9. Condemnation/Eminent Domain.
Promptly upon obtaining knowledge of the
institution of any proceedings for the
condemnation of the Mortgaged Property in its
entirety, or any portion thereof, Mortgagor will
notify Mortgagee of the pendency of such
proceedings. Mortgagor authorizes Mortgagee, at
Mortgagee's option and in Mortgagee's sole
discretion, as attorney-in-fact for Mortgagor, to
commence, appear in and prosecute, in Mortgagee's
or Mortgagor's name, any action or proceeding
relating to any condemnation of the Mortgaged
Property in its entirety, or any portion thereof.
If the Mortgaged Property in its entirety or any
part thereof shall be the subject of condemnation
proceedings, Mortgagee, as attorney-in-fact for
Mortgagor, shall have the right to settle or
compromise any claim in connection with such
condemnation. If Mortgagee elects not to
participate in such condemnation proceeding, then
Mortgagor shall, at its expense, diligently
prosecute any such proceeding and shall consult
with Mortgagee, its attorneys and experts and
cooperate with them in any defense of any such
proceedings. All awards and proceeds of
condemnation received by Mortgagee and/or
Mortgagor shall constitute Trust Moneys which
shall be paid and/or applied in accordance with
Subsection 13.2 of the Indenture.
10. Leases. (a) Mortgagor shall not
(i) 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 with
Mortgagee's prior written consent or (ii) without
the prior written consent of Mortgagee, execute
any Lease of any of the Mortgaged Property.
(b) As to any Lease relating to all or
any portion of the Mortgaged Property, Mortgagor
shall:
(i) promptly perform all of the
material provisions of the Lease on the part
of the lessor thereunder to be performed;
(ii) enforce, in accordance with sound
business practice, all of the material
provisions of the Lease on the part of the
lessee thereunder to be performed;
(iii) appear in and defend, in accordance
with sound business practice, any action or
proceeding arising under or in any manner
connected with the Lease or the obligations
of Mortgagor as lessor or of the lessee
thereunder;
(iv) exercise, within 5 days after
receipt of a request by Mortgagee, any right
to request from the lessee a certificate with
respect to the status thereof;
(v) promptly deliver to Mortgagee
copies of any notices of default which
Mortgagor may at any time forward to or
receive from the lessee;
(vi) promptly deliver to Mortgagee a
fully executed counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon
Mortgagee's request, an assignment of the
Mortgagor's interest under such Lease.
(c) Mortgagor shall deliver to
Mortgagee, within 10 days after receipt of a
request by Mortgagee, a written statement,
certified by Mortgagor as being true, correct and
complete, containing the names of all lessees and
other occupants of the Mortgaged Property, the
terms of all Leases and the spaces occupied and
rentals payable thereunder, and a list of all
Leases which are then in default, including the
nature and magnitude of the default; such
statement shall be accompanied by credit
information with respect to the lessees and such
other information as Mortgagee may request.
(d) All Leases entered into by
Mortgagor after the date hereof, if any, and all
rights of any lessees thereunder shall be subject
and subordinate in all respects to the lien and
provisions of this Mortgage unless Mortgagee shall
otherwise elect in writing.
(e) As to any Lease now in existence or
subsequently consented to by Mortgagee, Mortgagor
shall not, without the prior written consent of
Mortgagee, accept a surrender or terminate,
cancel, rescind, supplement, alter, revise, modify
or amend such Lease or permit any such action to
be taken nor shall Mortgagor accept the payment of
rent more than thirty (30) days in advance of its
due date.
(f) In the event of the enforcement by
Mortgagee of any remedy under this Mortgage, the
lessee under each Lease entered into after the
date of this Mortgage shall, if requested by
Mortgagee or any other person succeeding to the
interest of Mortgagee as a result of such
enforcement, attorn to Mortgagee or to such person
and shall recognize Mortgagee or such successor in
interest as lessor under the Lease without change
in the provisions thereof; provided however, that
Mortgagee or such successor in interest shall not
be: (i) bound by any payment of an installment of
rent or additional rent which may have been made
more than 30 days before the due date of such
installment; (ii) bound by any amendment or
modification to the Lease made without the consent
of Mortgagee or such successor in interest; (iii)
liable for any previous act or omission of
Mortgagor (or its predecessors in interest); (iv)
responsible for any monies owing by Mortgagor to
the credit of such lessee or subject to any
credits, offsets, claims, counterclaims, demands
or defenses which the lessee may have against
Mortgagor (or its predecessors in interest); (v)
bound by any covenant to undertake or complete any
construction of the Premises or any portion
thereof; or (vi) obligated to make any payment to
such lessee other than any security deposit
actually delivered to Mortgagee or such successor
in interest. Each lessee or other occupant under
each Lease entered into after the date of this
Mortgage, upon request by Mortgagee or such
successor in interest, shall execute and deliver
an instrument or instruments confirming such
attornment. In addition, Mortgagor agrees that
each Lease entered into after the date of this
Mortgage shall include language to the effect of
subsections (d)-(f) of this Section.
11. Further Assurances/Estoppel
Certificates. To further assure Mortgagee's
rights under this Mortgage, Mortgagor agrees 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 and a
separate assignment of each Lease in recordable
form) as may be required by Mortgagee to confirm
the lien of this Mortgage and all other rights or
benefits conferred on Mortgagee. Mortgagor,
within 5 business days after request, shall
deliver, in form and substance satisfactory to
Mortgagee, a written statement, duly acknowledged,
setting forth the amount of the Obligations, and
whether any offsets, claims, counterclaims or
defenses exist against the Obligations and
certifying as to such other matters as Mortgagee
shall reasonably request.
12. Mortgagee's Right to Perform. If
Mortgagor fails to perform any of the covenants or
agreements of Mortgagor hereunder, Mortgagee,
without waiving or releasing Mortgagor from any
obligation or default under this Mortgage, may, at
any time (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. Hazardous Material. (a) Mortgagor
shall comply with any and all applicable Legal
Requirements governing the discharge and removal
of Hazardous Material, shall pay promptly when due
the costs of removal of any Hazardous Material,
and shall keep the Premises free of any lien
imposed pursuant to such Legal Requirements. In
the event Mortgagor fails to do so, after notice
to Mortgagor and the expiration of the earlier of
(i) applicable cure periods hereunder and under
the Indenture, or (ii) the cure period permitted
under the applicable Legal Requirement, Mortgagee
may cause the Premises to be freed from the
Hazardous Material to the extent required by
applicable Legal Requirements, and the cost of the
removal with interest at the Default Rate shall
immediately be due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor further
agrees that any release or disposal of Hazardous
Materials at the Premises by Mortgagor shall
comply with all applicable Legal Requirements. In
addition, Mortgagor agrees not to allow the
manufacture, storage, transmission, presence or
disposal of any Hazardous Material over or upon
the Premises in violation of applicable Legal
Requirements. Mortgagor shall give Mortgagee and
its agents and employees access to the Premises to
remove Hazardous Material if required of Mortgagor
hereunder and if required by applicable Legal
Requirements and if Mortgagor has failed to so
remove after notice. Mortgagor agrees to defend,
indemnify and hold Mortgagee free and harmless
from and against all loss, costs, damage and
expense (including attorneys' fees and costs and
consequential damages) Mortgagee may sustain by
reason of (i) the imposition or recording of a
lien by any Governmental Authority with respect to
the Mortgaged Property pursuant to any Legal
Requirement relating to hazardous or toxic wastes
or substances or the removal thereof ("Hazardous
Material Laws"); (ii) claims of any private
parties regarding violations of Hazardous Material
Laws with respect to the Mortgaged Property; (iii)
costs and expenses (including, without limitation,
attorneys' fees and fees incidental to the
securing of repayment of such costs and expenses)
incurred by Mortgagor or Mortgagee in connection
with the removal of any such lien with respect to
the Mortgaged Property or in connection with
Mortgagor's or Mortgagee's compliance with any
Hazardous Material Laws with respect to the
Mortgaged Property; and (iv) the assertion against
Mortgagee by any party of any claim in connection
with Hazardous Material with respect to the
Mortgaged Property.
(b) For the purposes of this Mortgage,
"Hazardous Material" means and includes any
hazardous, nuclear, toxic or dangerous waste,
substance or material defined as such in (or for
purposes of) the Comprehensive Environmental
Response, Compensation, and Liability Act, any so-
called "Superfund" or "Superlien" law, or any
other Legal Requirement regulating, relating to,
or imposing liability or standards of conduct
concerning, any hazardous, nuclear, toxic or
dangerous waste, substance or material, as now or
at any time in effect.
(c) The foregoing indemnification shall
be a recourse obligation of Mortgagor and shall
survive repayment of the Obligations,
notwithstanding any limitations on recourse which
may be contained herein or in any Security
Documents or the delivery of any satisfaction,
release or release deed, discharge or deed of
reconveyance, or the assignment of this Mortgage
by Mortgagee; provided, however, that the
foregoing indemnification shall apply only to
matters arising prior to any taking of possession
of the Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
14. Asbestos. Mortgagor shall not
install or permit to be installed in the Premises
friable asbestos or any substance containing
asbestos and deemed hazardous by any Legal
Requirement respecting such material, and, with
respect to any such material currently present in
the Premises, shall promptly comply with such
Legal Requirements, at Mortgagor's expense. If
Mortgagor shall fail to so comply, Mortgagee may
do whatever is necessary to comply with the
applicable Legal Requirement, and the costs
thereof, with interest at the Default Rate, shall
be immediately due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor shall give
Mortgagee and its agents and employees, upon prior
notice and at reasonable times, access to the
Premises to remove such asbestos or substances if
required by Mortgagor hereunder and if required by
applicable Legal Requirements and if Mortgagor has
failed to so remove after notice. Mortgagor shall
defend, indemnify, and save Mortgagee harmless
from all loss, costs, damages and expense
(including attorneys' fees and costs and
consequential damages) asserted or proven against
Mortgagee by any party, as a result of the
presence of such substances or any removal or
compliance with such Legal Requirements. The
foregoing indemnification shall be a recourse
obligation of Mortgagor and shall survive
repayment of the Obligations, notwithstanding any
limitation on recourse which may be contained
herein or in any of the Security Documents or the
delivery of any satisfaction, release or release
deed, discharge or deed of reconveyance, or the
assignment of this Mortgage by Mortgagee;
provided, however, that the foregoing
indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
15. Event of Default. The occurrence
of an "Event of Default" (as defined in the
Indenture) shall constitute an Event of Default
hereunder.
16. Remedies. (a) Upon the occurrence
of any Event of Default, in addition to any other
rights and remedies Mortgagee may have pursuant to
the Security Documents, or as provided by law, and
without limitation, (a) if such event is an Event
of Default described in subsections 8.1(ix) or
8.1(x) of the Indenture, automatically the
Obligations immediately shall become due and
payable, and (b) if such event is any other Event
of Default, by notice to Mortgagor, Mortgagee may
declare the Obligations to be immediately due and
payable. Except as expressly provided above in
this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly
waived. In addition, upon 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 Guaranty, (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
Security 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.
(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.
(iii) It is further agreed that if
default be made in the payment of any part of
the Obligations, as an alternative to the
right of foreclosure for the full secured
Obligations after acceleration thereof,
Mortgagee shall have the right to institute
partial foreclosure proceedings with respect
to the portion of said Obligations so in
default, as if under a full foreclosure, and
without declaring the entire secured
Obligations due (such proceeding being
hereinafter referred to as a "partial
foreclosure"), and provided that if a partial
foreclosure sale is consummated as provided
herein, such sale may be made subject to the
continuing lien of this Mortgage for the
unmatured portion of the secured Obligations,
but as to such unmatured part, this Mortgage,
and the lien hereof, shall remain in full
force and effect just as though no partial
foreclosure sale had been made under the
provisions of this Section. Notwithstanding
the filing of any partial foreclosure or
entry of a decree of sale therein, Mortgagee
may elect at any time prior to a partial
foreclosure sale pursuant to such decree, to
discontinue such partial foreclosure and to
accelerate the Obligations secured hereby by
reason of any uncured Event of Default upon
which such partial foreclosure was predicated
or by reason of any other Event of Default,
and proceed with full foreclosure
proceedings. It is further agreed that one
or more foreclosure sales may be made
pursuant to partial foreclosures without
exhausting the right of full or partial
foreclosure sale for any unmatured part of
the secured Obligations, it being the purpose
to provide for a partial foreclosure sale of
the Obligations secured hereby without
exhausting the power to foreclose for any
other part of the Obligations whether matured
at the time or subsequently maturing, and
without exhausting any right of acceleration
and full foreclosure.
(iv) Without affecting any right, power
or remedy herein given to Mortgagee and in
addition to every other right, power and
remedy herein specifically given or now or
hereafter existing in equity, law or statute,
Mortgagor hereby grants to Mortgagee the non-
judicial Power of Sale. Such Power of Sale
shall be exercised by giving Mortgagor Notice
of Intent to Foreclose by Power of Sale and
setting forth, among other things, the nature
of the breach(es) or default(s) and the
action required to effect a cure thereof and
the time period within which such cure may be
effected all in compliance with Title 46
Oklahoma Statutes section 40 et. seq. (Oklahoma
Power of Sale Mortgage Foreclosure Act)
effective November 1, 1986, as the same may
be amended from time to time or other
applicable statutory or judicial authority
(the "Act"). If no cure is effected within
the statutory time limits, Mortgagee may
accelerate the Obligations secured hereby
without further notice (the aforementioned
statutory cure period shall run concurrently
with any contractual provision for notice
before acceleration of debt) and may then
proceed in the manner and subject to the
conditions of the Act to send to Mortgagor
and other necessary parties a Notice of Sale
and to sell and convey the Mortgaged Property
in accordance with such Act. The sale shall
be made at one or more sales, as an entirety
or in parcels upon such notice, at such times
and places, subject to all conditions and
with the proceeds thereof to be applied all
as provided in the Act. No action of
Mortgagee based upon the provisions contained
herein or in the Act, including, without
limitation, the giving of the Notice of
Intent to Foreclose by Power of Sale or the
Notice of Sale, shall constitute an election
of remedies which would preclude Mortgagee
from pursuing judicial foreclosure before or
at any time after commencement of the Power
of Sale foreclosure procedure. Whether or
not proceedings have commenced by the
exercise of the Power of Sale above given,
Mortgagee or the holder or holders of any of
the Obligations, in lieu of proceeding with
the Power of Sale (or in the event of
homestead property where Mortgagor has
elected judicial foreclosure, as provided in
the Act) may at its or their option, as
applicable, following acceleration of the
Obligations as set forth above, proceed by
suit or suits in equity or at law to
foreclose this Mortgage. If Mortgagee
institutes judicial proceedings to foreclose
this Mortgage, Mortgagor hereby waives or
does not waive, at the sole option of
Mortgagee, appraisement of the Mortgaged
Property, said option to be exercised by
Mortgagee at or prior to the time judgment is
rendered in such judicial foreclosure.
Mortgagor fully understands the consequences
of conferring on Mortgagee the above-
described Power of Sale, and if Mortgagee
elects to enforce this Mortgage by exercising
said Power of Sale, Mortgagor hereby
expressly waives to the fullest extent
permitted by law any right to a judicial
hearing prior to the sale of the Mortgaged
Property. As often as any proceedings may be
taken to foreclose this Mortgage, whether
pursuant to the Power of Sale herein
conferred or by judicial proceedings, or to
foreclose the security interest herein
granted to Mortgagee, Mortgagor agrees to pay
to Mortgagee, in addition to all other sums
due, all costs and expenses, including
reasonable attorney fees, incurred by
Mortgagee.
(b) The holder of this Mortgage, in any
action to foreclose it, shall be entitled to the
appointment of a receiver. In case of a
foreclosure sale, Mortgagor's estate in 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) In the event of any breach of any
of the covenants, agreements, terms or conditions
contained in this Mortgage, and notwithstanding to
the contrary any exculpatory or non-recourse
language which may be contained herein, 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) The proceeds of any foreclosure or
sale of the Mortgaged Property, or any portion
thereof, shall be distributed and applied in
accordance with all applicable provisions of the
Indenture.
(e) In case of foreclosure of this
Mortgage or the exercise of Power of Sale, and as
often as any proceedings shall be instituted
relating thereto, Mortgagor will pay to Mortgagee
a reasonable attorney's fee, together with the
cost of continuing the abstract of title to the
Real Estate to the date of filing such
foreclosure, court costs and all other expenses
incurred in connection with such proceedings, all
of which will be due and payable when suit is
filed and will be and become a part of the
Obligations to be paid or collected in such
foreclosure.
17. 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 therefor,
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
Guaranty 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.
18. 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
Property or any other collateral as security for
the Obligations or the interest of Mortgagor
therein, shall have the right to apply to any
court having jurisdiction to appoint a receiver or
receivers or other manager of the Mortgaged
Property, and Mortgagor hereby irrevocably
consents to such appointment and waives notice of
any application therefor (except as may be
required by law). Any such receiver or receivers
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.
19. 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, from time to time and without
notice, agree to (i) release any person liable for
the Obligations, (ii) extend the maturity or alter
any of the terms of the Obligations or any
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. 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.
(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, Mortgagor authorizes
Mortgagee at its option to foreclose the lien of
this Mortgage 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 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.
20. Assignment of Rents. Mortgagor
hereby assigns to Mortgagee the Rents and
Additional Rents as further security for the
payment of the Obligations 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 and Additional Rents on account of
the Obligations. The foregoing assignment and
grant is present and absolute and shall continue
in effect until the Obligations are paid in full,
but Mortgagee hereby waives the right to enter the
Mortgaged Property for the purpose of collecting
the Rents and Additional Rents and Mortgagor shall
be entitled to collect, receive, use and retain
the Rents and Additional Rents; such right of
Mortgagor to collect, receive, use and retain the
Rents and Additional Rents may be revoked by
Mortgagee upon 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, 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 the
Mortgaged Property or such part thereof 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).
21. Trust Funds. All lease security
deposits of the Real Estate held by Mortgagor
shall be treated as trust funds not to be
commingled with any other funds of Mortgagor.
Within 10 days after request by Mortgagee,
Mortgagor shall furnish Mortgagee satisfactory
evidence of compliance with this subsection,
together with a statement of all lease security
deposits by lessees and copies of all Leases not
previously delivered to Mortgagee, which statement
shall be certified by Mortgagor.
22. Additional Rights. The holder of
any subordinate lien on the Mortgaged Property
shall have no right to terminate any Lease whether
or not such Lease is subordinate to this Mortgage
nor shall any holder of any subordinate lien join
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 are subject to and
notified of this provision, and any action taken
by any such lienholder contrary to this provision
shall be null and void. Upon 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.
23. Changes in Method of Taxation. In
the event of the passage after the date hereof of
any law of any Governmental Authority deducting
from the value of the Premises for the purposes of
taxation any lien thereon, or changing in any way
the laws for the taxation of mortgages or debts
secured thereby for federal, state or local
purposes, or the manner of collection of any such
taxes, and imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby,
Mortgagor shall, if permitted by applicable law,
assume as an Obligation hereunder the payment of
any tax so imposed until full payment of the
Obligations.
24. Notices. All notices, requests,
demands and other communications hereunder shall
be given in the manner provided in the Indenture.
25. No Oral Modification. This
Mortgage may not be changed or terminated orally.
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.
26. 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 anything to the
contrary contained in this Mortgage or in any
provisions of the Obligations or Security
Documents, the obligations of Mortgagor and of any
other obligor under the Obligations or Security
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.
27. Waiver of Right of Redemption and
Other Rights. (a) Mortgagor hereby voluntarily
and knowingly releases and waives any and all
rights to retain possession of the Mortgaged
Property upon and during the continuance 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), 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 of 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 the 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 or declare
due the whole of the secured indebtedness and
marshalling in the event of foreclosure of the
liens hereby created.
28. Remedies Not Exclusive. Mortgagee
shall be entitled to enforce payment of the
Obligations and performance of the Obligations and
to exercise all rights and powers under this
Mortgage or under any of the other Security
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 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 right 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 Security Documents to Mortgagee or to which it
may otherwise be entitled, may be exercised,
concurrently or independently, from time to time
and as often as may be deemed expedient by
Mortgagee. 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.
29. 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 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
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
Obligations, 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 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
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
proceedings or exercise of any remedies in such
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
proceedings or any 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.
30. Expenses; Indemnification. (a)
Mortgagor shall pay or reimburse Mortgagee for all
expenses incurred by Mortgagee before and after
the date of this Mortgage with respect to any and
all transactions contemplated by this Mortgage
including without limitation, the preparation of
any document reasonably required hereunder or any
amendment, modification, restatement or supplement
to this Mortgage, the delivery of any consent,
non-disturbance agreement or similar document in
connection with this Mortgage or the enforcement
of any of Mortgagee's rights. Such expenses shall
include, without limitation, all title and
conveyancing charges, recording and filing fees
and taxes, mortgage taxes, intangible personal
property taxes, escrow fees, revenue and tax stamp
expenses, insurance premiums (including title
insurance premiums), title search and title
rundown charges, brokerage commissions, finders'
fees, placement fees, court costs, surveyors',
photographers', appraisers', architects',
engineers', consulting professional's,
accountants' and attorneys' fees and
disbursements. Mortgagor acknowledges that from
time to time Mortgagor may receive statements for
such expenses, including without limitation
attorneys' fees and disbursements. Mortgagor
shall pay such statements promptly upon receipt.
(b) If (i) any action or proceeding
shall be commenced by Mortgagee (including but not
limited to any action to foreclose this Mortgage
or to collect the Obligations), or any action or
proceeding is commenced to which Mortgagee is made
a party, or in which it becomes necessary to
defend or uphold the lien of this Mortgage
(including, without limitation, any proceeding or
other action relating to the bankruptcy,
insolvency or reorganization of Mortgagor and/or
any Subsidiary), or in which Mortgagee is served
with any legal process, discovery notice or
subpoena and (ii) in each of the foregoing
instances such action or proceeding in any manner
relates to or arises out of this Mortgage or
Mortgagee's acceptance of the Guaranty, then
Mortgagor will promptly reimburse or pay to
Mortgagee all of the expenses which have been
incurred by Mortgagee with respect to the
foregoing (including reasonable counsel fees and
disbursements), together with interest thereon at
the Default Rate, and any such sum and the
interest thereon shall be a lien on the Mortgaged
Property, prior to any right, or title to,
interest in or claim upon the Mortgaged Property
attaching or accruing subsequent to the lien of
this Mortgage, and shall be deemed to be secured
by this Mortgage. In any action or proceeding to
foreclose this Mortgage, or to recover or collect
the Obligations, the provisions of law respecting
the recovering of costs, disbursements and
allowances shall prevail unaffected by this
covenant.
(c) Mortgagor shall indemnify and hold
harmless Mortgagee and Mortgagee's affiliates, and
the respective directors, officers, agents and
employees of Mortgagee and its affiliates from and
against all claims, damages, losses and
liabilities (including, without limitation,
reasonable attorneys' fees and expenses) arising
out of or based upon any matter related to this
Mortgage, the Mortgaged Property or the occupancy,
ownership, maintenance or management of the
Mortgaged Property by Mortgagor, including,
without limitation, any claims based on the
alleged acts or omissions of any employee or agent
of Mortgagor; provided, however, that the
foregoing indemnification shall not apply to
claims, damages and the like arising from the
gross negligence or wilful misconduct of the party
seeking indemnification. This indemnification
shall be in addition to any other liability which
Mortgagor may otherwise have to Mortgagee.
31. 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 its sole discretion it
deems such waiver 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, 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.
32. 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 anywise
impairing or affecting the lien of this Mortgage
or the priority of such lien over any subordinate
lien.
33. Governing Law, etc. This Mortgage
shall be governed by and construed in accordance
with the laws of the State where the Real Estate
is located, except that Mortgagor expressly
acknowledges that by its terms the Indenture and
the Guaranty shall be governed and construed in
accordance with the laws of the State of New York,
without regard to principles of conflict of law,
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, without regard to principles of
conflict of law.
34. Waiver of Trial by Jury. Mortgagor
and Mortgagee each hereby irrevocably and
unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this
Mortgage and for any counterclaim brought therein.
Mortgagor hereby waives all rights to interpose
any counterclaim in any suit brought by Mortgagee
hereunder (other than compulsory counterclaims and
other counterclaims that must be interposed in
connection with such suit under applicable law)
and all rights to have any such suit consolidated
with any separate suit, action or proceeding (it
being understood and agreed, however, that
Mortgagor shall have the right to raise any such
claim in a separate suit, action or proceeding).
35. 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 collateral agent to the Mortgagee," the
word "person" shall include any individual,
corporation, partnership, 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 of reference only and in no way limit
or amplify the provisions hereof.
36. 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 the
Code. 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 five 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; and (iii) the addresses of
Mortgagor and Mortgagee are as set forth on the
first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee
from time to time, shall execute, acknowledge and
deliver to Mortgagee one or more separate security
agreements, in form satisfactory to Mortgagee,
covering all or any part of the Mortgaged Property
and will further execute, acknowledge and deliver,
or cause to be executed, acknowledged and
delivered, any financing statement, affidavit,
continuation statement or certificate or other
document as Mortgagee may request in order to
perfect, preserve, maintain, continue or extend
the security interest under and the priority of
this Mortgage and such security instrument.
Mortgagor further agrees to pay to Mortgagee on
demand all costs and expenses incurred by
Mortgagee in connection with the preparation,
execution, recording, filing and re-filing of any
such document and all reasonable costs and
expenses of any record searches for financing
statements Mortgagee shall reasonably require.
Mortgagor shall from time to time, on request of
Mortgagee, deliver to Mortgagee an inventory in
reasonable detail of any of the Mortgaged Property
which constitutes personal property. If Mortgagor
shall fail to furnish any financing or
continuation statement within 10 days after
request by Mortgagee, then pursuant to the
provisions of the Code, Mortgagor hereby
authorizes Mortgagee, without the signature of
Mortgagor, to execute and file any such financing
and continuation statements. The filing of any
financing or continuation statements in the
records relating to personal property or chattels
shall not be construed as in any way impairing the
right of Mortgagee to proceed against any personal
property encumbered by this Mortgage as real
property, as set forth above.
37. Release Upon Payment and Discharge
of Mortgagor's Obligations. Mortgagee shall
release this Mortgage and the lien hereof by
proper instrument upon payment and discharge of
all Obligations secured hereby (including payment
of reasonable expenses incurred by Mortgagee in
connection with the execution of such release) and
upon full and complete performance of all of the
Obligations. Mortgagee shall otherwise release
this Mortgage and the lien hereof in accordance
with the terms of Article XII of the Indenture.
38. Consistency with Other Documents.
If any provision hereof conflicts with any
provisions of the Indenture, then the terms of the
Indenture shall control to the extent of such
conflict.
39. Mortgaged Lease Provisions.
(a) Mortgagor shall pay or cause to be paid all
rent and other charges required under the
Mortgaged Lease as and when the same are due and
shall promptly and faithfully perform or cause to
be performed, all other material obligations,
covenants, agreements, indemnities,
representations, warranties or liabilities
required of Mortgagor under the Mortgaged Lease.
Mortgagor shall not, without the consent of
Mortgagee, (i) either orally or in writing,
modify, amend or permit any modification or
amendment of any of the terms of the Mortgaged
Lease in any material respect, (ii) in any manner,
cancel, terminate or surrender, or permit the
cancellation, termination or surrender of the
Mortgaged Lease, in whole or in part, except,
subject to Section 39(i) hereof, any expiration of
the Mortgaged Lease pursuant to its terms, or
(iii) permit the subordination thereof to any
mortgage; and any attempt to do the foregoing
shall be null and void and of no effect.
(b) Mortgagor shall do, or cause to be
done, all things reasonably necessary to preserve
and keep unimpaired all material rights of
Mortgagor as lessee under the Mortgaged Lease, and
to prevent any material default by Mortgagor under
the Mortgaged Lease, or any termination,
surrender, cancellation, forfeiture or impairment
thereof, except, subject to Section 39(i) hereof,
any expiration of the Mortgaged Lease pursuant to
its terms. Mortgagor hereby authorizes and
irrevocably appoints and constitutes Mortgagee as
its true and lawful attorney-in-fact, which
appointment is coupled with an interest, in its
name, place and stead, upon the occurrence and
continuance of an Event of Default hereunder, to
take any and all actions deemed necessary or
desirable by Mortgagee to perform and comply with
all the obligations of Mortgagor under the
Mortgaged Lease, and to do and take, but without
any obligation so to do, any action which
Mortgagee deems necessary or desirable to cure any
default by Mortgagor under the Mortgaged Lease, to
enter into and upon the Premises or any part
thereof to such extent and as often as Mortgagee,
in its sole reasonable discretion, deems necessary
or desirable in order to cure any default of
Mortgagor pursuant thereto, to the end that the
rights of Mortgagor in and to the leasehold estate
created by the Mortgaged Lease shall be kept
unimpaired and free from default, and all sums so
expended by Mortgagee, with interest thereon at
the Default Rate from the date of each such
expenditure, shall be paid by Mortgagor to
Mortgagee promptly upon demand by Mortgagee.
Mortgagor shall, within five (5) business days
after written request by Mortgagee, execute and
deliver to Mortgagee, or to any person designated
by Mortgagee, such further instruments,
agreements, powers, assignments, conveyances or
the like as may be reasonably necessary to
complete or perfect the interest, rights or powers
of Mortgagee pursuant to this paragraph (b).
(c) Mortgagor shall enforce the
material obligations of the lessor under the
Mortgaged Lease, and shall promptly notify
Mortgagee in writing of any material default by
either the lessor (if known by Mortgagor) or by
Mortgagor in the performance or observance of any
of the terms, covenants and conditions contained
in the Mortgaged Lease. Mortgagor shall deliver
to Mortgagee, within ten (10) business days after
receipt, a copy of any material notice, demand,
complaint or request for compliance made by the
lessor under the Mortgaged Lease. If the lessor
shall deliver to Mortgagee a copy of any notice of
default given to Mortgagor, such notice shall
constitute full authority and protection to
Mortgagee for any actions taken or omitted to be
taken in good faith pursuant to the provisions of
this Mortgage in reliance thereon.
(d) If any action or proceeding shall
be instituted to evict Mortgagor or to recover
possession of the Mortgaged Property from
Mortgagor or any part thereof or interest therein
or any action or proceeding otherwise affecting
the Mortgaged Lease or this Mortgage shall be
instituted, then Mortgagor shall, promptly after
receipt, deliver to Mortgagee a true and complete
copy of each petition, summons, complaint, notice
of motion, order to show cause and all other
provisions, pleadings, and papers, however
designated, served in any such action or
proceeding.
(e) Mortgagor covenants and agrees that
the fee title to the Real Estate and the leasehold
estate created under the Mortgaged Lease shall not
merge but shall always remain separate and
distinct, notwithstanding the union of said
estates either in Mortgagor or a third party by
purchase or otherwise; and in case Mortgagor
acquires the fee title or any other estate, title
or interest in and to the Real Estate, the lien of
this Mortgage shall, without further conveyance,
simultaneously with such acquisition, be spread to
cover and attach to such acquired estate and as so
spread and attached shall be prior to the lien of
any mortgage placed on the acquired estate after
the date of this Mortgage.
(f) No release or forbearance of any of
Mortgagor's obligations under the Mortgaged Lease,
pursuant to the Mortgaged Lease or otherwise,
shall release Mortgagor from any of its
obligations under this Mortgage.
(g) So long as no Event of Default
shall have occurred and be continuing hereunder,
Mortgagor may, without the consent of Mortgagee,
make any election or give any consent or approval
under the Mortgaged Lease. Upon the occurrence
and continuance of any Event of Default hereunder,
all such rights, together with the right of
termination, cancellation, modification, change,
supplement, alteration or amendment of the
Mortgaged Lease, all of which are hereby assigned
for collateral purposes to Mortgagee, shall
automatically vest exclusively in and be
exercisable solely by Mortgagee.
(h) Mortgagor will give Mortgagee
prompt written notice of the commencement of any
arbitration or appraisal proceeding under and
pursuant to the provisions of the Mortgaged Lease
involving amounts in excess of $1,000,000 on a
present value basis. So long as no Event of
Default shall have occurred and be continuing
hereunder, Mortgagor may conduct the proceeding
provided that (i) Mortgagee shall have the right
to intervene and participate in any such
proceeding, (ii) Mortgagor shall confer with
Mortgagee, (iii) Mortgagor shall exercise all
reasonable rights of arbitration conferred upon it
by the Mortgaged Lease and (iv) Mortgagor's
selection of an arbitrator shall be subject to
prior written approval by Mortgagee; provided,
however, upon the occurrence and continuance of an
Event of Default hereunder, Mortgagee shall have
sole authority to conduct the proceeding and
Mortgagor hereby irrevocably appoints and
constitutes Mortgagee as its true and lawful
attorney-in-fact, which appointment is coupled
with any interest, in its name, place and stead,
to exercise, at the expense of Mortgagor, all
right, title and interest of Mortgagor in
connection with such arbitration, including the
right to appoint arbitrators and to conduct
arbitration proceedings on behalf of Mortgagor.
Nothing contained herein shall obligate Mortgagee
to participate in such arbitration.
(i) Mortgagor shall not fail to
exercise any option or right to renew or extend
the term of the Mortgaged Lease without the prior
written consent of Mortgagee, which consent shall
not be unreasonably withheld. Mortgagor shall
give Mortgagee simultaneous written notice of any
such exercise, together with a copy of the notice
or other document given to the lessor, and shall
promptly deliver to Mortgagee a copy of any
acknowledgment by such lessor with respect to the
exercise of such option or right. Upon the
occurrence and continuance of any Event of Default
hereunder, Mortgagee may act in its stead and
Mortgagor hereby irrevocably authorizes and
appoints Mortgagee as its true and lawful
attorney-in-fact, which appointment is coupled
with an interest, in its name, place and stead, to
execute and deliver, for and in the name of
Mortgagor, all of the instruments and agreements
necessary under the Mortgaged Lease or otherwise
to cause any extension of the term of the
Mortgaged Lease. Nothing contained herein shall
affect or limit any rights of Mortgagor or
Mortgagee granted under the Mortgaged Lease.
(j) Mortgagor shall, within ten (10)
days after written demand from Mortgagee, deliver
to Mortgagee proof of payment of all items that
are required to be paid by Mortgagor under the
Mortgaged Lease, including, without limitation,
rent.
(k) (i) The lien of this Mortgage
shall attach to all of Mortgagor's rights and
remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11
U.S.C. section 365(h), as the same may hereafter be
amended (the "Bankruptcy Code"), including,
without limitation, all of Mortgagor's rights to
remain in possession of the Real Estate.
Mortgagor shall not, without Mortgagee's prior
written consent, elect to treat the Mortgaged
Lease as terminated under Subsection 365(h)(1) of
the Bankruptcy Code. Any such election made
without Mortgagee's consent shall be void.
(ii) Mortgagor hereby
unconditionally assigns, transfers and sets
over to Mortgagee all of Mortgagor's claims
and rights to the payment of damages arising
under the Bankruptcy Code from any rejection
of the Mortgaged Lease by the lessor or any
fee owner of the Real Estate or any part
thereof. Upon and during the continuance of
an Event of Default hereunder, Mortgagee
shall have the right to proceed in its own
name or in the name of Mortgagor in respect
of any claim, suit, action or proceeding
relating to the rejection of the Mortgaged
Lease, including, without limitation, the
right to file and prosecute under the
Bankruptcy Code, without joining or the
joinder of Mortgagor, any proofs of claim,
complaints, motions, applications, notices
and other documents, in any case with respect
to the lessor or any fee owner of the Real
Estate or any part thereof. Any amounts
received by Mortgagee as damages arising out
of the rejection of the Mortgaged Lease as
aforesaid shall be applied first to all costs
and expenses of Mortgagee (including, without
limitation, attorneys' fees) incurred in
connection with the exercise of any of its
rights or remedies under this paragraph.
Mortgagor shall, at the request of Mortgagee,
promptly make, execute, acknowledge and
deliver, in form and substance satisfactory
to Mortgagee, a UCC Financing Statement (Form
UCC-1) and all such additional instruments,
agreements and other documents, as may at any
time hereafter be required by Mortgagee to
carry out the assignment pursuant to this
paragraph.
(iii) If pursuant to Subsection
365(h)(2) of the Bankruptcy Code, Mortgagor
shall seek to offset against the rent
reserved in the Mortgaged Lease the amount of
any damages caused by the nonperformance by
the lessor of any of its obligations under
such Mortgaged Lease after the rejection by
the lessor of such Mortgaged Lease under the
Bankruptcy Code, then, upon and during the
continuance of an Event of Default hereunder,
Mortgagor shall, prior to effecting such
offset, notify Mortgagee of its intent to do
so, setting forth the amount proposed to be
so offset and the basis therefor. Upon and
during the continuance of an Event of Default
hereunder, Mortgagee shall have the right to
object to all or any part of such offset
that, in the reasonable judgment of
Mortgagee, would constitute a breach of such
Mortgaged Lease, and in the event of such
objection, Mortgagor shall not effect any
offset of the amounts so objected to by
Mortgagee. Neither Mortgagee's failure to
object as aforesaid nor any objection
relating to such offset shall constitute an
approval of any such offset by Mortgagee.
(iv) If any action, proceeding,
motion or notice shall be commenced or filed
in respect of the lessor or any other fee
owner of the Real Estate, or any portion
thereof or interest therein, or the Mortgaged
Lease in connection with any case under the
Bankruptcy Code, then, upon and during the
continuance of an Event of Default hereunder,
Mortgagee shall have the option, exercisable
upon notice from Mortgagee to Mortgagor, to
conduct and control any such litigation with
counsel of Mortgagee's choice. Upon and
during the continuance of an Event of Default
hereunder, Mortgagee may proceed in its own
name or in the name of Mortgagor in
connection with any such litigation, and
Mortgagor agrees to execute any and all
powers, authorizations, consents or other
documents reasonably required by Mortgagee in
connection therewith. Mortgagor shall, upon
demand, pay to Mortgagee all costs and
expenses (including attorneys' fees) paid or
incurred by Mortgagee in connection with the
prosecution or conduct of any such
proceedings. Upon and during the continuance
of an Event of Default hereunder, Mortgagor
shall not commence any action, suit,
proceeding or case, or file any application
or make any motion, in respect of the
Mortgaged Lease in any such case under the
Bankruptcy Code without the prior written
consent of Mortgagee.
(v) Mortgagor shall, after
obtaining knowledge thereof, promptly notify
Mortgagee of any filing by or against the
lessor or fee owner of the Real Estate of a
petition under the Bankruptcy Code.
Mortgagor shall promptly deliver to
Mortgagee, following receipt, copies of any
and all notices, summonses, pleadings,
applications and other documents received by
Mortgagor in connection with any such
petition and any proceedings relating
thereto.
(vi) If there shall be filed by or
against Mortgagor a petition under the
Bankruptcy Code and Mortgagor, as lessee
under the Mortgaged Lease, shall determine to
reject the Mortgaged Lease pursuant to
Section 365(a) of the Bankruptcy Code, then
Mortgagor shall give Mortgagee not less than
twenty (20) days' prior notice of the date on
which Mortgagor shall apply to the Bankruptcy
Court for authority to reject the Mortgaged
Lease. Mortgagee shall have the right, but
not the obligation, to serve upon Mortgagor
within such twenty (20) day period a notice
stating that Mortgagee demands that Mortgagor
assume and assign the Mortgaged Lease to
Mortgagee pursuant to Section 365 of the
Bankruptcy Code. If Mortgagee shall serve
upon Mortgagor the notice described in the
preceding sentence, Mortgagor shall not seek
to reject such Mortgaged Lease and shall
comply with the demand provided for in the
preceding sentence; provided, however, that
in connection with any such assumption and
assignment, Mortgagee shall provide Mortgagor
with the funds necessary to comply with the
cure obligations and other monetary
obligations described under subsection 365(b)
of the Bankruptcy Code, and the amount of any
such sums so provided shall be secured hereby
and shall be included as claims against
Mortgagor in the bankruptcy proceeding. In
addition, effective upon the entry of an
order for relief with respect to Mortgagor
under the Bankruptcy Code, Mortgagor hereby
assigns and transfers to Mortgagee a non-
exclusive right to apply to the Bankruptcy
Court under subsection 365(d)(4) of the
Bankruptcy Code for an order extending the
period during which the Mortgaged Lease may
be rejected or assumed.
(l) If the Mortgaged Lease shall be
terminated prior to the natural expiration of its
term, and if, pursuant to any provision of the
Mortgaged Lease or otherwise, Mortgagee or its
designee shall acquire from the lessor under such
Mortgaged Lease a new lease of the Real Estate or
any part hereof, Mortgagor shall have no right,
title or interest in or to such new lease or the
leasehold estate created thereby, or renewal
privileges therein contained.
NOTICE: A POWER OF SALE HAS BEEN
GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY
ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY
AND SELL IT WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR
UNDER THIS MORTGAGE.
This Mortgage has been duly executed by
Mortgagor on the date first above written.
ATTEST:
ERLANGER TUBULAR CORPORATION
By: /S/ ELIZABETH B. KELLY
--------------------------
Name: Elizabeth B. Kelly
Title: [Assistant] Secretary
By: /S/ J. R. PARKER
------------------------
Name: John R. Parker
Title: [Vice] President
[SEAL]
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
This instrument was acknowledged before
me this 26th day of July, 1995, by John R. Parker
and Elizabeth B. Kelly, [Vice] President and
[Assistant] Secretary, respectively, of Erlanger
Tubular Corporation, an Oklahoma corporation.
/S/ STEVEN MAHER
Notary Public
My Commission Expires:
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
10/15/96
Qualified in New York County
Certificate Filed in
New York County
Commission Expires October 15, 1996
SCHEDULE A
A tract of land that is part of the Southwest
Quarter of the Southwest Quarter (SW/4 SW/4) of
Section Five (5), part of the Southeast Quarter
(SE/4) of the Southeast Quarter (SE/4) of the
Southeast Quarter (SE/4) of Section Six (6), part
of the Northeast Quarter of the Northeast Quarter
of the Northeast Quarter (NE/4) NE/4 NE/4) of
Section Seven (7) and part of the Northwest
Quarter (NW/4) of Section Right (8), all in
Township Twenty (20) North, Range Fifteen (15)
East of the I.B.& M., Rogers County, Oklahoma,
according to the U.S. Government Survey thereof,
said tract of land being further described as
follows, to-wit: Starting at the NW Corner of said
Section 8; thence due North for 325.42 feet;
thence due West for 325.70 feet to the Point of
Beginning of said tract of land; thence N
53 00'17" E for 765.00 feet; thence S 81 59'43" E
for 14.14 feet; thence S 36 59'43" E for 2208.65
feet; thence S 19 50'38" W for 12.38 feet; thence
S 70 06'55" W for 0.00 feet to a point of curve;
thence Southwesterly along a curve to the left
with a central angle of 16 43'31" and a radius of
1205.92 feet, for 352.02 feet to a point of
tangency; thence S 53 23'24" W along said tangency
for 141.18 feet to a point of curve; thence
Southwesterly along a curve to the right, with a
central angle of 00 02'14" and a radius of 512.96
feet for 0.33 feet; thence N 81 36'36" W for
399.86 feet; thence N 12 37'26" W for 0.00 feet to
a point of curve; thence Northwesterly along a
curve to the left, with a central angle of
24 22'17" and a radius of 666.62 feet for 283.55
feet to a point of tangency; thence N 36 59'43" W
along said tangency for 1051.40 feet; thence S
53 00'17" W for 55.00 feet; thence N 36 59'43" W
for 560.00 feet to the Point of Beginning of said
tract of land.
As such premises are more fully described within
Memorandum of Lease and Option executed by and
between City of Tulsa-Rogers County Port
Authority, Sublessor, and Erlanger and Company,
Inc., as Sublessee, dated December 1, 1980, filed
January 27, 1991, recorded at Book 593, Page 610,
as amended and assigned.
SCHEDULE B
EXCLUDED PROPERTY
a) Any and all Collateral (as defined
in that certain Revolving Credit, Guaranty and
Security Agreement dated as of July 28, 1995 by
and between Newport Steel Corporation, Koppel
Steel Corporation and Imperial Adhesives, Inc., as
borrowers, NS Group, Inc., Erlanger Tubular
Corporation, Northern Kentucky Air, Inc. and
Northern Kentucky Management, Inc., as guarantors,
The Bank of New York Commercial Corporation, as
Lender, as ACM Agent and as Co-Agent, and PNC Bank
Ohio, National Association, as Lender and as Co-
Agent, and other lenders parties thereto).
b) Any and all intellectual property
rights and interests, including, without
limitation, any and all trade names, trade marks,
copyrights, trade secrets and patents.
c) Any and all vehicles and rolling
stock.
d) Any and all leased Equipment if and
to the extent the terms and conditions of the
applicable lease documentation prohibit, restrict
or require consent in connection with the creation
of liens and security interests with respect to
such Equipment.
e) Any and all general intangibles.
f) Stripper Crane subject to Contract
for Lease and Rent dated September 6, 1977 between
City of Wilder, Kentucky and Interlake, Inc.,
recorded at Misc. Book 82, page 401, and Sublease
dated April 15, 1981 between Interlake, Inc. and
Newport Steel Corporation, recorded at Misc. Book
95, page 101, provided, however, that such
Stripper Crane shall case to be Excluded Property
at such time (if ever) as all consents required in
connection with the granting of liens and security
interests with respect to such Stripper Crane
under such Lease and Sublease have been obtained.
g) Any and all Equipment described in
a certain Security Agreement, dated as of February
13, 1992, together with all exhibits, supplements,
addenda and amendments thereto in existence or
effect on the date hereof or hereafter.
JUNIOR LEASEHOLD AND FEE MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
from
NEWPORT STEEL CORPORATION, Mortgagor
to
NS GROUP, INC., Mortgagee
DATED AS OF JULY 28, 1995
This Instrument was prepared by and
after recording should be returned to:
F. Robert Wheeler, Jr., Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
/S/ F. ROBERT WHEELER, JR.
F. Robert Wheeler, Jr., Esq.
TABLE OF CONTENTS
Background . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . 2
1. Warranty of Title. . . . . . . . . . . . . . . . . . 7
2. Payment and Performance of Obligations . . . . . . . 8
3. Requirements . . . . . . . . . . . . . . . . . . . . 8
4. Payment of Taxes and Other Impositions . . . . . . . 9
5. Insurance . . . . . . . . . . . . . . . . . . . . . 11
6. Restrictions on Liens, Encumbrances and
Sales . . . . . . . . . . . . . . . . . . . . . . . 15
7. Relationship of Mortgagee and Mortgagor. . . . . . . 16
8. Maintenance; No Alteration; Inspection;
Utilities . . . . . . . . . . . . . . . . . . . . . 16
9. Condemnation/Eminent Domain. . . . . . . . . . . . . 16
10. Leases. . . . . . . . . . . . . . . . . . . . . . . 17
11. Further Assurances/Estoppel
Certificates. . . . . . . . . . . . . . . . . . . . 19
12. Mortgagee's Right to Perform. . . . . . . . . . . . 19
13. Hazardous Material. . . . . . . . . . . . . . . . . 19
14. Asbestos. . . . . . . . . . . . . . . . . . . . . . 21
15. Event of Default. . . . . . . . . . . . . . . . . . 21
16. Remedies. . . . . . . . . . . . . . . . . . . . . . 21
17. Right of Mortgagee to Credit Sale . . . . . . . . . 24
18. Appointment of Receiver . . . . . . . . . . . . . . 24
19. Extension, Release, etc.. . . . . . . . . . . . . . 24
20. Assignment of Rents . . . . . . . . . . . . . . . . 25
21. Trust Funds . . . . . . . . . . . . . . . . . . . . 26
22. Additional Rights . . . . . . . . . . . . . . . . . 26
23. Changes in Method of Taxation . . . . . . . . . . . 26
24. Notices . . . . . . . . . . . . . . . . . . . . . . 27
25. No Oral Modification. . . . . . . . . . . . . . . . 27
26. Partial Invalidity. . . . . . . . . . . . . . . . . 27
27. Waiver of Right of Redemption and Other
Rights. . . . . . . . . . . . . . . . . . . . . . . 27
28. Remedies Not Exclusive. . . . . . . . . . . . . . . 28
29. Multiple Security . . . . . . . . . . . . . . . . . 28
30. Expenses; Indemnification . . . . . . . . . . . . . 30
31. Successors and Assigns. . . . . . . . . . . . . . . 31
32. No Waivers, etc.. . . . . . . . . . . . . . . . . . 31
33. Governing Law, etc. . . . . . . . . . . . . . . . . 32
34. Waiver of Trial by Jury . . . . . . . . . . . . . . 32
35. Certain Definitions . . . . . . . . . . . . . . . . 32
36. Security Agreement under Uniform
Commercial Code . . . . . . . . . . . . . . . . . . 32
37. Release Upon Payment and Discharge of
Mortgagor's Obligations . . . . . . . . . . . . . . 34
39. Consistency with Other Documents. . . . . . . . . . 34
40. Mortgaged Lease Provisions. . . . . . . . . . . . . 35
SCHEDULES
Schedule A - Description of Real Property. . . . . . . 42
Schedule A-1 - Description of Leasehold
Improvements Land . . . . . . . . . . . . . . . . . 43
Schedule B - Description of Excluded
Property . . . . . . . . . . . . . . . . . . . . . 44
<PAGE>
JUNIOR LEASEHOLD AND FEE MORTGAGE, ASSIGNMENT OF
RENTS AND LEASES
AND SECURITY AGREEMENT
THIS JUNIOR LEASEHOLD AND FEE MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES AND SECURITY
AGREEMENT, dated as of July 28, 1995 is made by
NEWPORT STEEL CORPORATION, a Kentucky corporation
("Mortgagor"), whose address is Ninth and Lowell
Streets, Newport, Kentucky 41072, to NS GROUP,
INC., a Kentucky corporation ("Mortgagee"), whose
mailing address is Ninth and Lowell Streets,
Newport, Kentucky 41072, Campbell County,
Kentucky. 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. Mortgagor is the owner of fee and
leasehold estates with respect to the real
property described on Schedule A attached hereto
(such real property together with the Leasehold
Improvements referred to below and all other
buildings, improvements, structures and fixtures
now or subsequently located thereon (the
"Improvements") being collectively referred to as
the "Real Estate"). Mortgagor is the owner of a
leasehold estate in the building, improvements,
structures and fixtures (the "Leasehold
Improvements") located on so much of the real
property described on Schedule A as is set forth
in Schedule A-1 attached hereto, pursuant to that
certain Sublease dated April 15, 1981 by and
between Interlake, Inc. and Newport Steel
Corporation, a copy of which was recorded in Misc.
Book 95, Page 167 of the Campbell County, Kentucky
public records; as affected by an Assignment and
Assumption Agreement dated May 24, 1986 by and
between Interlake, Inc. and The Interlake
Companies, Inc. and as amended by an Amendment of
Lease Agreement dated as of July 28, 1995, a copy
of which will be recorded prior to the recording
hereof (the "Mortgaged Lease").
B. Mortgagor is a wholly owned
subsidiary of Mortgagee.
C. Mortgagee and The Huntington
National Bank, as Trustee, are parties to that
Indenture dated as of July 28, 1995 (as the same
may be amended, modified or otherwise supplemented
from time to time, the "Indenture"; capitalized
terms not defined herein shall have the meanings
ascribed thereto in the Indenture) for the benefit
of Holders of 13.5% Senior Secured Notes due 2003
in the aggregate principal amount of
$125,000,000.00 (the "Securities") issued by
Mortgagee, which Securities mature on July 15,
2003.
D. Mortgagor has executed and
delivered to Mortgagee that certain intercompany
note of even date herewith in the original
principal amount of $46,900,000 (the "Intercompany
Note"), which Intercompany Note is payable on
demand, or if no demand be made, on September 24,
2005. References in this Mortgage to the "Default
Rate" shall mean the interest rate payable with
respect to the Securities plus two percent (2%)
per annum.
E. Mortgagor, to secure its
obligations under the Intercompany Note, has
executed and delivered that certain security
agreement of even date herewith in favor of
Mortgagee (the "ICN Security Agreement"), which
ICN Security Agreement grants Mortgagee a security
interest in and to certain personal property now
or subsequently used in connection with the
operation of the Real Estate.
NOW, THEREFORE, in consideration of the
premises, the Mortgagor hereby agrees with the
Mortgagee as follows:
Granting Clauses
For good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, Mortgagor agrees that to secure all
of Mortgagor's obligations and liabilities under
the Intercompany Note and all other obligations
and liabilities of Mortgagor to Mortgagee
(including, without limitation, interest accruing
after the maturity of the Intercompany Note and
interest accruing after the filing of any petition
in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding,
relating to the Mortgagor, whether or not a claim
for post-filing or post-petition interest is
allowed in such proceeding and interest, to the
extent permitted by law, on the unpaid interest),
whether direct or indirect, absolute or
contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out
of, or in connection with, the Intercompany Note,
this Mortgage, the ICN Security Agreement or any
other document made, delivered or given in
connection therewith (collectively, the "Security
Documents"), in each case whether on account of
principal, interest, fees, indemnities, costs,
expenses or otherwise (including, without
limitation, all fees and disbursements of counsel
to Mortgagee that are required to be paid by the
Mortgagee pursuant to the terms of this Mortgage
or any other Security Document) (collectively, the
"Obligations").
MORTGAGOR BARGAINS, SELLS, MORTGAGES, WARRANTS,
CONVEYS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER
AND BY THESE PRESENTS DOES HEREBY BARGAIN, SELL,
MORTGAGE, WARRANT, CONVEY, GRANT, ASSIGN, TRANSFER
AND SET OVER UNTO MORTGAGEE ALL OF THE FOLLOWING:
(A) all right, title and interest of
Mortgagor in and to the leasehold estate
created under and by virtue of the Mortgaged
Lease, any interest in any fee, greater or
lesser title to the Real Estate that
Mortgagor may own or hereafter acquire
(whether acquired pursuant to a right or
option, if any, contained in the Mortgaged
Lease or otherwise), all options, privileges
and rights of Mortgagor under the Mortgaged
Lease (including all rights of use, occupancy
and enjoyment) and any amendments,
supplements, extensions, renewals,
restatements, replacements and modifications
thereof (including, without limitation, (i)
the right to give consents, (ii) the right,
if any, to renew or extend the Mortgaged
Lease for succeeding term or terms and (iii)
the right, if any, to purchase the Real
Estate) (all of the foregoing being
collectively referred to herein as the
"Leasehold Estate");
(B) 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, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water
courses, water and riparian rights,
development rights, air rights, mineral
rights and all estates, rights, titles,
interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging,
relating or appertaining to the Real Estate,
and any reversions and remainders 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 right, title and interest of
Mortgagor in and to all of the fixtures,
chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings
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 or used or usable in any way in
connection with any operation or letting of
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 mortgage,
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 (other than the Mortgaged
Lease), 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 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) all right, title and interest of
Mortgagor in and to all trade names, trade
marks, logos, copyrights, good will and books
and records relating to or used in connection
with the operation of the Real Estate or the
Equipment or any part thereof; all right,
title and interest of Mortgagor in and to all
general intangibles related to the operation
of the Improvements now existing or hereafter
arising;
(H) all right, title and interest of
Mortgagor in and to 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 any such insurance policies and 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 otherwise following and during the
continuance of an Event of Default; and all
right, title and interest of Mortgagor in and
to 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, subject to the provisions relating
to condemnation generally set forth below;
(I) 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 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;
(J) all right, title and interest of
Mortgagor in and to any and all monies now or
subsequently on deposit for the payment of
real estate taxes or special assessments
against the Real Estate or for the payment of
premiums on insurance policies covering the
foregoing property or otherwise on deposit
with or held by Mortgagee as provided in this
Mortgage; all capital, operating, reserve or
similar accounts held by or on behalf of
Mortgagor and related to the operation of the
Mortgaged Property, whether now existing or
hereafter arising and all monies held in any
of the foregoing accounts and any
certificates or instruments related to or
evidencing such accounts;
(K) all right, title and interest of
Mortgagor in and to all accounts and revenues
arising from the operation of the
Improvements including, without limitation,
(i) any right to payment now existing or
hereafter arising for rental of hotel rooms
or other space or for services rendered,
whether or not yet earned by performance,
arising from the operation of the
Improvements or any other facility on the
Mortgaged Property and (ii) all rights to
payment from any consumer credit-charge card
organization or entity including, without
limitation, payments arising from the use of
the American Express Card, the Visa Card, the
Carte Blanche Card, the Mastercard or any
other credit card, including those now
existing or hereafter created, substitutions
therefor, proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange,
transfer, collection or other disposition or
substitution thereof and any and all of the
foregoing and proceeds therefrom
(collectively, the "Additional Rents"); and
(L) all proceeds, both cash and
noncash, of the foregoing;
excluding, however, notwithstanding any
provision set forth in the foregoing clauses (A)
through (L), the property described on Schedule B
attached hereto and incorporated herein by
reference (collectively, the "Excluded Property")
(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 (E), excluding the
Excluded Property, are collectively referred to as
the "Premises", and those described in the
foregoing clauses (A) through (L), excluding the
Excluded Property, are collectively referred to as
the "Mortgaged Property").
PROVIDED, however, that notwithstanding
anything to the contrary contained herein
(including, without limitation, the Granting
Clauses set forth hereinabove), this Mortgage is
subject to an express condition, such that if the
terms and provisions of the Mortgaged Lease and/or
the Prime Lease (as defined in Section 1(b) below)
require that the landlord thereunder consent to
the granting of a deed of trust, mortgage,
security interest or other encumbrance on the
tenant's leasehold interest, then (i) this
Mortgage shall be effective with respect to the
Leasehold Estate and the Leasehold Improvements
and the Granting Clauses set forth hereinabove
shall become operative with respect to the
Leasehold Estate and the Leasehold Improvements
only at such time as the written consent of the
landlord under the Mortgaged Lease and/or the
Prime Lease shall have been procured, and
(ii) until such written consent shall have been
procured (if at all), this Mortgage shall not be
effective with respect to the Leasehold Estate and
the Leasehold Improvements and shall not create
any lien, security interest or other encumbrance
with respect to the Leasehold Estate and the
Leasehold Improvements and the Granting Clauses
with respect to the Leasehold Estate and the
Leasehold Improvements shall be of no force or
effect.
All of the Mortgaged Property
hereinabove described, real, personal and mixed,
whether affixed or annexed to the Real Estate or
not and all rights hereby conveyed and mortgaged
are intended so to be as a unit and are hereby
understood, agreed and declared, to the maximum
extent permitted by law, to form a part and parcel
of the Real Estate and to be appropriated to the
use of the Real Estate, and shall be for the
purposes of this Mortgage deemed to be real estate
and conveyed and mortgaged hereby; provided,
however, as to any of the property aforesaid which
does not so form a part and parcel of the Real
Estate or does not constitute a "fixture" (as
defined in the Uniform Commercial Code of Kentucky
(the "Code")), this Mortgage is hereby deemed to
also be a Security Agreement under the Code for
purposes of granting a security interest in such
property, which Mortgagor hereby grants to
Mortgagee, as Secured Party (as defined in the
Code), as more particularly provided below in this
Mortgage.
TO HAVE AND TO HOLD the Mortgaged
Property and the rights and privileges hereby
mortgaged, together with the right to retain
possession of the Mortgaged Property upon and
during the continuance of an Event of Default
hereunder, unto Mortgagee, its successors and
assigns for the uses and purposes set forth, until
the Obligations are fully paid and performed.
SUBJECT AND SUBORDINATE, HOWEVER, TO THE
RIGHTS OF The Huntington National Bank, as
mortgagee, under a Mortgage, Assignment of Rents
and Leases of even date herewith (herein called
the "Prior Mortgage").
Terms and Conditions
Mortgagor further represents, warrants,
covenants and agrees with Mortgagee as follows:
1. Warranty of Title. (a) Mortgagor
warrants that Mortgagor has good title to the Real
Estate (other than to the Leasehold Estate and
Leasehold Improvements) in fee simple and good
title to the rest of the Mortgaged Property (other
than to the Leasehold Estate and Leasehold
Improvements), 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 liens
permitted pursuant to subsection 6.10 of the
Indenture (collectively, the "Permitted
Exceptions"), and Mortgagor shall warrant, defend
and preserve such title and the lien of the
Mortgage thereon against all claims of all persons
and entities, excepting, however, the Permitted
Exceptions. Mortgagor further warrants that it
has the right to mortgage the Mortgaged Property
(other than the Leasehold Estate).
(b) Mortgagor represents and warrants
(i) that Mortgagor has title to the leasehold
estate in the Leasehold Improvements pursuant to
the Mortgaged Lease, and Mortgagor has a right to
mortgage the same, subject to the obtaining of any
consents required under the Mortgaged Lease and/or
the Prime Lease, (ii) that the Leasehold
Improvements are subject only to matters of
record, the Mortgaged Lease, that certain Lease
Agreement dated as of September 1, 1971 by and
between Campbell County, Kentucky, as lessor, and
Enbee Corporation, as lessee, a copy of which was
recorded on September 14, 1971 in Misc. Book 65,
Page 563 of the Campbell County, Kentucky public
records; as affected by an Assignment dated as of
September 1, 1971 by Campbell County, Kentucky to
National Bank of Westchester, as Trustee, a copy
of which was recorded on September 14, 1971 in
Book 65, Page 602 of said public records; as
further affected by an Assignment of Lease dated
as of September 1, 1971 by Enbee Corporation to
Interlake, Inc., a copy of which was recorded on
September 14, 1971 in Book 65, Page 607 of said
public records; as affected by an Assignment and
Assumption Agreement dated as of May 24, 1986 by
and between Interlake, Inc. and The Interlake
Companies, Inc. (the "Prime Lease"), this
Mortgage, 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 liens permitted pursuant
to subsection 6.10 of the Indenture (collectively,
the "Permitted Exceptions"), (iii) that Mortgagor
shall warrant and defend the lien thereon granted
or intended to be granted by this Mortgage against
all persons and entities, excepting, however, the
Permitted Exceptions, (iv) that the Mortgaged
Lease is in full force and effect and Mortgagor is
the holder of the lessee's or tenant's interest
thereunder, (v) that the Mortgaged Lease has not
been amended, supplemented or otherwise modified,
except as specifically described herein, (vi) that
Mortgagor has paid all rents and other charges to
the extent due and payable, is not in default
under the Mortgaged Lease, has received no notice
of default from the lessor thereunder which
default remains uncured and knows of no material
default by the lessor thereunder, and (vii) that
the granting of this Mortgage does not violate the
terms of the Mortgage Lease, subject to the
obtaining of any consents required under the
Mortgaged Lease and/or the Prime Lease.
2. Payment and Performance of
Obligations. Mortgagor shall pay the Obligations
at the times and places and in the manner
specified in the Intercompany Note and shall
perform all the Obligations.
3. Requirements. (a) Mortgagor shall
comply with, or cause to be complied with, and
conform to all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees,
rules, regulations and requirements, and
irrespective of the nature of the work to be done,
of each of the United States of America, any State
and any municipality, local government or other
political subdivision thereof and any agency,
department, bureau, board, commission or other
instrumentality of any of them, now existing or
subsequently created (collectively, "Governmental
Authority") which has jurisdiction over the
Mortgaged Property, except where the failure to so
comply with any of the foregoing would not have a
Material Adverse Effect on the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, and 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 the
failure to so comply with any of the foregoing
would not adversely affect the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole. All
present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules,
regulations and requirements of every Governmental
Authority applicable to Mortgagor or to any of the
Mortgaged Property and all covenants,
restrictions, and conditions which now or later
may be applicable to any of the Mortgaged Property
are collectively referred to as the "Legal
Requirements".
(b) With respect to the Real Estate
(other than the Leasehold Improvements), from and
after the date of this Mortgage, Mortgagor shall
not by act or omission permit any building or
other improvement on any premises not subject to
the lien of this Mortgage to rely on the Premises
or any part thereof or any interest therein to
fulfill any Legal Requirement and Mortgagor hereby
assigns to Mortgagee any and all rights to give
consent for all or any portion of the Premises or
any interest therein to be so used. Mortgagor
shall not by act or omission impair the integrity
of any of the Real Estate (other than the
Leasehold Improvements) as a single zoning lot
separate and apart from all other premises, and
Mortgagor (as opposed to the lessor under the
Mortgaged Lease or any other party) shall not by
act or omission impair the integrity of any of the
Leasehold Improvements as a single zoning lot
separate and apart from all other premises.
Mortgagor represents that each parcel of the Real
Estate (other than the Leasehold Improvements)
constitutes a legally subdivided lot, in
compliance with all subdivision laws and similar
Legal Requirements, and Mortgagor represents, to
the best of its actual knowledge, that each parcel
of the Leasehold Improvements constitutes a
legally subdivided lot, in compliance with all
subdivision laws and similar Legal Requirements.
Any act or omission by Mortgagor which would
result in a violation of any of the provisions of
this subsection shall be void.
4. Payment of Taxes and Other
Impositions. (a) Promptly when due, Mortgagor
shall pay and discharge all taxes of every kind
and nature (including, without limitation, all
real and personal property, income, franchise,
withholding, transfer, gains, profits and gross
receipts taxes), all charges for any easement or
agreement maintained for the benefit of any of the
Mortgaged Property, all general and special
assessments, levies, permits, inspection and
license fees, all water and sewer rents and
charges 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 Mortgaged Property, 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 as the "Impositions").
Upon request by Mortgagee, Mortgagor shall deliver
to Mortgagee (i) original or copies of receipted
bills and cancelled checks evidencing payment of
such Imposition if it is a real estate tax or
other public charge and (ii) evidence acceptable
to Mortgagee showing the payment of any other 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 to 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 Mortgage,
and (ii) payable on demand by Mortgagor to
Mortgagee together with interest at the Default
Rate as set forth above.
(c) Mortgagor shall not claim, demand
or be entitled to receive any credit or credits
toward the satisfaction of this Mortgage or on any
interest payable thereon for any taxes assessed
against the Mortgaged Property or any part
thereof, and shall not claim any deduction from
the taxable value of the Mortgaged Property by
reason of this Mortgage if any such claim would
adversely affect the interest of Mortgagee.
(d) Mortgagor shall have the right
before any delinquency occurs to contest or object
in good faith to the amount or validity of any
Imposition by appropriate legal proceedings, but
such right shall not be deemed or construed in any
way as relieving, modifying, or extending
Mortgagor's covenant to pay any such Imposition at
the time and in the manner provided in this
Section unless (i) Mortgagor has given prior
written notice to Mortgagee of Mortgagor's intent
so to contest or object to an Imposition,
(ii) Mortgagor shall demonstrate to Mortgagee's
satisfaction that the legal proceedings shall
operate conclusively to prevent the sale of the
Mortgaged Property, or any part thereof, to
satisfy such Imposition prior to final
determination of such proceedings and (iii)
Mortgagor shall furnish a good and sufficient bond
or surety as requested by and reasonably
satisfactory to Mortgagee in the amount of the
Impositions which are being contested plus any
interest and penalty which may be imposed thereon
and which could become a lien against the Real
Estate or any part of the Mortgaged Property.
(e) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default (as defined
below), shall be entitled to require Mortgagor to
pay monthly in advance to Mortgagee the equivalent
of 1/12th of the estimated annual Impositions.
Mortgagee may commingle such funds with its own
funds and Mortgagor shall not be entitled to
interest thereon.
5. Insurance. (a) Mortgagor shall
maintain or cause to be maintained on all of the
Premises
(i) property insurance against loss or
damage by (A) fire, lightning, windstorm,
tornado, water damage and by such other
further risks and hazards as now are or
subsequently may be covered by an "all risk"
policy or a fire policy covering "special"
causes of loss, which policy shall include
building ordinance law endorsements and shall
be automatically reinstated after each loss,
and (B) flood and earthquake in annual
aggregates of $25,000,000 for flood and
$50,000,000 for earthquake;
(ii) comprehensive general liability
insurance under a policy covering all claims
for personal injury, bodily injury or death,
or property damage occurring on, in or about
the Premises in an amount not less than
$10,000,000 combined single limit with
respect to injury and property damage
relating to any one occurrence plus such
excess limits as Mortgagee shall reasonably
request from time to time;
(iii) when and to the extent reasonably
required by Mortgagee, insurance against loss
or damage by any other risk commonly insured
against by persons occupying or using like
properties in the locality or localities in
which the Real Estate is situated;
(iv) insurance against rent loss, extra
expense or business interruption (and/or soft
costs, in the case of new construction), if
applicable, in amounts reasonably
satisfactory to Mortgagee, but not less than
one year's gross rent or gross income;
(v) during the course of any
construction or repair of Improvements,
comprehensive general liability insurance
(including coverage for elevators and
escalators, if any). The policy shall
provide coverage for independent contractors
and completed operations. The completed
operations coverage shall stay in effect for
two years after construction of any
Improvements has been completed. The policy
shall provide coverage on an occurrence basis
against claims for personal injury, such
insurance to afford immediate minimum
protection to a limit of not less than that
required by Mortgagee with respect to
personal injury, bodily injury or death to
any one or more persons or damage to
property;
(vi) during the course of any
construction or repair of the Improvements,
workers' compensation insurance (including
employer's liability insurance) for all
employees of Mortgagor engaged on or with
respect to the Premises in such amounts as
are reasonably satisfactory to Mortgagee, but
in no event less than the limits established
by law;
(vii) during the course of any
construction, addition, alteration or repair
of the Improvements, builder's risk completed
value form insurance against "all risks of
physical loss," including collapse, water
damage, flood and earthquake and transit
coverage, during construction or repairs of
the Improvements, with deductibles reasonably
approved by Mortgagee, in nonreporting form,
covering the total value of work performed
and equipment, supplies and materials
furnished (with an appropriate limit for soft
costs in the case of construction);
(viii) boiler and machinery property
insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator
equipment and escalator equipment, provided
the Improvements contain equipment of such
nature, and insurance against rent, extra
expense, business interruption and soft
costs, if applicable, arising from any such
breakdown, in such amounts as are reasonably
satisfactory to Mortgagee but not less than
the lesser of $1,000,000 or 10% of the value
of the Improvements;
(ix) if any portion of the Premises are
located in an area identified as a special
flood hazard area by the Federal Emergency
Management Agency or other applicable agency,
flood insurance in an amount reasonably
satisfactory to Mortgagee, but in no event
less than the maximum limit of coverage
available under the National Flood Insurance
Act of 1968, as amended; and
(x) such other insurance in such
amounts as Mortgagee may reasonably request
from time to time; provided, however, such
insurance is usually and customarily carried
with respect to similar facilities in the
same general area as the Premises.
Each insurance policy (other than flood insurance
written under the National Flood Insurance Act of
1968, as amended, in which case to the extent
available) shall (i) provide that it shall not be
cancelled without 30 days' prior written notice to
Mortgagee, (ii) with respect to all property
insurance, provide for deductibles in amounts
reasonably satisfactory to Mortgagee (which
deductibles shall not exceed $250,000, with the
exception of the deductible for boiler and
machinery, which deductible shall not exceed a ten
(10) day waiting period deductible), contain a
"Replacement Cost Endorsement" (predicated upon
rebuilding) without any deduction made for
depreciation and with no co-insurance penalty (or
attaching an agreed amount endorsement
satisfactory to Mortgagee), with loss payable to
Mortgagor and Mortgagee with respect to the
Mortgaged Property as their respective interests
may appear, without contribution, under a
"standard" or "New York" mortgagee clause
reasonably acceptable to Mortgagee and be written
by insurance companies having an A.M. Best
Company, Inc. rating of A or higher and a
financial size category of not less than XII, or
otherwise as approved by Mortgagee. Liability
insurance policies shall name Mortgagee as an
additional insured with respect to the Mortgaged
Property and contain a waiver of subrogation
against Mortgagee; all such policies shall
indemnify and hold Mortgagee harmless from all
liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and
passageways. Each policy shall expressly provide
that any proceeds which are payable to Mortgagee
pursuant to the terms hereof shall be paid by
check payable to the order of Mortgagee only and
shall require the endorsement of Mortgagee only.
The amounts of each insurance policy and the form
of each such policy shall at all times be
reasonably satisfactory to Mortgagee. If any
required insurance shall expire, be withdrawn,
become void by breach of any condition thereof by
Mortgagor or by any lessee of any part of the
Mortgaged Property or become void or unsafe by
reason of the failure or impairment of the capital
of any insurer, Mortgagor shall immediately obtain
new or additional insurance satisfactory to
Mortgagee. Mortgagor shall not take out any
separate or additional insurance which is
contributing in the event of loss unless it is
properly endorsed and otherwise reasonably
satisfactory to Mortgagee in all respects.
(b) Mortgagor shall deliver to
Mortgagee an original of each insurance policy
required to be maintained, or a certificate of
such insurance reasonably acceptable to Mortgagee.
Mortgagor shall (i) pay as they become due all
premiums for such insurance, and (ii) not later
than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions
of this Section, deliver a renewed policy or
policies, or duplicate original or originals
thereof, or a certificate of such insurance
reasonably acceptable to Mortgagee, accompanied by
evidence of payment reasonably satisfactory to
Mortgagee. Upon request of Mortgagee, Mortgagor
shall cause its insurance underwriter or broker to
certify to Mortgagee in writing that all the
requirements of this Mortgage governing insurance
have been satisfied.
(c) If Mortgagor is in default of its
obligations to insure or deliver any such policy
or a certificate thereof under this Section 5,
then Mortgagee, at its option and following
written notice to Mortgagor, may effect such
insurance from year to year, and pay the premium
or premiums therefor, and Mortgagor shall pay to
Mortgagee on demand such premium or premiums so
paid by Mortgagee with interest from the time of
payment at the Default Rate and the same shall be
deemed to be secured by this Mortgage and shall be
collectible in the same manner as the Obligations
secured by this Mortgage.
(d) Mortgagor promptly shall comply
with and conform to (i) all provisions of each
such insurance policy, and (ii) all requirements
of the insurers applicable to Mortgagor or to any
of the Mortgaged Property or to the use, manner of
use, occupancy, possession, operation,
maintenance, alteration or repair of any of the
Mortgaged Property. Mortgagor shall not use or
permit the use of the Mortgaged Property in any
manner which would permit any insurer to cancel
any insurance policy or void coverage required to
be maintained by this Mortgage.
(e) If the Mortgaged Property in its
entirety, or any material part thereof, shall be
destroyed or damaged by fire or any other
casualty, whether insured or uninsured, or in the
event any claim in excess of $5,000,000 is made
against Mortgagor for any personal injury, bodily
injury or property damage incurred on or about the
Premises, Mortgagor shall give prompt notice
thereof to Mortgagee. If the Mortgaged Property
is damaged by fire or other casualty, then
provided that no Event of Default shall have
occurred and be continuing, Mortgagor shall have
the right to adjust such loss. If the Mortgaged
Property is damaged by fire or other casualty, and
if an Event of Default shall have occurred and be
continuing, then Mortgagor authorizes and empowers
Mortgagee, at Mortgagee's option and in
Mortgagee's sole discretion, as attorney-in-fact
for Mortgagor, to make proof of loss, to adjust
and compromise any claim under any insurance
policy with respect to the Mortgaged Property, to
appear in and prosecute any action arising from
any policy, and to deduct from any insurance
proceeds Mortgagee's expenses incurred in the
collection process. The insurance proceeds or any
part thereof with respect to the Mortgaged
Property received by Mortgagee and/or Mortgagor
shall constitute Trust Moneys which shall be paid
and/or applied in accordance with subsection 13.2
of the Indenture.
(f) In the event of foreclosure of this
Mortgage or other transfer of title to the
Mortgaged Property in extinguishment of the
Obligations, all right, title and interest of
Mortgagor in and to any insurance policies then in
force with respect to the Mortgaged Property shall
pass to the purchaser or grantee and Mortgagor
hereby appoints Mortgagee its attorney-in-fact, in
Mortgagor's name, to assign and transfer all such
policies and proceeds to such purchaser or
grantee.
(g) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default, shall be
entitled to require Mortgagor to pay monthly in
advance to Mortgagee the equivalent of 1/12th of
the estimated annual premiums due on such
insurance. Mortgagee may commingle such funds
with its own funds and Mortgagor shall not be
entitled to interest thereon.
(h) Mortgagor may maintain insurance
required under this Mortgage by means of one or
more blanket insurance policies maintained by
Mortgagor; provided, however, that (A) any such
policy shall specify, or Mortgagor shall furnish
to Mortgagee a written statement from the insurer
so specifying, the maximum amount of the total
insurance afforded by such blanket policy which
shall be applicable on an occurrence basis and (B)
the protection afforded under any such blanket
policy shall be no less than that which would have
been afforded under a separate policy or policies
relating only to the Mortgaged Property.
6. Restrictions on Liens, Encumbrances
and Sales. Mortgagor acknowledges that any
secondary or junior financing placed on the
Mortgaged Property (a) may divert funds that would
otherwise be available for payment of the
Obligations, (b) could, if foreclosed, force
Mortgagee to incur expenses to protect its
security, and (c) would impair Mortgagee's right
to accept a deed in lieu of foreclosure or
otherwise to take actions to further its economic
interest prior to foreclosure, because a
foreclosure by Mortgagee would be required to
clear title to the Mortgaged Property of any such
secondary or junior lien or encumbrance. In
accordance with the foregoing and for the purpose
of (i) protecting Mortgagee's security, both of
repayment and of value in the Mortgaged Property,
(ii) giving Mortgagee the full benefit of its
bargain and contract with Mortgagor, and (iii)
keeping the Mortgaged Property free of subordinate
financing liens, Mortgagor agrees that if the
following provisions of this paragraph should be
deemed a restraint on alienation, that such
provisions are reasonable restraints.
(1) Except for the lien of this
Mortgage, the Permitted Exceptions and liens
permitted pursuant to subsection 6.10 of the
Indenture, 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.
(2) Except as may be permitted pursuant
to the Indenture, including, without limitation,
subsection 6.15 thereof, Mortgagor shall not make
any Asset Sale.
7. Relationship of Mortgagee and
Mortgagor. The Huntington National Bank shall in
no event be construed for any purpose to be a
partner, joint venturer, agent or associate of
Mortgagor or of any beneficiary, tenant,
subtenant, operator, concessionaire or licensee of
Mortgagor in the conduct of their respective
businesses, and without limiting the foregoing,
The Huntington National Bank shall not be deemed
to be such partner, joint venturer, agent or
associate on account of The Huntington National
Bank becoming a Mortgagee in possession or
exercising any rights pursuant to this Mortgage,
any of the other Security Documents, or otherwise.
8. Maintenance; No Alteration;
Inspection; Utilities. (a) Mortgagor shall
maintain or cause to be maintained all the
Improvements in good working order and condition,
ordinary wear and tear excepted, and shall cause
to be made all necessary (in the good faith
opinion of management of Mortgagor) repairs,
renewals, replacements, additions, betterments and
improvements thereto. Mortgagor shall not commit
any waste of the Improvements and shall not
demolish or materially alter the Improvements
without the prior written consent of Mortgagee.
(b) Mortgagee and any persons
authorized by Mortgagee, at all reasonable times
after reasonable notice, shall have the right to
enter and inspect the Premises and the right to
inspect all work done, labor performed and
materials furnished in and about the Improvements
and the right to inspect and make copies of all
books, contracts and records of Mortgagor relating
to the Mortgaged Property.
(c) Mortgagor shall pay or cause to be
paid when due all utility charges which are
incurred for gas, electricity, water or sewer
services furnished to the Premises and all other
assessments or charges of a similar nature,
whether public or private, affecting the Premises
or any portion thereof, whether or not such
assessments or charges are liens thereon.
9. Condemnation/Eminent Domain.
Promptly upon obtaining knowledge of the
institution of any proceedings for the
condemnation of the Mortgaged Property in its
entirety, or any portion thereof, Mortgagor will
notify Mortgagee of the pendency of such
proceedings. Mortgagor authorizes Mortgagee, at
Mortgagee's option and in Mortgagee's sole
discretion, as attorney-in-fact for Mortgagor, to
commence, appear in and prosecute, in Mortgagee's
or Mortgagor's name, any action or proceeding
relating to any condemnation of the Mortgaged
Property in its entirety, or any portion thereof.
If the Mortgaged Property in its entirety or any
part thereof shall be the subject of condemnation
proceedings, Mortgagee, as attorney-in-fact for
Mortgagor, shall have the right to settle or
compromise any claim in connection with such
condemnation. If Mortgagee elects not to
participate in such condemnation proceeding, then
Mortgagor shall, at its expense, diligently
prosecute any such proceeding and shall consult
with Mortgagee, its attorneys and experts and
cooperate with them in any defense of any such
proceedings. All awards and proceeds of
condemnation received by Mortgagee and/or
Mortgagor shall constitute Trust Moneys which
shall be paid and/or applied in accordance with
Subsection 13.2 of the Indenture.
10. Leases. (a) Mortgagor shall not
(i) 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 with
Mortgagee's prior written consent or (ii) without
the prior written consent of Mortgagee, execute
any Lease of any of the Mortgaged Property.
(b) As to any Lease relating to all or
any portion of the Mortgaged Property, Mortgagor
shall:
(i) promptly perform all of the
material provisions of the Lease on the part
of the lessor thereunder to be performed;
(ii) enforce, in accordance with sound
business practice, all of the material
provisions of the Lease on the part of the
lessee thereunder to be performed;
(iii) appear in and defend, in accordance
with sound business practice, any action or
proceeding arising under or in any manner
connected with the Lease or the obligations
of Mortgagor as lessor or of the lessee
thereunder;
(iv) exercise, within 5 days after
receipt of a request by Mortgagee, any right
to request from the lessee a certificate with
respect to the status thereof;
(v) promptly deliver to Mortgagee
copies of any notices of default which
Mortgagor may at any time forward to or
receive from the lessee;
(vi) promptly deliver to Mortgagee a
fully executed counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon
Mortgagee's request, an assignment of the
Mortgagor's interest under such Lease.
(c) Mortgagor shall deliver to
Mortgagee, within 10 days after receipt of a
request by Mortgagee, a written statement,
certified by Mortgagor as being true, correct and
complete, containing the names of all lessees and
other occupants of the Mortgaged Property, the
terms of all Leases and the spaces occupied and
rentals payable thereunder, and a list of all
Leases which are then in default, including the
nature and magnitude of the default; such
statement shall be accompanied by credit
information with respect to the lessees and such
other information as Mortgagee may request.
(d) All Leases entered into by
Mortgagor after the date hereof, if any, and all
rights of any lessees thereunder shall be subject
and subordinate in all respects to the lien and
provisions of this Mortgage unless Mortgagee shall
otherwise elect in writing.
(e) As to any Lease now in existence or
subsequently consented to by Mortgagee, Mortgagor
shall not, without the prior written consent of
Mortgagee, accept a surrender or terminate,
cancel, rescind, supplement, alter, revise, modify
or amend such Lease or permit any such action to
be taken nor shall Mortgagor accept the payment of
rent more than thirty (30) days in advance of its
due date.
(f) In the event of the enforcement by
Mortgagee of any remedy under this Mortgage, the
lessee under each Lease entered into after the
date of this Mortgage shall, if requested by
Mortgagee or any other person succeeding to the
interest of Mortgagee as a result of such
enforcement, attorn to Mortgagee or to such person
and shall recognize Mortgagee or such successor in
interest as lessor under the Lease without change
in the provisions thereof; provided however, that
Mortgagee or such successor in interest shall not
be: (i) bound by any payment of an installment of
rent or additional rent which may have been made
more than 30 days before the due date of such
installment; (ii) bound by any amendment or
modification to the Lease made without the consent
of Mortgagee or such successor in interest; (iii)
liable for any previous act or omission of
Mortgagor (or its predecessors in interest); (iv)
responsible for any monies owing by Mortgagor to
the credit of such lessee or subject to any
credits, offsets, claims, counterclaims, demands
or defenses which the lessee may have against
Mortgagor (or its predecessors in interest); (v)
bound by any covenant to undertake or complete any
construction of the Premises or any portion
thereof; or (vi) obligated to make any payment to
such lessee other than any security deposit
actually delivered to Mortgagee or such successor
in interest. Each lessee or other occupant under
each Lease entered into after the date of this
Mortgage, upon request by Mortgagee or such
successor in interest, shall execute and deliver
an instrument or instruments confirming such
attornment. In addition, Mortgagor agrees that
each Lease entered into after the date of this
Mortgage shall include language to the effect of
subsections (d)-(f) of this Section.
11. Further Assurances/Estoppel
Certificates. To further assure Mortgagee's
rights under this Mortgage, Mortgagor agrees 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 and a
separate assignment of each Lease in recordable
form) as may be required by Mortgagee to confirm
the lien of this Mortgage and all other rights or
benefits conferred on Mortgagee. Mortgagor,
within 5 business days after request, shall
deliver, in form and substance satisfactory to
Mortgagee, a written statement, duly acknowledged,
setting forth the amount of the Obligations, and
whether any offsets, claims, counterclaims or
defenses exist against the Obligations and
certifying as to such other matters as Mortgagee
shall reasonably request.
12. Mortgagee's Right to Perform. If
Mortgagor fails to perform any of the covenants or
agreements of Mortgagor hereunder, Mortgagee,
without waiving or releasing Mortgagor from any
obligation or default under this Mortgage, may, at
any time (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. Hazardous Material. (a) Mortgagor
shall comply with any and all applicable Legal
Requirements governing the discharge and removal
of Hazardous Material, shall pay promptly when due
the costs of removal of any Hazardous Material,
and shall keep the Premises free of any lien
imposed pursuant to such Legal Requirements. In
the event Mortgagor fails to do so, after notice
to Mortgagor and the expiration of the earlier of
(i) applicable cure periods hereunder and under
the Indenture, or (ii) the cure period permitted
under the applicable Legal Requirement, Mortgagee
may cause the Premises to be freed from the
Hazardous Material to the extent required by
applicable Legal Requirements, and the cost of the
removal with interest at the Default Rate shall
immediately be due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor further
agrees that any release or disposal of Hazardous
Materials at the Premises (other than the
Leasehold Improvements) shall comply with all
applicable Legal Requirements, and any such
release or disposal at the Leasehold Improvements
by Mortgagor shall comply with all applicable
Legal Requirements. In addition, Mortgagor agrees
not to allow the manufacture, storage,
transmission, presence or disposal of any
Hazardous Material over or upon the Premises in
violation of applicable Legal Requirements.
Mortgagor shall give Mortgagee and its agents and
employees access to the Premises to remove
Hazardous Material if required by applicable Legal
Requirements and if Mortgagor has failed to so
remove after notice. Mortgagor agrees to defend,
indemnify and hold Mortgagee free and harmless
from and against all loss, costs, damage and
expense (including attorneys' fees and costs and
consequential damages) Mortgagee may sustain by
reason of (i) the imposition or recording of a
lien by any Governmental Authority with respect to
the Mortgaged Property pursuant to any Legal
Requirement relating to hazardous or toxic wastes
or substances or the removal thereof ("Hazardous
Material Laws"); (ii) claims of any private
parties regarding violations of Hazardous Material
Laws with respect to the Mortgaged Property; (iii)
costs and expenses (including, without limitation,
attorneys' fees and fees incidental to the
securing of repayment of such costs and expenses)
incurred by Mortgagor or Mortgagee in connection
with the removal of any such lien with respect to
the Mortgaged Property or in connection with
Mortgagor's or Mortgagee's compliance with any
Hazardous Material Laws with respect to the
Mortgaged Property; and (iv) the assertion against
Mortgagee by any party of any claim in connection
with Hazardous Material with respect to the
Mortgaged Property.
(b) For the purposes of this Mortgage,
"Hazardous Material" means and includes any
hazardous, nuclear, toxic or dangerous waste,
substance or material defined as such in (or for
purposes of) the Comprehensive Environmental
Response, Compensation, and Liability Act, any so-
called "Superfund" or "Superlien" law, or any
other Legal Requirement regulating, relating to,
or imposing liability or standards of conduct
concerning, any hazardous, nuclear, toxic or
dangerous waste, substance or material, as now or
at any time in effect.
(c) The foregoing indemnification shall
be a recourse obligation of Mortgagor and shall
survive repayment of the Obligations,
notwithstanding any limitations on recourse which
may be contained herein or in any Security
Documents or the delivery of any satisfaction,
release or release deed, discharge or deed of
reconveyance, or the assignment of this Mortgage
by Mortgagee; provided, however, that the
foregoing indemnification shall apply only to
matters arising prior to any taking of possession
of the Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
14. Asbestos. Mortgagor shall not
install or permit to be installed in the Premises
friable asbestos or any substance containing
asbestos and deemed hazardous by any Legal
Requirement respecting such material, and, with
respect to any such material currently present in
the Premises, shall promptly comply with such
Legal Requirements, at Mortgagor's expense. If
Mortgagor shall fail to so comply, Mortgagee may
do whatever is necessary to comply with the
applicable Legal Requirement, and the costs
thereof, with interest at the Default Rate, shall
be immediately due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor shall give
Mortgagee and its agents and employees, upon prior
notice and at reasonable times, access to the
Premises to remove such asbestos or substances if
required by applicable Legal Requirements and if
Mortgagor has failed to so remove after notice.
Mortgagor shall defend, indemnify, and save
Mortgagee harmless from all loss, costs, damages
and expense (including attorneys' fees and costs
and consequential damages) asserted or proven
against Mortgagee by any party, as a result of the
presence of such substances or any removal or
compliance with such Legal Requirements. The
foregoing indemnification shall be a recourse
obligation of Mortgagor and shall survive
repayment of the Obligations, notwithstanding any
limitation on recourse which may be contained
herein or in any of the Security Documents or the
delivery of any satisfaction, release or release
deed, discharge or deed of reconveyance, or the
assignment of this Mortgage by Mortgagee;
provided, however, that the foregoing
indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
15. Event of Default. The occurrence
of an "Event of Default" (as defined in the
Indenture) shall constitute an Event of Default
hereunder.
16. Remedies. (a) Upon the occurrence
of any Event of Default, in addition to any other
rights and remedies Mortgagee may have pursuant to
the Security Documents, or as provided by law, and
without limitation, (a) if such event is an Event
of Default described in subsections 8.1(ix) or
8.1(x) of the Indenture, automatically the
Obligations immediately shall become due and
payable, and (b) if such event is any other Event
of Default, by notice to Mortgagor, Mortgagee may
declare the Obligations to be immediately due and
payable. Except as expressly provided above in
this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly
waived. In addition, upon 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 Intercompany Note,
(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
Security 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.
(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.
(iii) It is further agreed that if
default be made in the payment of any part of
the Obligations, as an alternative to the
right of foreclosure for the full secured
Obligations after acceleration thereof,
Mortgagee shall have the right to institute
partial foreclosure proceedings with respect
to the portion of said Obligations so in
default, as if under a full foreclosure, and
without declaring the entire secured
Obligations due (such proceeding being
hereinafter referred to as a "partial
foreclosure"), and provided that if a partial
foreclosure sale is consummated as provided
herein, such sale may be made subject to the
continuing lien of this Mortgage for the
unmatured portion of the secured Obligations,
but as to such unmatured part, this Mortgage,
and the lien hereof, shall remain in full
force and effect just as though no partial
foreclosure sale had been made under the
provisions of this Section. Notwithstanding
the filing of any partial foreclosure or
entry of a decree of sale therein, Mortgagee
may elect at any time prior to a partial
foreclosure sale pursuant to such decree, to
discontinue such partial foreclosure and to
accelerate the Obligations secured hereby by
reason of any uncured Event of Default upon
which such partial foreclosure was predicated
or by reason of any other Event of Default,
and proceed with full foreclosure
proceedings. It is further agreed that one
or more foreclosure sales may be made
pursuant to partial foreclosures without
exhausting the right of full or partial
foreclosure sale for any unmatured part of
the secured Obligations, it being the purpose
to provide for a partial foreclosure sale of
the Obligations secured hereby without
exhausting the power to foreclose for any
other part of the Obligations whether matured
at the time or subsequently maturing, and
without exhausting any right of acceleration
and full foreclosure.
(b) The holder of this Mortgage, in any
action to foreclose it, shall be entitled to the
appointment of a receiver. In case of a
foreclosure sale, Mortgagor's estate in 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) In the event of any breach of any
of the covenants, agreements, terms or conditions
contained in this Mortgage, and notwithstanding to
the contrary any exculpatory or non-recourse
language which may be contained herein, 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) The proceeds of any foreclosure or
sale of the Mortgaged Property, or any portion
thereof, shall be distributed and applied in
accordance with all applicable provisions of the
Indenture.
17. 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 therefor,
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
Intercompany Note 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.
18. 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
Property or any other collateral as security for
the Obligations or the interest of Mortgagor
therein, shall have the right to apply to any
court having jurisdiction to appoint a receiver or
receivers or other manager of the Mortgaged
Property, and Mortgagor hereby irrevocably
consents to such appointment and waives notice of
any application therefor (except as may be
required by law). Any such receiver or receivers
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.
19. 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, from time to time and without
notice, agree to (i) release any person liable for
the Obligations, (ii) extend the maturity or alter
any of the terms of the Obligations or any
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. 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.
(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, Mortgagor authorizes
Mortgagee at its option to foreclose the lien of
this Mortgage 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 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.
20. Assignment of Rents. Mortgagor
hereby assigns to Mortgagee the Rents and
Additional Rents as further security for the
payment of the Obligations 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 and Additional Rents on account of
the Obligations. The foregoing assignment and
grant is present and absolute and shall continue
in effect until the Obligations are paid in full,
but Mortgagee hereby waives the right to enter the
Mortgaged Property for the purpose of collecting
the Rents and Additional Rents and Mortgagor shall
be entitled to collect, receive, use and retain
the Rents and Additional Rents; such right of
Mortgagor to collect, receive, use and retain the
Rents and Additional Rents may be revoked by
Mortgagee upon 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, 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 the
Mortgaged Property or such part thereof 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).
21. Trust Funds. All lease security
deposits of the Real Estate held by Mortgagor
shall be treated as trust funds not to be
commingled with any other funds of Mortgagor.
Within 10 days after request by Mortgagee,
Mortgagor shall furnish Mortgagee satisfactory
evidence of compliance with this subsection,
together with a statement of all lease security
deposits by lessees and copies of all Leases not
previously delivered to Mortgagee, which statement
shall be certified by Mortgagor.
22. Additional Rights. The holder of
any subordinate lien on the Mortgaged Property
shall have no right to terminate any Lease whether
or not such Lease is subordinate to this Mortgage
nor shall any holder of any subordinate lien join
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 are subject to and
notified of this provision, and any action taken
by any such lienholder contrary to this provision
shall be null and void. Upon 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.
23. Changes in Method of Taxation. In
the event of the passage after the date hereof of
any law of any Governmental Authority deducting
from the value of the Premises for the purposes of
taxation any lien thereon, or changing in any way
the laws for the taxation of mortgages or debts
secured thereby for federal, state or local
purposes, or the manner of collection of any such
taxes, and imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby,
Mortgagor shall, if permitted by applicable law,
assume as an Obligation hereunder the payment of
any tax so imposed until full payment of the
Obligations.
24. Notices. All notices, requests,
demands and other communications hereunder shall
be given in the manner provided in the Indenture.
25. No Oral Modification. This
Mortgage may not be changed or terminated orally.
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.
26. 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 anything to the
contrary contained in this Mortgage or in any
provisions of the Obligations or Security
Documents, the obligations of Mortgagor and of any
other obligor under the Obligations or Security
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.
27. Waiver of Right of Redemption and
Other Rights. (a) Mortgagor hereby voluntarily
and knowingly releases and waives any and all
rights to retain possession of the Mortgaged
Property upon and during the continuance 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), 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 of 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 the 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 or declare
due the whole of the secured indebtedness and
marshalling in the event of foreclosure of the
liens hereby created.
28. Remedies Not Exclusive. Mortgagee
shall be entitled to enforce payment of the
Obligations and performance of the Obligations and
to exercise all rights and powers under this
Mortgage or under any of the other Security
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 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 right 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 Security Documents to Mortgagee or to which it
may otherwise be entitled, may be exercised,
concurrently or independently, from time to time
and as often as may be deemed expedient by
Mortgagee. 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.
29. 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 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
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
Obligations, 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 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
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
proceedings or exercise of any remedies in such
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
proceedings or any 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.
30. Expenses; Indemnification. (a)
Mortgagor shall pay or reimburse Mortgagee for all
expenses incurred by Mortgagee before and after
the date of this Mortgage with respect to any and
all transactions contemplated by this Mortgage
including without limitation, the preparation of
any document reasonably required hereunder or any
amendment, modification, restatement or supplement
to this Mortgage, the delivery of any consent,
non-disturbance agreement or similar document in
connection with this Mortgage or the enforcement
of any of Mortgagee's rights. Such expenses shall
include, without limitation, all title and
conveyancing charges, recording and filing fees
and taxes, mortgage taxes, intangible personal
property taxes, escrow fees, revenue and tax stamp
expenses, insurance premiums (including title
insurance premiums), title search and title
rundown charges, brokerage commissions, finders'
fees, placement fees, court costs, surveyors',
photographers', appraisers', architects',
engineers', consulting professional's,
accountants' and attorneys' fees and
disbursements. Mortgagor acknowledges that from
time to time Mortgagor may receive statements for
such expenses, including without limitation
attorneys' fees and disbursements. Mortgagor
shall pay such statements promptly upon receipt.
(b) If (i) any action or proceeding
shall be commenced by Mortgagee (including but not
limited to any action to foreclose this Mortgage
or to collect the Obligations), or any action or
proceeding is commenced to which Mortgagee is made
a party, or in which it becomes necessary to
defend or uphold the lien of this Mortgage
(including, without limitation, any proceeding or
other action relating to the bankruptcy,
insolvency or reorganization of Mortgagor and/or
any Subsidiary), or in which Mortgagee is served
with any legal process, discovery notice or
subpoena and (ii) in each of the foregoing
instances such action or proceeding in any manner
relates to or arises out of this Mortgage or
Mortgagee's acceptance of the Intercompany Note,
then Mortgagor will promptly reimburse or pay to
Mortgagee all of the expenses which have been
incurred by Mortgagee with respect to the
foregoing (including reasonable counsel fees and
disbursements), together with interest thereon at
the Default Rate, and any such sum and the
interest thereon shall be a lien on the Mortgaged
Property, prior to any right, or title to,
interest in or claim upon the Mortgaged Property
attaching or accruing subsequent to the lien of
this Mortgage, and shall be deemed to be secured
by this Mortgage. In any action or proceeding to
foreclose this Mortgage, or to recover or collect
the Obligations, the provisions of law respecting
the recovering of costs, disbursements and
allowances shall prevail unaffected by this
covenant.
(c) Mortgagor shall indemnify and hold
harmless Mortgagee and Mortgagee's affiliates, and
the respective directors, officers, agents and
employees of Mortgagee and its affiliates from and
against all claims, damages, losses and
liabilities (including, without limitation,
reasonable attorneys' fees and expenses) arising
out of or based upon any matter related to this
Mortgage, the Mortgaged Property or the occupancy,
ownership, maintenance or management of the
Mortgaged Property by Mortgagor, including,
without limitation, any claims based on the
alleged acts or omissions of any employee or agent
of Mortgagor; provided, however, that the
foregoing indemnification shall not apply to
claims, damages and the like arising from the
gross negligence or wilful misconduct of the party
seeking indemnification. This indemnification
shall be in addition to any other liability which
Mortgagor may otherwise have to Mortgagee.
31. 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 its sole discretion it
deems such waiver 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, 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.
32. 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 anywise
impairing or affecting the lien of this Mortgage
or the priority of such lien over any subordinate
lien.
33. Governing Law, etc. This Mortgage
shall be governed by and construed in accordance
with the laws of the State where the Real Estate
is located, except that Mortgagor expressly
acknowledges that by its terms the Indenture shall
be governed and construed in accordance with the
laws of the State of New York, without regard to
principles of conflict of law, 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,
without regard to principles of conflict of law.
34. Waiver of Trial by Jury. Mortgagor
and Mortgagee each hereby irrevocably and
unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this
Mortgage and for any counterclaim brought therein.
Mortgagor hereby waives all rights to interpose
any counterclaim in any suit brought by Mortgagee
hereunder (other than compulsory counterclaims and
other counterclaims that must be interposed in
connection with such suit under applicable law)
and all rights to have any such suit consolidated
with any separate suit, action or proceeding (it
being understood and agreed, however, that
Mortgagor shall have the right to raise any such
claim in a separate suit, action or proceeding).
35. 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 collateral agent to the Mortgagee," the
word "person" shall include any individual,
corporation, partnership, 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 of reference only and in no way limit
or amplify the provisions hereof.
36. 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 the
Code. 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 five 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; and (iii) the addresses of
Mortgagor and Mortgagee are as set forth on the
first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee
from time to time, shall execute, acknowledge and
deliver to Mortgagee one or more separate security
agreements, in form satisfactory to Mortgagee,
covering all or any part of the Mortgaged Property
and will further execute, acknowledge and deliver,
or cause to be executed, acknowledged and
delivered, any financing statement, affidavit,
continuation statement or certificate or other
document as Mortgagee may request in order to
perfect, preserve, maintain, continue or extend
the security interest under and the priority of
this Mortgage and such security instrument.
Mortgagor further agrees to pay to Mortgagee on
demand all costs and expenses incurred by
Mortgagee in connection with the preparation,
execution, recording, filing and re-filing of any
such document and all reasonable costs and
expenses of any record searches for financing
statements Mortgagee shall reasonably require.
Mortgagor shall from time to time, on request of
Mortgagee, deliver to Mortgagee an inventory in
reasonable detail of any of the Mortgaged Property
which constitutes personal property. If Mortgagor
shall fail to furnish any financing or
continuation statement within 10 days after
request by Mortgagee, then pursuant to the
provisions of the Code, Mortgagor hereby
authorizes Mortgagee, without the signature of
Mortgagor, to execute and file any such financing
and continuation statements. The filing of any
financing or continuation statements in the
records relating to personal property or chattels
shall not be construed as in any way impairing the
right of Mortgagee to proceed against any personal
property encumbered by this Mortgage as real
property, as set forth above.
37. Release Upon Payment and Discharge
of Mortgagor's Obligations. Mortgagee shall
release this Mortgage and the lien hereof by
proper instrument upon payment and discharge of
all Obligations secured hereby (including payment
of reasonable expenses incurred by Mortgagee in
connection with the execution of such release) and
upon full and complete performance of all of the
Obligations. Mortgagee shall otherwise release
this Mortgage and the lien hereof in accordance
with Article XII of the Indenture.
38. Maximum Additional Indebtedness.
This Mortgage secures not only said indebtedness
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
referring to this Mortgage, or which is evidenced
by any instrument stating that said indebtedness
is secured by this Mortgage, shall be defined as a
"Future Advance". The maximum additional
indebtedness which may be secured hereby shall not
exceed $50,000,000.00. 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.
39. Consistency with Other Documents.
If any provision hereof conflicts with any
provisions of the Indenture, then the terms of the
Indenture shall control to the extent of such
conflict. If any provision hereof conflicts with
any provision of the Prior Mortgage, or requires
any performance, action or inaction required of
the Mortgagor under the Prior Mortgage, then to
the extent of the conflict or inconsistency, the
Mortgagor shall be excused hereunder by compliance
with the Prior Mortgage.
40. Mortgaged Lease Provisions.
(a) Mortgagor shall pay or cause to be paid all
rent and other charges required under the
Mortgaged Lease as and when the same are due and
shall promptly and faithfully perform or cause to
be performed, all other material obligations,
covenants, agreements, indemnities,
representations, warranties or liabilities
required of Mortgagor under the Mortgaged Lease.
Mortgagor shall not, without the consent of
Mortgagee, (i) either orally or in writing,
modify, amend or permit any modification or
amendment of any of the terms of the Mortgaged
Lease in any material respect, (ii) in any manner,
cancel, terminate or surrender, or permit the
cancellation, termination or surrender of the
Mortgaged Lease, in whole or in part, except,
subject to Section 40(i) hereof, any expiration of
the Mortgaged Lease pursuant to its terms, or
(iii) permit the subordination thereof to any
mortgage; and any attempt to do the foregoing
shall be null and void and of no effect.
(b) Mortgagor shall do, or cause to be
done, all things reasonably necessary to preserve
and keep unimpaired all material rights of
Mortgagor as lessee under the Mortgaged Lease, and
to prevent any material default by Mortgagor under
the Mortgaged Lease, or any termination,
surrender, cancellation, forfeiture or impairment
thereof, except, subject to Section 40(i) hereof,
any expiration of the Mortgaged Lease pursuant to
its terms. Mortgagor hereby authorizes and
irrevocably appoints and constitutes Mortgagee as
its true and lawful attorney-in-fact, which
appointment is coupled with an interest, in its
name, place and stead, upon the occurrence and
continuance of an Event of Default hereunder, to
take any and all actions deemed necessary or
desirable by Mortgagee to perform and comply with
all the obligations of Mortgagor under the
Mortgaged Lease, and to do and take, but without
any obligation so to do, any action which
Mortgagee deems necessary or desirable to cure any
default by Mortgagor under the Mortgaged Lease, to
enter into and upon the Premises or any part
thereof to such extent and as often as Mortgagee,
in its sole reasonable discretion, deems necessary
or desirable in order to cure any default of
Mortgagor pursuant thereto, to the end that the
rights of Mortgagor in and to the leasehold estate
created by the Mortgaged Lease shall be kept
unimpaired and free from default, and all sums so
expended by Mortgagee, with interest thereon at
the Default Rate from the date of each such
expenditure, shall be paid by Mortgagor to
Mortgagee promptly upon demand by Mortgagee.
Mortgagor shall, within five (5) business days
after written request by Mortgagee, execute and
deliver to Mortgagee, or to any person designated
by Mortgagee, such further instruments,
agreements, powers, assignments, conveyances or
the like as may be reasonably necessary to
complete or perfect the interest, rights or powers
of Mortgagee pursuant to this paragraph (b).
(c) Mortgagor shall enforce the
material obligations of the lessor under the
Mortgaged Lease, and shall promptly notify
Mortgagee in writing of any material default by
either the lessor (if known by Mortgagor) or by
Mortgagor in the performance or observance of any
of the terms, covenants and conditions contained
in the Mortgaged Lease. Mortgagor shall deliver
to Mortgagee, within ten (10) business days after
receipt, a copy of any material notice, demand,
complaint or request for compliance made by the
lessor under the Mortgaged Lease. If the lessor
shall deliver to Mortgagee a copy of any notice of
default given to Mortgagor, such notice shall
constitute full authority and protection to
Mortgagee for any actions taken or omitted to be
taken in good faith pursuant to the provisions of
this Mortgage in reliance thereon.
(d) If any action or proceeding shall
be instituted to evict Mortgagor or to recover
possession of the Mortgaged Property from
Mortgagor or any part thereof or interest therein
or any action or proceeding otherwise affecting
the Mortgaged Lease or this Mortgage shall be
instituted, then Mortgagor shall, promptly after
receipt, deliver to Mortgagee a true and complete
copy of each petition, summons, complaint, notice
of motion, order to show cause and all other
provisions, pleadings, and papers, however
designated, served in any such action or
proceeding.
(e) Mortgagor covenants and agrees that
the fee title to the Real Estate and the leasehold
estate created under the Mortgaged Lease shall not
merge but shall always remain separate and
distinct, notwithstanding the union of said
estates either in Mortgagor or a third party by
purchase or otherwise; and in case Mortgagor
acquires the fee title or any other estate, title
or interest in and to the Real Estate, the lien of
this Mortgage shall, without further conveyance,
simultaneously with such acquisition, be spread to
cover and attach to such acquired estate and as so
spread and attached shall be prior to the lien of
any mortgage placed on the acquired estate after
the date of this Mortgage.
(f) No release or forbearance of any of
Mortgagor's obligations under the Mortgaged Lease,
pursuant to the Mortgaged Lease or otherwise,
shall release Mortgagor from any of its
obligations under this Mortgage.
(g) So long as no Event of Default
shall have occurred and be continuing hereunder,
Mortgagor may, without the consent of Mortgagee,
make any election or give any consent or approval
under the Mortgaged Lease. Upon the occurrence
and continuance of any Event of Default hereunder,
all such rights, together with the right of
termination, cancellation, modification, change,
supplement, alteration or amendment of the
Mortgaged Lease, all of which are hereby assigned
for collateral purposes to Mortgagee, shall
automatically vest exclusively in and be
exercisable solely by Mortgagee.
(h) Mortgagor will give Mortgagee
prompt written notice of the commencement of any
arbitration or appraisal proceeding under and
pursuant to the provisions of the Mortgaged Lease
involving amounts in excess of $1,000,000 on a
present value basis. So long as no Event of
Default shall have occurred and be continuing
hereunder, Mortgagor may conduct the proceeding
provided that (i) Mortgagee shall have the right
to intervene and participate in any such
proceeding, (ii) Mortgagor shall confer with
Mortgagee, (iii) Mortgagor shall exercise all
reasonable rights of arbitration conferred upon it
by the Mortgaged Lease and (iv) Mortgagor's
selection of an arbitrator shall be subject to
prior written approval by Mortgagee; provided,
however, upon the occurrence and continuance of an
Event of Default hereunder, Mortgagee shall have
sole authority to conduct the proceeding and
Mortgagor hereby irrevocably appoints and
constitutes Mortgagee as its true and lawful
attorney-in-fact, which appointment is coupled
with any interest, in its name, place and stead,
to exercise, at the expense of Mortgagor, all
right, title and interest of Mortgagor in
connection with such arbitration, including the
right to appoint arbitrators and to conduct
arbitration proceedings on behalf of Mortgagor.
Nothing contained herein shall obligate Mortgagee
to participate in such arbitration.
(i) Mortgagor shall not fail to
exercise any option or right to renew or extend
the term of the Mortgaged Lease without the prior
written consent of Mortgagee, which consent shall
not be unreasonably withheld. Mortgagor shall
give Mortgagee simultaneous written notice of any
such exercise, together with a copy of the notice
or other document given to the lessor, and shall
promptly deliver to Mortgagee a copy of any
acknowledgment by such lessor with respect to the
exercise of such option or right. Upon the
occurrence and continuance of any Event of Default
hereunder, Mortgagee may act in its stead and
Mortgagor hereby irrevocably authorizes and
appoints Mortgagee as its true and lawful
attorney-in-fact, which appointment is coupled
with an interest, in its name, place and stead, to
execute and deliver, for and in the name of
Mortgagor, all of the instruments and agreements
necessary under the Mortgaged Lease or otherwise
to cause any extension of the term of the
Mortgaged Lease. Nothing contained herein shall
affect or limit any rights of Mortgagor or
Mortgagee granted under the Mortgaged Lease.
(j) Mortgagor shall, within ten (10)
days after written demand from Mortgagee, deliver
to Mortgagee proof of payment of all items that
are required to be paid by Mortgagor under the
Mortgaged Lease, including, without limitation,
rent.
(k) (i) The lien of this Mortgage
shall attach to all of Mortgagor's rights and
remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11
U.S.C. section 365(h), as the same may hereafter be
amended (the "Bankruptcy Code"), including,
without limitation, all of Mortgagor's rights to
remain in possession of the Real Estate.
Mortgagor shall not, without Mortgagee's prior
written consent, elect to treat the Mortgaged
Lease as terminated under Subsection 365(h)(1) of
the Bankruptcy Code. Any such election made
without Mortgagee's consent shall be void.
(ii) Mortgagor hereby
unconditionally assigns, transfers and sets
over to Mortgagee all of Mortgagor's claims
and rights to the payment of damages arising
under the Bankruptcy Code from any rejection
of the Mortgaged Lease by the lessor or any
fee owner of the Real Estate or any part
thereof. Upon and during the continuance of
an Event of Default hereunder, Mortgagee
shall have the right to proceed in its own
name or in the name of Mortgagor in respect
of any claim, suit, action or proceeding
relating to the rejection of the Mortgaged
Lease, including, without limitation, the
right to file and prosecute under the
Bankruptcy Code, without joining or the
joinder of Mortgagor, any proofs of claim,
complaints, motions, applications, notices
and other documents, in any case with respect
to the lessor or any fee owner of the Real
Estate or any part thereof. Any amounts
received by Mortgagee as damages arising out
of the rejection of the Mortgaged Lease as
aforesaid shall be applied first to all costs
and expenses of Mortgagee (including, without
limitation, attorneys' fees) incurred in
connection with the exercise of any of its
rights or remedies under this paragraph.
Mortgagor shall, at the request of Mortgagee,
promptly make, execute, acknowledge and
deliver, in form and substance satisfactory
to Mortgagee, a UCC Financing Statement (Form
UCC-1) and all such additional instruments,
agreements and other documents, as may at any
time hereafter be required by Mortgagee to
carry out the assignment pursuant to this
paragraph.
(iii) If pursuant to Subsection
365(h)(2) of the Bankruptcy Code, Mortgagor
shall seek to offset against the rent
reserved in the Mortgaged Lease the amount of
any damages caused by the nonperformance by
the lessor of any of its obligations under
such Mortgaged Lease after the rejection by
the lessor of such Mortgaged Lease under the
Bankruptcy Code, then, upon and during the
continuance of an Event of Default hereunder,
Mortgagor shall, prior to effecting such
offset, notify Mortgagee of its intent to do
so, setting forth the amount proposed to be
so offset and the basis therefor. Upon and
during the continuance of an Event of Default
hereunder, Mortgagee shall have the right to
object to all or any part of such offset
that, in the reasonable judgment of
Mortgagee, would constitute a breach of such
Mortgaged Lease, and in the event of such
objection, Mortgagor shall not effect any
offset of the amounts so objected to by
Mortgagee. Neither Mortgagee's failure to
object as aforesaid nor any objection
relating to such offset shall constitute an
approval of any such offset by Mortgagee.
(iv) If any action, proceeding,
motion or notice shall be commenced or filed
in respect of the lessor or any other fee
owner of the Real Estate, or any portion
thereof or interest therein, or the Mortgaged
Lease in connection with any case under the
Bankruptcy Code, then, upon and during the
continuance of an Event of Default hereunder,
Mortgagee shall have the option, exercisable
upon notice from Mortgagee to Mortgagor, to
conduct and control any such litigation with
counsel of Mortgagee's choice. Upon and
during the continuance of an Event of Default
hereunder, Mortgagee may proceed in its own
name or in the name of Mortgagor in
connection with any such litigation, and
Mortgagor agrees to execute any and all
powers, authorizations, consents or other
documents reasonably required by Mortgagee in
connection therewith. Mortgagor shall, upon
demand, pay to Mortgagee all costs and
expenses (including attorneys' fees) paid or
incurred by Mortgagee in connection with the
prosecution or conduct of any such
proceedings. Upon and during the continuance
of an Event of Default hereunder, Mortgagor
shall not commence any action, suit,
proceeding or case, or file any application
or make any motion, in respect of the
Mortgaged Lease in any such case under the
Bankruptcy Code without the prior written
consent of Mortgagee.
(v) Mortgagor shall, after
obtaining knowledge thereof, promptly notify
Mortgagee of any filing by or against the
lessor or fee owner of the Real Estate of a
petition under the Bankruptcy Code.
Mortgagor shall promptly deliver to
Mortgagee, following receipt, copies of any
and all notices, summonses, pleadings,
applications and other documents received by
Mortgagor in connection with any such
petition and any proceedings relating
thereto.
(vi) If there shall be filed by or
against Mortgagor a petition under the
Bankruptcy Code and Mortgagor, as lessee
under the Mortgaged Lease, shall determine to
reject the Mortgaged Lease pursuant to
Section 365(a) of the Bankruptcy Code, then
Mortgagor shall give Mortgagee not less than
twenty (20) days' prior notice of the date on
which Mortgagor shall apply to the Bankruptcy
Court for authority to reject the Mortgaged
Lease. Mortgagee shall have the right, but
not the obligation, to serve upon Mortgagor
within such twenty (20) day period a notice
stating that Mortgagee demands that Mortgagor
assume and assign the Mortgaged Lease to
Mortgagee pursuant to Section 365 of the
Bankruptcy Code. If Mortgagee shall serve
upon Mortgagor the notice described in the
preceding sentence, Mortgagor shall not seek
to reject such Mortgaged Lease and shall
comply with the demand provided for in the
preceding sentence; provided, however, that
in connection with any such assumption and
assignment, Mortgagee shall provide Mortgagor
with the funds necessary to comply with the
cure obligations and other monetary
obligations described under subsection 365(b)
of the Bankruptcy Code, and the amount of any
such sums so provided shall be secured hereby
and shall be included as claims against
Mortgagor in the bankruptcy proceeding. In
addition, effective upon the entry of an
order for relief with respect to Mortgagor
under the Bankruptcy Code, Mortgagor hereby
assigns and transfers to Mortgagee a non-
exclusive right to apply to the Bankruptcy
Court under subsection 365(d)(4) of the
Bankruptcy Code for an order extending the
period during which the Mortgaged Lease may
be rejected or assumed.
(l) If the Mortgaged Lease shall be
terminated prior to the natural expiration of its
term, and if, pursuant to any provision of the
Mortgaged Lease or otherwise, Mortgagee or its
designee shall acquire from the lessor under such
Mortgaged Lease a new lease of the Real Estate or
any part hereof, Mortgagor shall have no right,
title or interest in or to such new lease or the
leasehold estate created thereby, or renewal
privileges therein contained.
(m) Notwithstanding anything contained
herein to the contrary, the terms and provisions
of this Section 40 shall be effective only from
and after the date (if ever) on which the
Leasehold Consent shall have been obtained and
recorded in accordance with the terms hereinabove
provided.
This Mortgage has been duly executed by
Mortgagor on the date first above written.
ATTEST:
By: /S/ ELIZABETH B KELLY
----------------------------
Name: Elizabeth B. Kelly
Title: [Assistant] Secretary
NEWPORT STEEL CORPORATION
By: /S/ J. R. PARKER
------------------------
Name: John R. Parker
Title: [Vice] President
[SEAL]
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
The foregoing instrument was
acknowledged before me this 26th day of July,
1995, by John R. Parker and Elizabeth B. Kelly,
[Vice] President and [Assistant] Secretary,
respectively, of Newport Steel Corporation, a
Kentucky corporation, on behalf of said
corporation.
/S/ STEVEN MAHER
Notary Public
[Notarial Seal]
My Commission Expires:
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
10/15/96
Qualified in New York County
Certificate Filed in
New York County
Commission Expires October 15, 1996
SCHEDULE A
WILDER WORKS
PARCEL A (OVERALL PARCEL):
A parcel of land lying on the southwesterly side
of Licking Pike (KY 9) in Wilder, Campbell County,
Kentucky, and being more particularly described as
follows:
Beginning at a point said point being 30.5 feet
left of Licking Pike Station 50+47, said point
also being North 0degree 57' 44" East 460.00 feet from
the northwesterly right of way line of North
Street, and running thence; North 85degree 34' 40" West
648.25 feet; thence South 05degree 35' 23" West 250.00
feet; thence North 85degree 34' 40" West 530.00 feet;
thence North 84degree 24' 37" West 45.00 feet to a
point in the westerly right of way line of the L &
N Railroad property and the TRUE POINT OF
BEGINNING of the parcel herein described thence
continuing along said westerly right of way of the
L & N Railroad property the next twenty-one (21)
courses:
1) South 14degree 43' 41" West 330.77 feet;
2) South 84degree 24' 37" East 78.00 feet;
3) South 05degree 35' 23" West 800.00 feet;
4) South 09degree 18' 31" West 100.21 feet;
5) South 05degree 35' 23" West 200.00 feet;
6) South 84degree 24' 37" West 17.00 feet;
7) South 05degree 35' 23" West 73.97 feet;
8) South 84degree 24' 37" East 8.00 feet;
9) South 05' 35' 23" West 164.00 feet;
10) North 84degree 24' 37" West 8.00 feet;
11) South 05degree 35' 23" West 126.00 feet;
12) South 84degree 24' 37" West 19.50 feet;
13) South 05degree 35' 23" West 84.00 feet;
14) North 84degree 24' 37" West 19.50 feet;
15) South 05degree 35' 23" West 91.17 feet to
16) a point of curvature of a 907.84 foot
radius to the right (chord bears South
09degree 34' 22" West 126.12 feet) thence
southwesterly along the arc of said
curve 126.22 feet to
17) a point of compound curvature to the
right (chord bears South 24degree 04' 46"
West 237.61 feet) thence southwesterly
along the arc of said curve 238.30 feet
to
18) a point of compound curvature to the
right (chord bears South 44degree 50' 26"
West 410.88 feet) thence southwesterly
along the arc of said curve 426.23 feet;
thence
19) South 58degree 01' 23" West 175.71 feet;
20) North 80degree 37' 45" West 333.02 feet;
21) South 58degree 01' 23" West 132.49 feet to a
point of intersection of the westerly
right of way line of the L & N Railroad
property and the centerline of the
Licking River; thence along the
centerline of said River the next nine
(9) courses:
(1) North 37degree 07' 46" West 682.89 feet;
(2) North 22degree 35' 30" West 678.77 feet;
(3) North 10degree 33' 32" West 650.94 feet;
(4) North 13degree 39' 07" East 1015.11 feet;
(5) North 21degree 14' 11" East 986.30 feet;
(6) North 16degree 12' 13" East 1039.41 feet;
(7) North 14degree 29' 45" East 1308.22 feet;
(8) North 11degree 13' 44" East 872.36 feet;
(9) North 20degree 21' 59" East 414.26 feet;
thence leaving said centerline of Licking River
and continuing North 67degree 25' 56" East 274.83 feet
to the westerly right of way of the L & N Railroad
property thence along said westerly right of way
line the next eight (8) courses:
(1) South 27degree 01' 43" East 290.00 feet;
(2) South 25degree 25' 20" West 831.25 feet;
(3) South 15degree 13' 54" East 597.60 feet;
(4) South 03degree 00' 57" East 266.00 feet;
(5) South 86degree 59' 03" West 5.00 feet;
(6) South 03degree 00' 57" East 567.23 feet;
(7) South 01degree 20' 23" West 436.40 feet;
(8) South 05degree 35' 23" West 1743.44 feet;
to the TRUE POINT OF BEGINNING. Contains 216.998
acres. Less and excepting the parcel of land deed
to Sanitation District No. 1 of Campbell and
Kenton Counties of record at Deed Book 375, Page
323 of the Campbell County Recorder's Office.
Contains 0.0344 Acres. Overall parcel total:
216.964 Acres.
PARCEL B (ENTRANCE PARCEL) (EASEMENT ONLY):
A parcel of land lying on the southwesterly side
of Licking Pike (KY 9) in Wilder, Campbell County,
Kentucky, and being more particularly described as
follows:
Beginning at point, said point being 30.5 feet
left of Licking Pike Station 50+47, said point
also being North 0degree 57' 44" East 460.00 feet from
the northwesterly right of way line of North
Street, and running thence North 85degree 34' 40" West
648.25 feet; thence South 05degree 35' 23" West 250.00
feet; thence North 85degree 34' 40" West 530.00 feet;
thence North 84degree 24' 37" West 45.00 feet to a
point in the westerly right of way line of the L &
N Railroad; thence North 05degree 35' 23" East along
said westerly right of way line 7.65 feet to the
TRUE POINT OF BEGINNING of the tract herein
described; thence North 05degree 35' 23" East along
said westerly right of way line 34.93 feet; thence
North 74degree 05' 23" East 258.43 feet to a point
curvature of a 457.69 foot radius curve to the
left (chord bears North 64degree 49' 53" East 147.27
feet) thence northeasterly along the arc of said
curve 147.91 feet; thence North 55degree 34' 23" East
100.88 feet; thence North 54degree 32' 08" East 280.23
feet; thence North 45degree 59' 00" East 149.80 feet;
thence North 42degree 40' 00" East 209.82 feet; thence
North 35degree 41' 42" East 95.78 feet; thence North
18degree 44' 12" East 94.69 feet; thence North 06degree 33'
27" East 533.11 feet; thence North 12degree 42' 47"
East 182.67 feet; thence North 03degree 34' 17" East
96.27 feet; thence North 08degree 18' 35" West 97.12
feet; thence North 12degree 54' 23" West 216.84 feet;
thence North 05degree 10' 53" West 102.43 feet; thence
South 00' 54' 07" east 81.51 feet; thence South
13degree 03' 52" East 55.62 feet; thence North 27degree 02'
44" East 58.19 feet to the westerly right of way
line of Licking Pike (KY route 9); thence South
19degree 55' 52" East along said westerly right of way
line 44.46 feet; thence South 27degree 02' 44" West
23.88 feet; thence South 13degree 03' 52" West 48.18
feet; thence South 00degree 54' 07" West 76.33 feet;
thence South 05degree 10' 53" East 98.52; thence South
12degree 54' 23" East 216.05 feet; thence South 08degree 18'
35" West 101.67 feet; thence South 03degree 34' 17"
West 102.25 feet; thence South 12degree 42' 47" West
183.52 feet; thence South 06degree 33' 27" West 534.83
feet; thence South 18degree 44' 12" West 103.00 feet;
thence South 35degree 41' 42" West 102.60 feet; thence
South 42degree 40' 00" West 212.74 feet; thence South
45degree 59' 00" West 153.17 feet; thence South 54degree 32'
08" West 282.96 feet; thence South 55degree 34' 23"
West 101.17 feet to a point of curvature of a
490.19 foot radius curve to the left (chord bears
South 64degree 49' 53" West 157.73 feet) thence
southwesterly along the arc of said curve 158.42
feet; thence South 74degree 05' 23" West 271.23 feet to
a point on the aforementioned westerly right of
way line of the L & N Railroad property and the
TRUE POINT OF BEGINNING. Contains 2.064 Acres.
Groups: 1372
1533
PARCEL C (AKA PARCEL 38) (EASEMENT ONLY):
A perpetual easement, right-of-way or servitude
approximately 38 feet in width for the purpose of
constructing, maintaining, repairing and using a
vehicular grade crossing, a pedestrian overpass or
a pedestrian and vehicular overpass or a
combination thereof, and in the event of the use
of any overpass for the future purposes of
erecting, maintaining and using the necessary
foundations and supports for spans four tracts in
width and having a vertical clearance of not less
than 23 feet and a horizontal clearance of not
less than 8 feet. Said easement is for the
further purpose of installing, maintaining,
repairing and using underground, grade or overhead
water, gas and electric lines, which lies if
overhead and not affixed to a structure, shall
have a vertical clearance of not less than 30 feet
and a horizontal clearance of not less than 8
feet. Said easement being over, upon and across a
certain tract or parcel of land situated in the
Town of Wilder, Campbell County, Kentucky, and
beginning at a point North 5 degrees 21 minutes 16
seconds East 109.41 feet distant from the South
line of the lands conveyed to Andrews Steel
Company by James C. Wright, Trustee, October 23,
1918 and recorded in Deed Book 129, page 400, of
the records in the County Clerk's office at
Newport, Kentucky, where same intersects the East
line of the L & N right of way; thence North 84
degrees 38 minutes 44 seconds West a distance of
75 feet to a point in the west line of the L & N
right of way; thence North 5 degrees 21 minutes 16
seconds East along said West line of said right of
way a distance of 38 feet to a point; thence South
84 degrees 38 minutes 44 seconds East a distance
of 75 feet to a point in the East line of said
right of way; thence South 5 degrees 21 minutes 16
seconds West along said East line of said right of
way a distance of 38 feet to the point of
beginning.
Group: 1372
PARCEL D (AKA PARCEL 50) (EASEMENT ONLY)
The rights and easements granted to Interlake,
Inc. in the Easement Agreement dated March 16,
1976, recorded May 14, 1976 in Miscellaneous Book
78, page 225, in Campbell County, Kentucky, made
by and among Interlake, Inc., Louisville, and
Nashville Railroad Company and Licking River
Terminal Company.
PARCEL E - LEASEHOLD ESTATE:
Leasehold Estate created by Sublease from
Interlake, Inc. to Newport Steel Corporation dated
4/15/81 and recorded at Misc. Book 95, page 167,
leasing for a term of years beginning 4/15/81 and
continuing until September 1, 1996, and any
greater estate acquired by Mortgagor hereafter,
the following described property (2 PARTS):
GROUP: 760, 768, 1372 AND 1533
PART 1: LEASEHOLD ESTATE
Situate in the City of Wilder, Campbell County,
Kentucky and being more particularly described as
follows:
Commencing at the point of intersection of the
center line of North Street and the center line of
Elm Street as shown on the plat of Maple Park
Subdivision and recorded in Plat Book 12, Page 4B
in the Campbell County Recorder's Office at
Newport, Kentucky; thence with the center line of
North Street N. 82degree 17' W. 869.94 feet to a point
in the easterly right-of-way line of the
Louisville and Nashville Railroad; thence with the
easterly right-of-way line of said Railroad N. 5degree
21' 16" E., 1065.98 feet to the real POINT OF
BEGINNING; thence continuing with the said
railroad right-of-way line N. 5degree 21' 16" E., 150.0
feet to a point; thence S. 84degree 38' 44" E., 240.00
feet to a point; thence S. 5degree 21' 16" W., 150.0
feet to a point; thence N. 84degree 38' 44" W., 240.00
feet to the PLACE OF BEGINNING.
Containing 0.826 acres, more or less.
PART 2: II-EASEMENT AND RIGHTS OF WAY - A
Leasehold only as described above, created on the
following Easement and Right of Way:
An EASEMENT for ingress and egress to the herein
described tract. Said easement to extend from the
intersection of the existing access drive to the
Interlake Steel Corporation Plant with State Route
9 (Licking Pike), thence with said access drive
south westwardly 2004.34 feet, more or less, to a
point; thence with an easement or right-of-way, 25
feet in width, 960 feet, more or less to a point
in the southerly line of the tract described
herein; the center line of said easement being
more particularly described as follows: Beginning
at the point of intersection of the center line of
said existing access drive to the Interlake Steel
Corporation Plant with the center line of State
Route 9 (Licking Pike); thence S. 43degree 04' W.,
79.72 feet to a point; thence curving to the left
along the arc of a circle having a radius of 125
feet a distance of 51.12 feet said arc being
subtended by a chord bearing S. 31degree 21' W., and
50.77 feet long; thence continuing with the center
line of said existing drive, S. 19degree 38' W., 78.38
feet; thence 12degree 31' W., 100.00 feet; thence S. 5degree
53' W., 216.64 feet; thence S. 9degree 44' W., 100.00
feet; thence S. 20degree 50' W., 100.00 feet; thence S.
31degree 11' W., 182.86 feet; thence S. 25degree 14' W.,
533.83 feet; thence S. 36degree 33' W., 100.00 feet;
thence S. 53degree 01' W., 100.00 feet and S. 62degree 28'
W., 361.80 feet to a point in the center of the
said 25 foot easement or right-of-way; thence with
the center line of said 25 foot easement N. 81degree
54' 15" W., 532.40 feet; thence N. 1degree 57' 45" E.,
300.25 feet and N. 8degree 15' 45" E., 130.51 feet to a
point in the southerly line of the herein above
described tract, said point being S. 84degree 38' 44"
E., and 55.84 feet from the southwesterly corner
of said tract.
PARCEL F:
A parcel of land lying on the Southwesterly side
of Licking Pike (KY 9) in Wilder, Campbell County,
Kentucky also a portion of property as described
as "Parcel D" recorded at Deed Book 465, page 282
in the Campbell County recorder's office and being
more particularly described as follows:
Beginning at a point, said point being 30.5 feet
left of Licking Pike station 87+23 said point also
being South 32degree 11' 40" East 308.00 feet from the
center of Huling Street and running thence South
72degree 46' 00" West 92.36 feet; thence South 17degree 14'
00" East 466.88 feet; thence South 05degree 06' 20"
East 330.85 feet; thence South 69degree 37' 40" West
200.71 feet; thence South 06degree 12' 20" East 759.76
feet; thence South 06degree 47' 00" West 768.02 feet;
thence South 83degree 13' 00" East 202.29 feet; thence
South 05degree 03' 00" West 325.20 feet to the TRUE
POINT OF BEGINNING of the tract herein described
and running thence a South 84degree 57' 00" East 12.90
feet; thence South 05degree 03' 00" West 70.00 feet;
thence North 84degree 57' 00" West 185.00 feet; thence
North 05degree 03' 00" East 70.00 feet; thence South
84degree 57' 00" East 172.10 feet to the TRUE POINT OF
BEGINNING. Contains 0.2973 acres. Together with
a thirty (30) foot wide access easement described
as follows:
Beginning at the southwest most corner of the
above described tract and running thence South 84degree
57' 00" East 30.00 feet; thence South 05degree 03' 00"
West 315.19 feet; thence South 85degree 54' 40" East
506.53 feet to the westerly line of Steel Plant
Road thence South 45degree 59' 00" West along said
westerly line 40.30 feet; thence North 85degree 54' 40"
West 510.13 feet; thence North 05degree 03' 00" East
345.70 feet to the point of beginning of the
access easement herein described.
SCHEDULE A
NEWPORT WORKS
GROUP: 41202/A1 41205/A1
41202/A2 41205/Z
41202/A3
41202/A4 41476/A1
41202/A5 41476/Z
41202/Z
41480/A1
41203/A1 41480/Z
41203/A2
41203/A3 41527/A1
41203/A4 41527/A2
41203/A5 41527/Z
41203/Z
41528/A1
41204/A1 41528/A2
41204/A2 41528/A3
41204/A3
41204/A4
41204/A5
41204/Z
PARCEL 1:
A parcel of land lying on the easterly side of the
Licking River between 6th Street and 10th Street
in Newport, Campbell County, Kentucky and being
more particularly described as follows:
Beginning at a point in the southerly right of way
line of Sixth Street at its intersection with the
centerline of Lowell Street (now closed) said
point being South 55degree 18' 00" West 25.00 feet from
the northwesterly corner of Lot 138, Southern
Subdivision Plat Book 5, Page 31 Campbell County
Records, Newport, Kentucky and running thence
South 35degree 00' 00" East along said centerline of
closed Lowell Street 718.27 feet to the centerline
of 8th Street; thence North 55degree 11' 00" East along
said centerline 28.36 feet; thence South 46degree 00'
09" East 249.86 feet; thence South 34degree 49' 00"
East 12.50 feet to the centerline of closed Powell
Street; thence North 55degree 11' 00" East along said
centerline of Powell Street 114.09 feet; to the
centerline of closed Mill Street; thence South 35degree
00' 00" East along said centerline 361.61 feet to
the northerly right of way line of 9th Street;
thence South 55degree 03' 00" West along said right of
line 212.09 feet to the westerly right of way line
of Lowell Street; thence South 34degree 52' 00" East
along said westerly right of line of Lowell Street
531.03 feet; thence North 44degree 28' 49" West 101.77
feet; thence South 56degree 23' 49" West 632.38 feet to
the centerline of the Licking River; thence along
the centerline of said river the next three
courses:
1) North 35degree 24' 07" West 889.48 feet
2) North 25degree 59' 02" West 759.37 feet
3) North 18degree 29' 00" West 247.25 feet
thence North 55degree 00' 00" East 466.80 feet; thence
South 35degree 18' 00" East 140.50 feet to the
aforementioned southerly right of way line of 6th
Street; thence North 55degree 18' 00" East along said
right of way line 25.00 feet to the point of
beginning. Contains 29.090 Acres more or less.
GROUP: 41433/A2
GROUP: 41433/A3
PARCEL 2:
Situated in City of Newport, Campbell County,
State of Kentucky, and more particularly described
as follows: Lots 244, 245, 246, 247, 248 and 249
and the westerly 22 1/2 feet off of Lot 243 in the
Trustees' Addition to the said City of Newport.
Said lot number Two Hundred Forty-Nine (249) being
located at the Southeast corner of Ninth and
Lowell Streets, fronting thirty-five (35) feet on
Lowell Street by one hundred (100) feet deep.
Lots Numbers Two Hundred Forty-Four (244) to Two
Hundred Forty-Eight (248) each fronting thirty
(30) feet on the southerly side of ninth Street;
and the westerly twenty-two and one-half (22 1/2)
feet off of Lot Number Two Hundred Forty-Three
(243) is described as follows: Beginning at a
point in the southerly line of Ninth Street,
between Brighton and Lowell Streets at the
dividing line between Lots Number Two Hundred
Forty-Three (243) and Two Hundred Forty-Four (244)
in said addition; thence eastwardly with the
southerly line of Ninth Street twenty-two and one
half (22 1/2) feet, and from these two points
extending back southwardly, in rectangular shape,
one hundred (100) feet deep to an alley.
Also being described as follows: beginning at a
point where the east right of way line of Lowell
Street intersects the southerly right of way line
of 9th Street and running thence North 55degree 03' 00"
East along said southerly right of way line 207.50
feet; thence South 34degree 52' 00" East 100.00 feet;
thence South 55degree 03' 00" West 207.50 feet to the
easterly right of way line of the aforementioned
east right of way line of Lowell Street; thence
North 34degree 52' 00" West along said right of way
line 100.00 feet to the point of beginning.
Contains 0.4764 Acres.
GROUP: 41434/A1
PARCEL 3:
Lying and being in the City of Newport, Campbell
County, Kentucky, and known and designated as Lot
Number Two Hundred Fifty (250) in the Trustees'
Addition to the City of Newport, Campbell County,
Kentucky, said lot being situated on the Northeast
corner of Lindsey and Lowell Streets in said City
and situated in the City of Newport, County of
Campbell, and State of Kentucky, and being all of
Lot Numbered Two Hundred and Fifty-One (251) in
the Trustees' Addition to said City. Said Lot
No. 251 is bounded as follows: Beginning at a
point in the northerly line of Lindsey Street,
which point is 35 feet eastwardly from the
northeasterly corner of Lindsey and Lowell
Streets; thence it runs eastwardly, in said
northerly line of Lindsey Street, thirty (3) feet
to a point; and from such two points extends back
northwardly, between parallel lines, and lines
which are parallel with Lowell Street aforesaid,
one hundred (100) feet to the southerly line of a
16-foot wide alley.
Also being described as follows: Beginning at a
point where the easterly right of way line of
Lowell Street intersects with the northerly right
of way line of Lindsey Street and running thence;
North 34degree 52' 00" West along said easterly right
of way line of Lowell Street 100.00 feet; thence
North 55degree 03' 00" East 65.00 feet; thence South
34degree 52' 00" East 100.00 feet to the aforementioned
northerly right of way of Lindsey Street thence;
South 55degree 03' 00" West along the northerly right
of way line 65.00 feet to the point of beginning.
Contains 0.1492 Acres.
SCHEDULE A-1
WILDER WORKS
PARCEL E - LEASEHOLD ESTATE:
Leasehold Estate created by Sublease from
Interlake, Inc. to Newport Steel Corporation dated
4/15/81 and recorded at Misc. Book 95, page 167,
leasing for a term of years beginning 4/15/81 and
continuing until September 1, 1996, and any
greater estate acquired by Mortgagor hereafter,
the following described property (2 PARTS):
GROUP: 760, 768, 1372 AND 1533
PART 1: LEASEHOLD ESTATE
Situate in the City of Wilder, Campbell County,
Kentucky and being more particularly described as
follows:
Commencing at the point of intersection of the
center line of North Street and the center line of
Elm Street as shown on the plat of Maple Park
Subdivision and recorded in Plat Book 12, Page 4B
in the Campbell County Recorder's Office at
Newport, Kentucky; thence with the center line of
North Street N. 82 17' W. 869.94 feet to a point
in the easterly right-of-way line of the
Louisville and Nashville Railroad; thence with the
easterly right-of-way line of said Railroad N. 5
21' 16" E., 1065.98 feet to the real POINT OF
BEGINNING; thence continuing with the said
railroad right-of-way line N. 5 21' 16" E., 150.0
feet to a point; thence S. 84 38' 44" E., 240.00
feet to a point; thence S. 5 21' 16" W., 150.0
feet to a point; thence N. 84 38' 44" W., 240.00
feet to the PLACE OF BEGINNING.
Containing 0.826 acres, more or less.
PART 2: II-EASEMENT AND RIGHTS OF WAY - A
Leasehold only as described above, created on the
following Easement and Right of Way:
An EASEMENT for ingress and egress to the herein
described tract. Said easement to extend from the
intersection fo the existing access drive to the
Interlake Steel Corporation Plan with State Route
9 (Licking Pike), thence with said access drive
south westwardly 2004.34 feet, more or less, to a
point; thence with an easement or right-of-way, 25
feet in width, 960 feet, more or less to a point
in the southerly line of the tract described
herein; the center line of said easement beign
more particularly described as follows: Beginning
at the point of intersection fothe center line of
said existing access drive to the Interlake Steel
Corporation Plan with the center line of State
Route 9 (Licking Pike); thence S. 43 04' W.,
79.72 feet to a point; thence curving to the left
along the arc of a circle having a radius of 125
feet a distance of 51.12 feet said arc being
subtended by a chord bearing S. 31 21' W., and
50.77 feet long; thence continuing with the center
line of said existing drive, S. 19 38' W., 78.38
feet; thence 12 31' W., 100.00 feet; thence S. 5
53' W., 216.64 feet; thence S. 9 44' W., 100.00
feet; thence S. 20 50' W., 100.00 feet; thence S.
31 11' W., 182.86 feet; thence S. 25 14' W.,
533.83 feet; thence S. 36 33' W., 100.00 feet;
thence S. 53 01' W., 100.00 feet and S. 62 23'
W., 361.80 feet to a point in the center of the
said 25 foot easement or right-of-way; thence with
the center line of said 25 foot easement N. 81
54' 15" W., 532.40 feet; thence N. 1 57' 45" E.,
300.25 feet and N. 8 15' 45" E., 130.51 feet to a
point in the southerly line of the herein above
described tract, said point being S. 84 38' 44"
E., and 55.84 feet from the southwesterly corner
of said tract.
SCHEDULE B
EXCLUDED PROPERTY
a) Any and all Collateral (as defined
in that certain Revolving Credit, Guaranty and
Security Agreement dated as of July 28, 1995 by
and between Newport Steel Corporation, Koppel
Steel Corporation and Imperial Adhesives, Inc., as
borrowers, NS Group, Inc., Erlanger Tubular
Corporation, Northern Kentucky Air, Inc. and
Northern Kentucky Management, Inc., as guarantors,
The Bank of New York Commercial Corporation, as
Lender, as ACM Agent and as Co-Agent, and PNC Bank
Ohio, National Association, as Lender and as Co-
Agent, and other lenders parties thereto).
b) Any and all intellectual property
rights and interests, including, without
limitation, any and all trade names, trade marks,
copyrights, trade secrets and patents.
c) Any and all vehicles and rolling
stock.
d) Any and all leased Equipment if and
to the extent the terms and conditions of the
applicable lease documentation prohibit, restrict
or require consent in connection with the creation
of liens and security interests with respect to
such Equipment.
e) Any and all general intangibles.
f) Stripper Crane subject to Contract
for Lease and Rent dated September 6, 1977 between
City of Wilder, Kentucky and Interlake, Inc.,
recorded at Misc. Book 82, page 401, and Sublease
dated April 15, 1981 between Interlake, Inc. and
Newport Steel Corporation, recorded at Misc. Book
95, page 101, provided, however, that such
Stripper Crane shall case to be Excluded Property
at such time (if ever) as all consents required in
connection with the granting of liens and security
interests with respect to such Stripper Crane
under such Lease and Sublease have been obtained.
g) Any and all Equipment described in
a certain Security Agreement, dated as of February
13, 1992, together with all exhibits, supplements,
addenda and amendments thereto in existence or
effect on the date hereof or hereafter.
Recording requested by, and
when recorded return to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
ATTN: F. Robert Wheeler, Jr., Esq.
OPEN-END JUNIOR MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
from
KOPPEL STEEL CORPORATION, Mortgagor
to
NS GROUP, INC., Mortgagee
DATED AS OF JULY 28, 1995
THIS MORTGAGE SECURES FUTURE ADVANCES
(All notices to be given to Mortgagee pursuant to 42
PA.C.S.A. section 8143 shall be given as set forth in Section 24
of
this Mortgage.)
TABLE OF CONTENTS
Background . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . 2
1. Warranty of Title . . . . . . . . . . . . . . . . . 6
2. Payment and Performance of Obligations. . . . . . . 7
3. Requirements. . . . . . . . . . . . . . . . . . . . 7
4. Payment of Taxes and Other Impositions. . . . . . . 8
5. Insurance . . . . . . . . . . . . . . . . . . . . . 9
6. Restrictions on Liens, Encumbrances and
Sales . . . . . . . . . . . . . . . . . . . . . . . 13
7. Relationship of Mortgagee and Mortgagor . . . . . . 14
8. Maintenance; No Alteration; Inspection;
Utilities . . . . . . . . . . . . . . . . . . . . . 14
9. Condemnation/Eminent Domain . . . . . . . . . . . . 15
10. Leases. . . . . . . . . . . . . . . . . . . . . . . 15
11. Further Assurances/Estoppel
Certificates. . . . . . . . . . . . . . . . . . . . 17
12. Mortgagee's Right to Perform. . . . . . . . . . . . 18
13. Hazardous Material. . . . . . . . . . . . . . . . . 18
14. Asbestos. . . . . . . . . . . . . . . . . . . . . . 19
15. Event of Default. . . . . . . . . . . . . . . . . . 20
16. Remedies. . . . . . . . . . . . . . . . . . . . . . 20
17. Right of Mortgagee to Credit Sale . . . . . . . . . 23
18. Appointment of Receiver . . . . . . . . . . . . . . 23
19. Extension, Release, etc.. . . . . . . . . . . . . . 24
20. Assignment of Rents . . . . . . . . . . . . . . . . 24
21. Trust Funds . . . . . . . . . . . . . . . . . . . . 25
22. Additional Rights . . . . . . . . . . . . . . . . . 25
23. Changes in Method of Taxation . . . . . . . . . . . 26
24. Notices . . . . . . . . . . . . . . . . . . . . . . 26
25. No Oral Modification. . . . . . . . . . . . . . . . 26
26. Partial Invalidity. . . . . . . . . . . . . . . . . 26
27. Waiver of Right of Redemption and Other
Rights. . . . . . . . . . . . . . . . . . . . . . . 26
28. Remedies Not Exclusive. . . . . . . . . . . . . . . 27
29. Multiple Security . . . . . . . . . . . . . . . . . 28
30. Expenses; Indemnification . . . . . . . . . . . . . 29
31. Successors and Assigns. . . . . . . . . . . . . . . 30
32. No Waivers, etc.. . . . . . . . . . . . . . . . . . 31
33. Governing Law, etc. . . . . . . . . . . . . . . . . 31
34. Waiver of Trial by Jury . . . . . . . . . . . . . . 31
35. Certain Definitions . . . . . . . . . . . . . . . . 32
36. Security Agreement under Uniform
Commercial Code . . . . . . . . . . . . . . . . . . 32
37. Release Upon Payment and Discharge of
Mortgagor's Obligations . . . . . . . . . . . . . . 33
38. Industrial Plant Mortgage . . . . . . . . . . . . . 34
39. Open-End Mortgage . . . . . . . . . . . . . . . . . 34
SCHEDULES
Schedule A - Description of Real Property
Schedule B - Description of Excluded Property
OPEN-END JUNIOR MORTGAGE, ASSIGNMENT OF RENTS AND
LEASES
AND SECURITY AGREEMENT
THIS MORTGAGE SECURES FUTURE ADVANCES
(All notices to be given to Mortgagee pursuant to
42 PA.C.S.A. section 8143 shall be given as set forth in
Section 24 of this Mortgage.)
THIS OPEN-END JUNIOR MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES AND SECURITY
AGREEMENT, dated as of July 28, 1995 is made by
KOPPEL STEEL CORPORATION, a Pennsylvania
corporation ("Mortgagor"), whose address is Sixth
Avenue and Mount, P.O. Box 750, Beaver Falls,
Pennsylvania 15010, to NS GROUP, INC., a Kentucky
corporation ("Mortgagee"), whose mailing address
is Ninth and Lowell Streets, Newport, Kentucky
41072. 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. Mortgagor is the owner of the
parcel(s) of real property described on Schedule A
attached (such real property, together with all of
the buildings, improvements, structures and
fixtures now or subsequently located thereon (the
"Improvements"), being collectively referred to as
the "Real Estate").
B. Mortgagor is a wholly owned
subsidiary of Mortgagee.
C. Mortgagee and The Huntington
National Bank, as Trustee, are parties to that
Indenture dated as of July 28, 1995 (as the same
may be amended, modified or otherwise supplemented
from time to time, the "Indenture"; capitalized
terms not defined herein shall have the meanings
ascribed thereto in the Indenture) for the benefit
of Holders of 13.5% Senior Secured Notes due 2003
in the aggregate principal amount of
$125,000,000.00 (the "Securities") issued by
Mortgagee.
D. Mortgagor has executed and
delivered to Mortgagee that certain intercompany
note of even date herewith in the original
principal amount of $81,500,000 (the "Intercompany
Note"). References in this Mortgage to the
"Default Rate" shall mean the interest rate
payable with respect to the Securities plus two
percent (2%) per annum.
E. Mortgagor, to secure its
obligations under the Intercompany Note, has
executed and delivered that certain security
agreement of even date herewith in favor of
Mortgagee (the "ICN Security Agreement"), which
ICN Security Agreement grants Mortgagee a security
interest in and to certain personal property now
or subsequently used in connection with the
operation of the Real Estate.
NOW, THEREFORE, in consideration of the
premises, the Mortgagor hereby agrees with the
Mortgagee as follows:
Granting Clauses
For good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, Mortgagor agrees that to secure all
of Mortgagor's obligations and liabilities under
the Intercompany Note and all other obligations
and liabilities of Mortgagor to Mortgagee
(including, without limitation, interest accruing
after the maturity of the Intercompany Note and
interest accruing after the filing of any petition
in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding,
relating to the Mortgagor, whether or not a claim
for post-filing or post-petition interest is
allowed in such proceeding and interest, to the
extent permitted by law, on the unpaid interest),
whether direct or indirect, absolute or
contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out
of, or in connection with, the Intercompany Note,
this Mortgage, the ICN Security Agreement or any
other document made, delivered or given in
connection therewith (collectively, the "Security
Documents"), in each case whether on account of
principal, interest, fees, indemnities, costs,
expenses or otherwise (including, without
limitation, all fees and disbursements of counsel
to Mortgagee that are required to be paid by the
Mortgagee pursuant to the terms of this Mortgage
or any other Security Document) (collectively, the
"Obligations").
MORTGAGOR BARGAINS, SELLS, MORTGAGES, WARRANTS,
CONVEYS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER
AND BY THESE PRESENTS DOES HEREBY BARGAIN, SELL,
MORTGAGE, WARRANT, CONVEY, GRANT, ASSIGN, TRANSFER
AND SET OVER UNTO MORTGAGEE ALL OF THE FOLLOWING:
(A) all right, title and interest of
Mortgagor in and to the Real Estate;
(B) 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, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water
courses, water and riparian rights,
development rights, air rights, mineral
rights and all estates, rights, titles,
interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging,
relating or appertaining to the Real Estate,
and any reversions and remainders 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 right, title and interest of
Mortgagor in and to all of the fixtures,
chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings
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 or used or usable in any way in
connection with any operation or letting of
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 mortgage,
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 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) all right, title and interest of
Mortgagor in and to all trade names, trade
marks, logos, copyrights, good will and books
and records relating to or used in connection
with the operation of the Real Estate or the
Equipment or any part thereof; all right,
title and interest of Mortgagor in and to all
general intangibles related to the operation
of the Improvements now existing or hereafter
arising;
(H) all right, title and interest of
Mortgagor in and to 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 any such insurance policies and 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 otherwise following and during the
continuance of an Event of Default; and all
right, title and interest of Mortgagor in and
to 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, subject to the provisions relating
to condemnation generally set forth below;
(I) 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 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;
(J) all right, title and interest of
Mortgagor in and to any and all monies now or
subsequently on deposit for the payment of
real estate taxes or special assessments
against the Real Estate or for the payment of
premiums on insurance policies covering the
foregoing property or otherwise on deposit
with or held by Mortgagee as provided in this
Mortgage; all capital, operating, reserve or
similar accounts held by or on behalf of
Mortgagor and related to the operation of the
Mortgaged Property, whether now existing or
hereafter arising and all monies held in any
of the foregoing accounts and any
certificates or instruments related to or
evidencing such accounts;
(K) all right, title and interest of
Mortgagor in and to all accounts and revenues
arising from the operation of the
Improvements including, without limitation,
(i) any right to payment now existing or
hereafter arising for rental of hotel rooms
or other space or for services rendered,
whether or not yet earned by performance,
arising from the operation of the
Improvements or any other facility on the
Mortgaged Property and (ii) all rights to
payment from any consumer credit-charge card
organization or entity including, without
limitation, payments arising from the use of
the American Express Card, the Visa Card, the
Carte Blanche Card, the Mastercard or any
other credit card, including those now
existing or hereafter created, substitutions
therefor, proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange,
transfer, collection or other disposition or
substitution thereof and any and all of the
foregoing and proceeds therefrom
(collectively, the "Additional Rents"); and
(L) all proceeds, both cash and
noncash, of the foregoing;
excluding, however, notwithstanding any
provision set forth in the foregoing clauses (A)
through (L), the property described on Schedule B
attached hereto and incorporated herein by
reference (collectively, the "Excluded Property")
(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 (E), excluding the
Excluded Property, are collectively referred to as
the "Premises", and those described in the
foregoing clauses (A) through (L), excluding the
Excluded Property, are collectively referred to as
the "Mortgaged Property").
All of the Mortgaged Property
hereinabove described, real, personal and mixed,
whether affixed or annexed to the Real Estate or
not and all rights hereby conveyed and mortgaged
are intended so to be as a unit and are hereby
understood, agreed and declared, to the maximum
extent permitted by law, to form a part and parcel
of the Real Estate and to be appropriated to the
use of the Real Estate, and shall be for the
purposes of this Mortgage deemed to be real estate
and conveyed and mortgaged hereby; provided,
however, as to any of the property aforesaid which
does not so form a part and parcel of the Real
Estate or does not constitute a "fixture" (as
defined in the Uniform Commercial Code of
Pennsylvania (the "Code")), this Mortgage is
hereby deemed to also be a Security Agreement
under the Code for purposes of granting a security
interest in such property, which Mortgagor hereby
grants to Mortgagee, as Secured Party (as defined
in the Code), as more particularly provided below
in this Mortgage.
TO HAVE AND TO HOLD the Mortgaged
Property and the rights and privileges hereby
mortgaged, together with the right to retain
possession of the Mortgaged Property upon and
during the continuance of an Event of Default
hereunder, unto Mortgagee, its successors and
assigns for the uses and purposes set forth, until
the Obligations are fully paid and performed.
SUBJECT AND SUBORDINATE, HOWEVER, TO THE
RIGHTS OF The Huntington National Bank, as
mortgagee, under a Mortgage, Assignment of Rents
and Leases of even date herewith (herein called
the "Prior Mortgage").
Terms and Conditions
Mortgagor further represents, warrants,
covenants and agrees with Mortgagee as follows:
1. Warranty of Title. Mortgagor
warrants that Mortgagor has good title to the Real
Estate in fee simple and good title to the rest of
the Mortgaged Property, 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
liens permitted pursuant to subsection 6.10 of the
Indenture (collectively, the "Permitted
Exceptions"), and Mortgagor shall warrant, defend
and preserve such title and the lien of the
Mortgage thereon against all claims of all persons
and entities, excepting, however, the Permitted
Exceptions. Mortgagor further warrants that it
has the right to mortgage the Mortgaged Property.
2. Payment and Performance of
Obligations. Mortgagor shall pay the Obligations
at the times and places and in the manner
specified in the Intercompany Note and shall
perform all the Obligations.
3. Requirements. (a) Mortgagor shall
comply with, or cause to be complied with, and
conform to all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees,
rules, regulations and requirements, and
irrespective of the nature of the work to be done,
of each of the United States of America, any State
and any municipality, local government or other
political subdivision thereof and any agency,
department, bureau, board, commission or other
instrumentality of any of them, now existing or
subsequently created (collectively, "Governmental
Authority") which has jurisdiction over the
Mortgaged Property, except where the failure to so
comply with any of the foregoing would not have a
Material Adverse Effect on the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, and 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 the
failure to so comply with any of the foregoing
would not adversely affect the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole. All
present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules,
regulations and requirements of every Governmental
Authority applicable to Mortgagor or to any of the
Mortgaged Property and all covenants,
restrictions, and conditions which now or later
may be applicable to any of the Mortgaged Property
are collectively referred to as the "Legal
Requirements".
(b) From and after the date of this
Mortgage, Mortgagor shall not by act or omission
permit any building or other improvement on any
premises not subject to the lien of this Mortgage
to rely on the Premises or any part thereof or any
interest therein to fulfill any Legal Requirement
and Mortgagor hereby assigns to Mortgagee any and
all rights to give consent for all or any portion
of the Premises or any interest therein to be so
used. Mortgagor shall not by act or omission
impair the integrity of any of the Real Estate as
a single zoning lot separate and apart from all
other premises. Mortgagor represents that each
parcel of the Real Estate constitutes a legally
subdivided lot, in compliance with all subdivision
laws and similar Legal Requirements. Any act or
omission by Mortgagor which would result in a
violation of any of the provisions of this
subsection shall be void.
4. Payment of Taxes and Other
Impositions. (a) Promptly when due, Mortgagor
shall pay and discharge all taxes of every kind
and nature (including, without limitation, all
real and personal property, income, franchise,
withholding, transfer, gains, profits and gross
receipts taxes), all charges for any easement or
agreement maintained for the benefit of any of the
Mortgaged Property, all general and special
assessments, levies, permits, inspection and
license fees, all water and sewer rents and
charges 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 Mortgaged Property, 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 as the "Impositions").
Upon request by Mortgagee, Mortgagor shall deliver
to Mortgagee (i) original or copies of receipted
bills and cancelled checks evidencing payment of
such Imposition if it is a real estate tax or
other public charge and (ii) evidence acceptable
to Mortgagee showing the payment of any other 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 to 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 Mortgage,
and (ii) payable on demand by Mortgagor to
Mortgagee together with interest at the Default
Rate as set forth above.
(c) Mortgagor shall not claim, demand
or be entitled to receive any credit or credits
toward the satisfaction of this Mortgage or on any
interest payable thereon for any taxes assessed
against the Mortgaged Property or any part
thereof, and shall not claim any deduction from
the taxable value of the Mortgaged Property by
reason of this Mortgage if any such claim would
adversely affect the interest of Mortgagee.
(d) Mortgagor shall have the right
before any delinquency occurs to contest or object
in good faith to the amount or validity of any
Imposition by appropriate legal proceedings, but
such right shall not be deemed or construed in any
way as relieving, modifying, or extending
Mortgagor's covenant to pay any such Imposition at
the time and in the manner provided in this
Section unless (i) Mortgagor has given prior
written notice to Mortgagee of Mortgagor's intent
so to contest or object to an Imposition,
(ii) Mortgagor shall demonstrate to Mortgagee's
satisfaction that the legal proceedings shall
operate conclusively to prevent the sale of the
Mortgaged Property, or any part thereof, to
satisfy such Imposition prior to final
determination of such proceedings and (iii)
Mortgagor shall furnish a good and sufficient bond
or surety as requested by and reasonably
satisfactory to Mortgagee in the amount of the
Impositions which are being contested plus any
interest and penalty which may be imposed thereon
and which could become a lien against the Real
Estate or any part of the Mortgaged Property.
(e) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default (as defined
below), shall be entitled to require Mortgagor to
pay monthly in advance to Mortgagee the equivalent
of 1/12th of the estimated annual Impositions.
Mortgagee may commingle such funds with its own
funds and Mortgagor shall not be entitled to
interest thereon.
5. Insurance. (a) Mortgagor shall
maintain or cause to be maintained on all of the
Premises
(i) property insurance against loss or
damage by (A) fire, lightning, windstorm,
tornado, water damage and by such other
further risks and hazards as now are or
subsequently may be covered by an "all risk"
policy or a fire policy covering "special"
causes of loss, which policy shall include
building ordinance law endorsements and shall
be automatically reinstated after each loss,
and (B) flood and earthquake in annual
aggregates of $25,000,000 for flood and
$50,000,000 for earthquake;
(ii) comprehensive general liability
insurance under a policy covering all claims
for personal injury, bodily injury or death,
or property damage occurring on, in or about
the Premises in an amount not less than
$10,000,000 combined single limit with
respect to injury and property damage
relating to any one occurrence plus such
excess limits as Mortgagee shall reasonably
request from time to time;
(iii) when and to the extent reasonably
required by Mortgagee, insurance against loss
or damage by any other risk commonly insured
against by persons occupying or using like
properties in the locality or localities in
which the Real Estate is situated;
(iv) insurance against rent loss, extra
expense or business interruption (and/or soft
costs, in the case of new construction), if
applicable, in amounts reasonably
satisfactory to Mortgagee, but not less than
one year's gross rent or gross income;
(v) during the course of any
construction or repair of Improvements,
comprehensive general liability insurance
(including coverage for elevators and
escalators, if any). The policy shall
provide coverage for independent contractors
and completed operations. The completed
operations coverage shall stay in effect for
two years after construction of any
Improvements has been completed. The policy
shall provide coverage on an occurrence basis
against claims for personal injury, such
insurance to afford immediate minimum
protection to a limit of not less than that
required by Mortgagee with respect to
personal injury, bodily injury or death to
any one or more persons or damage to
property;
(vi) during the course of any
construction or repair of the Improvements,
workers' compensation insurance (including
employer's liability insurance) for all
employees of Mortgagor engaged on or with
respect to the Premises in such amounts as
are reasonably satisfactory to Mortgagee, but
in no event less than the limits established
by law;
(vii) during the course of any
construction, addition, alteration or repair
of the Improvements, builder's risk completed
value form insurance against "all risks of
physical loss," including collapse, water
damage, flood and earthquake and transit
coverage, during construction or repairs of
the Improvements, with deductibles reasonably
approved by Mortgagee, in nonreporting form,
covering the total value of work performed
and equipment, supplies and materials
furnished (with an appropriate limit for soft
costs in the case of construction);
(viii) boiler and machinery property
insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator
equipment and escalator equipment, provided
the Improvements contain equipment of such
nature, and insurance against rent, extra
expense, business interruption and soft
costs, if applicable, arising from any such
breakdown, in such amounts as are reasonably
satisfactory to Mortgagee but not less than
the lesser of $1,000,000 or 10% of the value
of the Improvements;
(ix) if any portion of the Premises are
located in an area identified as a special
flood hazard area by the Federal Emergency
Management Agency or other applicable agency,
flood insurance in an amount reasonably
satisfactory to Mortgagee, but in no event
less than the maximum limit of coverage
available under the National Flood Insurance
Act of 1968, as amended; and
(x) such other insurance in such
amounts as Mortgagee may reasonably request
from time to time; provided, however, such
insurance is usually and customarily carried
with respect to similar facilities in the
same general area as the Premises.
Each insurance policy (other than flood insurance
written under the National Flood Insurance Act of
1968, as amended, in which case to the extent
available) shall (i) provide that it shall not be
cancelled without 30 days' prior written notice to
Mortgagee, (ii) with respect to all property
insurance, provide for deductibles in amounts
reasonably satisfactory to Mortgagee (which
deductibles shall not exceed $250,000, with the
exception of the deductible for boiler and
machinery, which deductible shall not exceed a ten
(10) day waiting period deductible), contain a
"Replacement Cost Endorsement" (predicated upon
rebuilding) without any deduction made for
depreciation and with no co-insurance penalty (or
attaching an agreed amount endorsement
satisfactory to Mortgagee), with loss payable to
Mortgagor and Mortgagee with respect to the
Mortgaged Property as their respective interests
may appear, without contribution, under a
"standard" or "New York" mortgagee clause
reasonably acceptable to Mortgagee and be written
by insurance companies having an A.M. Best
Company, Inc. rating of A or higher and a
financial size category of not less than XII, or
otherwise as approved by Mortgagee. Liability
insurance policies shall name Mortgagee as an
additional insured with respect to the Mortgaged
Property and contain a waiver of subrogation
against Mortgagee; all such policies shall
indemnify and hold Mortgagee harmless from all
liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and
passageways. Each policy shall expressly provide
that any proceeds which are payable to Mortgagee
pursuant to the terms hereof shall be paid by
check payable to the order of Mortgagee only and
shall require the endorsement of Mortgagee only.
The amounts of each insurance policy and the form
of each such policy shall at all times be
reasonably satisfactory to Mortgagee. If any
required insurance shall expire, be withdrawn,
become void by breach of any condition thereof by
Mortgagor or by any lessee of any part of the
Mortgaged Property or become void or unsafe by
reason of the failure or impairment of the capital
of any insurer, Mortgagor shall immediately obtain
new or additional insurance satisfactory to
Mortgagee. Mortgagor shall not take out any
separate or additional insurance which is
contributing in the event of loss unless it is
properly endorsed and otherwise reasonably
satisfactory to Mortgagee in all respects.
(b) Mortgagor shall deliver to
Mortgagee an original of each insurance policy
required to be maintained, or a certificate of
such insurance reasonably acceptable to Mortgagee.
Mortgagor shall (i) pay as they become due all
premiums for such insurance, and (ii) not later
than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions
of this Section, deliver a renewed policy or
policies, or duplicate original or originals
thereof, or a certificate of such insurance
reasonably acceptable to Mortgagee, accompanied by
evidence of payment reasonably satisfactory to
Mortgagee. Upon request of Mortgagee, Mortgagor
shall cause its insurance underwriter or broker to
certify to Mortgagee in writing that all the
requirements of this Mortgage governing insurance
have been satisfied.
(c) If Mortgagor is in default of its
obligations to insure or deliver any such policy
or a certificate thereof under this Section 5,
then Mortgagee, at its option and following
written notice to Mortgagor, may effect such
insurance from year to year, and pay the premium
or premiums therefor, and Mortgagor shall pay to
Mortgagee on demand such premium or premiums so
paid by Mortgagee with interest from the time of
payment at the Default Rate and the same shall be
deemed to be secured by this Mortgage and shall be
collectible in the same manner as the Obligations
secured by this Mortgage.
(d) Mortgagor promptly shall comply
with and conform to (i) all provisions of each
such insurance policy, and (ii) all requirements
of the insurers applicable to Mortgagor or to any
of the Mortgaged Property or to the use, manner of
use, occupancy, possession, operation,
maintenance, alteration or repair of any of the
Mortgaged Property. Mortgagor shall not use or
permit the use of the Mortgaged Property in any
manner which would permit any insurer to cancel
any insurance policy or void coverage required to
be maintained by this Mortgage.
(e) If the Mortgaged Property in its
entirety, or any material part thereof, shall be
destroyed or damaged by fire or any other
casualty, whether insured or uninsured, or in the
event any claim in excess of $5,000,000 is made
against Mortgagor for any personal injury, bodily
injury or property damage incurred on or about the
Premises, Mortgagor shall give prompt notice
thereof to Mortgagee. If the Mortgaged Property
is damaged by fire or other casualty, then
provided that no Event of Default shall have
occurred and be continuing, Mortgagor shall have
the right to adjust such loss. If the Mortgaged
Property is damaged by fire or other casualty, and
if an Event of Default shall have occurred and be
continuing, then Mortgagor authorizes and empowers
Mortgagee, at Mortgagee's option and in
Mortgagee's sole discretion, as attorney-in-fact
for Mortgagor, to make proof of loss, to adjust
and compromise any claim under any insurance
policy with respect to the Mortgaged Property, to
appear in and prosecute any action arising from
any policy, and to deduct from any insurance
proceeds Mortgagee's expenses incurred in the
collection process. The insurance proceeds or any
part thereof with respect to the Mortgaged
Property received by Mortgagee and/or Mortgagor
shall constitute Trust Moneys which shall be paid
and/or applied in accordance with subsection 13.2
of the Indenture.
(f) In the event of foreclosure of this
Mortgage or other transfer of title to the
Mortgaged Property in extinguishment of the
Obligations, all right, title and interest of
Mortgagor in and to any insurance policies then in
force with respect to the Mortgaged Property shall
pass to the purchaser or grantee and Mortgagor
hereby appoints Mortgagee its attorney-in-fact, in
Mortgagor's name, to assign and transfer all such
policies and proceeds to such purchaser or
grantee.
(g) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default, shall be
entitled to require Mortgagor to pay monthly in
advance to Mortgagee the equivalent of 1/12th of
the estimated annual premiums due on such
insurance. Mortgagee may commingle such funds
with its own funds and Mortgagor shall not be
entitled to interest thereon.
(h) Mortgagor may maintain insurance
required under this Mortgage by means of one or
more blanket insurance policies maintained by
Mortgagor; provided, however, that (A) any such
policy shall specify, or Mortgagor shall furnish
to Mortgagee a written statement from the insurer
so specifying, the maximum amount of the total
insurance afforded by such blanket policy which
shall be applicable on an occurrence basis and (B)
the protection afforded under any such blanket
policy shall be no less than that which would have
been afforded under a separate policy or policies
relating only to the Mortgaged Property.
6. Restrictions on Liens, Encumbrances
and Sales. Mortgagor acknowledges that any
secondary or junior financing placed on the
Mortgaged Property (a) may divert funds that would
otherwise be available for payment of the
Obligations, (b) could, if foreclosed, force
Mortgagee to incur expenses to protect its
security, and (c) would impair Mortgagee's right
to accept a deed in lieu of foreclosure or
otherwise to take actions to further its economic
interest prior to foreclosure, because a
foreclosure by Mortgagee would be required to
clear title to the Mortgaged Property of any such
secondary or junior lien or encumbrance. In
accordance with the foregoing and for the purpose
of (i) protecting Mortgagee's security, both of
repayment and of value in the Mortgaged Property,
(ii) giving Mortgagee the full benefit of its
bargain and contract with Mortgagor, and (iii)
keeping the Mortgaged Property free of subordinate
financing liens, Mortgagor agrees that if the
following provisions of this paragraph should be
deemed a restraint on alienation, that such
provisions are reasonable restraints.
(1) Except for the lien of this
Mortgage, the Permitted Exceptions and liens
permitted pursuant to subsection 6.10 of the
Indenture, 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.
(2) Except as may be permitted pursuant
to the Indenture, including, without limitation,
subsection 6.15 thereof, Mortgagor shall not make
any Asset Sale.
7. Relationship of Mortgagee and
Mortgagor. The Huntington National Bank shall in
no event be construed for any purpose to be a
partner, joint venturer, agent or associate of
Mortgagor or of any beneficiary, tenant,
subtenant, operator, concessionaire or licensee of
Mortgagor in the conduct of their respective
businesses, and without limiting the foregoing,
The Huntington National Bank shall not be deemed
to be such partner, joint venturer, agent or
associate on account of The Huntington National
Bank becoming a Mortgagee in possession or
exercising any rights pursuant to this Mortgage,
any of the other Security Documents, or otherwise.
8. Maintenance; No Alteration;
Inspection; Utilities. (a) Mortgagor shall
maintain or cause to be maintained all the
Improvements in good working order and condition,
ordinary wear and tear excepted, and shall cause
to be made all necessary (in the good faith
opinion of management of Mortgagor) repairs,
renewals, replacements, additions, betterments and
improvements thereto. Mortgagor shall not commit
any waste of the Improvements and shall not
demolish or materially alter the Improvements
without the prior written consent of Mortgagee.
(b) Mortgagee and any persons
authorized by Mortgagee, at all reasonable times
after reasonable notice, shall have the right to
enter and inspect the Premises and the right to
inspect all work done, labor performed and
materials furnished in and about the Improvements
and the right to inspect and make copies of all
books, contracts and records of Mortgagor relating
to the Mortgaged Property.
(c) Mortgagor shall pay or cause to be
paid when due all utility charges which are
incurred for gas, electricity, water or sewer
services furnished to the Premises and all other
assessments or charges of a similar nature,
whether public or private, affecting the Premises
or any portion thereof, whether or not such
assessments or charges are liens thereon.
9. Condemnation/Eminent Domain.
Promptly upon obtaining knowledge of the
institution of any proceedings for the
condemnation of the Mortgaged Property in its
entirety, or any portion thereof, Mortgagor will
notify Mortgagee of the pendency of such
proceedings. Mortgagor authorizes Mortgagee, at
Mortgagee's option and in Mortgagee's sole
discretion, as attorney-in-fact for Mortgagor, to
commence, appear in and prosecute, in Mortgagee's
or Mortgagor's name, any action or proceeding
relating to any condemnation of the Mortgaged
Property in its entirety, or any portion thereof.
If the Mortgaged Property in its entirety or any
part thereof shall be the subject of condemnation
proceedings, Mortgagee, as attorney-in-fact for
Mortgagor, shall have the right to settle or
compromise any claim in connection with such
condemnation. If Mortgagee elects not to
participate in such condemnation proceeding, then
Mortgagor shall, at its expense, diligently
prosecute any such proceeding and shall consult
with Mortgagee, its attorneys and experts and
cooperate with them in any defense of any such
proceedings. All awards and proceeds of
condemnation received by Mortgagee and/or
Mortgagor shall constitute Trust Moneys which
shall be paid and/or applied in accordance with
Subsection 13.2 of the Indenture.
10. Leases. (a) Mortgagor shall not
(i) 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 with
Mortgagee's prior written consent or (ii) without
the prior written consent of Mortgagee, execute
any Lease of any of the Mortgaged Property.
(b) As to any Lease relating to all or
any portion of the Mortgaged Property, Mortgagor
shall:
(i) promptly perform all of the
material provisions of the Lease on the part
of the lessor thereunder to be performed;
(ii) enforce, in accordance with sound
business practice, all of the material
provisions of the Lease on the part of the
lessee thereunder to be performed;
(iii) appear in and defend, in accordance
with sound business practice, any action or
proceeding arising under or in any manner
connected with the Lease or the obligations
of Mortgagor as lessor or of the lessee
thereunder;
(iv) exercise, within 5 days after
receipt of a request by Mortgagee, any right
to request from the lessee a certificate with
respect to the status thereof;
(v) promptly deliver to Mortgagee
copies of any notices of default which
Mortgagor may at any time forward to or
receive from the lessee;
(vi) promptly deliver to Mortgagee a
fully executed counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon
Mortgagee's request, an assignment of the
Mortgagor's interest under such Lease.
(c) Mortgagor shall deliver to
Mortgagee, within 10 days after receipt of a
request by Mortgagee, a written statement,
certified by Mortgagor as being true, correct and
complete, containing the names of all lessees and
other occupants of the Mortgaged Property, the
terms of all Leases and the spaces occupied and
rentals payable thereunder, and a list of all
Leases which are then in default, including the
nature and magnitude of the default; such
statement shall be accompanied by credit
information with respect to the lessees and such
other information as Mortgagee may request.
(d) All Leases entered into by
Mortgagor after the date hereof, if any, and all
rights of any lessees thereunder shall be subject
and subordinate in all respects to the lien and
provisions of this Mortgage unless Mortgagee shall
otherwise elect in writing.
(e) As to any Lease now in existence or
subsequently consented to by Mortgagee, Mortgagor
shall not, without the prior written consent of
Mortgagee, accept a surrender or terminate,
cancel, rescind, supplement, alter, revise, modify
or amend such Lease or permit any such action to
be taken nor shall Mortgagor accept the payment of
rent more than thirty (30) days in advance of its
due date.
(f) In the event of the enforcement by
Mortgagee of any remedy under this Mortgage, the
lessee under each Lease entered into after the
date of this Mortgage shall, if requested by
Mortgagee or any other person succeeding to the
interest of Mortgagee as a result of such
enforcement, attorn to Mortgagee or to such person
and shall recognize Mortgagee or such successor in
interest as lessor under the Lease without change
in the provisions thereof; provided however, that
Mortgagee or such successor in interest shall not
be: (i) bound by any payment of an installment of
rent or additional rent which may have been made
more than 30 days before the due date of such
installment; (ii) bound by any amendment or
modification to the Lease made without the consent
of Mortgagee or such successor in interest; (iii)
liable for any previous act or omission of
Mortgagor (or its predecessors in interest); (iv)
responsible for any monies owing by Mortgagor to
the credit of such lessee or subject to any
credits, offsets, claims, counterclaims, demands
or defenses which the lessee may have against
Mortgagor (or its predecessors in interest); (v)
bound by any covenant to undertake or complete any
construction of the Premises or any portion
thereof; or (vi) obligated to make any payment to
such lessee other than any security deposit
actually delivered to Mortgagee or such successor
in interest. Each lessee or other occupant under
each Lease entered into after the date of this
Mortgage, upon request by Mortgagee or such
successor in interest, shall execute and deliver
an instrument or instruments confirming such
attornment. In addition, Mortgagor agrees that
each Lease entered into after the date of this
Mortgage shall include language to the effect of
subsections (d)-(f) of this Section.
11. Further Assurances/Estoppel
Certificates. To further assure Mortgagee's
rights under this Mortgage, Mortgagor agrees 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 and a
separate assignment of each Lease in recordable
form) as may be required by Mortgagee to confirm
the lien of this Mortgage and all other rights or
benefits conferred on Mortgagee. Mortgagor,
within 5 business days after request, shall
deliver, in form and substance satisfactory to
Mortgagee, a written statement, duly acknowledged,
setting forth the amount of the Obligations, and
whether any offsets, claims, counterclaims or
defenses exist against the Obligations and
certifying as to such other matters as Mortgagee
shall reasonably request.
12. Mortgagee's Right to Perform. If
Mortgagor fails to perform any of the covenants or
agreements of Mortgagor hereunder, Mortgagee,
without waiving or releasing Mortgagor from any
obligation or default under this Mortgage, may, at
any time (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. Hazardous Material. (a) Mortgagor
shall comply with any and all applicable Legal
Requirements governing the discharge and removal
of Hazardous Material, shall pay promptly when due
the costs of removal of any Hazardous Material,
and shall keep the Premises free of any lien
imposed pursuant to such Legal Requirements. In
the event Mortgagor fails to do so, after notice
to Mortgagor and the expiration of the earlier of
(i) applicable cure periods hereunder and under
the Indenture, or (ii) the cure period permitted
under the applicable Legal Requirement, Mortgagee
may cause the Premises to be freed from the
Hazardous Material to the extent required by
applicable Legal Requirements, and the cost of the
removal with interest at the Default Rate shall
immediately be due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor further
agrees that any release or disposal of Hazardous
Materials at the Premises shall comply with all
applicable Legal Requirements. In addition,
Mortgagor agrees not to allow the manufacture,
storage, transmission, presence or disposal of any
Hazardous Material over or upon the Premises in
violation of applicable Legal Requirements.
Mortgagor shall give Mortgagee and its agents and
employees access to the Premises to remove
Hazardous Material if required by applicable Legal
Requirements and if Mortgagor has failed to so
remove after notice. Mortgagor agrees to defend,
indemnify and hold Mortgagee free and harmless
from and against all loss, costs, damage and
expense (including attorneys' fees and costs and
consequential damages) Mortgagee may sustain by
reason of (i) the imposition or recording of a
lien by any Governmental Authority with respect to
the Mortgaged Property pursuant to any Legal
Requirement relating to hazardous or toxic wastes
or substances or the removal thereof ("Hazardous
Material Laws"); (ii) claims of any private
parties regarding violations of Hazardous Material
Laws with respect to the Mortgaged Property; (iii)
costs and expenses (including, without limitation,
attorneys' fees and fees incidental to the
securing of repayment of such costs and expenses)
incurred by Mortgagor or Mortgagee in connection
with the removal of any such lien with respect to
the Mortgaged Property or in connection with
Mortgagor's or Mortgagee's compliance with any
Hazardous Material Laws with respect to the
Mortgaged Property; and (iv) the assertion against
Mortgagee by any party of any claim in connection
with Hazardous Material with respect to the
Mortgaged Property.
(b) For the purposes of this Mortgage,
"Hazardous Material" means and includes any
hazardous, nuclear, toxic or dangerous waste,
substance or material defined as such in (or for
purposes of) the Comprehensive Environmental
Response, Compensation, and Liability Act, any so-
called "Superfund" or "Superlien" law, or any
other Legal Requirement regulating, relating to,
or imposing liability or standards of conduct
concerning, any hazardous, nuclear, toxic or
dangerous waste, substance or material, as now or
at any time in effect.
(c) The foregoing indemnification shall
be a recourse obligation of Mortgagor and shall
survive repayment of the Obligations,
notwithstanding any limitations on recourse which
may be contained herein or in any Security
Documents or the delivery of any satisfaction,
release or release deed, discharge or deed of
reconveyance, or the assignment of this Mortgage
by Mortgagee; provided, however, that the
foregoing indemnification shall apply only to
matters arising prior to any taking of possession
of the Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
14. Asbestos. Mortgagor shall not
install or permit to be installed in the Premises
friable asbestos or any substance containing
asbestos and deemed hazardous by any Legal
Requirement respecting such material, and, with
respect to any such material currently present in
the Premises, shall promptly comply with such
Legal Requirements, at Mortgagor's expense. If
Mortgagor shall fail to so comply, Mortgagee may
do whatever is necessary to comply with the
applicable Legal Requirement, and the costs
thereof, with interest at the Default Rate, shall
be immediately due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor shall give
Mortgagee and its agents and employees, upon prior
notice and at reasonable times, access to the
Premises to remove such asbestos or substances if
required by applicable Legal Requirements and if
Mortgagor has failed to so remove after notice.
Mortgagor shall defend, indemnify, and save
Mortgagee harmless from all loss, costs, damages
and expense (including attorneys' fees and costs
and consequential damages) asserted or proven
against Mortgagee by any party, as a result of the
presence of such substances or any removal or
compliance with such Legal Requirements. The
foregoing indemnification shall be a recourse
obligation of Mortgagor and shall survive
repayment of the Obligations, notwithstanding any
limitation on recourse which may be contained
herein or in any of the Security Documents or the
delivery of any satisfaction, release or release
deed, discharge or deed of reconveyance, or the
assignment of this Mortgage by Mortgagee;
provided, however, that the foregoing
indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
15. Event of Default. The occurrence
of an "Event of Default" (as defined in the
Indenture) shall constitute an Event of Default
hereunder.
16. Remedies. (a) Upon the occurrence
of any Event of Default, in addition to any other
rights and remedies Mortgagee may have pursuant to
the Security Documents, or as provided by law, and
without limitation, (a) if such event is an Event
of Default described in subsections 8.1(ix) or
8.1(x) of the Indenture, automatically the
Obligations immediately shall become due and
payable, and (b) if such event is any other Event
of Default, by notice to Mortgagor, Mortgagee may
declare the Obligations to be immediately due and
payable. Except as expressly provided above in
this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly
waived. In addition, upon 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 Intercompany Note,
(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
Security 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.
(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.
(iii) It is further agreed that if
default be made in the payment of any part of
the Obligations, as an alternative to the
right of foreclosure for the full secured
Obligations after acceleration thereof,
Mortgagee shall have the right to institute
partial foreclosure proceedings with respect
to the portion of said Obligations so in
default, as if under a full foreclosure, and
without declaring the entire secured
Obligations due (such proceeding being
hereinafter referred to as a "partial
foreclosure"), and provided that if a partial
foreclosure sale is consummated as provided
herein, such sale may be made subject to the
continuing lien of this Mortgage for the
unmatured portion of the secured Obligations,
but as to such unmatured part, this Mortgage,
and the lien hereof, shall remain in full
force and effect just as though no partial
foreclosure sale had been made under the
provisions of this Section. Notwithstanding
the filing of any partial foreclosure or
entry of a decree of sale therein, Mortgagee
may elect at any time prior to a partial
foreclosure sale pursuant to such decree, to
discontinue such partial foreclosure and to
accelerate the Obligations secured hereby by
reason of any uncured Event of Default upon
which such partial foreclosure was predicated
or by reason of any other Event of Default,
and proceed with full foreclosure
proceedings. It is further agreed that one
or more foreclosure sales may be made
pursuant to partial foreclosures without
exhausting the right of full or partial
foreclosure sale for any unmatured part of
the secured Obligations, it being the purpose
to provide for a partial foreclosure sale of
the Obligations secured hereby without
exhausting the power to foreclose for any
other part of the Obligations whether matured
at the time or subsequently maturing, and
without exhausting any right of acceleration
and full foreclosure.
(b) The holder of this Mortgage, in any
action to foreclose it, shall be entitled to the
appointment of a receiver. 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) In the event of any breach of any
of the covenants, agreements, terms or conditions
contained in this Mortgage, and notwithstanding to
the contrary any exculpatory or non-recourse
language which may be contained herein, 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) The proceeds of any foreclosure or
sale of the Mortgaged Property, or any portion
thereof, shall be distributed and applied in
accordance with all applicable provisions of the
Indenture.
(e) MORTGAGOR AUTHORIZES AND EMPOWERS
ANY ATTORNEY OF ANY COURT OF RECORD OF THE
COMMONWEALTH OF PENNSYLVANIA TO APPEAR FOR AND TO
CONFESS JUDGMENT IN EJECTMENT AGAINST MORTGAGOR
(AND, AT THE ELECTION OF SAID ATTORNEY, AGAINST
ANY PERSON CLAIMING UNDER, BY OR THROUGH
MORTGAGOR) FOR THE RECOVERY BY MORTGAGEE OF
POSSESSION OF THE ENTIRE PREMISES OR, AT THE
ELECTION OF SAID ATTORNEY, ANY PORTION OR PORTIONS
OF THE PREMISES. THE FOREGOING AUTHORITY TO
CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY ANY
EXERCISE THEREOF BUT SHALL CONTINUE FROM TIME TO
TIME UNTIL MORTGAGEE IS FULLY AND FINALLY VESTED
WITH POSSESSION OF THE ENTIRE PREMISES. MORTGAGOR
EXPRESSLY AGREES THAT ANY JUDGMENT ENTERED
PURSUANT TO THE FOREGOING AUTHORITY SHALL BE FINAL
AND RELEASES TO MORTGAGEE, AND TO ANY ATTORNEY
APPEARING FOR MORTGAGOR OR MORTGAGEE, ALL ERRORS
IN SAID PROCEEDINGS AND ALL LIABILITY THEREFOR.
UPON CONFESSION OF JUDGMENT IN EJECTMENT PURSUANT
TO THE FOREGOING AUTHORITY, A WRIT OF POSSESSION
(OR LIKE WRIT APPROPRIATE UNDER THEN APPLICABLE
LAW) MAY ISSUE FORTHWITH WITHOUT ANY PRIOR
PROCEEDINGS AND MAY INCLUDE THE COSTS OF
MORTGAGEE. JUDGMENT MAY BE ENTERED PURSUANT TO
THE FOREGOING AUTHORITY ON THE BASIS OF AN
AFFIDAVIT MADE ON MORTGAGEE'S BEHALF AND SETTING
FORTH THE RELEVANT FACTS, OF WHICH FACTS SUCH
AFFIDAVIT SHALL BE CONCLUSIVE EVIDENCE, AND IF A
TRUE COPY OF THIS MORTGAGE IS FILED IN ANY ACTION
FOR SUCH JUDGMENT IT SHALL
NOT BE NECESSARY TO FILE THE ORIGINAL OF THIS
MORTGAGE. JRP
________
17. 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 therefor,
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
Intercompany Note 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.
18. 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
Property or any other collateral as security for
the Obligations or the interest of Mortgagor
therein, shall have the right to apply to any
court having jurisdiction to appoint a receiver or
receivers or other manager of the Mortgaged
Property, and Mortgagor hereby irrevocably
consents to such appointment and waives notice of
any application therefor (except as may be
required by law). Any such receiver or receivers
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.
19. 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, from time to time and without
notice, agree to (i) release any person liable for
the Obligations, (ii) extend the maturity or alter
any of the terms of the Obligations or any
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. 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.
(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, Mortgagor authorizes
Mortgagee at its option to foreclose the lien of
this Mortgage 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 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.
20. Assignment of Rents. Mortgagor
hereby assigns to Mortgagee the Rents and
Additional Rents as further security for the
payment of the Obligations 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 and Additional Rents on account of
the Obligations. The foregoing assignment and
grant is present and absolute and shall continue
in effect until the Obligations are paid in full,
but Mortgagee hereby waives the right to enter the
Mortgaged Property for the purpose of collecting
the Rents and Additional Rents and Mortgagor shall
be entitled to collect, receive, use and retain
the Rents and Additional Rents; such right of
Mortgagor to collect, receive, use and retain the
Rents and Additional Rents may be revoked by
Mortgagee upon 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, 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 the
Mortgaged Property or such part thereof 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).
21. Trust Funds. All lease security
deposits of the Real Estate held by Mortgagor
shall be treated as trust funds not to be
commingled with any other funds of Mortgagor.
Within 10 days after request by Mortgagee,
Mortgagor shall furnish Mortgagee satisfactory
evidence of compliance with this subsection,
together with a statement of all lease security
deposits by lessees and copies of all Leases not
previously delivered to Mortgagee, which statement
shall be certified by Mortgagor.
22. Additional Rights. The holder of
any subordinate lien on the Mortgaged Property
shall have no right to terminate any Lease whether
or not such Lease is subordinate to this Mortgage
nor shall any holder of any subordinate lien join
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 are subject to and
notified of this provision, and any action taken
by any such lienholder contrary to this provision
shall be null and void. Upon 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.
23. Changes in Method of Taxation. In
the event of the passage after the date hereof of
any law of any Governmental Authority deducting
from the value of the Premises for the purposes of
taxation any lien thereon, or changing in any way
the laws for the taxation of mortgages or debts
secured thereby for federal, state or local
purposes, or the manner of collection of any such
taxes, and imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby,
Mortgagor shall, if permitted by applicable law,
assume as an Obligation hereunder the payment of
any tax so imposed until full payment of the
Obligations.
24. Notices. All notices, requests,
demands and other communications hereunder shall
be given in the manner provided in the Indenture.
25. No Oral Modification. This
Mortgage may not be changed or terminated orally.
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.
26. 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 anything to the
contrary contained in this Mortgage or in any
provisions of the Obligations or Security
Documents, the obligations of Mortgagor and of any
other obligor under the Obligations or Security
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.
27. Waiver of Right of Redemption and
Other Rights. (a) Mortgagor hereby voluntarily
and knowingly releases and waives any and all
rights to retain possession of the Mortgaged
Property upon and during the continuance 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), 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 of 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 the 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 or declare
due the whole of the secured indebtedness and
marshalling in the event of foreclosure of the
liens hereby created.
28. Remedies Not Exclusive. Mortgagee
shall be entitled to enforce payment of the
Obligations and performance of the Obligations and
to exercise all rights and powers under this
Mortgage or under any of the other Security
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 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 right 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 Security Documents to Mortgagee or to which it
may otherwise be entitled, may be exercised,
concurrently or independently, from time to time
and as often as may be deemed expedient by
Mortgagee. 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.
29. 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 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
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
Obligations, 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 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
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
proceedings or exercise of any remedies in such
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
proceedings or any 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.
30. Expenses; Indemnification. (a)
Mortgagor shall pay or reimburse Mortgagee for all
expenses incurred by Mortgagee before and after
the date of this Mortgage with respect to any and
all transactions contemplated by this Mortgage
including without limitation, the preparation of
any document reasonably required hereunder or any
amendment, modification, restatement or supplement
to this Mortgage, the delivery of any consent,
non-disturbance agreement or similar document in
connection with this Mortgage or the enforcement
of any of Mortgagee's rights. Such expenses shall
include, without limitation, all title and
conveyancing charges, recording and filing fees
and taxes, mortgage taxes, intangible personal
property taxes, escrow fees, revenue and tax stamp
expenses, insurance premiums (including title
insurance premiums), title search and title
rundown charges, brokerage commissions, finders'
fees, placement fees, court costs, surveyors',
photographers', appraisers', architects',
engineers', consulting professional's,
accountants' and attorneys' fees and
disbursements. Mortgagor acknowledges that from
time to time Mortgagor may receive statements for
such expenses, including without limitation
attorneys' fees and disbursements. Mortgagor
shall pay such statements promptly upon receipt.
(b) If (i) any action or proceeding
shall be commenced by Mortgagee (including but not
limited to any action to foreclose this Mortgage
or to collect the Obligations), or any action or
proceeding is commenced to which Mortgagee is made
a party, or in which it becomes necessary to
defend or uphold the lien of this Mortgage
(including, without limitation, any proceeding or
other action relating to the bankruptcy,
insolvency or reorganization of Mortgagor and/or
any Subsidiary), or in which Mortgagee is served
with any legal process, discovery notice or
subpoena and (ii) in each of the foregoing
instances such action or proceeding in any manner
relates to or arises out of this Mortgage or
Mortgagee's acceptance of the Intercompany Note,
then Mortgagor will promptly reimburse or pay to
Mortgagee all of the expenses which have been
incurred by Mortgagee with respect to the
foregoing (including reasonable counsel fees and
disbursements), together with interest thereon at
the Default Rate, and any such sum and the
interest thereon shall be a lien on the Mortgaged
Property, prior to any right, or title to,
interest in or claim upon the Mortgaged Property
attaching or accruing subsequent to the lien of
this Mortgage, and shall be deemed to be secured
by this Mortgage. In any action or proceeding to
foreclose this Mortgage, or to recover or collect
the Obligations, the provisions of law respecting
the recovering of costs, disbursements and
allowances shall prevail unaffected by this
covenant.
(c) Mortgagor shall indemnify and hold
harmless Mortgagee and Mortgagee's affiliates, and
the respective directors, officers, agents and
employees of Mortgagee and its affiliates from and
against all claims, damages, losses and
liabilities (including, without limitation,
reasonable attorneys' fees and expenses) arising
out of or based upon any matter related to this
Mortgage, the Mortgaged Property or the occupancy,
ownership, maintenance or management of the
Mortgaged Property by Mortgagor, including,
without limitation, any claims based on the
alleged acts or omissions of any employee or agent
of Mortgagor; provided, however, that the
foregoing indemnification shall not apply to
claims, damages and the like arising from the
gross negligence or wilful misconduct of the party
seeking indemnification. This indemnification
shall be in addition to any other liability which
Mortgagor may otherwise have to Mortgagee.
31. 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 its sole discretion it
deems such waiver 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, 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.
32. 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 anywise
impairing or affecting the lien of this Mortgage
or the priority of such lien over any subordinate
lien.
33. Governing Law, etc. This Mortgage
shall be governed by and construed in accordance
with the laws of the State where the Real Estate
is located, except that Mortgagor expressly
acknowledges that by its terms the Indenture shall
be governed and construed in accordance with the
laws of the State of New York, without regard to
principles of conflict of law, 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,
without regard to principles of conflict of law.
34. Waiver of Trial by Jury. Mortgagor
and Mortgagee each hereby irrevocably and
unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this
Mortgage and for any counterclaim brought therein.
Mortgagor hereby waives all rights to interpose
any counterclaim in any suit brought by Mortgagee
hereunder (other than compulsory counterclaims and
other counterclaims that must be interposed in
connection with such suit under applicable law)
and all rights to have any such suit consolidated
with any separate suit, action or proceeding (it
being understood and agreed, however, that
Mortgagor shall have the right to raise any such
claim in a separate suit, action or proceeding).
35. 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 collateral agent to the Mortgagee," the
word "person" shall include any individual,
corporation, partnership, 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 of reference only and in no way limit
or amplify the provisions hereof.
36. 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 the
Code. 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 five 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; and (iii) the addresses of
Mortgagor and Mortgagee are as set forth on the
first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee
from time to time, shall execute, acknowledge and
deliver to Mortgagee one or more separate security
agreements, in form satisfactory to Mortgagee,
covering all or any part of the Mortgaged Property
and will further execute, acknowledge and deliver,
or cause to be executed, acknowledged and
delivered, any financing statement, affidavit,
continuation statement or certificate or other
document as Mortgagee may request in order to
perfect, preserve, maintain, continue or extend
the security interest under and the priority of
this Mortgage and such security instrument.
Mortgagor further agrees to pay to Mortgagee on
demand all costs and expenses incurred by
Mortgagee in connection with the preparation,
execution, recording, filing and re-filing of any
such document and all reasonable costs and
expenses of any record searches for financing
statements Mortgagee shall reasonably require.
Mortgagor shall from time to time, on request of
Mortgagee, deliver to Mortgagee an inventory in
reasonable detail of any of the Mortgaged Property
which constitutes personal property. If Mortgagor
shall fail to furnish any financing or
continuation statement within 10 days after
request by Mortgagee, then pursuant to the
provisions of the Code, Mortgagor hereby
authorizes Mortgagee, without the signature of
Mortgagor, to execute and file any such financing
and continuation statements. The filing of any
financing or continuation statements in the
records relating to personal property or chattels
shall not be construed as in any way impairing the
right of Mortgagee to proceed against any personal
property encumbered by this Mortgage as real
property, as set forth above.
37. Release Upon Payment and Discharge
of Mortgagor's Obligations. Mortgagee shall
release this Mortgage and the lien hereof by
proper instrument upon payment and discharge of
all Obligations secured hereby (including payment
of reasonable expenses incurred by Mortgagee in
connection with the execution of such release) and
upon full and complete performance of all of the
Obligations. Mortgagee shall otherwise release
this Mortgage and the lien hereof in accordance
with Article XII of the Indenture.
38. Industrial Plant Mortgage. This
Mortgage is an industrial plant mortgage within
the broadest interpretation of the "industrial
plant mortgage doctrine" under the laws of the
Commonwealth of Pennsylvania.
39. Open-End Mortgage. This Mortgage
is an "Open-End Mortgage" as set forth in 42
PA.C.S.A. section 8143 and secures advances plus accrued
and unpaid interest, advances for the payment of
Obligations, maintenance charges, insurance
premiums or costs incurred for the protection of
the Mortgaged Property or the lien of this
Mortgage and expenses incurred by Mortgagee by
reason of default by the Mortgagor under this
Mortgage, together with all other sums due
hereunder or secured hereby.
40. Consistency with Other Documents.
If any provision hereof conflicts with any
provisions of the Indenture, then the terms of the
Indenture shall control to the extent of such
conflict. If any provision hereof conflicts with
any provision of the Prior Mortgage, or requires
any performance, action or inaction required of
the Mortgagor under the Prior Mortgage, then to
the extent of the conflict or inconsistency, the
Mortgagor shall be excused hereunder by compliance
with the Prior Mortgage.
This Mortgage has been duly executed by
Mortgagor on the date first above written.
ATTEST:
By: /S/ ELIZABETH B. KELLY
----------------------------
Name: Elizabeth B. Kelly
Title: [Assistant] Secretary
KOPPEL STEEL CORPORATION
By: /S/ J. R. PARKER
-------------------------
Name: John R. Parker
Title: [Vice] President
[SEAL]
The address of the within-named Mortgagee is:
Ninth and Lowell Streets, Newport, Kentucky 41072.
For the Mortgagee:
/S/ F. ROBERT WHEELER, JR.
Name: F. Robert Wheeler, Jr.
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On this, the 26th day of July, 1995,
before me, a Notary Public in and for the State
and County aforesaid, the undersigned officers,
personally appeared John R. Parker and Elizabeth
B. Kelly, who acknowledged themselves to be the
[Vice] President and [Assistant] Secretary,
respectively, of Koppel Steel Corporation, a
Pennsylvania corporation and that they, as such
officers, being authorized to do so, executed the
foregoing instrument for the purposes therein
contained, by signing the name of the corporation
by themselves as such officers.
IN WITNESS WHEREOF, I hereunto set my
hand and official seal.
/S/ STEVEN MAHER
Notary Public
[Notarial Seal]
My Commission Expires:
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
10/15/96
Qualified in New York County
Certificate Filed in New York County
Commission Expires October 15, 1996
SCHEDULE A
KOPPEL STEEL PLANT
PLANT PARCEL
ALL THAT CERTAIN Residue Parcel of the South
Koppel Industrial Plan of Lots in the Borough of
Koppel, County of Beaver, Commonwealth of
Pennsylvania, as per plan recorded in Plan Book
Volume 24, Page 23, in the Office of the Beaver
County Recorder, and Residue Parcel of the Big
Beaver Turnpike Industrial Plan of Lots, in the
Borough of Big Beaver, County of Beaver,
Commonwealth of Pennsylvania, as per plan recorded
in Plan Book Volume 24, Page 28-29, in the Office
of the Beaver County Recorder, bounded and
described as follows:
BEGINNING at an iron pin (found) at the
northeasterly corner of the terminus of Sixth
Avenue; thence, S 88degree 43' 44" W, a distance of
47.01 feet to a concrete monument (found) on an
easterly line of lands now or formerly of Bruce F.
and Irene M. Stacy; thence, along said easterly
line of Bruce F. and Irene M. Stacy and other
lands now or formerly of Michael Lasky, N 02degree 08'
24" E, a distance of 172.04 feet to an iron pin
(found) on a southerly right-of-way line of
Legislative Route 04017 (State Route 351) and
being the northwesterly corner of the herein
described parcel; thence, along said southerly
right-of-way line the following four bearings and
distances: first, by a non-tangent curve to the
right having a radius 380.00 feet, an arc distance
of 177.75 feet and a chord of N 83degree 44' 41" E, a
distance of 176.14 feet to an iron pin (found);
thence, S 82degree 51' 17" E, a distance of 28.34 feet
to an iron pin (found); thence, by a curve to the
left having a radius 736.34 feet, an arc distance
of 758.03 feet and a chord of N 67degree 39' 13" E, a
distance of 725.00 feet to an iron pin (found);
thence, N 38degree 09' 42" E a distance of 9.22 feet to
an iron pin (found); the same being a
northwesterly corner of lands of the Borough of
Koppel; thence, along said Borough of Koppel lands
the following four bearings and distances: first,
S 31degree 09' 29" E, a distance of 221.21 feet to an
iron pin (found); thence, N 58degree 50' 31" E, a
distance of 140.00 feet to an iron pin (found);
thence, S 31degree 09' 29" E, a distance of 75.00 feet
to an iron pin (found); thence, N 58degree 50' 31" E, a
distance of 160.00 feet to an iron pin (found) in
a westerly right-of-way line of lands now or
formerly of the Pittsburgh and Lake Erie Railroad;
thence, along said westerly right-of-way line the
following sixteen bearings and distances: first,
S 31degree 09' 21" E a distance of 421.38 feet to a
point; thence N 89degree 40' 31" E, a distance of
8.45 feet to a point; thence, S 25degree 53' 49" E, a
distance of 292.80 feet to a point; thence, by a
curve to the right having a radius of 1402.69 feet
and an arc distance of 445.90 feet and a chord of
S 16degree 47' 46" E, a distance of 444.12 feet to a
point; thence, N 76degree 00' 54" E, a distance of
34.32 feet to a point; thence, S 13degree 51' 28" E, a
distance of 181.45 feet to a point; thence, S 11degree
00' 28" E, a distance of 1,116.57 feet to a point
in the line dividing the Borough of Koppel and the
Borough of Big Beaver; thence, S 11degree 00' 28" E, a
distance of 16.24 feet to a point; thence, S 09degree
42' 13" E, a distance of 168.99 feet to a point;
thence, S 11degree 22' 13" E, a distance of 109.81 feet
to a point; thence, S 15degree 31' 13" E, a distance of
180.00 feet to a point; thence, S 08degree 01' 28" E, a
distance of 423.55 feet to a point; thence, S 10degree
03' 51" E, a distance of 635.05 feet to a point;
thence, S 39degree 42' 40" E, a distance of 7.50 feet
to a point; thence, S 10degree 29' 12" E, a distance of
337.77 feet to a point; thence, S 04degree 37' 08" E, a
distance of 296.81 feet to an intersecting point
with the northerly line of a 100 foot right-of-way
now or formerly of the Pennsylvania Power Company,
the same being the northeasterly corner of Parcel
No. 3 of the aforesaid Big Beaver Turnpike
Industrial Plan of Lots, and being further
described as the southeasterly corner of the
Residue Parcel of the aforesaid South Koppel
Industrial Plan of Lots; thence, along a line
dividing said Parcel No. 3 and the said Residue
Parcel the following two bearings and distances:
first, S 62degree 23' 54" W, a distance of 428.23 feet
to an iron pin (set); thence, S 89degree 16' 24" W, a
distance of 1459.84 feet to an iron pin (set);
thence, along a line dividing this parcel and
Parcel No. 2 of the said Big Beaver Turnpike
Industrial Plan of Lots, the following six
bearings and distances: first, N 00degree 58' 56" W, a
distance of 400.00 feet to an iron pin (set);
thence, N 89degree 16' 24" E, a distance of 120.00 feet
to an angle point; thence, N 00degree 58' 56" W, a
distance of 680.00 feet to an iron pin (set);
thence, N 28degree 48' 44" E, a distance of 340.13 feet
to an iron pin (set); thence, N 87degree 51' 36" W, a
distance of 567.95 feet to an iron pin (set);
thence, S 49degree 03' 04" W, a distance of 30.32 feet
to an iron pin (set), said point being the
northeast corner of Parcel No. 1 of the South
Koppel Industrial Plan of Lots and in the line
dividing the Boroughs of Big Beaver and Koppel;
thence, along said Parcel No. 1 the following
three bearings and distances: first, S 49degree 03'
04" W, a distance of 264.68 feet to an iron pin
(set); thence, by a curve to the left having a
chord of S 24degree 02' 04" W, a distance of
143.78 feet and a radius of 170.00 feet and an arc
of 148.45 feet to an iron pin (set); thence, S 00degree
58' 56" E, a distance of 1083.27 feet to an iron
pin (set), the same being a point on the aforesaid
Borough line; thence, along said Borough line,
S 89degree 16' 24" W, a distance of 85.00 feet to an
iron pin (set); thence, along a line dividing this
parcel and Parcel No. 2 of the aforesaid South
Koppel Industrial Plan of Lots, N 00degree 58' 56" W,
along said line and passing through an iron pin
(set) a distance of 1,422.96 feet to a point on
the southerly line of lands now or formerly of
Glenn H. Marshall; thence, along said lands now or
formerly of Glenn H. Marshall, S 87degree 51' 36" E, a
distance of 188.73 feet to a point; thence, along
an easterly line of lands now or formerly of
Glenn H. Marshall and Norma A. Marshall, N 00degree 58'
56" W, a distance of 235.31 feet to a point;
thence, along lands now or formerly of Robert R.
Berkebile, S 87degree 51' 36" E, a distance of
120.39 feet to a point; thence, continuing along
lands now or formerly of Robert R. Berkebile,
N 00degree 58' 56" W, a distance of 658.10 feet to a
concrete monument (found); thence, along lands now
or formerly of the Right Reverend Hugh C. Boyle
and the easterly terminus of Arthur Street, N 08degree
26' 40" W, a distance of 505.88 feet to a concrete
monument (found); thence, continuing along lands
of said Right Reverend Hugh C. Boyle and lands now
or formerly of the Koppel Realty Company, N 02degree
18' 41" W; a distance of 406.27 feet to an iron
pin (found); thence, continuing along lands of
said Koppel Realty Company, N 87degree 51' 36" W, a
distance of 116.00 feet to an iron pin (found) in
the easterly right-of-way line of Sixth Avenue;
thence, along said easterly right-of-way line,
N 02degree 08' 24" E, a distance of 400.00 feet to an
iron pin (found); thence, along lands now or
formerly of George and Anne Tita and lands now or
formerly of Helen M. Tita the following three
bearings and distances: first, S 87degree 51' 36" E, a
distance of 84.47 feet to an iron pin (found);
thence, N 02degree 18' 41" W, a distance of 100.30 feet
to an iron pin (found); thence, N 87degree 51' 31" W, a
distance of 77.09 feet to an iron pin (found) in
the easterly right-of-way line of the aforesaid
Sixth Avenue; thence, along said easterly
right-of-way line, N 02degree 08' 24" E, a distance of
588.90 feet to the point of beginning containing
187.011 acres, more or less.
EXCEPTING THEREFROM AND THEREOUT all those
two parcels of land bounded and described as
follows:
(1) ALL THAT CERTAIN Parcel No. 1 of the Big
Beaver Turnpike Industrial Plan of Lots, in the
Borough of Big Beaver, County of Beaver,
Commonwealth of Pennsylvania, as per plan recorded
in Plan Book Volume 24, Pages 28-29, in the Office
of the Beaver County Recorder, bounded and
described as follows:
COMMENCING in the centerline of Arthur Street
(60 feet) at its terminus on a westerly line of
the South Koppel Industrial Plan of Lots as
recorded in Plan Book Volume 24, Page 23, in the
Office of the Beaver County Recorder; thence,
along the centerline of an access road the
following six bearings and distances: first,
S 88degree 30' 53" E, a distance of 76.20 feet to a
point; thence, S 53degree 08' 46" E, a distance of
275.00 feet to a point; thence, S 06degree 55' 09" E, a
distance of 100.00 feet to a point; thence, S 48degree
07' 27" E, a distance of 248.00 feet to a point;
thence, N 88degree 14' 28" E, a distance of 768.00 feet
to a point; thence, S 30degree 19' 18" E, a distance of
235.29 feet, to an iron pin (set) and being the
TRUE POINT OF BEGINNING of the herein described
Parcel No. 1; thence, along said parcel's boundary
line by the following eighteen bearings and
distances: first, S 25degree 00' 24" E, a distance of
238.45 feet to an iron pin (set); thence, S 15degree
54' 57" E, a distance of 133.10 feet, to an iron
pin (set); thence, Due South a distance of
51.40 feet to an iron pin (set); thence, S 11degree 26'
42" W, a distance of 274.66 feet to an iron pin
(set); thence, Due West, a distance of 196.00 feet
to an iron pin (set); thence, Due North, a
distance of 224.60 feet to an iron pin (set);
thence, N 57degree 50' 06" W, a distance of 175.07 feet
to an iron pin (set); thence, Due West, a distance
of 84.80 feet, to an iron pin (set); thence, N 08degree
38' 44" E, a distance of 177.62 feet to an iron
pin (set); thence, N 52degree 56' 06" W, a distance of
99.88 feet to an iron pin (set); thence, N 83degree 51'
46" W, a distance of 37.41 feet to an iron pin
(set); thence, N 42degree 34' 03" W, a distance of
141.62 feet to an iron pin (set); thence, Due
North, a distance of 63.20 feet to an iron pin
(set); thence, N 40degree 17' 18" E, a distance of
129.13 feet to an iron pin (set); thence, N 88degree
05' 27" E, a distance of 234.13 feet to an iron
pin (set); thence, S 29degree 55' 25" E, a distance of
115.27 feet to an iron pin (set); thence, S 60degree
48' 54" E, a distance of 46.96 feet, to an iron
pin (set); thence, S 69degree 18' 13" E, a distance of
124.22 feet to the point of beginning containing
6.846 acres.
(2) ALL THAT CERTAIN Parcel No. 4 of Revised South
Koppel Industrial Plan of Lots in the Borough of
Koppel, County of Beaver, Commonwealth of
Pennsylvania, as per plan recorded in Plan Book
Volume 25, Page 64, in the Office of The Beaver
County Recorder, bounded and described as follows:
COMMENCING at an iron pin in an angle point
of said Revised South Koppel Industrial Plan of
Lots, said iron pin being on the easterly
right-of-way of Sixth Avenue at a point 75.00 feet
southerly of the south line of Mount Street
extended 50 feet easterly to said Sixth Avenue
right-of-way; thence, from said iron pin N 02degree 08'
24" E along said Sixth Avenue's easterly
right-of-way a distance of 98.00 feet to a point;
thence, N 88degree 26' 22" E along a line in the
residue parcel of the said Revised South Koppel
Industrial Plan of Lots, a distance of 707.79 feet
to an angle point; thence, S 02degree 19' 20" E, a
distance of 535.31 feet to an angle point; thence,
N 87degree 41' 24" E, a distance of 15.13 feet to a
point 5plus/minus feet from the west curb wall of the
included building of the herein described Parcel
No. 4 and being on the centerline of Column "B"
and being further described as the TRUE POINT OF
BEGINNING of the herein described Parcel No. 4;
thence, N 02degree 18' 36" W, along the westerly side
of and 5 plus/minus feet distant from the curb wall, a
distance of 371.00 feet to a point 16 feet north
of the centerline of Column "FX"; thence, N 87degree
41' 24" E, along said line 16 feet distant from
said centerline of Column "FX"; a distance of
274.35 feet to a point of intersection with the
centerline of Column "G"; thence, N 02degree 18' 36" W,
along said centerline of Column "G" a distance of
298.00 feet to a point of intersection with the
centerline of Column "K"; thence, N 87degree 41' 24" E
along said Column "K" line, a distance of
130.00 feet to a point of intersection with the
centerline of Column "J"; thence, S 02degree 18' 36" E
along said centerline of Column "J", a distance of
291.39 feet to a point; thence, N 87degree 41' 24" E, a
distance of 49.32 feet to a point; thence, N 02degree
18' 36" W, a distance of 25.69 feet to a point
5 plus/minus feet south of the face of the Maintenance
Shop's southerly wall; thence, N 87degree 41' 24" E,
along the southerly side and 5 plus/minus feet distant from
the curb wall, a distance of 78.68 feet to a
point; thence, N 02degree 18' 35" W along a line
5 plus/minus feet east of the face of the east wall of the
said Maintenance Shop, a distance of 10.10 feet to
a point; thence, N 87degree 41' 24" E, a distance of
145.50 feet to a point; thence, S 02degree 18' 36" E, a
distance of 53.76 feet to a point; thence, S 87degree
41' 24" W, a distance of 15.93 feet to a point;
5 plus/minus feet east of the east curb wall; thence, by the
following seven courses and distances along the
easterly side of and 5 plus/minus feet distant from the curb
walls, first, S 02degree 18' 35" E, a distance of
114.45 feet to a point; thence, N 87degree 41' 24" E, a
distance of 26.09 feet to a point; thence, S 02degree
18' 36" E, a distance of 93.46 feet to a point;
thence, S 87degree 41' 24" W, a distance of 52.70 feet
to a point; thence, S 02degree 18' 35" E, a distance of
50.00 feet to a point; thence, N 87degree 41' 24" E, a
distance of 26.95 feet to a point; thence, S 02degree
18' 36" E, a distance of 101.73 feet to a point on
the said centerline of Column "B"; thence, S 87degree
41' 24" W along said centerline of Column "B", a
distance of 662.66 feet to the point of beginning,
containing 6.768 acres, more or less.
NON EXCLUSIVE ACCESS to the above-described
parcel is provided by the following:
COMMENCING at the iron pin in an angle point
of said Revised South Koppel Industrial Plan of
Lots, said iron pin being on the easterly
right-of-way of Sixth Avenue at a point 75.00 feet
southerly of the south line of Mount Street
extended 50 feet easterly to said Sixth Avenue
right-of-way; thence, from said iron pin N 02degree 08'
24" E along said Sixth Avenue's easterly
right-of-way a distance of 98.00 feet to a point,
said point being on a westerly line of said
revised South Koppel Industrial Plan of Lots and
being the point of beginning of the herein
described Non-Exclusive Access; thence, along the
centerline of the non-exclusive access road, the
following two courses and distances: first, N 88degree
26' 22" E, a distance of 707.79 feet to a point;
thence, S 02degree 19' 20" E, a distance of 535.31 feet
to a point; thence, to Parcel No. 4 parcel line
N 87degree 41' 24" E, a distance of 16.13 feet to the
southwesterly corner of said parcel and there
terminate.
KOPPEL STEEL PLANT
DISPATCH PARCEL
ALL THAT CERTAIN Parcel No. 3 also known as
the "Dispatch Parcel" in the Borough of Big
Beaver, County of Beaver, Commonwealth of
Pennsylvania, and bounded and described as
follows:
COMMENCING at the intersection of the
centerline of Mary Street of the Borough of Koppel
and the centerline of State Route No. 18,
Legislative Route No. 77; thence, along a survey
line, the following three bearings and distances
to the herein described parcel: first, S 03degree 33'
06" W, a distance of 419.56 feet to a point;
thence, S 11degree 30' 19" W, a distance of 2,720.46
feet to a point; thence, S 05degree 52' 38" E, a
distance of 681.04 feet to a drill hole (found) in
the concrete median of the aforesaid State Route
No. 18, Legislative Route No. 77, the same being
the TRUE POINT OF BEGINNING; thence, along lands
now or formerly of Lawrence E. Ferrigno, N 73degree 25'
00" E, a distance of 167.22 feet to a railroad
spike (found) on a westerly right-of-way line of
the Consolidated Rail Corporation, the same being
the northeasterly corner of the herein described
parcel; thence, along said westerly right-of-way
line, S 05degree 57' 36" E, a distance of 70.75 feet to
an iron pin (found); thence, continuing along said
westerly right-of-way by a curve to the right,
having a radius of 1,518.80 feet and an arc of
142.88 feet and a chord of S 03degree 18' 15" E, a
distance of 142.86 feet to an iron pin (found);
thence, by lands now or formerly of Daniel and
Shirley A. Gisondi, S 88degree 55' 55" W, a distance of
161.63 feet to a drill hole (found) in the
concrete median of L.R. 77 (S.R. 18); thence,
along the centerline of said L.R. 77 by a curve to
the left, having a radius of 6,875.55 feet and an
arc distance of 168.90 feet and a chord of N 04degree
50' 17" W, a distance of 168.90 feet to the point
of beginning, containing 0.721 acres, more or
less.
KOPPEL STEEL PLANT
NORTH PARCEL
ALL THOSE CERTAIN Lots No. 1 and 2 of the
North Plant Industrial Plan of Lots in the Borough
Big Beaver, County of Beaver, Commonwealth of
Pennsylvania, as per Plan Book Volume 23, Page 60,
in the Office of the Beaver County Recorder and
Residue Parcel of the North Plant Industrial Plan
of Lots No. 2 in the Borough of Koppel, County of
Beaver, Commonwealth of Pennsylvania as per Plan
recorded in Plan Book Volume 24, Page 52, in the
Office of the Beaver County Recorder, bounded and
described as follows:
BEGINNING at a concrete monument (found) as
the northwesterly corner of the herein described
parcel and being the northwesterly corner of the
aforesaid Lot No. 2, the same being a point on the
easterly right-of-way line of the Consolidated
Rail Corporation; thence, N 89degree 22' 55" E, along a
northerly line of the herein described parcel, the
same being a southerly line of lands now or
formerly of John E. and Harriet J. Mulroy, at
633.00 feet, passing through a concrete monument
(found), a total distance of 755.82 feet to an
iron pin (found) a westerly right-of-way line of
the Pittsburgh and Lake Erie Railroad (switch-
back); thence, along said westerly right-of-way
line the following six bearings and distances:
first, S 45degree 04' 36" E, a distance of 278.10 feet
to an iron pin (found) at a point of curve;
thence, along said curve to the right, having a
radius of 553.47 feet and an arc or 354.68 feet
and having a chord of S 26degree 42' 48" E, a distance
of 348.63 feet to an iron pin (found) at a point
of tangency; thence, S 08degree 21' 36" E, a distance
of 235.43 feet to the Borough Line separating the
Borough of Big Beaver and the Borough of Koppel,
to an iron pin (set); thence, S 08degree 21' 36" E, a
distance of 165.00 feet to an iron pin (found) at
a point of curve; thence, by a curve to the right
having a radius of 1,890.08 feet and an arc of
223.84 and having a chord of S 04degree 58' 06" E, a
distance of 223.74 feet to an iron pin (found) at
a point of tangency, thence, S 01degree 34' 36" E, a
distance of 230.58 feet to an iron pin (found) at
the terminal line of said right-of-way line of the
Pittsburgh and Lake Erie Railroad (switch-back);
thence, along said terminal line, N 88degree 54' 52" E,
a distance of 40.00 feet, to an iron pin (found);
thence, along an easterly right-of-way line of
said Pittsburgh and Lake Erie Railroad
(switchback), the following four bearings and
distances: first, N 01degree 34' 36" W, a distance of
230.92 feet to an iron pin (found) at a point of
curve; thence, by said curve to the left having a
radius of 1,930.08 feet and an arc of 228.47 feet
and having a chord of N 04degree 58' 06" W, a distance
of 228.36 feet to an iron pin (found) at a point
of tangency; thence, N 08degree 21' 36" W, a distance
of 161.19 feet to an iron pin (set) at the
aforesaid Borough Line separating the Borough of
Big Beaver and the Borough of Koppel; thence, N
08degree 21' 36" W, a distance of 239.24 feet to an
iron pin (found) at an angle point in the said
Pittsburgh and Lake Erie Railroads right-of-way;
thence, N 81degree 39' 56" E, along said right-of-way,
a distance of 220.50 feet to an iron pin (found)
on a westerly right-of-way line of said Pittsburgh
and Lake Erie Railroad; thence, S 40degree 38' 13" E,
along said westerly right-of-way line, a distance
of 328.84 feet to a point on the aforesaid Borough
line; thence, continuing along said westerly
right-of-way line, a distance of 818.21 feet to an
iron pin (found); thence, S 31degree 09' 29" E,
continuing along said westerly right-of-way line,
a distance of 165.26 feet to an iron pin (found)
on a northerly line of a 40 foot right-of-way line
of S.R. 351 (L.R. 04017); thence, along said
northerly right-of-way line by the following four
bearings and distances: first, S 38degree 09' 42" W, a
distance of 344.96 feet to a hub (found); thence,
by a curve to the right having a radius of 696.34
feet and an arc of 716.86 feet and having a chord
of S 67degree 39' 13" W, a distance of 685.62 feet to
an iron pin (found) at a point of tangency;
thence, N 82degree 51' 17" W, a distance of 28.34 feet
to an iron pin (found); thence, by a curve to the
left having a radius of 420.00 feet and an arc of
167.08 feet and having a chord of S 85degree 44' 55" W,
a distance of 165.98 feet to an iron pin (set) at
a point of intersection of the said northerly
right-of-way line and a line dividing the herein
described property and Parcel No. 1 of the
aforesaid North Plant Industrial Plan of Lots No.
2; thence, along said dividing line by the
following five bearings and distances: first, N
02degree 08' 35" E, a distance of 411.82 feet to an
iron pin (set); thence, N 16degree 13' 57" W, a
distance of 94.69 feet to an iron pin (set);
thence, N 13degree 26' 33" W, a distance of 167.38 feet
to an iron pin (set); thence, N 48degree 22' 32" W, a
distance of 788.34 feet to an iron pin (set);
thence, S 67degree 19' 41" W, a distance of 29.66 feet,
to an iron pin (set) in an easterly right-of-way
line of the Consolidated Rail Corporation; thence,
along said easterly right-of-way by the following
four bearings and distances: first, by a curve to
the left having a radius of 1,595.88 feet and an
arc of 78.46 feet and having a chord of N 24degree 04'
56" W, a distance of 78.46 feet to an angle point
in the aforesaid Borough Line separating the
Borough of Big Beaver and the Borough of Koppel;
thence, continuing along said right-of-way line by
said curve to the left having a radius of 1,595.88
feet and an arc of 121.51 feet and having a chord
of N 27degree 40' 13" W, a distance of 121.48 feet to a
concrete monument (found); thence, N 29degree 51' 06"
W, a distance of 409.60 feet to an iron pin
(found); thence, by a curve to the left having a
radius of 2,897.93 feet and arc of 362.89 feet and
having a chord of N 33degree 26' 21" W, a distance of
362.64 feet to the point of beginning, containing
43.085 acres, more or less.
TOGETHER with easements: created in favor of
Koppel Steel Corporation by Easement Agreement
among the Babcock & Wilcox Company, PMAC, Ltd. and
Koppel Steel Corporation dated May 7, 1991 and
recorded in Miscellaneous Book Volume 1441, page
569.
SCHEDULE A
AMBRIDGE PLANT
PARCEL NO. 1:
ALL THAT CERTAIN piece or parcel of land
situated in both the Borough of Ambridge and the
Township of Harmony, County of Beaver,
Commonwealth of Pennsylvania shown on and
described according to that certain Land Title
Survey entitled "Property of The Babcock & Wilcox
Company" prepared by Michael Baker, Jr., Inc.
(Charles F. Coe, Pennsylvania Surveyor No. 19314-
E), dated July 15, 1988, last revised
September 25, 1990, which survey is incorporated
herein by this reference and made a part of the
description herein, and being more particularly
described as follows:
COMMENCING at a hub (found), said point being
at the intersection of the northerly right-of-way
line of 21st Street (Plan) and the easterly right-
of-way line of Oak Alley and being the
southwesterly corner of Lot #27 as shown of the
Charles A. Dickson Plan #10 of lots recorded in
Plan Book Volume 2, Page 147; thence, along a
projection of said northerly right-of-way line of
21st Street, S 89degree 34' 38" W, a distance of 32.00
feet to a point on the westerly right-of-way of
the Penn Central Transportation Company, (Economy
Belt of Conrail); thence, following the said
westerly right-of-way, S 00degree 25' 22" E, a distance
of 580.78 feet to an iron pin (set) and being the
TRUE POINT OF BEGINNING, said point being the most
southeasterly corner of the herein described
parcel and also being the northeasterly corner of
lands now or formerly of Wyckoff Drawn Steel
Company; thence, departing from the said westerly
right-of-way of the Penn Central Transportation
Company, (Economy Belt of Conrail), and along the
line dividing lands now or formerly of said
Wyckoff Drawn Steel Company and the herein
described parcel by the following twelve bearings
and distances: first, S 68degree 53' 38" W, a distance
of 445.62 feet to an iron pin (set); thence, S 68degree
51' 53" W, a distance of 186.54 feet to an iron
pin (set); thence, N 87degree 37' 05" W, a distance of
59.91 feet to an iron pin (set); thence, S 81degree 44'
05" W, a distance of 25.18 feet to an iron pin
(set); thence, S 81degree 22' 25" W, a distance of
84.27 feet to an iron pin (set); thence, S 62degree 14'
33" W, a distance of 20.85 feet to an iron pin
(set); thence, S 72degree 04' 40" W, a distance of
69.22 feet to an iron pin (set); thence, S 67degree 45'
20" W, a distance of 43.97 feet to a point;
thence, S 67degree 45' 20" W, a distance of 24.66 feet
to an iron pin (set); thence, S 40degree 30' 20" W, a
distance of 318.40 feet to an iron pin (set);
thence, S 23degree 26' 14" W; a distance of 84.47 feet
to an iron pin (set); thence, N 70degree 36' 45" W, a
distance of 50.00 feet to an iron pin (set) on the
easterly line of the lands now or formerly of
Consolidated Rail Corporation; thence, continuing
along said easterly line, by the following six
bearings and distances: first, N 05degree 01' 00" W, a
distance of 209.53 feet to an iron pin (set);
thence, N 08degree 53' 25" E, a distance of 133.43 feet
to an iron pin (set); thence, N 01degree 14' 10" W, a
distance of 152.03 feet to an iron pin (set);
thence, N 02degree 07' 05" W, a distance of 121.49 feet
to an iron pin (set); thence, passing through the
line dividing the Borough of Ambridge from the
Township of Harmony, N 00degree 34' 18" W, a distance
of 435.85 feet to an iron pin (set); thence, S 89degree
25' 42" W, a distance of 25.00 feet to an iron pin
(set) on the easterly right-of-way line of the
State of Pennsylvania, Department of Highways,
Route 65, known as Ohio River Boulevard; thence,
departing from said railroad right-of-way and
along said easterly right-of-way line of
Pennsylvania State Route 65 by the following
fourteen bearings and distances: first, N 00degree 34'
18" W, a distance of 665.78 feet to an iron pin
(set); thence, S 89degree 25' 42" W, a distance of
24.00 feet to an iron pin (set); thence, N 00degree 34'
18" W, a distance of 130.00 feet to an iron pin
(set); thence, N 89degree 25' 42" E, a distance of
14.00 feet to an iron pin (set); thence, N 00degree 34'
18" W, a distance of 901.32 feet to an iron pin
(set); thence, along a curve to the left having a
radius of 11,509.20 feet and an arc length of
202.60 feet, and having a chord of N 01degree 04' 33"
W, a distance of 202.58 feet to an iron pin (set);
thence, N 31degree 09' 00" E, a distance of 18.48 feet
to an iron pin (set); thence, along a curve to the
left having a radius of 11,519.20 feet and an arc
length of 117.84 feet, and having a chord of
N 01degree 57' 02" W, a distance of 117.84 feet to an
iron pin (set); thence N 02degree 14' 37" W, a distance
of 1007.60 feet to an iron pin (set) and being
perpendicular to and 136.21 feet from a State
Route 65 right-of-way monument (found) 76.21 feet
left of P.C. Station 139 + 15.47 feet; thence,
along a curve to the right said point having a
radius of 11,399.20 feet and an arc length of
84.16 feet, and having a chord of N 02degree 01' 56" W,
a distance of 84.16 feet to a P.K. Nail; thence, S
88degree 10' 44" W, a distance of 20.00 feet to an iron
pin (set); thence, along a curve to the right,
having a radius of 11,419.20 feet and an arc
length of 49.83 feet, and having a chord of N 01degree
41' 46" W, a distance of 49.83 feet to an iron pin
(set); thence, N 88degree 25' 44" E, a distance of
20.00 feet to an "X" cut in concrete; thence along
a curve to the right, having a radius of 11,399.20
feet and an arc length of 600.00 feet, and having
a chord of N 00degree 03' 47" W, a distance of 599.93
feet to an iron pin (set); thence, departing from
said easterly right of way of said State Route 65
and along the dividing lines of lands now or
formerly of Value Ambridge Association and the
herein described tract by the following fifteen
bearings and distances: first, S 24degree 54' 12" E, a
distance of 792.94 feet to an iron pin (found);
thence, S 64degree 26' 44" E, a distance of 222.30 feet
to an iron pin (found); thence, S 32degree 19' 58" E, a
distance of 138.39 feet to a concrete monument
(found), thence, S 31degree 09' 00" W, a distance of
792.61 feet to an iron pin (set); thence, S 58degree
56' 13" E, a distance of 355.55 feet to an iron
pin (set); thence S 23degree 46' 46" W, a distance of
161.74 feet to an iron pin (set); thence, along a
line parallel to and 19.00 feet perpendicular from
building #70 located in the aforesaid tract, S 00degree
24' 00" E, a distance of 341.25 feet to an iron
pin (set); thence, N 89degree 36' 00" E, a distance of
46.00 feet to a point; thence, S 00degree 24' 00" E, a
distance of 125.63 feet to a point; thence, S 89degree
36' 00" W, a distance of 46.00 feet to an iron pin
(set); thence, along said line parallel to and
19.00 feet perpendicular from building #70, S 00degree
24' 00" E, a distance of 1957.93 feet to an iron
pin (set); thence, leaving said parallel line, N
74degree 00' 10" E, a distance of 214.59 feet to a P.K.
nail (set) in concrete - at a fence post; thence,
N 71degree 43' 12" E, a distance of 231.68 feet to a
P.K. nail (set) in concrete at a fence post;
thence S 00degree 24' 00" E, a distance of 121.00 feet
to an iron pin (set); thence, N 68degree 53' 38" E, a
distance of 445.63 feet to an iron pin (set) on
the aforesaid westerly right-of-way line of the
Penn Central Transportation Company, (Economy Belt
Line of Conrail); thence, departing from said
dividing line and along said westerly line, S 00degree
25' 22" E, a distance of 26.38 feet to the point
of beginning, said parcel of land containing
39.308 acres, more or less. The portion situated
in Borough of Ambridge contains 6.646 acres, more
or less and remaining parcel in the Township of
Harmony contains 32.662 acres, more or less.
Parcel No. 2
ALL THAT CERTAIN piece of parcel of land
situated in the Borough of Ambridge, Beaver
County, Pennsylvania, bounded and more
particularly described as follows:
COMMENCING at a hub (found), said point being
at the intersection of the northerly right-of-way
line of 21st Street (Plan) and the easterly right-
of-way line of Oak Alley and being the
southwesterly corner of Lot #27 as shown on the
Charles A. Dickson Plan #10 of lots recorded in
Plan Book 2, Page 147; thence, along said easterly
line of the Oak Alley, S 00degree 25' 22" E, a distance
of 540.00 feet to a P.K. nail (set) at a fence
post, being the northwesterly corner of Lot #8 of
said plan and also being the TRUE POINT OF
BEGINNING; thence, departing from said easterly
line of Oak Alley, and along the dividing line of
Lot #9 and Lot #8 of said plan, N 89degree 34' 38" E, a
distance of 120.00 feet to an "X" cut in the
sidewalk on the westerly line of Duss Avenue;
thence, departing from said dividing line, and
along the westerly line of Duss Avenue, S 00degree 25'
22" E, a distance of 50.00 feet to an "X" cut in
the sidewalk; thence, departing from said westerly
line of Duss Avenue, and along a dividing line
between Lot #6 and Lot #7 of said plan, S 89degree 34'
38" W a distance of 120.00 feet to an "X" cut in
the sidewalk on the easterly line of Oak Alley;
thence, along the easterly line of Oak Alley, N
00degree 25' 22" W, a distance of 50.00 feet to the
point of beginning, said parcel contains 0.138
acre, more or less.
TOGETHER WITH any right, title and interest in and
to that certain right-of-way easement for electric
lines as described in Agreement between Armco
Steel Corporation and The Babcock & Wilcox
Company, dated January 4, 1972 (the "1972
Agreement") and recorded in Deed Book Volume 985,
page 299, Section 3, Paragraph G, and pursuant to
the Agreement between Armco Steel Corporation and
The Babcock & Wilcox Company dated May 26, 1987
(the "1987 Agreement") and recorded June 23, 1987
in Deed Book Volume 1301, page 384, Section 3.05.
AND FURTHER TOGETHER WITH an easement and right-
of-way for Duquesne Light Company for poles,
lines, etc. across Value Ambridge Association
property to a substation in the Township of
Harmony, County of Beaver and Commonwealth of
Pennsylvania, said lines being described as
follows:
BEGINNING at a point on the north line of the
substation property where the same is intersected
by the electric tower centerline; thence, along
said centerline N 06degree 54' 58" E, a distance of
184.43 feet to Tower #390; thence,
N 21degree 13' 09" E, a distance of 650.60 feet to
Tower #389; thence, N 21degree 11' 38" E, a distance of
629.40 feet to Tower #388 where the electric lines
on the West and East side of the tower go in
different directions; thence, first continuing
along said centerline but following the west side
electric line toward Tower #385 N 73degree 14' 44" W, a
distance of 642.44 feet to an intersection with a
line common to the aforementioned Parcel No. 1 and
lands now or formerly of Value Ambridge
Association and the terminus of the westerly
portion of this easement; second, beginning again
at said Tower #388 and following the centerline of
the eastside electric line toward Tower #386, N
51degree 19' 07" E, a distance of 287.18 feet to said
Tower #386 and being the terminus of the easterly
electric line easement and being in an 85-foot
right-of-way recorded in the Recorder of Deeds
Office in Beaver County.
AND FURTHER TOGETHER WITH any right, title and
interest in and to that certain right-of-way
easement for free and unimpeded use of railroad
track Nos. 29, 41 and 99 as created by
Paragraph 3B of the 1972 Agreement.
AND FURTHER TOGETHER WITH any right, title and
interest in and to that certain non-exclusive
easement for vehicular access across Armco's south
parking lot as created by Paragraph 3.02 of the
1987 Agreement.
AND FURTHER TOGETHER WITH any right, title and
interest in and to that certain non-exclusive
right-of-way easement for free and unimpeded use
of railroad track Nos. 35 and 39 and a temporary
non-exclusive access easement for the purpose of
installing a new turnout for railroad track Nos.
99 and 17 as referred to in Paragraph 3.03 of the
1987 Agreement.
AND FURTHER TOGETHER WITH any and all easements,
rights-of-way, privileges and benefits granted in
favor of The Babcock & Wilcox Company in (a) the
1972 Agreement, (b) the 1987 Agreement, (c) Deed
from Armco, Inc. to The Babcock & Wilcox Company,
dated March 31, 1988 and recorded on April 7,
1988, in Deed Book Volume 1335, page 623, and (d)
Deed from The Babcock & Wilcox Company to Armco,
Inc., dated April 5, 1988 and recorded April 7,
1988 in Deed Book Volume 1335, page 630.
AND FURTHER TOGETHER WITH the right of ingress,
egress and regress between Parcel No. 1 and Parcel
No. 2 and to and from Duss Avenue and Ohio River
Boulevard.
SCHEDULE A
KOPPEL STEEL PLANT
QUENCH & TEMPER
ALL THAT CERTAIN Parcel being designated as
Parcel No. 1 of the North Plant Industrial Plan of
Lots No. 2 in the Borough of Koppel, County of
Beaver, Commonwealth of Pennsylvania, as per Plan
recorded in Plan Book Volume 24, Page 52, in the
Office of the Beaver County Recorder, bounded and
described as follows:
BEGINNING at an iron pin at the northwesterly
corner of the terminus of Fourth Avenue and being
a point on an easterly right-of-way line of the
Consolidated Rail Corporation, as shown on the
Plan of Koppel, as recorded in Plan Book Volume 1,
Page 308; thence, along said easterly right-of-way
line the following four bearings and distances:
first, N 02degree 08' 24" E, a distance of 862.53 feet
to a concrete monument (found); thence, by a curve
to the left having a radius of 1,592.88 and an arc
distance of 150.73 feet and a chord of N 00degree 35'
00" W, a distance of 150.56 feet to an iron pin
(found); thence, N 88degree 54' 52" E, a distance of
3.00 feet to an iron pin (found); thence, by a
curve to the left having a radius of 1,595.88 feet
and an arc distance of 540.13 feet and a chord of
N 12degree 58' 33" W, a distance of 537.56 feet to an
iron pin (set); thence, leaving said Consolidated
Rail Corporation right-of-way and along the
following five bearings and distances dividing the
herein described Parcel No. 1 and the Residue
Parcel of the aforesaid North Plant Industrial
Plan of Lots No. 2: first, N 67degree 19' 41" E, a
distance of 29.66 feet to an iron pin (set);
thence, S 48degree 22' 32" E. a distance of 788.34 feet
to an iron pin (set); thence, S 13degree 26' 33" E, a
distance of 167.38 feet to an iron pin (set);
thence, S 16degree 13' 57" E, a distance of 94.69 feet
to an iron pin (set); thence, S 02degree 08' 35" W, a
distance of 411.82 feet to an iron pin (set) on a
northerly right-of-way line of L.R. 04017, (S.R.
351); thence, along said northerly right-of-way
line the following three bearings and distances:
first, by a curve to the left having radius of
420.00 feet and an arc of 358.45 feet and a chord
of S 49degree 54' 10" W, a distance of 347.67 feet to
an iron pin (found); thence, S 88degree 43' 44" W, a
distance of 48.55 feet to an iron pin (found);
thence, S 02degree 08' 24" W, a distance of 143.64 feet
to an iron pin (found); thence, along lands now or
formerly of Mark T. & Sharon Langhel, the north
end of Lemon Drive, lands now or formerly of
Lloyd J. and Mary L. Siecker and the north end of
said Fourth Avenue, N 87degree 51' 36" W, a distance of
260.00 feet to the point of beginning containing
14.297 acres, more or less.
SCHEDULE B
EXCLUDED PROPERTY
a) Any and all Collateral (as defined
in that certain Revolving Credit, Guaranty and
Security Agreement dated as of July 28, 1995 by
and between Newport Steel Corporation, Koppel
Steel Corporation and Imperial Adhesives, Inc., as
borrowers, NS Group, Inc., Erlanger Tubular
Corporation, Northern Kentucky Air, Inc. and
Northern Kentucky Management, Inc., as guarantors,
The Bank of New York Commercial Corporation, as
Lender, as ACM Agent and as Co-Agent, and PNC Bank
Ohio, National Association, as Lender and as Co-
Agent, and other lenders parties thereto).
b) Any and all intellectual property
rights and interests, including, without
limitation, any and all trade names, trade marks,
copyrights, trade secrets and patents.
c) Any and all vehicles and rolling
stock.
d) Any and all leased Equipment if and
to the extent the terms and conditions of the
applicable lease documentation prohibit, restrict
or require consent in connection with the creation
of liens and security interests with respect to
such Equipment.
e) Any and all general intangibles.
f) Stripper Crane subject to Contract
for Lease and Rent dated September 6, 1977 between
City of Wilder, Kentucky and Interlake, Inc.,
recorded at Misc. Book 82, page 401, and Sublease
dated April 15, 1981 between Interlake, Inc. and
Newport Steel Corporation, recorded at Misc. Book
95, page 101, provided, however, that such
Stripper Crane shall case to be Excluded Property
at such time (if ever) as all consents required in
connection with the granting of liens and security
interests with respect to such Stripper Crane
under such Lease and Sublease have been obtained.
g) Any and all Equipment described in
a certain Security Agreement, dated as of February
13, 1992, together with all exhibits, supplements,
addenda and amendments thereto in existence or
effect on the date hereof or hereafter.
Recording requested by, and
when recorded return to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
ATTN: F. Robert Wheeler, Jr., Esq.
JUNIOR DEED OF TRUST,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
from
KOPPEL STEEL CORPORATION, Grantor
to
William D. Cleveland, Trustee
for the use and benefit of
NS GROUP, INC.,
as Trustee and Collateral Agent, Beneficiary
DATED AS OF JULY 28, 1995
TABLE OF CONTENTS
Background . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . 2
1. Warranty of Title . . . . . . . . . . . . . . . . . 6
2. Payment and Performance of Obligations. . . . . . . 7
3. Requirements. . . . . . . . . . . . . . . . . . . . 7
4. Payment of Taxes and Other Impositions. . . . . . . 8
5. Insurance . . . . . . . . . . . . . . . . . . . . . 9
6. Restrictions on Liens, Encumbrances and
Sales . . . . . . . . . . . . . . . . . . . . . . . 13
7. Relationship of Beneficiary and Grantor . . . . . . 14
8. Maintenance; No Alteration; Inspection;
Utilities . . . . . . . . . . . . . . . . . . . . . 14
9. Condemnation/Eminent Domain . . . . . . . . . . . . 15
10. Leases. . . . . . . . . . . . . . . . . . . . . . . 15
11. Further Assurances/Estoppel
Certificates. . . . . . . . . . . . . . . . . . . . 17
12. Beneficiary's Right to Perform. . . . . . . . . . . 17
13. Hazardous Material. . . . . . . . . . . . . . . . . 18
14. Asbestos. . . . . . . . . . . . . . . . . . . . . . 19
15. Event of Default. . . . . . . . . . . . . . . . . . 20
16. Remedies. . . . . . . . . . . . . . . . . . . . . . 20
17. Right of Beneficiary to Credit Sale . . . . . . . . 24
18. Appointment of Receiver . . . . . . . . . . . . . . 25
19. Extension, Release, etc.. . . . . . . . . . . . . . 25
20. Assignment of Rents . . . . . . . . . . . . . . . . 26
21. Trust Funds . . . . . . . . . . . . . . . . . . . . 26
22. Additional Rights . . . . . . . . . . . . . . . . . 27
23. Changes in Method of Taxation . . . . . . . . . . . 27
24. Notices . . . . . . . . . . . . . . . . . . . . . . 27
25. No Oral Modification. . . . . . . . . . . . . . . . 27
26. Partial Invalidity. . . . . . . . . . . . . . . . . 27
27. Waiver of Right of Redemption and Other
Rights. . . . . . . . . . . . . . . . . . . . . . . 28
28. Remedies Not Exclusive. . . . . . . . . . . . . . . 29
29. Multiple Security . . . . . . . . . . . . . . . . . 29
30. Expenses; Indemnification . . . . . . . . . . . . . 31
31. Successors and Assigns. . . . . . . . . . . . . . . 32
32. No Waivers, etc.. . . . . . . . . . . . . . . . . . 32
33. GOVERNING LAW, ETC. . . . . . . . . . . . . . . . . 33
34. Waiver of Trial by Jury . . . . . . . . . . . . . . 33
35. Certain Definitions . . . . . . . . . . . . . . . . 33
36. Security Agreement under Uniform
Commercial Code . . . . . . . . . . . . . . . . . . 33
37. Release Upon Payment and Discharge of
Grantor's Obligations . . . . . . . . . . . . . . . 35
38. Enforceability; Usury . . . . . . . . . . . . . . . 35
39. Homestead . . . . . . . . . . . . . . . . . . . . . 36
40. Substitute Trustee. . . . . . . . . . . . . . . . . 36
41. Indemnification of Trustee. . . . . . . . . . . . . 37
42. Business or Commercial Purpose. . . . . . . . . . . 37
43. Final Agreement . . . . . . . . . . . . . . . . . . 37
44. Consistency with Other Documents. . . . . . . . . . 38
45. THIS WRITTEN LOAN AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. . . . . . . . . . . 38
SCHEDULES
Schedule A - Description of Real Property
Schedule B - Description of Excluded Property
JUNIOR DEED OF TRUST, ASSIGNMENT OF RENTS AND
LEASES
AND SECURITY AGREEMENT
THIS JUNIOR DEED OF TRUST, ASSIGNMENT OF
RENTS AND LEASES AND SECURITY AGREEMENT, dated as
of July 28, 1995 is made by KOPPEL STEEL
CORPORATION, a Pennsylvania corporation
("Grantor"), to William D. Cleveland, an
individual ("Trustee"), whose address is 909
Fannin Street, Suite 100, Houston, Texas 77001,
for the use and benefit of NS GROUP, INC., a
Kentucky Corporation ("Beneficiary"), whose
mailing address is Ninth and Lowell Streets,
Newport, Kentucky 41072. References to this "Deed
of Trust" shall mean this instrument and any and
all renewals, modifications, amendments,
supplements, extensions, consolidations,
substitutions, spreaders and replacements of this
instrument.
Background
A. Grantor is the owner of the
parcel(s) of real property described on Schedule A
attached (such real property, together with all of
the buildings, improvements, structures and
fixtures now or subsequently located thereon (the
"Improvements"), being collectively referred to as
the "Real Estate").
B. Grantor is a wholly owned
subsidiary of Beneficiary.
C. Beneficiary and The Huntington
National Bank, as trustee, are parties to that
Indenture dated as of July 28, 1995 (as the same
may be amended, modified or otherwise supplemented
from time to time, the "Indenture"; capitalized
terms not defined herein shall have the meanings
ascribed thereto in the Indenture) for the benefit
of Holders of 13.5% Senior Secured Notes due 2003
in the aggregate principal amount of
$125,000,000.00 (the "Securities") issued by
Beneficiary.
D. Grantor has executed and delivered
to Beneficiary that certain intercompany note of
even date herewith in the original principal
amount of $81,500,000 (the "Intercompany Note").
References in this Deed of Trust to the "Default
Rate" shall mean the interest rate payable with
respect to the Securities plus two percent (2%)
per annum.
E. Grantor, to secure its obligations
under the Intercompany Note, has executed and
delivered that certain security agreement of even
date herewith in favor of Beneficiary (the "ICN
Security Agreement"), which ICN Security Agreement
grants Beneficiary a security interest in and to
certain personal property now or subsequently used
in connection with the operation of the Real
Estate.
NOW, THEREFORE, in consideration of the
premises, the Grantor hereby agrees with the
Beneficiary as follows:
Granting Clauses
For good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, Grantor agrees that to secure all of
Grantor's obligations and liabilities under the
Intercompany Note and all other obligations and
liabilities of Grantor to Beneficiary (including,
without limitation, interest accruing after the
maturity of the Intercompany Note and interest
accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the
Grantor, whether or not a claim for post-filing or
post-petition interest is allowed in such
proceeding and interest, to the extent permitted
by law, on the unpaid interest), whether direct or
indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with,
the Intercompany Note, this Deed of Trust, the ICN
Security Agreement or any other document made,
delivered or given in connection therewith
(collectively, the "Security Documents"), in each
case whether on account of principal, interest,
fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and
disbursements of counsel to Beneficiary that are
required to be paid by the Beneficiary pursuant to
the terms of this Deed of Trust or any other
Security Document) (collectively, the
"Obligations").
GRANTOR HEREBY CONVEYS TO TRUSTEE AND HEREBY
MORTGAGES, GRANTS, ASSIGNS, TRANSFERS AND SETS
OVER TO TRUSTEE AND ALSO TO SUBSTITUTE TRUSTEE (AS
DEFINED BELOW), IN TRUST WITH POWER OF SALE FOR
THE USE AND BENEFIT OF BENEFICIARY, AND GRANTS
BENEFICIARY AND TRUSTEE A SECURITY INTEREST IN:
(A) all right, title and interest of
Grantor in and to the Real Estate;
(B) all the estate, right, title, claim
or demand whatsoever of Grantor, in
possession or expectancy, in and to the Real
Estate or any part thereof;
(C) all right, title and interest of
Grantor in, to and under all easements,
rights of way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water
courses, water and riparian rights,
development rights, air rights, mineral
rights and all estates, rights, titles,
interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging,
relating or appertaining to the Real Estate,
and any reversions and remainders 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 right, title and interest of
Grantor in and to all of the fixtures,
chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings
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 Grantor and
now or subsequently attached to, or contained
in or used or usable in any way in connection
with any operation or letting of 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
Grantor 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 Grantor or constructed, assembled
or placed by Grantor 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 mortgage, conveyance,
assignment or other act by Grantor;
(F) all right, title and interest of
Grantor 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 Grantor 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
Grantor 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 Trust
Property (as defined below) (collectively,
the "Rents");
(G) all right, title and interest of
Grantor in and to all trade names, trade
marks, logos, copyrights, good will and books
and records relating to or used in connection
with the operation of the Real Estate or the
Equipment or any part thereof; all right,
title and interest of Grantor in and to all
general intangibles related to the operation
of the Improvements now existing or hereafter
arising;
(H) all right, title and interest of
Grantor in and to all unearned premiums under
insurance policies now or subsequently
obtained by Grantor relating to the Real
Estate or Equipment and Grantor's interest in
and to any such insurance policies and 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 otherwise following and during the
continuance of an Event of Default; and all
right, title and interest of Grantor in and
to 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, subject to the provisions relating
to condemnation generally set forth below;
(I) all right, title and interest of
Grantor in and to (i) all contracts from time
to time executed by Grantor 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 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;
(J) all right, title and interest of
Grantor in and to any and all monies now or
subsequently on deposit for the payment of
real estate taxes or special assessments
against the Real Estate or for the payment of
premiums on insurance policies covering the
foregoing property or otherwise on deposit
with or held by Beneficiary as provided in
this Deed of Trust; all capital, operating,
reserve or similar accounts held by or on
behalf of Grantor and related to the
operation of the Trust Property, whether now
existing or hereafter arising and all monies
held in any of the foregoing accounts and any
certificates or instruments related to or
evidencing such accounts;
(K) all right, title and interest of
Grantor in and to all accounts and revenues
arising from the operation of the
Improvements including, without limitation,
(i) any right to payment now existing or
hereafter arising for rental of hotel rooms
or other space or for services rendered,
whether or not yet earned by performance,
arising from the operation of the
Improvements or any other facility on the
Trust Property and (ii) all rights to payment
from any consumer credit-charge card
organization or entity including, without
limitation, payments arising from the use of
the American Express Card, the Visa Card, the
Carte Blanche Card, the Mastercard or any
other credit card, including those now
existing or hereafter created, substitutions
therefor, proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange,
transfer, collection or other disposition or
substitution thereof and any and all of the
foregoing and proceeds therefrom
(collectively, the "Additional Rents"); and
(L) all proceeds, both cash and
noncash, of the foregoing;
excluding, however, notwithstanding any
provision set forth in the foregoing clauses (A)
through (L), the property described on Schedule B
attached hereto and incorporated herein by
reference (collectively, the "Excluded Property")
(all of the foregoing property and rights and
interests now owned or held or subsequently
acquired by Grantor and described in the foregoing
clauses (A) through (E), excluding the Excluded
Property, are collectively referred to as the
"Premises", and those described in the foregoing
clauses (A) through (L), excluding the Excluded
Property, are collectively referred to as the
"Trust Property").
All of the Trust Property hereinabove
described, real, personal and mixed, whether
affixed or annexed to the Real Estate or not and
all rights hereby conveyed and mortgaged are
intended so to be as a unit and are hereby
understood, agreed and declared, to the maximum
extent permitted by law, to form a part and parcel
of the Real Estate and to be appropriated to the
use of the Real Estate, and shall be for the
purposes of this Deed of Trust deemed to be real
estate and conveyed and mortgaged hereby;
provided, however, as to any of the property
aforesaid which does not so form a part and parcel
of the Real Estate or does not constitute a
"fixture" (as defined in the Texas Business and
Commerce Code (the "Code")), this Deed of Trust is
hereby deemed to also be a Security Agreement
under the Code for purposes of granting a security
interest in such property, which Grantor hereby
grants to Beneficiary, as Secured Party (as
defined in the Code), as more particularly
provided below in this Deed of Trust.
TO HAVE AND TO HOLD the Trust Property
and the rights and privileges hereby granted unto
Trustee, Substitute Trustee, their successors and
assigns, for the uses and purposes set forth,
together with the right to retain possession of
the Trust Property upon and during the continuance
of an Event of Default hereunder, until the
Obligations are fully paid and performed.
SUBJECT AND SUBORDINATE, HOWEVER, TO THE
RIGHTS OF The Huntington National Bank, as
beneficiary, under a Deed of Trust, Assignment of
Rents and Leases of even date herewith (herein
called the "Prior Deed of Trust").
Terms and Conditions
Grantor further represents, warrants,
covenants and agrees with Beneficiary as follows:
1. Warranty of Title. Grantor
warrants that Grantor has good title to the Real
Estate in fee simple and good title to the rest of
the Trust Property, subject only to the matters
that are set forth in Schedule B of the title
insurance policy or policies being issued to
Beneficiary to insure the lien of this Deed of
Trust and liens permitted pursuant to subsection
6.10 of the Indenture (collectively, the
"Permitted Exceptions"), and Grantor shall
warrant, defend and preserve such title and the
lien of the Deed of Trust thereon against all
claims of all persons and entities, excepting,
however, the Permitted Exceptions. Grantor
further warrants that it has the right to mortgage
the Trust Property.
2. Payment and Performance of
Obligations. Grantor shall pay the Obligations at
the times and places and in the manner specified
in the Intercompany Note and shall perform all the
Obligations.
3. Requirements. (a) Grantor shall
comply with, or cause to be complied with, and
conform to all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees,
rules, regulations and requirements, and
irrespective of the nature of the work to be done,
of each of the United States of America, any State
and any municipality, local government or other
political subdivision thereof and any agency,
department, bureau, board, commission or other
instrumentality of any of them, now existing or
subsequently created (collectively, "Governmental
Authority") which has jurisdiction over the Trust
Property, except where the failure to so comply
with any of the foregoing would not have a
Material Adverse Effect on the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, and all
covenants, restrictions and conditions now or
later of record which may be applicable to any of
the Trust Property, or to the use, manner of use,
occupancy, possession, operation, maintenance,
alteration, repair or reconstruction of any of the
Trust Property, except where the failure to so
comply with any of the foregoing would not
adversely affect the business, prospects,
earnings, properties, assets or condition
(financial or otherwise) of the Company and its
Subsidiaries taken as a whole. All present and
future laws, statutes, codes, ordinances, orders,
judgments, decrees, rules, regulations and
requirements of every Governmental Authority
applicable to Grantor or to any of the Trust
Property and all covenants, restrictions, and
conditions which now or later may be applicable to
any of the Trust Property are collectively
referred to as the "Legal Requirements".
(b) From and after the date of this
Deed of Trust, Grantor shall not by act or
omission permit any building or other improvement
on any premises not subject to the lien of this
Deed of Trust to rely on the Premises or any part
thereof or any interest therein to fulfill any
Legal Requirement and Grantor hereby assigns to
Beneficiary any and all rights to give consent for
all or any portion of the Premises or any interest
therein to be so used. Grantor shall not by act
or omission impair the integrity of any of the
Real Estate as a single zoning lot separate and
apart from all other premises. Grantor represents
that each parcel of the Real Estate constitutes a
legally subdivided lot, in compliance with all
subdivision laws and similar Legal Requirements.
Any act or omission by Grantor which would result
in a violation of any of the provisions of this
subsection shall be void.
4. Payment of Taxes and Other
Impositions. (a) Promptly when due, Grantor
shall pay and discharge all taxes of every kind
and nature (including, without limitation, all
real and personal property, income, franchise,
withholding, transfer, gains, profits and gross
receipts taxes), all charges for any easement or
agreement maintained for the benefit of any of the
Trust Property, all general and special
assessments, levies, permits, inspection and
license fees, all water and sewer rents and
charges 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 Trust Property, 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 as the "Impositions"). Upon request
by Beneficiary, Grantor shall deliver to
Beneficiary (i) original or copies of receipted
bills and cancelled checks evidencing payment of
such Imposition if it is a real estate tax or
other public charge and (ii) evidence acceptable
to Beneficiary showing the payment of any other
such Imposition. If by law any Imposition, at
Grantor's option, may be paid in installments
(whether or not interest shall accrue on the
unpaid balance of such Imposition), Grantor 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 Beneficiary under this Deed of
Trust or otherwise, without notice or demand to
Grantor, to pay any Imposition after the date such
Imposition shall have become due, and to add to
the Obligations the amount so paid, together with
interest from the time of payment at the Default
Rate. Any sums paid by Beneficiary 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 Deed of Trust, and
(ii) payable on demand by Grantor to Beneficiary
together with interest at the Default Rate as set
forth above.
(c) Grantor shall not claim, demand or
be entitled to receive any credit or credits
toward the satisfaction of this Deed of Trust or
on any interest payable thereon for any taxes
assessed against the Trust Property or any part
thereof, and shall not claim any deduction from
the taxable value of the Trust Property by reason
of this Deed of Trust if any such claim would
adversely affect the interest of Beneficiary.
(d) Grantor shall have the right before
any delinquency occurs to contest or object in
good faith to the amount or validity of any
Imposition by appropriate legal proceedings, but
such right shall not be deemed or construed in any
way as relieving, modifying, or extending
Grantor's covenant to pay any such Imposition at
the time and in the manner provided in this
Section unless (i) Grantor has given prior written
notice to Beneficiary of Grantor's intent so to
contest or object to an Imposition, (ii) Grantor
shall demonstrate to Beneficiary's satisfaction
that the legal proceedings shall operate
conclusively to prevent the sale of the Trust
Property, or any part thereof, to satisfy such
Imposition prior to final determination of such
proceedings and (iii) Grantor shall furnish a good
and sufficient bond or surety as requested by and
reasonably satisfactory to Beneficiary in the
amount of the Impositions which are being
contested plus any interest and penalty which may
be imposed thereon and which could become a lien
against the Real Estate or any part of the Trust
Property.
(e) Upon written notice to Grantor,
Beneficiary, after an Event of Default (as defined
below), shall be entitled to require Grantor to
pay monthly in advance to Beneficiary the
equivalent of 1/12th of the estimated annual
Impositions. Beneficiary may commingle such funds
with its own funds and Grantor shall not be
entitled to interest thereon.
5. Insurance. (a) Grantor shall
maintain or cause to be maintained on all of the
Premises
(i) property insurance against loss or
damage by (A) fire, lightning, windstorm,
tornado, water damage and by such other
further risks and hazards as now are or
subsequently may be covered by an "all risk"
policy or a fire policy covering "special"
causes of loss, which policy shall include
building ordinance law endorsements and shall
be automatically reinstated after each loss,
and (B) flood and earthquake in annual
aggregates of $25,000,000 for flood and
$50,000,000 for earthquake;
(ii) comprehensive general liability
insurance under a policy covering all claims
for personal injury, bodily injury or death,
or property damage occurring on, in or about
the Premises in an amount not less than
$10,000,000 combined single limit with
respect to injury and property damage
relating to any one occurrence plus such
excess limits as Beneficiary shall reasonably
request from time to time;
(iii) when and to the extent reasonably
required by Beneficiary, insurance against
loss or damage by any other risk commonly
insured against by persons occupying or using
like properties in the locality or localities
in which the Real Estate is situated;
(iv) insurance against rent loss, extra
expense or business interruption (and/or soft
costs, in the case of new construction), if
applicable, in amounts reasonably
satisfactory to Beneficiary, but not less
than one year's gross rent or gross income;
(v) during the course of any
construction or repair of Improvements,
comprehensive general liability insurance
(including coverage for elevators and
escalators, if any). The policy shall
provide coverage for independent contractors
and completed operations. The completed
operations coverage shall stay in effect for
two years after construction of any
Improvements has been completed. The policy
shall provide coverage on an occurrence basis
against claims for personal injury, such
insurance to afford immediate minimum
protection to a limit of not less than that
required by Beneficiary with respect to
personal injury, bodily injury or death to
any one or more persons or damage to
property;
(vi) during the course of any
construction or repair of the Improvements,
workers' compensation insurance (including
employer's liability insurance) for all
employees of Grantor engaged on or with
respect to the Premises in such amounts as
are reasonably satisfactory to Beneficiary,
but in no event less than the limits
established by law;
(vii) during the course of any
construction, addition, alteration or repair
of the Improvements, builder's risk completed
value form insurance against "all risks of
physical loss," including collapse, water
damage, flood and earthquake and transit
coverage, during construction or repairs of
the Improvements, with deductibles reasonably
approved by Beneficiary, in nonreporting
form, covering the total value of work
performed and equipment, supplies and
materials furnished (with an appropriate
limit for soft costs in the case of
construction);
(viii) boiler and machinery property
insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator
equipment and escalator equipment, provided
the Improvements contain equipment of such
nature, and insurance against rent, extra
expense, business interruption and soft
costs, if applicable, arising from any such
breakdown, in such amounts as are reasonably
satisfactory to Beneficiary but not less than
the lesser of $1,000,000 or 10% of the value
of the Improvements;
(ix) if any portion of the Premises are
located in an area identified as a special
flood hazard area by the Federal Emergency
Management Agency or other applicable agency,
flood insurance in an amount reasonably
satisfactory to Beneficiary, but in no event
less than the maximum limit of coverage
available under the National Flood Insurance
Act of 1968, as amended; and
(x) such other insurance in such
amounts as Beneficiary may reasonably request
from time to time; provided, however, such
insurance is usually and customarily carried
with respect to similar facilities in the
same general area as the Premises.
Each insurance policy (other than flood insurance
written under the National Flood Insurance Act of
1968, as amended, in which case to the extent
available) shall (i) provide that it shall not be
cancelled without 30 days' prior written notice to
Beneficiary, (ii) with respect to all property
insurance, provide for deductibles in amounts
reasonably satisfactory to Beneficiary (which
deductibles shall not exceed $250,000, with the
exception of the deductible for boiler and
machinery, which deductible shall not exceed a ten
(10) day waiting period deductible), contain a
"Replacement Cost Endorsement" (predicated upon
rebuilding) without any deduction made for
depreciation and with no co-insurance penalty (or
attaching an agreed amount endorsement
satisfactory to Beneficiary), with loss payable to
Grantor and Beneficiary with respect to the Trust
Property as their respective interests may appear,
without contribution, under a "standard" or "New
York" mortgagee clause reasonably acceptable to
Beneficiary and be written by insurance companies
having an A.M. Best Company, Inc. rating of A or
higher and a financial size category of not less
than XII, or otherwise as approved by Beneficiary.
Liability insurance policies shall name
Beneficiary as an additional insured with respect
to the Trust Property and contain a waiver of
subrogation against Beneficiary; all such policies
shall indemnify and hold Beneficiary harmless from
all liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and
passageways. Each policy shall expressly provide
that any proceeds which are payable to Beneficiary
pursuant to the terms hereof shall be paid by
check payable to the order of Beneficiary only and
shall require the endorsement of Beneficiary only.
The amounts of each insurance policy and the form
of each such policy shall at all times be
reasonably satisfactory to Beneficiary. If any
required insurance shall expire, be withdrawn,
become void by breach of any condition thereof by
Grantor or by any lessee of any part of the Trust
Property or become void or unsafe by reason of the
failure or impairment of the capital of any
insurer, Grantor shall immediately obtain new or
additional insurance satisfactory to Beneficiary.
Grantor shall not take out any separate or
additional insurance which is contributing in the
event of loss unless it is properly endorsed and
otherwise reasonably satisfactory to Beneficiary
in all respects.
(b) Grantor shall deliver to
Beneficiary an original of each insurance policy
required to be maintained, or a certificate of
such insurance reasonably acceptable to
Beneficiary. Grantor shall (i) pay as they become
due all premiums for such insurance, and (ii) not
later than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions
of this Section, deliver a renewed policy or
policies, or duplicate original or originals
thereof, or a certificate of such insurance
reasonably acceptable to Beneficiary, accompanied
by evidence of payment reasonably satisfactory to
Beneficiary. Upon request of Beneficiary, Grantor
shall cause its insurance underwriter or broker to
certify to Beneficiary in writing that all the
requirements of this Deed of Trust governing
insurance have been satisfied.
(c) If Grantor is in default of its
obligations to insure or deliver any such policy
or a certificate thereof under this Section 5,
then Beneficiary, at its option and following
written notice to Grantor, may effect such
insurance from year to year, and pay the premium
or premiums therefor, and Grantor shall pay to
Beneficiary on demand such premium or premiums so
paid by Beneficiary with interest from the time of
payment at the Default Rate and the same shall be
deemed to be secured by this Deed of Trust and
shall be collectible in the same manner as the
Obligations secured by this Deed of Trust.
(d) Grantor promptly shall comply with
and conform to (i) all provisions of each such
insurance policy, and (ii) all requirements of the
insurers applicable to Grantor or to any of the
Trust Property or to the use, manner of use,
occupancy, possession, operation, maintenance,
alteration or repair of any of the Trust Property.
Grantor shall not use or permit the use of the
Trust Property in any manner which would permit
any insurer to cancel any insurance policy or void
coverage required to be maintained by this Deed of
Trust.
(e) If the Trust Property in its
entirety, or any material part thereof, shall be
destroyed or damaged by fire or any other
casualty, whether insured or uninsured, or in the
event any claim in excess of $5,000,000 is made
against Grantor for any personal injury, bodily
injury or property damage incurred on or about the
Premises, Grantor shall give prompt notice thereof
to Beneficiary. If the Trust Property is damaged
by fire or other casualty, then provided that no
Event of Default shall have occurred and be
continuing, Grantor shall have the right to adjust
such loss. If the Trust Property is damaged by
fire or other casualty, and if an Event of Default
shall have occurred and be continuing, then
Grantor authorizes and empowers Beneficiary, at
Beneficiary's option and in Beneficiary's sole
discretion, as attorney-in-fact for Grantor, to
make proof of loss, to adjust and compromise any
claim under any insurance policy with respect to
the Trust Property, to appear in and prosecute any
action arising from any policy, and to deduct from
any insurance proceeds Beneficiary's expenses
incurred in the collection process. The insurance
proceeds or any part thereof with respect to the
Trust Property received by Beneficiary and/or
Grantor shall constitute Trust Moneys which shall
be paid and/or applied in accordance with
subsection 13.2 of the Indenture.
(f) In the event of foreclosure of this
Deed of Trust or other transfer of title to the
Trust Property in extinguishment of the
Obligations, all right, title and interest of
Grantor in and to any insurance policies then in
force with respect to the Trust Property shall
pass to the purchaser or grantee and Grantor
hereby appoints Beneficiary its attorney-in-fact,
in Grantor's name, to assign and transfer all such
policies and proceeds to such purchaser or
grantee.
(g) Upon written notice to Grantor,
Beneficiary, after an Event of Default, shall be
entitled to require Grantor to pay monthly in
advance to Beneficiary the equivalent of 1/12th of
the estimated annual premiums due on such
insurance. Beneficiary may commingle such funds
with its own funds and Grantor shall not be
entitled to interest thereon.
(h) Grantor may maintain insurance
required under this Deed of Trust by means of one
or more blanket insurance policies maintained by
Grantor; provided, however, that (A) any such
policy shall specify, or Grantor shall furnish to
Beneficiary a written statement from the insurer
so specifying, the maximum amount of the total
insurance afforded by such blanket policy which
shall be applicable on an occurrence basis and (B)
the protection afforded under any such blanket
policy shall be no less than that which would have
been afforded under a separate policy or policies
relating only to the Trust Property.
6. Restrictions on Liens, Encumbrances
and Sales. Grantor acknowledges that any
secondary or junior financing placed on the Trust
Property (a) may divert funds that would otherwise
be available for payment of the Obligations, (b)
could, if foreclosed, force Beneficiary to incur
expenses to protect its security, and (c) would
impair Beneficiary's right to accept a deed in
lieu of foreclosure or otherwise to take actions
to further its economic interest prior to
foreclosure, because a foreclosure by Beneficiary
would be required to clear title to the Trust
Property of any such secondary or junior lien or
encumbrance. In accordance with the foregoing and
for the purpose of (i) protecting Beneficiary's
security, both of repayment and of value in the
Trust Property, (ii) giving Beneficiary the full
benefit of its bargain and contract with Grantor,
and (iii) keeping the Trust Property free of
subordinate financing liens, Grantor agrees that
if the following provisions of this paragraph
should be deemed a restraint on alienation, that
such provisions are reasonable restraints.
(1) Except for the lien of this Deed of
Trust, the Permitted Exceptions and liens
permitted pursuant to subsection 6.10 of the
Indenture, Grantor shall not further mortgage, nor
otherwise encumber the Trust Property nor create
or suffer to exist any lien, charge or encumbrance
on the Trust Property, or any part thereof,
whether superior or subordinate to the lien of
this Deed of Trust and whether recourse or non-
recourse.
(2) Except as may be permitted pursuant
to the Indenture, including, without limitation,
subsection 6.15 thereof, Grantor shall not make
any Asset Sale.
7. Relationship of Beneficiary and
Grantor. The Huntington National Bank shall in no
event be construed for any purpose to be a
partner, joint venturer, agent or associate of
Grantor or of any beneficiary, tenant, subtenant,
operator, concessionaire or licensee of Grantor in
the conduct of their respective businesses, and
without limiting the foregoing, The Huntington
National Bank shall not be deemed to be such
partner, joint venturer, agent or associate on
account of The Huntington National Bank becoming a
mortgagee in possession or exercising any rights
pursuant to this Deed of Trust, any of the other
Security Documents, or otherwise.
8. Maintenance; No Alteration;
Inspection; Utilities. (a) Grantor shall
maintain or cause to be maintained all the
Improvements in good working order and condition,
ordinary wear and tear excepted, and shall cause
to be made all necessary (in the good faith
opinion of management of Grantor) repairs,
renewals, replacements, additions, betterments and
improvements thereto. Grantor shall not commit
any waste of the Improvements and shall not
demolish or materially alter the Improvements
without the prior written consent of Beneficiary.
(b) Beneficiary and any persons
authorized by Beneficiary, at all reasonable times
after reasonable notice, shall have the right to
enter and inspect the Premises and the right to
inspect all work done, labor performed and
materials furnished in and about the Improvements
and the right to inspect and make copies of all
books, contracts and records of Grantor relating
to the Trust Property.
(c) Grantor shall pay or cause to be
paid when due all utility charges which are
incurred for gas, electricity, water or sewer
services furnished to the Premises and all other
assessments or charges of a similar nature,
whether public or private, affecting the Premises
or any portion thereof, whether or not such
assessments or charges are liens thereon.
9. Condemnation/Eminent Domain.
Promptly upon obtaining knowledge of the
institution of any proceedings for the
condemnation of the Trust Property in its
entirety, or any portion thereof, Grantor will
notify Beneficiary of the pendency of such
proceedings. Grantor authorizes Beneficiary, at
Beneficiary's option and in Beneficiary's sole
discretion, as attorney-in-fact for Grantor, to
commence, appear in and prosecute, in
Beneficiary's or Grantor's name, any action or
proceeding relating to any condemnation of the
Trust Property in its entirety, or any portion
thereof. If the Trust Property in its entirety or
any part thereof shall be the subject of
condemnation proceedings, Beneficiary, as
attorney-in-fact for Grantor, shall have the right
to settle or compromise any claim in connection
with such condemnation. If Beneficiary elects not
to participate in such condemnation proceeding,
then Grantor shall, at its expense, diligently
prosecute any such proceeding and shall consult
with Beneficiary, its attorneys and experts and
cooperate with them in any defense of any such
proceedings. All awards and proceeds of
condemnation received by Beneficiary and/or
Grantor shall constitute Trust Moneys which shall
be paid and/or applied in accordance with
Subsection 13.2 of the Indenture.
10. Leases. (a) Grantor shall not
(i) execute an assignment or pledge of any Lease
relating to all or any portion of the Trust
Property other than in favor of Beneficiary or
with Beneficiary's prior written consent or
(ii) without the prior written consent of
Beneficiary, execute any Lease of any of the Trust
Property.
(b) As to any Lease relating to all or
any portion of the Trust Property, Grantor shall:
(i) promptly perform all of the
material provisions of the Lease on the part
of the lessor thereunder to be performed;
(ii) enforce, in accordance with sound
business practice, all of the material
provisions of the Lease on the part of the
lessee thereunder to be performed;
(iii) appear in and defend, in accordance
with sound business practice, any action or
proceeding arising under or in any manner
connected with the Lease or the obligations
of Grantor as lessor or of the lessee
thereunder;
(iv) exercise, within 5 days after
receipt of a request by Beneficiary, any
right to request from the lessee a
certificate with respect to the status
thereof;
(v) promptly deliver to Beneficiary
copies of any notices of default which
Grantor may at any time forward to or receive
from the lessee;
(vi) promptly deliver to Beneficiary a
fully executed counterpart of the Lease; and
(vii) promptly deliver to Beneficiary,
upon Beneficiary's request, an assignment of
the Grantor's interest under such Lease.
(c) Grantor shall deliver to
Beneficiary, within 10 days after receipt of a
request by Beneficiary, a written statement,
certified by Grantor as being true, correct and
complete, containing the names of all lessees and
other occupants of the Trust Property, the terms
of all Leases and the spaces occupied and rentals
payable thereunder, and a list of all Leases which
are then in default, including the nature and
magnitude of the default; such statement shall be
accompanied by credit information with respect to
the lessees and such other information as
Beneficiary may request.
(d) All Leases entered into by Grantor
after the date hereof, if any, and all rights of
any lessees thereunder shall be subject and
subordinate in all respects to the lien and
provisions of this Deed of Trust unless
Beneficiary shall otherwise elect in writing.
(e) As to any Lease now in existence or
subsequently consented to by Beneficiary, Grantor
shall not, without the prior written consent of
Beneficiary, accept a surrender or terminate,
cancel, rescind, supplement, alter, revise, modify
or amend such Lease or permit any such action to
be taken nor shall Grantor accept the payment of
rent more than thirty (30) days in advance of its
due date.
(f) In the event of the enforcement by
Beneficiary of any remedy under this Deed of
Trust, the lessee under each Lease entered into
after the date of this Deed of Trust shall, if
requested by Beneficiary or any other person
succeeding to the interest of Beneficiary as a
result of such enforcement, attorn to Beneficiary
or to such person and shall recognize Beneficiary
or such successor in interest as lessor under the
Lease without change in the provisions thereof;
provided however, that Beneficiary or such
successor in interest shall not be: (i) bound by
any payment of an installment of rent or
additional rent which may have been made more than
30 days before the due date of such installment;
(ii) bound by any amendment or modification to the
Lease made without the consent of Beneficiary or
such successor in interest; (iii) liable for any
previous act or omission of Grantor (or its
predecessors in interest); (iv) responsible for
any monies owing by Grantor to the credit of such
lessee or subject to any credits, offsets, claims,
counterclaims, demands or defenses which the
lessee may have against Grantor (or its
predecessors in interest); (v) bound by any
covenant to undertake or complete any construction
of the Premises or any portion thereof; or (vi)
obligated to make any payment to such lessee other
than any security deposit actually delivered to
Beneficiary or such successor in interest. Each
lessee or other occupant under each Lease entered
into after the date of this Deed of Trust, upon
request by Beneficiary or such successor in
interest, shall execute and deliver an instrument
or instruments confirming such attornment. In
addition, Grantor agrees that each Lease entered
into after the date of this Deed of Trust shall
include language to the effect of subsections (d)-
(f) of this Section.
11. Further Assurances/Estoppel
Certificates. To further assure Beneficiary's
rights under this Deed of Trust, Grantor agrees
upon demand of Beneficiary 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 Trust
Property and a separate assignment of each Lease
in recordable form) as may be required by
Beneficiary to confirm the lien of this Deed of
Trust and all other rights or benefits conferred
on Beneficiary. Grantor, within 5 business days
after request, shall deliver, in form and
substance satisfactory to Beneficiary, a written
statement, duly acknowledged, setting forth the
amount of the Obligations, and whether any
offsets, claims, counterclaims or defenses exist
against the Obligations and certifying as to such
other matters as Beneficiary shall reasonably
request.
12. Beneficiary's Right to Perform. If
Grantor fails to perform any of the covenants or
agreements of Grantor hereunder, Beneficiary,
without waiving or releasing Grantor from any
obligation or default under this Deed of Trust,
may, at any time (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 Grantor to
Beneficiary and the same shall be secured by this
Deed of Trust and shall be a lien on the Trust
Property prior to any right, title to, interest in
or claim upon the Trust Property attaching
subsequent to the lien of this Deed of Trust. No
payment or advance of money by Beneficiary under
this Section shall be deemed or construed to cure
Grantor's default or waive any right or remedy of
Beneficiary.
13. Hazardous Material. (a) Grantor
shall comply with any and all applicable Legal
Requirements governing the discharge and removal
of Hazardous Material, shall pay promptly when due
the costs of removal of any Hazardous Material,
and shall keep the Premises free of any lien
imposed pursuant to such Legal Requirements. In
the event Grantor fails to do so, after notice to
Grantor and the expiration of the earlier of
(i) applicable cure periods hereunder and under
the Indenture, or (ii) the cure period permitted
under the applicable Legal Requirement,
Beneficiary may cause the Premises to be freed
from the Hazardous Material to the extent required
by applicable Legal Requirements, and the cost of
the removal with interest at the Default Rate
shall immediately be due from Grantor to
Beneficiary and the same shall be added to the
Obligations and be secured by this Deed of Trust.
Grantor further agrees that any release or
disposal of Hazardous Materials at the Premises
shall comply with all applicable Legal
Requirements. In addition, Grantor agrees not to
allow the manufacture, storage, transmission,
presence or disposal of any Hazardous Material
over or upon the Premises in violation of
applicable Legal Requirements. Grantor shall give
Beneficiary and its agents and employees access to
the Premises to remove Hazardous Material if
required by applicable Legal Requirements and if
Grantor has failed to so remove after notice.
Grantor agrees to defend, indemnify and hold
Beneficiary free and harmless from and against all
loss, costs, damage and expense (including
attorneys' fees and costs and consequential
damages) Beneficiary may sustain by reason of (i)
the imposition or recording of a lien by any
Governmental Authority with respect to the Trust
Property pursuant to any Legal Requirement
relating to hazardous or toxic wastes or
substances or the removal thereof ("Hazardous
Material Laws"); (ii) claims of any private
parties regarding violations of Hazardous Material
Laws with respect to the Trust Property; (iii)
costs and expenses (including, without limitation,
attorneys' fees and fees incidental to the
securing of repayment of such costs and expenses)
incurred by Grantor or Beneficiary in connection
with the removal of any such lien with respect to
the Trust Property or in connection with Grantor's
or Beneficiary's compliance with any Hazardous
Material Laws with respect to the Trust Property;
and (iv) the assertion against Beneficiary by any
party of any claim in connection with Hazardous
Material with respect to the Trust Property.
(b) For the purposes of this Deed of
Trust, "Hazardous Material" means and includes any
hazardous, nuclear, toxic or dangerous waste,
substance or material defined as such in (or for
purposes of) the Comprehensive Environmental
Response, Compensation, and Liability Act, any so-
called "Superfund" or "Superlien" law, or any
other Legal Requirement regulating, relating to,
or imposing liability or standards of conduct
concerning, any hazardous, nuclear, toxic or
dangerous waste, substance or material, as now or
at any time in effect.
(c) The foregoing indemnification shall
be a recourse obligation of Grantor and shall
survive repayment of the Obligations,
notwithstanding any limitations on recourse which
may be contained herein or in any Security
Documents or the delivery of any satisfaction,
release or release deed, discharge or deed of
reconveyance, or the assignment of this Deed of
Trust by Beneficiary; provided, however, that the
foregoing indemnification shall apply only to
matters arising prior to any taking of possession
of the Premises by Beneficiary or any other person
succeeding to the interest of Beneficiary pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
14. Asbestos. Grantor shall not
install or permit to be installed in the Premises
friable asbestos or any substance containing
asbestos and deemed hazardous by any Legal
Requirement respecting such material, and, with
respect to any such material currently present in
the Premises, shall promptly comply with such
Legal Requirements, at Grantor's expense. If
Grantor shall fail to so comply, Beneficiary may
do whatever is necessary to comply with the
applicable Legal Requirement, and the costs
thereof, with interest at the Default Rate, shall
be immediately due from Grantor to Beneficiary and
the same shall be added to the Obligations and be
secured by this Deed of Trust. Grantor shall give
Beneficiary and its agents and employees, upon
prior notice and at reasonable times, access to
the Premises to remove such asbestos or substances
if required by applicable Legal Requirements and
if Grantor has failed to so remove after notice.
Grantor shall defend, indemnify, and save
Beneficiary harmless from all loss, costs, damages
and expense (including attorneys' fees and costs
and consequential damages) asserted or proven
against Beneficiary by any party, as a result of
the presence of such substances or any removal or
compliance with such Legal Requirements. The
foregoing indemnification shall be a recourse
obligation of Grantor and shall survive repayment
of the Obligations, notwithstanding any limitation
on recourse which may be contained herein or in
any of the Security Documents or the delivery of
any satisfaction, release or release deed,
discharge or deed of reconveyance, or the
assignment of this Deed of Trust by Beneficiary;
provided, however, that the foregoing
indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Beneficiary or any other person
succeeding to the interest of Beneficiary pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
15. Event of Default. The occurrence
of an "Event of Default" (as defined in the
Indenture) shall constitute an Event of Default
hereunder.
16. Remedies. (a) Upon the occurrence
of any Event of Default, in addition to any other
rights and remedies Beneficiary may have pursuant
to the Security Documents, or as provided by law,
and without limitation, (a) if such event is an
Event of Default described in subsections 8.1(ix)
or 8.1(x) of the Indenture, automatically the
Obligations immediately shall become due and
payable, and (b) if such event is any other Event
of Default, by notice to Grantor, Beneficiary may
declare the Obligations to be immediately due and
payable. Except as expressly provided above in
this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly
waived. In addition, upon and during the
continuance of any Event of Default, Beneficiary
may immediately take such action, without notice
or demand, as it deems advisable to protect and
enforce its rights against Grantor and in and to
the Trust 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 Beneficiary may determine,
in its sole discretion, without impairing or
otherwise affecting the other rights and remedies
of Beneficiary:
(i) Beneficiary may, to the extent
permitted by applicable law, (A) institute
and maintain an action of mortgage
foreclosure against all or any part of the
Trust Property, (B) institute and maintain an
action on the Intercompany Note, (C) sell all
or part of the Trust Property (Grantor
expressly granting to Beneficiary the power
of sale), or (D) take such other action at
law or in equity for the enforcement of this
Deed of Trust or any of the Security
Documents as the law may allow. Beneficiary
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 Beneficiary from the
date of judgment until actual payment is made
of the full amount of the judgment.
(ii) Beneficiary may personally, or by
its agents, attorneys and employees and
without regard to the adequacy or inadequacy
of the Trust Property or any other collateral
as security for the Obligations, enter into
and upon the Trust Property and each and
every part thereof and exclude Grantor and
its agents and employees therefrom without
liability for trespass, damage or otherwise
(Grantor hereby agreeing to surrender
possession of the Trust Property to
Beneficiary upon demand at any such time) and
use, operate, manage, maintain and control
the Trust Property and every part thereof.
Following such entry and taking of
possession, Beneficiary shall be entitled,
without limitation, (x) to lease all or any
part or parts of the Trust Property for such
periods of time and upon such conditions as
Beneficiary 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 Trust Property as Beneficiary
shall deem appropriate as fully as Grantor
might do.
(iii) It is further agreed that if
default be made in the payment of any part of
the Obligations, as an alternative to the
right of foreclosure for the full secured
Obligations after acceleration thereof,
Beneficiary shall have the right to institute
partial foreclosure proceedings with respect
to the portion of said Obligations so in
default, as if under a full foreclosure, and
without declaring the entire secured
Obligations due (such proceeding being
hereinafter referred to as a "partial
foreclosure"), and provided that if a partial
foreclosure sale is consummated as provided
herein, such sale may be made subject to the
continuing lien of this Deed of Trust for the
unmatured portion of the secured Obligations,
but as to such unmatured part, this Deed of
Trust, and the lien hereof, shall remain in
full force and effect just as though no
partial foreclosure sale had been made under
the provisions of this Section.
Notwithstanding the filing of any partial
foreclosure or entry of a decree of sale
therein, Beneficiary may elect at any time
prior to a partial foreclosure sale pursuant
to such decree, to discontinue such partial
foreclosure and to accelerate the Obligations
secured hereby by reason of any uncured Event
of Default upon which such partial
foreclosure was predicated or by reason of
any other Event of Default, and proceed with
full foreclosure proceedings. It is further
agreed that one or more foreclosure sales may
be made pursuant to partial foreclosures
without exhausting the right of full or
partial foreclosure sale for any unmatured
part of the secured Obligations, it being the
purpose to provide for a partial foreclosure
sale of the Obligations secured hereby
without exhausting the power to foreclose for
any other part of the Obligations whether
matured at the time or subsequently maturing,
and without exhausting any right of
acceleration and full foreclosure.
(iv) Beneficiary may direct Trustee to
sell or offer for sale the Trust Property in
such portions, order and parcels as
Beneficiary may determine, with or without
having first taken possession of the same, to
the highest bidder for cash at public
auction. Such sale shall be made at the
courthouse door of the County wherein the
Real Estate (or any of that portion thereof
to be sold) is situated (whether the parts or
parcels thereof, if any, in different
counties are contiguous or not, and without
the necessity of having any personal property
hereby mortgaged present at such sale) on the
first Tuesday of any month between the hours
of 10:00 a.m. and 4:00 p.m. after posting a
written or printed notice or notices of the
place, time and terms of the sale of the
Trust Property for twenty-one (21) days prior
to the date of the sale at the courthouse
door of the county in which the sale is to be
made and at the courthouse door of any other
county in which a portion of the Trust
Property may be situated and filing a copy of
such notice(s) in the office of the county
clerk in each of such counties, and by
serving written notice of the proposed sale
at least twenty-one (21) days preceding the
date of sale by certified mail on Grantor and
on each debtor obligated to pay the
Obligations according to the records of the
Beneficiary. It is agreed that the posting
and transmittal of notices may be performed
by the Trustee, Beneficiary, or by any person
acting for them. The sale shall be
accomplished by following the procedures
permitted or required by Tex. Prop. Code Ann.
51.002 (Vernon 1984), as same may be amended
from time to time, relating to the sale of
real estate and/or by Chapter 9 of the Texas
Uniform Commercial Code relating to the sale
of personal property collateral after default
by a debtor (as said Section and Chapter may
now exist or may hereafter be amended or
succeeded), or by any other present or
subsequent articles or enactments relating to
the same. Nothing contained in this
subsection (iv) shall be construed to limit
in any way Trustee's rights to sell the Trust
Property by private sale if, and to the
extent, that such private sale is permitted
under the laws of the State of Texas or by
public or private sale after entry of
judgment by any court of competent
jurisdiction ordering the same. At any such
sale (i) whether made under power herein
contained, the aforesaid 51.002, the Texas
Uniform Commercial Code, any other legal
requirement or by virtue of any judicial
procedure or any other legal right, remedy or
recourse, it shall not be necessary for
Trustee to have physically present, or to
have constructive possession of, the Trust
Property (Grantor hereby covenanting and
agreeing to deliver to Trustee any portion of
the Trust Property not actually or
constructively possessed by Trustee
immediately upon demand by Trustee), and the
title to and right of possession of any such
property shall pass to the purchaser thereof
as completely as if the same had been
actually present and delivered to purchaser
at such sale, (ii) each instrument of
conveyance executed by Trustee shall contain
a special warranty of title, subject to
Permitted Exceptions, binding upon Grantor,
(iii) each and every recital contained in any
instrument of conveyance made by Trustee
shall be prima facie proof of the truth and
accuracy of the matters recited therein,
including, without limitation, nonpayment of
the Obligations, advertisement and conduct of
such sale in the manner provided herein and
otherwise by law and appointment of any
Substitute Trustee hereunder, (iv) there
shall be a prima facie presumption that any
and all prerequisites to the validity thereof
shall have been performed, (v) the receipt of
Trustee or of such other party or officer
making the sale shall be a sufficient
discharge to the purchaser or purchasers for
his or their purchase money and no such
purchaser or purchasers, or his or their
assigns or personal representatives, shall
thereafter be obligated to see to the
application of such purchase money or be in
any way answerable for any loss,
misapplication or nonapplication thereof,
(vi) to the fullest extent permitted by law,
Grantor shall be completely and irrevocably
divested of all of its right, title,
interest, claim and demand whatsoever, either
at law or in equity, in and to the property
sold and such sale shall be a perpetual bar,
both at law and in equity, against Grantor,
and against any and all other persons
claiming or to claim the property sold or any
part thereof, by, through or under Grantor,
and (vii) to the extent and under such
circumstances as are permitted by law,
Beneficiary may be a purchaser at any such
sale;
(b) The holder of this Deed of Trust,
in any action to foreclose it, shall be entitled
to the appointment of a receiver. In case of a
foreclosure sale, the Real Estate may be sold, at
Beneficiary's election, in one parcel or in more
than one parcel and Beneficiary is specifically
empowered, (without being required to do so, and
in its sole and absolute discretion) to cause
successive sales of portions of the Trust Property
to be held.
(c) In the event of any breach of any
of the covenants, agreements, terms or conditions
contained in this Deed of Trust, and
notwithstanding to the contrary any exculpatory or
non-recourse language which may be contained
herein, Beneficiary shall be entitled to enjoin
such breach and obtain specific performance of any
covenant, agreement, term or condition and
Beneficiary shall have the right to invoke any
equitable right or remedy as though other remedies
were not provided for in this Deed of Trust.
(d) The proceeds of any foreclosure or
sale of the Trust Property, or any portion
thereof, shall be distributed and applied in
accordance with all applicable provisions of the
Indenture.
(e) Following any sale of the Trust
Property, or any part hereof, under the provisions
of this instrument, all persons and parties in
possession of the property sold shall be divested
of any and all interest in and claim to the Trust
Property, and shall be obligated to immediately
vacate the premises, and prior to such vacation
shall be tenants at sufferance of the purchaser of
the property sold and shall be subject to eviction
in an action of forcible detainer; provided, the
provisions of this subparagraph shall be subject
to any agreements made in writing by Beneficiary
with reference to any existing and/or future
leases; provided, further, the purchaser at any
foreclosure sale shall have the option but not the
obligation to affirm any then existing leases or
tenancies or otherwise succeed to the rights of
Grantor thereunder.
17. Right of Beneficiary to Credit
Sale. Upon the occurrence of any sale made under
this Deed of Trust, whether made under the power
of sale or by virtue of judicial proceedings or of
a judgment or decree of foreclosure and sale,
Beneficiary may bid for and acquire the Trust
Property or any part thereof. In lieu of paying
cash therefor, Beneficiary may make settlement for
the purchase price by crediting upon the
Obligations or other sums secured by this Deed of
Trust the net sales price after deducting
therefrom the expenses of sale and the cost of the
action and any other sums which Beneficiary is
authorized to deduct under this Deed of Trust. In
such event, this Deed of Trust, the Intercompany
Note 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.
18. Appointment of Receiver. If an
Event of Default shall have occurred and be
continuing, Beneficiary as a matter of right and
without notice to Grantor, unless otherwise
required by applicable law, and without regard to
the adequacy or inadequacy of the Trust Property
or any other collateral as security for the
Obligations or the interest of Grantor therein,
shall have the right to apply to any court having
jurisdiction to appoint a receiver or receivers or
other manager of the Trust Property, and Grantor
hereby irrevocably consents to such appointment
and waives notice of any application therefor
(except as may be required by law). Any such
receiver or receivers shall have all the usual
powers and duties of receivers in like or similar
cases and all the powers and duties of Beneficiary
in case of entry as provided in this Deed of
Trust, including, without limitation and to the
extent permitted by law, the right to enter into
leases of all or any part of the Trust Property,
and shall continue as such and exercise all such
powers until the date of confirmation of sale of
the Trust Property unless such receivership is
sooner terminated.
19. Extension, Release, etc. (a)
Without affecting the lien or charge of this Deed
of Trust upon any portion of the Trust Property
not then or theretofore released as security for
the full amount of the Obligations, Beneficiary
may, from time to time and without notice, agree
to (i) release any person liable for the
Obligations, (ii) extend the maturity or alter any
of the terms of the Obligations or any guaranty
thereof, (iii) grant other indulgences, (iv)
release or reconvey, or cause to be released or
reconveyed at any time at Beneficiary's option any
parcel, portion or all of the Trust 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. If at any time this Deed of
Trust 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 Deed of Trust until the lien amount
shall equal the principal amount of the
Obligations outstanding.
(b) No recovery of any judgment by
Beneficiary and no levy of an execution under any
judgment upon the Trust Property or upon any other
property of Grantor shall affect the lien of this
Deed of Trust or any liens, rights, powers or
remedies of Beneficiary hereunder, and such liens,
rights, powers and remedies shall continue
unimpaired.
(c) If Beneficiary shall have the right
to foreclose this Deed of Trust, Grantor
authorizes Beneficiary at its option to foreclose
the lien of this Deed of Trust subject to the
rights of any tenants of the Trust Property. The
failure to make any such tenants parties defendant
to any such foreclosure proceeding and to
foreclose their rights will not be asserted by
Grantor as a defense to any proceeding instituted
by Beneficiary to collect the Obligations or to
foreclose the lien of this Deed of Trust.
(d) Unless expressly provided
otherwise, in the event that ownership of this
Deed of Trust and title to the Trust Property or
any estate therein shall become vested in the same
person or entity, this Deed of Trust shall not
merge in such title but shall continue as a valid
lien on the Trust Property for the amount secured
hereby.
20. Assignment of Rents. Grantor
hereby assigns to Beneficiary the Rents and
Additional Rents as further security for the
payment of the Obligations and performance of the
Obligations, and Grantor grants to Beneficiary the
right to enter the Trust Property for the purpose
of collecting the same and to let the Trust
Property or any part thereof, and to apply the
Rents and Additional Rents on account of the
Obligations. The foregoing assignment and grant
is present and absolute and shall continue in
effect until the Obligations are paid in full, but
Beneficiary hereby waives the right to enter the
Trust Property for the purpose of collecting the
Rents and Additional Rents and Grantor shall be
entitled to collect, receive, use and retain the
Rents and Additional Rents; such right of Grantor
to collect, receive, use and retain the Rents and
Additional Rents may be revoked by Beneficiary
upon and during the continuance of any Event of
Default under this Deed of Trust by giving not
less than five days' written notice of such
revocation to Grantor; in the event such notice is
given, Grantor shall pay over to Beneficiary, or
to any receiver appointed to collect the Rents,
any lease security deposits, shall pay monthly in
advance to Beneficiary, or to any such receiver,
the fair and reasonable rental value as determined
by Beneficiary for the use and occupancy of the
Trust Property or such part thereof as may be in
the possession of Grantor or any affiliate of
Grantor, and upon default in any such payment
Grantor and any such affiliate will vacate and
surrender the possession of the Trust Property to
Beneficiary or to such receiver, and in default
thereof may be evicted by summary proceedings or
otherwise. Grantor 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).
21. Trust Funds. All lease security
deposits of the Real Estate held by Grantor shall
be treated as trust funds not to be commingled
with any other funds of Grantor. Within 10 days
after request by Beneficiary, Grantor shall
furnish Beneficiary satisfactory evidence of
compliance with this subsection, together with a
statement of all lease security deposits by
lessees and copies of all Leases not previously
delivered to Beneficiary, which statement shall be
certified by Grantor.
22. Additional Rights. The holder of
any subordinate lien on the Trust Property shall
have no right to terminate any Lease whether or
not such Lease is subordinate to this Deed of
Trust nor shall any holder of any subordinate lien
join 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 Deed of
Trust all subordinate lienholders are subject to
and notified of this provision, and any action
taken by any such lienholder contrary to this
provision shall be null and void. Upon and during
the continuance of any Event of Default,
Beneficiary may, in its sole discretion and
without regard to the adequacy of its security
under this Deed of Trust, apply all or any part of
any amounts on deposit with Beneficiary under this
Deed of Trust 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 Beneficiary
on account of such Default or Event of Default.
23. Changes in Method of Taxation. In
the event of the passage after the date hereof of
any law of any Governmental Authority deducting
from the value of the Premises for the purposes of
taxation any lien thereon, or changing in any way
the laws for the taxation of mortgages or debts
secured thereby for federal, state or local
purposes, or the manner of collection of any such
taxes, and imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby,
Grantor shall, if permitted by applicable law,
assume as an Obligation hereunder the payment of
any tax so imposed until full payment of the
Obligations.
24. Notices. All notices, requests,
demands and other communications hereunder shall
be given in the manner provided in the Indenture.
25. No Oral Modification. This Deed of
Trust may not be changed or terminated orally.
Any agreement made by Grantor and Beneficiary
after the date of this Deed of Trust relating to
this Deed of Trust shall be superior to the rights
of the holder of any intervening or subordinate
lien or encumbrance.
26. Partial Invalidity. In the event
any one or more of the provisions contained in
this Deed of Trust 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 anything to the contrary contained
in this Deed of Trust or in any provisions of the
Obligations or Security Documents, the obligations
of Grantor and of any other obligor under the
Obligations or Security Documents shall be subject
to the limitation that Beneficiary shall not
charge, take or receive, nor shall Grantor or any
other obligor be obligated to pay to Beneficiary,
any amounts constituting interest in excess of the
maximum rate permitted by law to be charged by
Beneficiary.
27. Waiver of Right of Redemption and
Other Rights. (a) Grantor hereby voluntarily and
knowingly releases and waives any and all rights
to retain possession of the Trust Property upon
and during the continuance 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), on its own behalf, on
behalf of all persons claiming or having an
interest (direct or indirectly) by, through or
under each constituent of Grantor and on behalf of
each and every person acquiring any interest in
the Trust Property subsequent to the date hereof,
it being the intent hereof that any and all such
rights of redemption of each constituent of
Grantor 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 Grantor 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 the Beneficiary, 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, Grantor 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 Trust 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 Trust Property from attachment, levy or
sale under execution or exemption from civil
process. To the full extent Grantor may do so,
Grantor agrees that Grantor 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 Deed of Trust before
exercising any other remedy granted hereunder and
Grantor, for Grantor and its successors and
assigns, and for any and all persons ever claiming
any interest in the Trust 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 or
declare due the whole of the secured indebtedness
and marshalling in the event of foreclosure of the
liens hereby created.
28. Remedies Not Exclusive.
Beneficiary shall be entitled to enforce payment
of the Obligations and performance of the
Obligations and to exercise all rights and powers
under this Deed of Trust or under any of the other
Security 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 mortgage, security
agreement, pledge, lien, assignment or otherwise.
Neither the acceptance of this Deed of Trust nor
its enforcement, shall prejudice or in any manner
affect Beneficiary's right to realize upon or
enforce any other security now or hereafter held
by Beneficiary, it being agreed that Beneficiary
shall be entitled to enforce this Deed of Trust
and any other security now or hereafter held by
Beneficiary in such order and manner as
Beneficiary may determine in its absolute
discretion. No remedy herein conferred upon or
reserved to Beneficiary 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 Security
Documents to Beneficiary or to which it may
otherwise be entitled, may be exercised,
concurrently or independently, from time to time
and as often as may be deemed expedient by
Beneficiary. In no event shall Beneficiary, in
the exercise of the remedies provided in this Deed
of Trust (including, without limitation, in
connection with the assignment of Rents to
Beneficiary, or the appointment of a receiver and
the entry of such receiver on to all or any part
of the Trust Property), be deemed a "mortgagee in
possession," and Beneficiary shall not in any way
be made liable for any act, either of commission
or omission, in connection with the exercise of
such remedies.
29. 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 Deed of Trust, Beneficiary shall now or
hereafter hold 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
Grantor 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, Beneficiary may, at its
election, commence or consolidate in a single
foreclosure action all foreclosure proceedings
against all such collateral securing the
Obligations (including the Trust Property), which
action may be brought or consolidated in the
courts of any county in which any of such
collateral is located. Grantor acknowledges that
the right to maintain a consolidated foreclosure
action is a specific inducement to Beneficiary to
extend the Obligations, and Grantor 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. Grantor further agrees that if Beneficiary
shall be prosecuting one or more foreclosure or
other proceedings against a portion of the Trust
Property or against any collateral other than the
Trust Property, which collateral directly or
indirectly secures the Obligations, or if
Beneficiary 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, Beneficiary may commence or
continue foreclosure proceedings and exercise its
other remedies granted in this Deed of Trust
against all or any part of the Trust Property and
Grantor waives any objections to the commencement
or continuation of a foreclosure of this Deed of
Trust 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 Deed of Trust or such other proceedings on
such basis. Neither the commencement nor
continuation of proceedings to foreclose this Deed
of Trust nor the exercise of any other rights
hereunder nor the recovery of any judgment by
Beneficiary in any such proceedings shall
prejudice, limit or preclude Beneficiary'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 Grantor
expressly waives any objections to the
commencement of, continuation of, or entry of a
judgment in such other proceedings or exercise of
any remedies in such proceedings based upon any
action or judgment connected to this Deed of
Trust, and Grantor also waives any right to seek
to dismiss, stay, remove, transfer or consolidate
either such other proceedings or any action under
this Deed of Trust on such basis. It is expressly
understood and agreed that to the fullest extent
permitted by law, Beneficiary 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.
30. Expenses; Indemnification. (a)
Grantor shall pay or reimburse Beneficiary for all
expenses incurred by Beneficiary before and after
the date of this Deed of Trust with respect to any
and all transactions contemplated by this Deed of
Trust including without limitation, the
preparation of any document reasonably required
hereunder or any amendment, modification,
restatement or supplement to this Deed of Trust,
the delivery of any consent, non-disturbance
agreement or similar document in connection with
this Deed of Trust or the enforcement of any of
Beneficiary's rights. Such expenses shall
include, without limitation, all title and
conveyancing charges, recording and filing fees
and taxes, mortgage taxes, intangible personal
property taxes, escrow fees, revenue and tax stamp
expenses, insurance premiums (including title
insurance premiums), title search and title
rundown charges, brokerage commissions, finders'
fees, placement fees, court costs, surveyors',
photographers', appraisers', architects',
engineers', consulting professional's,
accountants' and attorneys' fees and
disbursements. Grantor acknowledges that from
time to time Grantor may receive statements for
such expenses, including without limitation
attorneys' fees and disbursements. Grantor shall
pay such statements promptly upon receipt.
(b) If (i) any action or proceeding
shall be commenced by Beneficiary (including but
not limited to any action to foreclose this Deed
of Trust or to collect the Obligations), or any
action or proceeding is commenced to which
Beneficiary is made a party, or in which it
becomes necessary to defend or uphold the lien of
this Deed of Trust (including, without limitation,
any proceeding or other action relating to the
bankruptcy, insolvency or reorganization of
Grantor and/or any Subsidiary), or in which
Beneficiary is served with any legal process,
discovery notice or subpoena and (ii) in each of
the foregoing instances such action or proceeding
in any manner relates to or arises out of this
Deed of Trust or Beneficiary's acceptance of the
Intercompany Note, then Grantor will promptly
reimburse or pay to Beneficiary all of the
expenses which have been incurred by Beneficiary
with respect to the foregoing (including
reasonable counsel fees and disbursements),
together with interest thereon at the Default
Rate, and any such sum and the interest thereon
shall be a lien on the Trust Property, prior to
any right, or title to, interest in or claim upon
the Trust Property attaching or accruing
subsequent to the lien of this Deed of Trust, and
shall be deemed to be secured by this Deed of
Trust. In any action or proceeding to foreclose
this Deed of Trust, or to recover or collect the
Obligations, the provisions of law respecting the
recovering of costs, disbursements and allowances
shall prevail unaffected by this covenant.
(c) Grantor shall indemnify and hold
harmless Beneficiary and Beneficiary's affiliates,
and the respective directors, officers, agents and
employees of Beneficiary and its affiliates from
and against all claims, damages, losses and
liabilities (including, without limitation,
reasonable attorneys' fees and expenses) arising
out of or based upon any matter related to this
Deed of Trust, the Trust Property or the
occupancy, ownership, maintenance or management of
the Trust Property by Grantor, including, without
limitation, any claims based on the alleged acts
or omissions of any employee or agent of Grantor;
provided, however, that the foregoing
indemnification shall not apply to claims, damages
and the like arising from the gross negligence or
wilful misconduct of the party seeking
indemnification. This indemnification shall be in
addition to any other liability which Grantor may
otherwise have to Beneficiary.
31. Successors and Assigns. All
covenants of Grantor contained in this Deed of
Trust are imposed solely and exclusively for the
benefit of Beneficiary 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
Beneficiary at any time if in its sole discretion
it deems such waiver advisable. All such
covenants of Grantor shall run with the land and
bind Grantor, the successors and assigns of
Grantor (and each of them) and all subsequent
owners, encumbrancers and tenants of the Trust
Property, and shall inure to the benefit of
Beneficiary, its successors and assigns. The word
"Grantor" shall be construed as if it read
"Grantors" whenever the sense of this Deed of
Trust so requires and if there shall be more than
one Grantor, the obligations of the Grantors shall
be joint and several.
32. No Waivers, etc. Any failure by
Beneficiary to insist upon the strict performance
by Grantor of any of the terms and provisions of
this Deed of Trust shall not be deemed to be a
waiver of any of the terms and provisions hereof,
and Beneficiary, notwithstanding any such failure,
shall have the right thereafter to insist upon the
strict performance by Grantor of any and all of
the terms and provisions of this Deed of Trust to
be performed by Grantor. Beneficiary may release,
regardless of consideration and without the
necessity for any notice to or consent by the
holder of any subordinate lien on the Trust
Property, any part of the security held for the
Obligations secured by this Deed of Trust without,
as to the remainder of the security, in anywise
impairing or affecting the lien of this Deed of
Trust or the priority of such lien over any
subordinate lien.
33. GOVERNING LAW, ETC. THIS DEED OF
TRUST SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE
REAL ESTATE IS LOCATED, EXCEPT THAT GRANTOR
EXPRESSLY ACKNOWLEDGES THAT BY ITS TERMS THE
INDENTURE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW,
AND FOR PURPOSES OF CONSISTENCY, GRANTOR AGREES
THAT IN ANY IN PERSONAM PROCEEDING RELATED TO THIS
DEED OF TRUST THE RIGHTS OF THE PARTIES TO THIS
DEED OF TRUST 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, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAW.
34. Waiver of Trial by Jury. Grantor
and Beneficiary each hereby irrevocably and
unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this Deed of
Trust and for any counterclaim brought therein.
Grantor hereby waives all rights to interpose any
counterclaim in any suit brought by Beneficiary
hereunder (other than compulsory counterclaims and
other counterclaims that must be interposed in
connection with such suit under applicable law)
and all rights to have any such suit consolidated
with any separate suit, action or proceeding (it
being understood and agreed, however, that Grantor
shall have the right to raise any such claim in a
separate suit, action or proceeding).
35. Certain Definitions. Unless the
context clearly indicates a contrary intent or
unless otherwise specifically provided herein,
words used in this Deed of Trust shall be used
interchangeably in singular or plural form and the
word "Grantor" shall mean "each Grantor or any
subsequent owner or owners of the Trust Property
or any part thereof or interest therein," the word
"Beneficiary" shall mean "Beneficiary or any
successor collateral agent to the Beneficiary,"
the word "person" shall include any individual,
corporation, partnership, trust, unincorporated
association, government, governmental authority,
or other entity, and the words "Trust Property"
shall include any portion of the Trust 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 Deed of Trust are for convenience
of reference only and in no way limit or amplify
the provisions hereof.
36. Security Agreement under Uniform
Commercial Code. (a) It is the intention of the
parties hereto that this Deed of Trust shall
constitute a Security Agreement within the meaning
of the Code. If an Event of Default shall occur
and be continuing under this Deed of Trust, then
in addition to having any other right or remedy
available at law or in equity, Beneficiary 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 Trust
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 Trust Property in accordance with
Beneficiary's rights, powers and remedies with
respect to the real property (in which event the
default provisions of the Code shall not apply).
If Beneficiary shall elect to proceed under the
Code, then five 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 Beneficiary shall include, but not be
limited to, attorneys' fees and legal expenses.
At Beneficiary's request, Grantor shall assemble
the personal property and make it available to
Beneficiary at a place designated by Beneficiary
which is reasonably convenient to both parties.
(b) Grantor and Beneficiary 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 Deed of Trust 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; and (iii) the
addresses of Grantor and Beneficiary are as set
forth on the first page of this Deed of Trust.
(c) Grantor, upon request by Beneficiary
from time to time, shall execute, acknowledge and
deliver to Beneficiary one or more separate
security agreements, in form satisfactory to
Beneficiary, covering all or any part of the Trust
Property and will further execute, acknowledge and
deliver, or cause to be executed, acknowledged and
delivered, any financing statement, affidavit,
continuation statement or certificate or other
document as Beneficiary may request in order to
perfect, preserve, maintain, continue or extend
the security interest under and the priority of
this Deed of Trust and such security instrument.
Grantor further agrees to pay to Beneficiary on
demand all costs and expenses incurred by
Beneficiary in connection with the preparation,
execution, recording, filing and re-filing of any
such document and all reasonable costs and
expenses of any record searches for financing
statements Beneficiary shall reasonably require.
Grantor shall from time to time, on request of
Beneficiary, deliver to Beneficiary an inventory
in reasonable detail of any of the Trust Property
which constitutes personal property. If Grantor
shall fail to furnish any financing or
continuation statement within 10 days after
request by Beneficiary, then pursuant to the
provisions of the Code, Grantor hereby authorizes
Beneficiary, without the signature of Grantor, to
execute and file any such financing and
continuation statements. The filing of any
financing or continuation statements in the
records relating to personal property or chattels
shall not be construed as in any way impairing the
right of Beneficiary to proceed against any
personal property encumbered by this Deed of Trust
as real property, as set forth above.
37. Release Upon Payment and Discharge
of Grantor's Obligations. Beneficiary shall
release this Deed of Trust and the lien hereof by
proper instrument upon payment and discharge of
all Obligations secured hereby (including payment
of reasonable expenses incurred by Beneficiary in
connection with the execution of such release) and
upon full and complete performance of all of the
Obligations. Beneficiary shall otherwise release
this Deed of Trust and the lien hereof in
accordance with Article XII of the Indenture.
38. Enforceability; Usury. In no event
shall any provision of this Deed of Trust or any
other instrument evidencing or securing the
Obligations ever obligate Grantor to pay or allow
Beneficiary to collect interest on the Obligations
secured hereby at a rate greater than the maximum
non-usurious rate permitted by applicable law
(herein referred to as the "Highest Lawful Rate"),
or obligate Grantor to pay any taxes, assessments,
charges, insurance premiums or other amounts to
the extent that such payments, when added to the
interest payable on the Obligations, would be held
to constitute the payment by Grantor of interest
at a rate greater than the Highest Lawful Rate;
and this provision shall control over any
provision to the contrary. To the extent the
Highest Lawful Rate is determined by reference to
the laws of the State of Texas, same shall be
determined by reference to the indicated (weekly)
rate ceiling (as defined and described in Texas
Revised Civil Statutes Article 5069-1.04, as
amended) at the applicable time in effect.
Without limiting the generality of the
foregoing, in the event the maturity of all or any
part of the principal amount of the Obligations
shall be accelerated for any reason, then such
principal amount so accelerated shall be credited
with any interest theretofore paid thereon in
advance and remaining unearned at the time of such
acceleration. If, pursuant to the terms of this
instrument or the Obligations, any funds are
applied to the payment of any part of the
principal amount of the Obligations prior to the
maturity thereof, then (a) any interest which
would otherwise thereafter accrue on the principal
amount so paid by such application shall be
canceled, and (b) the Obligations remaining unpaid
after such application shall be credited with the
amount of all interest, if any, theretofore
collected on the principal amount so paid by such
application and remaining unearned at the date of
said application; and if the funds so applied
shall be sufficient to pay in full all the
Obligations, then Beneficiary shall refund to
Grantor all interest theretofore paid thereon in
advance and remaining unearned at the time of such
acceleration. Regardless of any other provision
in this instrument, or in any of the written
evidences of the Obligations, Grantor shall never
be required to pay any unearned interest on the
Obligations or any portion thereof, and shall
never be required to pay interest thereon at a
rate in excess of the Highest Lawful Rate
construed by courts having competent jurisdiction
thereof.
39. Homestead. Grantor represents and
covenants that the Trust Property forms no part
any property owned, used or claimed by Grantor as
a business or residential homestead, or as exempt
from forced sale under the laws of the State of
Texas, and disclaims and renounces all and every
such claim thereto.
40. Substitute Trustee. In case of the
resignation of the Trustee, or the inability
(through death or otherwise), refusal or failure
of the Trustee to act, or at the option of
Beneficiary or the holder(s) of a majority of the
Obligations for any other reason (which reason
need not be stated), a Substitute Trustee may be
named, constituted and appointed by Beneficiary or
the holder(s) of a majority of the Obligations,
without other formality than an appointment and
designation in writing, which appointment and
designation shall be full evidence of the right
and authority to make the same and of all facts
therein recited, and this conveyance shall vest in
the Substitute Trustee the title, powers and
duties herein conferred on the Trustee originally
named herein, and the conveyance of the Substitute
Trustee to the purchaser(s) at any sale of the
Trust Property of any part thereof shall be
equally valid and effective. The right to appoint
a Substitute Trustee shall exist as often and
whenever from any of said causes, the Trustee,
original or Substitute, resigns or cannot, will
not or does not act, or Beneficiary or the
holder(s) of a majority of the Obligations desires
to appoint a new Trustee. No bond shall ever be
required of the Trustee, original or Substitute.
The recitals in any conveyance made by the
Trustee, original or Substitute, shall be accepted
and construed in court and elsewhere as prima
facie evidence and proof of the facts recited, and
no other proof shall be required as to the request
by Beneficiary or the holder(s) of a majority of
the Obligations to the Trustee to enforce this
Deed of Trust, or as to the notice of or holding
of the sale, or as to any particulars thereof, or
as to the resignation of the Trustee, original or
Substitute, or as to the inability, refusal or
failure of the Trustee, original or Substitute, to
act, or as to the election of Beneficiary or the
holder(s) of a majority of the Obligations to
appoint a new Trustee, or as to appointment of a
Substitute Trustee, and all prerequisites of said
sale shall be presumed to have been performed; and
each sale made under the powers herein granted
shall be a perpetual bar against Grantor and the
heirs, personal representatives, successors and
assigns of Grantor. Trustee, original or
substitute, is hereby authorized and empowered to
appoint any one or more persons as attorney-in-
fact to act as Trustee under him and in his name,
place and stead in order to take any actions that
Trustee is authorized and empowered to do
hereunder, such appointment to be evidenced by an
instrument signed and acknowledged by said
Trustee, original or Substitute; and all acts done
by said attorney-in-fact shall be valid, lawful
and binding as if done by said Trustee, original
or Substitute, in person.
41. Indemnification of Trustee. Except
for gross negligence or willful misconduct,
Trustee shall not be liable for any act or
omission or error of judgment. Trustee may rely
on any document believed by him in good faith to
be genuine. All money received by Trustee shall,
until used or applied as herein provided, be held
in trust, and Trustee shall not be liable for
interest thereon. Grantor shall indemnify Trustee
against all liability and expenses that he may
incur in the performance of his duties hereunder
except for gross negligence or willful misconduct.
42. Business or Commercial Purpose.
Grantor warrants that the extension of credit
evidenced by the Obligations secured hereby is
solely for business or commercial purposes, other
than agricultural purposes. Grantor further
warrants that the credit transaction evidenced by
the Obligations is specifically exempted under
Section 226.3(a) of Regulation Z issued by the
Board of Governors of the Federal Reserve System
and Title 12 (Truth in Lending Act) and Section
1603 of Title 15 (General Provisions) of the
Consumer Credit Protection Act and that no
disclosures are required to be given under such
regulations and federal laws in connection with
the above transaction.
43. Final Agreement. In consideration
of the premises and other good and valuable
consideration, the receipt and sufficiency of
which are hereby acknowledged, Grantor hereby
confirms and agrees that this Deed of Trust
(including the schedules hereto), the Intercompany
Note, any guarantees of the Intercompany Note
executed by any guarantors and all other Loan
Documents and loan papers together constitute a
written "loan agreement" as defined in Section
26.02(a) of the Texas Business and Commerce Code.
44. Consistency with Other Documents.
If any provision hereof conflicts with any
provisions of the Indenture, then the terms of the
Indenture shall control to the extent of such
conflict. If any provision hereof conflicts with
any provision of the Prior Deed of Trust, or
requires any performance, action or inaction
required of the Grantor under the Prior Deed of
Trust, then to the extent of the conflict or
inconsistency, the Grantor shall be excused
hereunder by compliance with the Prior Deed of
Trust.
45. THIS WRITTEN LOAN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES.
This Deed of Trust has been duly
executed by Grantor on the date first above
written.
ATTEST:
By: /S/ ELIZABETH B. KELLY
----------------------------
Name: Elizabeth B. Kelly
Title: [Assistant] Secretary
KOPPEL STEEL CORPORATION
By: /S/ J. R. PARKER
-------------------------
Name: John R. Parker
Title: [Vice] President
[SEAL]
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On this 26th day of July, 1995,
personally came John R. Parker and Elizabeth B.
Kelly, to be duly sworn by me, and did depose and
say they executed the foregoing instrument in the
firm name of Koppel Steel Corporation, the
corporation therein mentioned for the purposes
therein mentioned.
/S/ STEVEN MAHER
Notary Public
[Notarial Stamp]
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
Qualified in New York County
Certificate Filed in
New York County
Commission Expires October 15, 1996
SCHEDULE A
DESCRIPTION
PARCEL I:
TRACT 1:
FIELD NOTES of a 39.743 acre tract of land
situated in the John Steele Survey, Abstract No.
227, Chambers County, Texas, and being out of and
a part of a 357.611 acre tract of land called
Tract No. One in a deed dated March 2, 1967, from
Theo Wilburn, et al, to United States Steel
Corporation and recorded in Volume 283 at Page
205, of the Deed Records of Chambers County,
Texas, and being the same tract of land called
40.000 acres in a deed dated February 18, 1982,
from United States Steel Corporation to Hoesch
Tubular Products Company and recorded in Volume
495 at Page 296, of the Deed Records of Chambers
County, Texas. Said 39.743 acre tract of land is
more particularly described by metes and bounds as
follows, to-wit:
NOTE: All bearings are Lambert Grid bearings and
all coordinates refer to the State Plane
Coordinate System, South Central Zone, 1927 Datum,
as defined by Article 5300A of the Revised Civil
Statutes of the State of Texas.
BEGINNING at a 1/2 inch iron rod found for the
Northeast corner of this tract of land, the
Northeast corner of said 40.000 tract of land, and
in the South line of the Continental Oil Company
10 foot right-of-way as described in a deed dated
February 5, 1979, from United States Steel
Corporation to continental Oil Company and
recorded in Volume 432 at Page 328, of the Deed
Records of Chambers County, Texas. From this
BEGINNING corner the Southeast corner of said
357.611 acre tract of land bears South 62 deg. 45
min. 15 sec. East, a distance of 4117.30
3,292,544.95.
THENCE South with the East line of this tract of
land and the East line of said 40.000 acre tract
of land, a distance of 1100.00 feet to a 1/2 inch
iron rod set for the Southeast corner of this
tract of land and the Southeast corner of said
40.000 acre tract of land;
THENCE West with the South line of this tract of
land and the South line of said 40.000 acre tract
of land, at 1267.68 feet the East line of the City
of Baytown City Limits as described in an
Industrial District Agreement dated December 31,
1990, between Hoesch Tubular Products Company and
the City of Baytown, in all a total distance of
1272.47 feet to a 1/2 inch iron rod set for a
corner of this tract of land, a corner of said
40.000 acre tract of land, and a corner of the
said City of Baytown City Limits;
THENCE South 45 deg. 58 min. 03 sec. West, with
the South or Southeast line of this tract of land,
the South or Southeast line of said 40.000 acre
tract of land, and the South or Southeast line of
the City of Baytown City Limits, at 255.89 feet
the East line of said Continental Oil Co. 10 foot
right-of-way, at 269.80 feet the West line of said
Continental Oil Co. 10 foot right-of-way, at
408.00 feet set a 1/2 inch iron rod on line, in
all a total distance of 439.14 feet to a point for
a corner of this tract of land. Said point being
in the North or Northeast edge of water of Cedar
Bayou;
THENCE in a Northwesterly direction with the South
or Southwest line of this tract of land and the
North or Northeast edge of water of Cedar Bayou
the following courses:
North 64 deg. 49 min. 20 sec. West, 113.96
feet;
North 54 deg. 21 min. 07 sec. West, 90.49 feet;
North 63 deg. 08 min. 15 sec. West,
110.51 feet to a point for a corner of
this tract of land. Said point being in
the Northwest line of the City of
Baytown City Limits;
THENCE North 45 deg. 58 min. 03 sec. East, with
the West or Southwest line of this tract of land,
the West or Southwest line of said 40.000 acre
tract of land, and the Northwest line of said City
of Baytown City Limits, at 20.00 feet set a 1/2
inch iron rod on line, at 552.21 feet the West
line of said Continental Oil Co. 10 foot right-of-
way, in all a total distance of 566.12 feet to an
"X" cut in concrete for a corner of this tract of
land, a corner of said 40.000 acre tract of land,
and a corner of said City of Baytown City Limits;
THENCE North with the West line of this tract of
land, the West line of said 40.000 acre tract of
land, the East line of said Continental Oil Co. 10
foot right-of-way, and the West line of said City
of Baytown City Limits, a distance of 860.59 feet
to a 1/2 inch iron rod set for the Northwest
corner of this tract of land, the Northwest corner
of said 40.000 acre tract of land, a corner of
said Continental Oil Co. 10 foot right-of-way, and
the Northwest corner of said City of Baytown City
Limits;
THENCE East with the North line of this tract of
land, the North line of said 40.000 acre tract of
land, the South line of said Continental Oil Co.
10 foot right-of-way, and the North line of said
City of Baytown City Limits, at 24.65 feet set a
1/2 inch iron rod for the West right-of-way line
of a 1.777 acre tract of land conveyed for a 100
foot wide road easement and right of way to Hoesch
Tubular Products by USX Corporation, as amended
July 2, 1990 and recorded in Volume 116 at Page
488 and Volume 116, at Page 493 of the Official
Public Records of Chambers County, Texas, at 80.00
feet the centerline of said 100 foot road right-
of-way, at 135.35 feet set a 1/2 inch iron rod for
the East right-of-way line of said 100 foot road
right-of-way, at 188.75 feet the Northeast corner
of said City of Baytown City Limits, in all a
total distance of 1456.44 feet to the PLACE OF
BEGINNING, containing within said boundaries
39.743 acres of land.
TRACTS 2 and 3: EASEMENT ESTATE
FIELD NOTES of a 1.777 acre tract of land situated
in the John Steele Survey, Abstract No. 227,
Chambers County, Texas, and being out of and a
part of a 357.611 acre tract of land called Tract
No. One, conveyed to United States Steel
Corporation by Theo Wilburn, et al, by deed dated
March 2, 1967 and recorded in Volume 283 at Page
205 of the Deed Records of Chambers County, Texas,
and being that same 1.777 acre tract of land
conveyed for a 100 foot wide road easement right-
of-way to Hoesch Tubular Products Company by USX
Corporation, created by instrument recorded in
Volume 116 at Page 488 as amended July 2, 1990
Volume 116 at Page 493 of the Official Public
Records of Chambers County, Texas. This 1.777
acre tract of land is more particularly described
by metes and bounds as follow, to-wit:
NOTE: All bearings are Lambert Grid bearings and
all coordinates refer to the State Plane
Coordinate System, South Central Zone, 1927 Datum,
as defined by Article 5300A of the Revised Civil
Statutes of the State of Texas.
BEGINNING at a 1/2 inch iron rod set for the
Southwest corner of this tract of land, in the
North line of a called 40 acre tract of land that
was conveyed to Hoesch Tubular Products Company by
United States Steel Corporation by deed dated
February 18, 1982 and recorded in Volume 495 at
Page 296 of the Deed Records of Chambers County,
Texas and in the South line of a 10 foot wide
right-of-way conveyed to Continental Oil Company
by United States Steel Corporation by deed dated
February 5, 1979 and recorded in Volume 432 at
Page 328 of the Deed Records of Chambers County,
Texas, with certain rights assigned to Hoesch
Tubular Products Company by instrument dated
February 18, 1982 and recorded in Volume 496 at
Page 199 of the Deed Records of Chambers County,
Texas. From this BEGINNING corner a 1/2 inch iron
rod found for the Northwest corner of said 40 acre
tract of land bears West a distance of 24.65
3,291.113.33;
THENCE North 25 deg. 25 min. 20 sec. West, with
the West line of this tract of land a distance of
746.42 feet to a 1/2 inch iron rod set for the
Northwest corner of this tract of land and in the
South right-of-way line of Spur No. 55, a State
Highway 240 feet wide;
THENCE in a Northeasterly direction with the North
line of this tract of land and the South right-of-
way line of Spur No. 55, a curve to the left
(concave to the Northwest) having a central angle
of 01 deg. 55 min. 37 sec., a radius of 2984.86
feet, an arc length of 100.39 feet and a chord of
North 59 deg. 26 min. 41 sec. East, 100.38 feet to
a 1/2 inch iron rod set for the Northeast corner
of this tract of land and in the South right-of-
way line of Spur No. 55;
THENCE South 25 deg. 25 min. 20 sec. East, with
the East line of this tract of land a distance of
802.92 feet to a 1/2 inch iron rod set for the
Southeast corner of this tract of land, in the
North line of said 40 acre tract of land and in
the South line of said Continental Oil Company
right-of-way;
THENCE West with the South line of this tract of
land, the North line of said 40 acre tract of land
and the South line of said Continental Oil Company
right-of-way a distance of 110.70 feet to the
PLACE OF BEGINNING, containing with said
boundaries 1.777 acres of land.
Tract 4: Easement Estate created by that certain
Rail Use and Easement Agreement dated December 22,
1981 (Effective February 25, 1982), recorded in
Volume 495, Page 312, of the Deed Records of
Chambers County, Texas, executed by and between
United States Steel Corporation and Hoesch Tubular
Products Company.
Tract 5: Easement Estate created by that certain
Electric Power and Easement Agreement dated
December 22, 1981 (Effective February 25, 1982),
recorded in Volume 495, Page 318, of the Deed
Records of Chambers County, Texas, executed by and
between United States Steel Corporation, USS
Realty Development Division and Hoesch Tubular
Products Company.
Tract 6: Easement Estate created by that certain
Gas, Industrial Waste Disposal and Sewer Line
Easement Agreement dated December 22, 1981
(Effective February 25, 1982), recorded in Volume
495, Page 324, of the Deed Records of Chambers
County, Texas, executed by and between United
States Steel Corporation, USS Realty Development
Division and Hoesch Tubular Products Company.
PARCEL II:
FEE SIMPLE - TRACT NO. 1
FIELD NOTES of a 14.964 acre tract of land
surveyed for NS Group Inc., and situated in the
John Steele Survey, Abstract No. 227, Chambers
County, Texas. This 14.964 acre tract of land is
out of and a part of a 357.611 acre tract of land
described as Tract No. One in a deed dated
March 2, 1967, from Theo Wilburn, et al, to United
States Steel Corporation and recorded in Volume
283 at Page 205 of the Deed Records of Chambers
County, Texas. This 14.964 acre tract of land is
more particularly described by metes and bounds as
follows, to-wit:
NOTE: ALL BEARINGS ARE LAMBERT GRID BEARINGS AND
ALL COORDINATES REFER TO THE STATE PLANE
COORDINATE SYSTEM, SOUTH CENTRAL ZONE, AS DEFINED
BY ARTICLE 5300A OF THE REVISED CIVIL STATUTES OF
THE STATE OF TEXAS, 1927 DATUM. ALL DISTANCES ARE
ACTUAL DISTANCES.
BEGINNING at 3/4 inch iron rod found for the
Northeast corner of this tract of land in the
South line of a 39.743 acre tract of land called
40 acres in a deed dated February 18, 1982, from
United States Steel Corporation to Hoesch Tubular
Products and recorded in Volume 495 at Page 296 of
the Deed Records of Chambers County, Texas. From
this corner an iron rod found for the Southeast
corner of said 40 acre tract bears EAST 673.04
feet. This BEGINNING corner has a State Plane
3,291,871.99;
THENCE SOUTH with the East line of this tract of
land a distance of 850.87 feet to a 5/8 inch iron
rod found for the Southeast corner of this tract
of land in the South line of said 357.611 acre
tract of land and in the North line of a 126.322
acre tract of land conveyed to United States Steel
Corporation by McDonough Co. by deed dated June
30, 1967, and recorded in Volume 288 at Page 394
of the Deed Records of Chambers County, Texas.
From this corner an iron rod found for the
Northeast corner of said 126.322 acre tract of
land bears North 88 deg. 12 min. 00 sec. East,
1318.29 feet;
THENCE South 88 deg. 12 min. 00 sec. West, with
the South line of this tract, the South line of
said 357.611 acre tract and the North line of said
126.322 acre tract of land, at 642.53 feet set a
1/2 inch iron rod in line, in all a total distance
of 662.53 feet to a point for the Southwest corner
of this tract of land on the East bank of Cedar
Bayou;
THENCE in a Northerly direction with the West line
of this tract and the East bank of Cedar Bayou the
following courses:
North 14 deg. 05 min. 17 sec. West, 114.24
feet;
North 03 deg. 06 min. 42 sec. East, 24.34
feet;
North 14 deg. 34 min. 01 sec. East, 37.54
feet;
North 28 deg. 23 min. 23 sec. West, 53.66
feet;
North 27 deg. 42 min. 31 sec. West, 219.82
feet;
North 55 deg. 09 min. 34 sec. East, 11.27
feet;
North 31 deg. 25 min. 43 sec. West, 70.24
feet;
South 62 deg. 57 min. 57 sec. West, 13.86
feet;
North 56 deg. 13 min. 12 sec. West, 43.99
feet;
North 12 deg. 38 min. 29 sec. West, 48.54
feet;
North 45 deg. 10 min. 35 sec. West, 30.09
feet to a point for the Northwest corner of
this tract of land and the Southwest corner
of the Hoesch 40 acre tract of land;
THENCE North 45 deg. 58 min. 03 sec. East, with
the Northwest line of this tract and the Southeast
line of said 40 acre tract, at 30.52 feet found a
1/2 inch iron rod in line, in all a total distance
of 439.24 feet to a 5/8 inch iron rod found for
the most Northern Northwest corner of this tract
of land and a corner of said 40 acre tract of
land;
THENCE EAST with the North line of this tract and
the South line of said 40 acre tract, a distance
of 599.43 feet to the PLACE OF BEGINNING,
containing within said boundaries 14.964 acres of
land.
EASEMENT ESTATE: TRACT NO. 2
FIELD NOTES of the centerline of an existing road
surveyed for NS Group, Inc., and situated in the
John Steele Survey, Abstract No. 227, Chambers
County, Texas. This road is out of and a part of
a 357.611 acre tract called Tract No. One that was
conveyed to United Steel Corporation by Theo
Wilburn, et al by deed dated March 2, 1967, and
recorded in Volume 283 at Page 205 of the Deed
Records of Chambers County, Texas, and being out
of and a part of a 126.322 tract of land conveyed
to United States Steel Corporation by McDonough
Co., by deed dated June 30, 1967, and recorded in
Volume 288 at Page 394 of the Deed Records of
Chambers County, Texas. This centerline is more
particularly described by metes and bounds as
follows, to-wit:
NOTE: ALL BEARINGS ARE LAMBERT GRID BEARINGS AND
ALL COORDINATES REFER TO THE STATE PLANE
COORDINATE SYSTEM, SOUTH CENTRAL ZONE, AS DEFINED
BY ARTICLE 5300A OF THE REVISED CIVIL STATUTES OF
THE STATE OF TEXAS, 1927 DATUM. ALL DISTANCES ARE
ACTUAL DISTANCES.
BEGINNING at a point in the center of this
existing road and in the West right-of-way line of
f.M Highway No. 1405, 300 foot right-of-way. From
this point a 1-1/4 inch galvanized iron pipe found
at the intersection of the West right-of-way line
of Highway No. 1405 with the South line of said
357.611 acre tract of land bears South 03 deg. 09
min. 06 sec. East, 26.49 feet. This BEGINNING
point has a State Plane Coordinate Value
3,296,043.92;
THENCE South 85 deg. 32 min. 52 sec. West, with
the centerline of this existing road, at 2856.95
feet cross the West line of said 357.611 acre
tract and the East line of said 126.322 acre tract
of land, in all a total distance of 3659.65 feet
to a point for a PI in the centerline of this
road;
THENCE with the centerline of this road the
following courses:
South 86 deg. 25 min. 19 sec. West, 100.97
feet;
North 78 deg. 44 min. 28 sec. West, 98.37
feet;
North 60 deg. 13 min. 09 sec. West, 97.07
feet;
North 41 deg. 24 min. 14 sec. West, 98.23
feet;
North 38 deg. 52 min. 18 sec. West, at 93.33
feet cross the North line of said 126.322
acre tract and the South line of said 357.611
acre tract, in all a total distance of 99.24
feet;
North 54 deg. 55 min. 05 sec. West, 96.98
feet;
South 87 deg. 45 min. 01 sec. West, 35.71
feet to a point for the END of this
centerline in the East line of a 14.964 acre
tract of land surveyed this day. A 5/8 inch
iron rod found for the Southeast corner of
said 14.964 acre tract of land bears SOUTH
62.85 feet.
SCHEDULE B
EXCLUDED PROPERTY
a) Any and all Collateral (as defined
in that certain Revolving Credit, Guaranty and
Security Agreement dated as of July 28, 1995 by
and between Newport Steel Corporation, Koppel
Steel Corporation and Imperial Adhesives, Inc., as
borrowers, NS Group, Inc., Erlanger Tubular
Corporation, Northern Kentucky Air, Inc. and
Northern Kentucky Management, Inc., as guarantors,
The Bank of New York Commercial Corporation, as
Lender, as ACM Agent and as Co-Agent, and PNC Bank
Ohio, National Association, as Lender and as Co-
Agent, and other lenders parties thereto).
b) Any and all intellectual property
rights and interests, including, without
limitation, any and all trade names, trade marks,
copyrights, trade secrets and patents.
c) Any and all vehicles and rolling
stock.
d) Any and all leased Equipment if and
to the extent the terms and conditions of the
applicable lease documentation prohibit, restrict
or require consent in connection with the creation
of liens and security interests with respect to
such Equipment.
e) Any and all general intangibles.
f) Stripper Crane subject to Contract
for Lease and Rent dated September 6, 1977 between
City of Wilder, Kentucky and Interlake, Inc.,
recorded at Misc. Book 82, page 401, and Sublease
dated April 15, 1981 between Interlake, Inc. and
Newport Steel Corporation, recorded at Misc. Book
95, page 101, provided, however, that such
Stripper Crane shall case to be Excluded Property
at such time (if ever) as all consents required in
connection with the granting of liens and security
interests with respect to such Stripper Crane
under such Lease and Sublease have been obtained.
g) Any and all Equipment described in
a certain Security Agreement, dated as of February
13, 1992, together with all exhibits, supplements,
addenda and amendments thereto in existence or
effect on the date hereof or hereafter.
Recording requested by, and
when recorded return to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
ATTN: F. Robert Wheeler, Jr., Esq.
LEASEHOLD JUNIOR MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
from
ERLANGER TUBULAR CORPORATION, Mortgagor
to
NS GROUP, INC., Mortgagee
DATED AS OF JULY 28, 1995
TABLE OF CONTENTS
Background . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . 2
1. Warranty of Title . . . . . . . . . . . . . . . . . 7
2. Payment and Performance of Obligations. . . . . . . 8
3. Requirements. . . . . . . . . . . . . . . . . . . . 8
4. Payment of Taxes and Other Impositions. . . . . . . 9
5. Insurance . . . . . . . . . . . . . . . . . . . . . 10
6. Restrictions on Liens, Encumbrances and
Sales . . . . . . . . . . . . . . . . . . . . . . . 15
7. Relationship of Mortgagee and Mortgagor . . . . . . 15
8. Maintenance; No Alteration; Inspection;
Utilities . . . . . . . . . . . . . . . . . . . . . 15
9. Condemnation/Eminent Domain . . . . . . . . . . . . 16
10. Leases. . . . . . . . . . . . . . . . . . . . . . . 16
11. Further Assurances/Estoppel
Certificates. . . . . . . . . . . . . . . . . . . . 18
12. Mortgagee's Right to Perform. . . . . . . . . . . . 19
13. Hazardous Material. . . . . . . . . . . . . . . . . 19
14. Asbestos. . . . . . . . . . . . . . . . . . . . . . 20
15. Event of Default. . . . . . . . . . . . . . . . . . 21
16. Remedies. . . . . . . . . . . . . . . . . . . . . . 21
17. Right of Mortgagee to Credit Sale . . . . . . . . . 25
18. Appointment of Receiver . . . . . . . . . . . . . . 25
19. Extension, Release, etc.. . . . . . . . . . . . . . 26
20. Assignment of Rents . . . . . . . . . . . . . . . . 26
21. Trust Funds . . . . . . . . . . . . . . . . . . . . 27
22. Additional Rights . . . . . . . . . . . . . . . . . 27
23. Changes in Method of Taxation . . . . . . . . . . . 28
24. Notices . . . . . . . . . . . . . . . . . . . . . . 28
25. No Oral Modification. . . . . . . . . . . . . . . . 28
26. Partial Invalidity. . . . . . . . . . . . . . . . . 28
27. Waiver of Right of Redemption and Other
Rights. . . . . . . . . . . . . . . . . . . . . . . 28
28. Remedies Not Exclusive. . . . . . . . . . . . . . . 29
29. Multiple Security . . . . . . . . . . . . . . . . . 30
30. Expenses; Indemnification . . . . . . . . . . . . . 31
31. Successors and Assigns. . . . . . . . . . . . . . . 32
32. No Waivers, etc.. . . . . . . . . . . . . . . . . . 33
33. Governing Law, etc. . . . . . . . . . . . . . . . . 33
34. Waiver of Trial by Jury . . . . . . . . . . . . . . 33
35. Certain Definitions . . . . . . . . . . . . . . . . 34
36. Security Agreement under Uniform
Commercial Code . . . . . . . . . . . . . . . . . . 34
37. Release Upon Payment and Discharge of
Mortgagor's Obligations . . . . . . . . . . . . . . 35
38. Consistency with Other Documents. . . . . . . . . . 36
39. Mortgaged Lease Provisions. . . . . . . . . . . . . 36
SCHEDULES
Schedule A - Description of Real Property
Schedule B - Description of Excluded Property
LEASEHOLD JUNIOR MORTGAGE, ASSIGNMENT OF RENTS AND
LEASES AND SECURITY AGREEMENT
THIS LEASEHOLD JUNIOR MORTGAGE,
ASSIGNMENT OF RENTS AND LEASES AND SECURITY
AGREEMENT, dated as of July 28, 1995 is made by
ERLANGER TUBULAR CORPORATION, an Oklahoma
corporation ("Mortgagor"), whose address is 5610
Bird Creek Avenue, Catoosa, Oklahoma 74015, to NS
GROUP, INC., a Kentucky corporation ("Mortgagee"),
whose mailing address is Ninth and Lowell Streets,
Newport, Kentucky 41072. 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. Mortgagor is the owner of a
leasehold estate affecting the parcel(s) of real
property described on Schedule A attached (such
real property, together with all of the buildings,
improvements, structures and fixtures now or
subsequently located thereon (the "Improvements"),
being collectively referred to as the "Real
Estate") pursuant to that certain Lease Agreement
dated as of December 1, 1980 by and between the
City of Tulsa - Rogers County Port Authority, as
lessor, and Erlanger & Company, Inc., as lessee, a
memorandum of which was recorded on January 27,
1981 in Book 593, Page 610 of the Rogers County,
Oklahoma public records; as amended by a First
Amendment to Lease Agreement dated July 1, 1981, a
memorandum of which was recorded on June 16, 1982
in Book 625, Page 73 of said public records; as
affected by an Assignment of Lease dated as of
June 30, 1986 by and between Erlanger and Company,
Inc. and Newport Steel Corporation, a copy of
which was recorded on July 18, 1986 in Book 736,
Page 287 of said public records; as further
amended by an Amendment of Lease Agreement dated
as of October 5, 1994, a copy of which was
recorded on , in Book , Page
of said public records; as further affected by
an Assignment of Lease dated as of July 28, 1995
by and between Mortgagee (f/k/a Newport Steel
Corporation) and Mortgagor, a copy of which will
be recorded prior to the recording hereof and as
further amended by a Third Amendment of Lease
Agreement dated as of July 28, 1995, a copy of
which will be recorded prior to the recording
hereof (the "Mortgaged Lease").
B. Mortgagor is a wholly owned
subsidiary of Mortgagee.
C. Mortgagee and The Huntington
National Bank, as Trustee, are parties to that
Indenture dated as of July 28, 1995 (as the same
may be amended, modified or otherwise supplemented
from time to time, the "Indenture"; capitalized
terms not defined herein shall have the meanings
ascribed thereto in the Indenture) for the benefit
of Holders of 13.5% Senior Secured Notes due 2003
in the aggregate principal amount of
$125,000,000.00 (the "Securities") issued by
Mortgagee.
D. Mortgagor has executed and
delivered to Mortgagee that certain intercompany
note of even date herewith in the original
principal amount of $10,400,000 (the "Intercompany
Note"). References in this Mortgage to the
"Default Rate" shall mean the interest rate
payable with respect to the Securities plus two
percent (2%) per annum.
E. Mortgagor, to secure its
obligations under the Intercompany Note, has
executed and delivered that certain security
agreement of even date herewith in favor of
Mortgagee (the "ICN Security Agreement"), which
ICN Security Agreement grants Mortgagee a security
interest in and to certain personal property now
or subsequently used in connection with the
operation of the Real Estate.
NOW, THEREFORE, in consideration of the
premises, the Mortgagor hereby agrees with the
Mortgagee as follows:
Granting Clauses
For good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, Mortgagor agrees that to secure all
of Mortgagor's obligations and liabilities under
the Intercompany Note and all other obligations
and liabilities of Mortgagor to Mortgagee
(including, without limitation, interest accruing
after the maturity of the Intercompany Note and
interest accruing after the filing of any petition
in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding,
relating to the Mortgagor, whether or not a claim
for post-filing or post-petition interest is
allowed in such proceeding and interest, to the
extent permitted by law, on the unpaid interest),
whether direct or indirect, absolute or
contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out
of, or in connection with, the Intercompany Note,
this Mortgage, the ICN Security Agreement or any
other document made, delivered or given in
connection therewith (collectively, the "Security
Documents"), in each case whether on account of
principal, interest, fees, indemnities, costs,
expenses or otherwise (including, without
limitation, all fees and disbursements of counsel
to Mortgagee that are required to be paid by the
Mortgagee pursuant to the terms of this Mortgage
or any other Security Document) (collectively, the
"Obligations").
MORTGAGOR BARGAINS, SELLS, MORTGAGES, WARRANTS,
CONVEYS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER
AND BY THESE PRESENTS DOES HEREBY BARGAIN, SELL,
MORTGAGE, WARRANT, CONVEY, GRANT, ASSIGN, TRANSFER
AND SET OVER UNTO MORTGAGEE ALL OF THE FOLLOWING:
(A) all right, title and interest of
Mortgagor in and to the leasehold estate
created under and by virtue of the Mortgaged
Lease, any interest in any fee, greater or
lesser title to the Real Estate that
Mortgagor may own or hereafter acquire
(whether acquired pursuant to a right or
option, if any, contained in the Mortgaged
Lease or otherwise), all options, privileges
and rights of Mortgagor under the Mortgaged
Lease (including all rights of use, occupancy
and enjoyment) and any amendments,
supplements, extensions, renewals,
restatements, replacements and modifications
thereof (including, without limitation,
(i) the right to give consents, (ii) the
right, if any, to renew or extend the
Mortgaged Lease for succeeding term or terms
and (iii) the right, if any, to purchase the
Real Estate);
(B) all right, title and interest
Mortgagor now has or may hereafter acquire in
and to the Improvements or any part thereof
(whether owned in fee by Mortgagor or held
pursuant to the Mortgaged Lease or otherwise)
and all the estate, right, title, claim or
demand whatsoever to Mortgagor, in possession
or expecting, 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, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water
courses, water and riparian rights,
development rights, air rights, mineral
rights and all estates, rights, titles,
interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging,
relating or appertaining to the Real Estate,
and any reversions and remainders 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 right, title and interest of
Mortgagor in and to all of the fixtures,
chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings
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 or used or usable in any way in
connection with any operation or letting of
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 mortgage,
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 (other than the Mortgaged
Lease), 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 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) all right, title and interest of
Mortgagor in and to all trade names, trade
marks, logos, copyrights, good will and books
and records relating to or used in connection
with the operation of the Real Estate or the
Equipment or any part thereof; all right,
title and interest of Mortgagor in and to all
general intangibles related to the operation
of the Improvements now existing or hereafter
arising;
(H) all right, title and interest of
Mortgagor in and to 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 any such insurance policies and 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 otherwise following and during the
continuance of an Event of Default; and all
right, title and interest of Mortgagor in and
to 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, subject to the provisions relating
to condemnation generally set forth below;
(I) 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 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;
(J) all right, title and interest of
Mortgagor in and to any and all monies now or
subsequently on deposit for the payment of
real estate taxes or special assessments
against the Real Estate or for the payment of
premiums on insurance policies covering the
foregoing property or otherwise on deposit
with or held by Mortgagee as provided in this
Mortgage; all capital, operating, reserve or
similar accounts held by or on behalf of
Mortgagor and related to the operation of the
Mortgaged Property, whether now existing or
hereafter arising and all monies held in any
of the foregoing accounts and any
certificates or instruments related to or
evidencing such accounts;
(K) all right, title and interest of
Mortgagor in and to all accounts and revenues
arising from the operation of the
Improvements including, without limitation,
(i) any right to payment now existing or
hereafter arising for rental of hotel rooms
or other space or for services rendered,
whether or not yet earned by performance,
arising from the operation of the
Improvements or any other facility on the
Mortgaged Property and (ii) all rights to
payment from any consumer credit-charge card
organization or entity including, without
limitation, payments arising from the use of
the American Express Card, the Visa Card, the
Carte Blanche Card, the Mastercard or any
other credit card, including those now
existing or hereafter created, substitutions
therefor, proceeds thereof (whether cash or
non-cash, movable or immovable, tangible or
intangible) received upon the sale, exchange,
transfer, collection or other disposition or
substitution thereof and any and all of the
foregoing and proceeds therefrom
(collectively, the "Additional Rents"); and
(L) all proceeds, both cash and
noncash, of the foregoing;
excluding, however, notwithstanding any
provision set forth in the foregoing clauses (A)
through (L), the property described on Schedule B
attached hereto and incorporated herein by
reference (collectively, the "Excluded Property")
(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 (E), excluding the
Excluded Property, are collectively referred to as
the "Premises", and those described in the
foregoing clauses (A) through (L), excluding the
Excluded Property, are collectively referred to as
the "Mortgaged Property").
All of the Mortgaged Property
hereinabove described, real, personal and mixed,
whether affixed or annexed to the Real Estate or
not and all rights hereby conveyed and mortgaged
are intended so to be as a unit and are hereby
understood, agreed and declared, to the maximum
extent permitted by law, to form a part and parcel
of the Real Estate and to be appropriated to the
use of the Real Estate, and shall be for the
purposes of this Mortgage deemed to be real estate
and conveyed and mortgaged hereby; provided,
however, as to any of the property aforesaid which
does not so form a part and parcel of the Real
Estate or does not constitute a "fixture" (as
defined in the Uniform Commercial Code of Oklahoma
(the "Code")), this Mortgage is hereby deemed to
also be a Security Agreement under the Code for
purposes of granting a security interest in such
property, which Mortgagor hereby grants to
Mortgagee, as Secured Party (as defined in the
Code), as more particularly provided below in this
Mortgage.
TO HAVE AND TO HOLD the Mortgaged
Property and the rights and privileges hereby
mortgaged, together with the right to retain
possession of the Mortgaged Property upon and
during the continuance of an Event of Default
hereunder, unto Mortgagee, its successors and
assigns for the uses and purposes set forth, until
the Obligations are fully paid and performed. The
maximum aggregate principal amount secured hereby
shall not exceed at any one time $1,300,000.00.
SUBJECT AND SUBORDINATE, HOWEVER, TO THE
RIGHTS OF The Huntington National Bank, as
mortgagee, under a Mortgage, Assignment of Rents
and Leases of even date herewith (herein called
the "Prior Mortgage").
Terms and Conditions
Mortgagor further represents, warrants,
covenants and agrees with Mortgagee as follows:
1. Warranty of Title. Mortgagor
represents and warrants (i) that Mortgagor has
title to the leasehold estate in the Real Estate
pursuant to the Mortgaged Lease, Mortgagor has
good title to the rest of the Mortgaged Property,
and Mortgagor has a right to mortgage the same,
(ii) that the Mortgaged Property is subject only
to matters of record, the Mortgaged Lease, that
certain Lease Agreement dated as of June 9, 1967
by and between the City of Tulsa, as lessor, and
the City of Tulsa - Rogers County Port Authority,
as lessee, a copy of which was recorded on April
5, 1977 in Book 514, Page 387 of the Rogers
County, Oklahoma public records; as amended by an
Amended Lease Agreement dated of September 26,
1969, a copy of which was recorded on April 15,
1971 in Book 440, Page 587 of said public records;
as further amended by an Amended Lease Agreement
dated as of June 22, 1971, a copy of which was
recorded on November 28, 1973 in Book 472, Page
284 of said public records and as further amended
by a Third Amendment to Lease dated as of May 20,
1976, a copy of which was recorded on August 26,
1976 in Book 505, Page 1 of said public records
(the "Prime Lease"), this Mortgage, 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
liens permitted pursuant to subsection 6.10 of the
Indenture (collectively, the "Permitted
Exceptions"), (iii) that Mortgagor shall warrant
and defend the lien thereon granted or intended to
be granted by this Mortgage against all persons
and entities, excepting, however, the Permitted
Exceptions, (iv) that the Mortgaged Lease is in
full force and effect and Mortgagor is the holder
of the lessee's or tenant's interest thereunder,
(v) that the Mortgaged Lease has not been amended,
supplemented or otherwise modified, except as
specifically described herein, (vi) that Mortgagor
has paid all rents and other charges to the extent
due and payable, is not in default under the
Mortgaged Lease, has received no notice of default
from the lessor thereunder which default remains
uncured and knows of no material default by the
lessor thereunder, and (vii) that the granting of
this Mortgage does not violate the terms of the
Mortgage Lease nor is any consent of the lessor
under the Mortgaged Lease required to be obtained
in connection with the granting of this Mortgage
unless such consent has been obtained.
2. Payment and Performance of
Obligations. Mortgagor shall pay the Obligations
at the times and places and in the manner
specified in the Intercompany Note and shall
perform all the Obligations.
3. Requirements. (a) Mortgagor shall
comply with, or cause to be complied with, and
conform to all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees,
rules, regulations and requirements, and
irrespective of the nature of the work to be done,
of each of the United States of America, any State
and any municipality, local government or other
political subdivision thereof and any agency,
department, bureau, board, commission or other
instrumentality of any of them, now existing or
subsequently created (collectively, "Governmental
Authority") which has jurisdiction over the
Mortgaged Property, except where the failure to so
comply with any of the foregoing would not have a
Material Adverse Effect on the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole, and 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 the
failure to so comply with any of the foregoing
would not adversely affect the business,
prospects, earnings, properties, assets or
condition (financial or otherwise) of the Company
and its Subsidiaries taken as a whole. All
present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules,
regulations and requirements of every Governmental
Authority applicable to Mortgagor or to any of the
Mortgaged Property and all covenants,
restrictions, and conditions which now or later
may be applicable to any of the Mortgaged Property
are collectively referred to as the "Legal
Requirements".
(b) Mortgagor (as opposed to the lessor
under the Mortgaged Lease or any other party)
shall not by act or omission impair the integrity
of any of the Real Estate as a single zoning lot
separate and apart from all other premises.
Mortgagor represents, to the best of its actual
knowledge, that each parcel of the Real Estate
constitutes a legally subdivided lot, in
compliance with all subdivision laws and similar
Legal Requirements. Any act or omission by
Mortgagor which would result in a violation of any
of the provisions of this subsection shall be
void.
4. Payment of Taxes and Other
Impositions. (a) Promptly when due, Mortgagor
shall pay and discharge all taxes of every kind
and nature (including, without limitation, all
real and personal property, income, franchise,
withholding, transfer, gains, profits and gross
receipts taxes), all charges for any easement or
agreement maintained for the benefit of any of the
Mortgaged Property, all general and special
assessments, levies, permits, inspection and
license fees, all water and sewer rents and
charges 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 Mortgaged Property, 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 as the "Impositions").
Upon request by Mortgagee, Mortgagor shall deliver
to Mortgagee (i) original or copies of receipted
bills and cancelled checks evidencing payment of
such Imposition if it is a real estate tax or
other public charge and (ii) evidence acceptable
to Mortgagee showing the payment of any other 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 to 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 Mortgage,
and (ii) payable on demand by Mortgagor to
Mortgagee together with interest at the Default
Rate as set forth above.
(c) Mortgagor shall not claim, demand
or be entitled to receive any credit or credits
toward the satisfaction of this Mortgage or on any
interest payable thereon for any taxes assessed
against the Mortgaged Property or any part
thereof, and shall not claim any deduction from
the taxable value of the Mortgaged Property by
reason of this Mortgage if any such claim would
adversely affect the interest of Mortgagee.
(d) Mortgagor shall have the right
before any delinquency occurs to contest or object
in good faith to the amount or validity of any
Imposition by appropriate legal proceedings, but
such right shall not be deemed or construed in any
way as relieving, modifying, or extending
Mortgagor's covenant to pay any such Imposition at
the time and in the manner provided in this
Section unless (i) Mortgagor has given prior
written notice to Mortgagee of Mortgagor's intent
so to contest or object to an Imposition,
(ii) Mortgagor shall demonstrate to Mortgagee's
satisfaction that the legal proceedings shall
operate conclusively to prevent the sale of the
Mortgaged Property, or any part thereof, to
satisfy such Imposition prior to final
determination of such proceedings and (iii)
Mortgagor shall furnish a good and sufficient bond
or surety as requested by and reasonably
satisfactory to Mortgagee in the amount of the
Impositions which are being contested plus any
interest and penalty which may be imposed thereon
and which could become a lien against the Real
Estate or any part of the Mortgaged Property.
(e) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default (as defined
below), shall be entitled to require Mortgagor to
pay monthly in advance to Mortgagee the equivalent
of 1/12th of the estimated annual Impositions.
Mortgagee may commingle such funds with its own
funds and Mortgagor shall not be entitled to
interest thereon.
5. Insurance. (a) Mortgagor shall
maintain or cause to be maintained on all of the
Premises
(i) property insurance against loss or
damage by (A) fire, lightning, windstorm,
tornado, water damage and by such other
further risks and hazards as now are or
subsequently may be covered by an "all risk"
policy or a fire policy covering "special"
causes of loss, which policy shall include
building ordinance law endorsements and shall
be automatically reinstated after each loss,
and (B) flood and earthquake in annual
aggregates of $25,000,000 for flood and
$50,000,000 for earthquake;
(ii) comprehensive general liability
insurance under a policy covering all claims
for personal injury, bodily injury or death,
or property damage occurring on, in or about
the Premises in an amount not less than
$10,000,000 combined single limit with
respect to injury and property damage
relating to any one occurrence plus such
excess limits as Mortgagee shall reasonably
request from time to time;
(iii) when and to the extent reasonably
required by Mortgagee, insurance against loss
or damage by any other risk commonly insured
against by persons occupying or using like
properties in the locality or localities in
which the Real Estate is situated;
(iv) insurance against rent loss, extra
expense or business interruption (and/or soft
costs, in the case of new construction), if
applicable, in amounts reasonably
satisfactory to Mortgagee, but not less than
one year's gross rent or gross income;
(v) during the course of any
construction or repair of Improvements,
comprehensive general liability insurance
(including coverage for elevators and
escalators, if any). The policy shall
provide coverage for independent contractors
and completed operations. The completed
operations coverage shall stay in effect for
two years after construction of any
Improvements has been completed. The policy
shall provide coverage on an occurrence basis
against claims for personal injury, such
insurance to afford immediate minimum
protection to a limit of not less than that
required by Mortgagee with respect to
personal injury, bodily injury or death to
any one or more persons or damage to
property;
(vi) during the course of any
construction or repair of the Improvements,
workers' compensation insurance (including
employer's liability insurance) for all
employees of Mortgagor engaged on or with
respect to the Premises in such amounts as
are reasonably satisfactory to Mortgagee, but
in no event less than the limits established
by law;
(vii) during the course of any
construction, addition, alteration or repair
of the Improvements, builder's risk completed
value form insurance against "all risks of
physical loss," including collapse, water
damage, flood and earthquake and transit
coverage, during construction or repairs of
the Improvements, with deductibles reasonably
approved by Mortgagee, in nonreporting form,
covering the total value of work performed
and equipment, supplies and materials
furnished (with an appropriate limit for soft
costs in the case of construction);
(viii) boiler and machinery property
insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping,
heating, air conditioning and elevator
equipment and escalator equipment, provided
the Improvements contain equipment of such
nature, and insurance against rent, extra
expense, business interruption and soft
costs, if applicable, arising from any such
breakdown, in such amounts as are reasonably
satisfactory to Mortgagee but not less than
the lesser of $1,000,000 or 10% of the value
of the Improvements;
(ix) if any portion of the Premises are
located in an area identified as a special
flood hazard area by the Federal Emergency
Management Agency or other applicable agency,
flood insurance in an amount reasonably
satisfactory to Mortgagee, but in no event
less than the maximum limit of coverage
available under the National Flood Insurance
Act of 1968, as amended; and
(x) such other insurance in such
amounts as Mortgagee may reasonably request
from time to time; provided, however, such
insurance is usually and customarily carried
with respect to similar facilities in the
same general area as the Premises.
Each insurance policy (other than flood insurance
written under the National Flood Insurance Act of
1968, as amended, in which case to the extent
available) shall (i) provide that it shall not be
cancelled without 30 days' prior written notice to
Mortgagee, (ii) with respect to all property
insurance, provide for deductibles in amounts
reasonably satisfactory to Mortgagee (which
deductibles shall not exceed $250,000, with the
exception of the deductible for boiler and
machinery, which deductible shall not exceed a ten
(10) day waiting period deductible), contain a
"Replacement Cost Endorsement" (predicated upon
rebuilding) without any deduction made for
depreciation and with no co-insurance penalty (or
attaching an agreed amount endorsement
satisfactory to Mortgagee), with loss payable to
Mortgagor and Mortgagee with respect to the
Mortgaged Property as their respective interests
may appear, without contribution, under a
"standard" or "New York" mortgagee clause
reasonably acceptable to Mortgagee and be written
by insurance companies having an A.M. Best
Company, Inc. rating of A or higher and a
financial size category of not less than XII, or
otherwise as approved by Mortgagee. Liability
insurance policies shall name Mortgagee as an
additional insured with respect to the Mortgaged
Property and contain a waiver of subrogation
against Mortgagee; all such policies shall
indemnify and hold Mortgagee harmless from all
liability claims occurring on, in or about the
Premises and the adjoining streets, sidewalks and
passageways. Each policy shall expressly provide
that any proceeds which are payable to Mortgagee
pursuant to the terms hereof shall be paid by
check payable to the order of Mortgagee only and
shall require the endorsement of Mortgagee only.
The amounts of each insurance policy and the form
of each such policy shall at all times be
reasonably satisfactory to Mortgagee. If any
required insurance shall expire, be withdrawn,
become void by breach of any condition thereof by
Mortgagor or by any lessee of any part of the
Mortgaged Property or become void or unsafe by
reason of the failure or impairment of the capital
of any insurer, Mortgagor shall immediately obtain
new or additional insurance satisfactory to
Mortgagee. Mortgagor shall not take out any
separate or additional insurance which is
contributing in the event of loss unless it is
properly endorsed and otherwise reasonably
satisfactory to Mortgagee in all respects.
(b) Mortgagor shall deliver to
Mortgagee an original of each insurance policy
required to be maintained, or a certificate of
such insurance reasonably acceptable to Mortgagee.
Mortgagor shall (i) pay as they become due all
premiums for such insurance, and (ii) not later
than 15 days prior to the expiration of each
policy to be furnished pursuant to the provisions
of this Section, deliver a renewed policy or
policies, or duplicate original or originals
thereof, or a certificate of such insurance
reasonably acceptable to Mortgagee, accompanied by
evidence of payment reasonably satisfactory to
Mortgagee. Upon request of Mortgagee, Mortgagor
shall cause its insurance underwriter or broker to
certify to Mortgagee in writing that all the
requirements of this Mortgage governing insurance
have been satisfied.
(c) If Mortgagor is in default of its
obligations to insure or deliver any such policy
or a certificate thereof under this Section 5,
then Mortgagee, at its option and following
written notice to Mortgagor, may effect such
insurance from year to year, and pay the premium
or premiums therefor, and Mortgagor shall pay to
Mortgagee on demand such premium or premiums so
paid by Mortgagee with interest from the time of
payment at the Default Rate and the same shall be
deemed to be secured by this Mortgage and shall be
collectible in the same manner as the Obligations
secured by this Mortgage.
(d) Mortgagor promptly shall comply
with and conform to (i) all provisions of each
such insurance policy, and (ii) all requirements
of the insurers applicable to Mortgagor or to any
of the Mortgaged Property or to the use, manner of
use, occupancy, possession, operation,
maintenance, alteration or repair of any of the
Mortgaged Property. Mortgagor shall not use or
permit the use of the Mortgaged Property in any
manner which would permit any insurer to cancel
any insurance policy or void coverage required to
be maintained by this Mortgage.
(e) If the Mortgaged Property in its
entirety, or any material part thereof, shall be
destroyed or damaged by fire or any other
casualty, whether insured or uninsured, or in the
event any claim in excess of $5,000,000 is made
against Mortgagor for any personal injury, bodily
injury or property damage incurred on or about the
Premises, Mortgagor shall give prompt notice
thereof to Mortgagee. If the Mortgaged Property
is damaged by fire or other casualty, then
provided that no Event of Default shall have
occurred and be continuing, Mortgagor shall have
the right to adjust such loss. If the Mortgaged
Property is damaged by fire or other casualty, and
if an Event of Default shall have occurred and be
continuing, then Mortgagor authorizes and empowers
Mortgagee, at Mortgagee's option and in
Mortgagee's sole discretion, as attorney-in-fact
for Mortgagor, to make proof of loss, to adjust
and compromise any claim under any insurance
policy with respect to the Mortgaged Property, to
appear in and prosecute any action arising from
any policy, and to deduct from any insurance
proceeds Mortgagee's expenses incurred in the
collection process. The insurance proceeds or any
part thereof with respect to the Mortgaged
Property received by Mortgagee and/or Mortgagor
shall constitute Trust Moneys which shall be paid
and/or applied in accordance with subsection 13.2
of the Indenture.
(f) In the event of foreclosure of this
Mortgage or other transfer of title to the
Mortgaged Property in extinguishment of the
Obligations, all right, title and interest of
Mortgagor in and to any insurance policies then in
force with respect to the Mortgaged Property shall
pass to the purchaser or grantee and Mortgagor
hereby appoints Mortgagee its attorney-in-fact, in
Mortgagor's name, to assign and transfer all such
policies and proceeds to such purchaser or
grantee.
(g) Upon written notice to Mortgagor,
Mortgagee, after an Event of Default, shall be
entitled to require Mortgagor to pay monthly in
advance to Mortgagee the equivalent of 1/12th of
the estimated annual premiums due on such
insurance. Mortgagee may commingle such funds
with its own funds and Mortgagor shall not be
entitled to interest thereon.
(h) Mortgagor may maintain insurance
required under this Mortgage by means of one or
more blanket insurance policies maintained by
Mortgagor; provided, however, that (A) any such
policy shall specify, or Mortgagor shall furnish
to Mortgagee a written statement from the insurer
so specifying, the maximum amount of the total
insurance afforded by such blanket policy which
shall be applicable on an occurrence basis and (B)
the protection afforded under any such blanket
policy shall be no less than that which would have
been afforded under a separate policy or policies
relating only to the Mortgaged Property.
6. Restrictions on Liens, Encumbrances
and Sales. Mortgagor acknowledges that any
secondary or junior financing placed on the
Mortgaged Property (a) may divert funds that would
otherwise be available for payment of the
Obligations, (b) could, if foreclosed, force
Mortgagee to incur expenses to protect its
security, and (c) would impair Mortgagee's right
to accept a deed in lieu of foreclosure or
otherwise to take actions to further its economic
interest prior to foreclosure, because a
foreclosure by Mortgagee would be required to
clear title to the Mortgaged Property of any such
secondary or junior lien or encumbrance. In
accordance with the foregoing and for the purpose
of (i) protecting Mortgagee's security, both of
repayment and of value in the Mortgaged Property,
(ii) giving Mortgagee the full benefit of its
bargain and contract with Mortgagor, and (iii)
keeping the Mortgaged Property free of subordinate
financing liens, Mortgagor agrees that if the
following provisions of this paragraph should be
deemed a restraint on alienation, that such
provisions are reasonable restraints.
(1) Except for the lien of this
Mortgage, the Permitted Exceptions and liens
permitted pursuant to subsection 6.10 of the
Indenture, 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.
(2) Except as may be permitted pursuant
to the Indenture, including, without limitation,
subsection 6.15 thereof, Mortgagor shall not make
any Asset Sale.
7. Relationship of Mortgagee and
Mortgagor. The Huntington National Bank shall in
no event be construed for any purpose to be a
partner, joint venturer, agent or associate of
Mortgagor or of any beneficiary, tenant,
subtenant, operator, concessionaire or licensee of
Mortgagor in the conduct of their respective
businesses, and without limiting the foregoing,
The Huntington National Bank shall not be deemed
to be such partner, joint venturer, agent or
associate on account of The Huntington National
Bank becoming a Mortgagee in possession or
exercising any rights pursuant to this Mortgage,
any of the other Security Documents, or otherwise.
8. Maintenance; No Alteration;
Inspection; Utilities. (a) Mortgagor shall
maintain or cause to be maintained all the
Improvements in good working order and condition,
ordinary wear and tear excepted, and shall cause
to be made all necessary (in the good faith
opinion of management of Mortgagor) repairs,
renewals, replacements, additions, betterments and
improvements thereto. Mortgagor shall not commit
any waste of the Improvements and shall not
demolish or materially alter the Improvements
without the prior written consent of Mortgagee.
(b) Mortgagee and any persons
authorized by Mortgagee, at all reasonable times
after reasonable notice, shall have the right to
enter and inspect the Premises and the right to
inspect all work done, labor performed and
materials furnished in and about the Improvements
and the right to inspect and make copies of all
books, contracts and records of Mortgagor relating
to the Mortgaged Property.
(c) Mortgagor shall pay or cause to be
paid when due all utility charges which are
incurred for gas, electricity, water or sewer
services furnished to the Premises and all other
assessments or charges of a similar nature,
whether public or private, affecting the Premises
or any portion thereof, whether or not such
assessments or charges are liens thereon.
9. Condemnation/Eminent Domain.
Promptly upon obtaining knowledge of the
institution of any proceedings for the
condemnation of the Mortgaged Property in its
entirety, or any portion thereof, Mortgagor will
notify Mortgagee of the pendency of such
proceedings. Mortgagor authorizes Mortgagee, at
Mortgagee's option and in Mortgagee's sole
discretion, as attorney-in-fact for Mortgagor, to
commence, appear in and prosecute, in Mortgagee's
or Mortgagor's name, any action or proceeding
relating to any condemnation of the Mortgaged
Property in its entirety, or any portion thereof.
If the Mortgaged Property in its entirety or any
part thereof shall be the subject of condemnation
proceedings, Mortgagee, as attorney-in-fact for
Mortgagor, shall have the right to settle or
compromise any claim in connection with such
condemnation. If Mortgagee elects not to
participate in such condemnation proceeding, then
Mortgagor shall, at its expense, diligently
prosecute any such proceeding and shall consult
with Mortgagee, its attorneys and experts and
cooperate with them in any defense of any such
proceedings. All awards and proceeds of
condemnation received by Mortgagee and/or
Mortgagor shall constitute Trust Moneys which
shall be paid and/or applied in accordance with
Subsection 13.2 of the Indenture.
10. Leases. (a) Mortgagor shall not
(i) 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 with
Mortgagee's prior written consent or (ii) without
the prior written consent of Mortgagee, execute
any Lease of any of the Mortgaged Property.
(b) As to any Lease relating to all or
any portion of the Mortgaged Property, Mortgagor
shall:
(i) promptly perform all of the
material provisions of the Lease on the part
of the lessor thereunder to be performed;
(ii) enforce, in accordance with sound
business practice, all of the material
provisions of the Lease on the part of the
lessee thereunder to be performed;
(iii) appear in and defend, in accordance
with sound business practice, any action or
proceeding arising under or in any manner
connected with the Lease or the obligations
of Mortgagor as lessor or of the lessee
thereunder;
(iv) exercise, within 5 days after
receipt of a request by Mortgagee, any right
to request from the lessee a certificate with
respect to the status thereof;
(v) promptly deliver to Mortgagee
copies of any notices of default which
Mortgagor may at any time forward to or
receive from the lessee;
(vi) promptly deliver to Mortgagee a
fully executed counterpart of the Lease; and
(vii) promptly deliver to Mortgagee, upon
Mortgagee's request, an assignment of the
Mortgagor's interest under such Lease.
(c) Mortgagor shall deliver to
Mortgagee, within 10 days after receipt of a
request by Mortgagee, a written statement,
certified by Mortgagor as being true, correct and
complete, containing the names of all lessees and
other occupants of the Mortgaged Property, the
terms of all Leases and the spaces occupied and
rentals payable thereunder, and a list of all
Leases which are then in default, including the
nature and magnitude of the default; such
statement shall be accompanied by credit
information with respect to the lessees and such
other information as Mortgagee may request.
(d) All Leases entered into by
Mortgagor after the date hereof, if any, and all
rights of any lessees thereunder shall be subject
and subordinate in all respects to the lien and
provisions of this Mortgage unless Mortgagee shall
otherwise elect in writing.
(e) As to any Lease now in existence or
subsequently consented to by Mortgagee, Mortgagor
shall not, without the prior written consent of
Mortgagee, accept a surrender or terminate,
cancel, rescind, supplement, alter, revise, modify
or amend such Lease or permit any such action to
be taken nor shall Mortgagor accept the payment of
rent more than thirty (30) days in advance of its
due date.
(f) In the event of the enforcement by
Mortgagee of any remedy under this Mortgage, the
lessee under each Lease entered into after the
date of this Mortgage shall, if requested by
Mortgagee or any other person succeeding to the
interest of Mortgagee as a result of such
enforcement, attorn to Mortgagee or to such person
and shall recognize Mortgagee or such successor in
interest as lessor under the Lease without change
in the provisions thereof; provided however, that
Mortgagee or such successor in interest shall not
be: (i) bound by any payment of an installment of
rent or additional rent which may have been made
more than 30 days before the due date of such
installment; (ii) bound by any amendment or
modification to the Lease made without the consent
of Mortgagee or such successor in interest; (iii)
liable for any previous act or omission of
Mortgagor (or its predecessors in interest); (iv)
responsible for any monies owing by Mortgagor to
the credit of such lessee or subject to any
credits, offsets, claims, counterclaims, demands
or defenses which the lessee may have against
Mortgagor (or its predecessors in interest); (v)
bound by any covenant to undertake or complete any
construction of the Premises or any portion
thereof; or (vi) obligated to make any payment to
such lessee other than any security deposit
actually delivered to Mortgagee or such successor
in interest. Each lessee or other occupant under
each Lease entered into after the date of this
Mortgage, upon request by Mortgagee or such
successor in interest, shall execute and deliver
an instrument or instruments confirming such
attornment. In addition, Mortgagor agrees that
each Lease entered into after the date of this
Mortgage shall include language to the effect of
subsections (d)-(f) of this Section.
11. Further Assurances/Estoppel
Certificates. To further assure Mortgagee's
rights under this Mortgage, Mortgagor agrees 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 and a
separate assignment of each Lease in recordable
form) as may be required by Mortgagee to confirm
the lien of this Mortgage and all other rights or
benefits conferred on Mortgagee. Mortgagor,
within 5 business days after request, shall
deliver, in form and substance satisfactory to
Mortgagee, a written statement, duly acknowledged,
setting forth the amount of the Obligations, and
whether any offsets, claims, counterclaims or
defenses exist against the Obligations and
certifying as to such other matters as Mortgagee
shall reasonably request.
12. Mortgagee's Right to Perform. If
Mortgagor fails to perform any of the covenants or
agreements of Mortgagor hereunder, Mortgagee,
without waiving or releasing Mortgagor from any
obligation or default under this Mortgage, may, at
any time (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. Hazardous Material. (a) Mortgagor
shall comply with any and all applicable Legal
Requirements governing the discharge and removal
of Hazardous Material, shall pay promptly when due
the costs of removal of any Hazardous Material,
and shall keep the Premises free of any lien
imposed pursuant to such Legal Requirements. In
the event Mortgagor fails to do so, after notice
to Mortgagor and the expiration of the earlier of
(i) applicable cure periods hereunder and under
the Indenture, or (ii) the cure period permitted
under the applicable Legal Requirement, Mortgagee
may cause the Premises to be freed from the
Hazardous Material to the extent required by
applicable Legal Requirements, and the cost of the
removal with interest at the Default Rate shall
immediately be due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor further
agrees that any release or disposal of Hazardous
Materials at the Premises by Mortgagor shall
comply with all applicable Legal Requirements. In
addition, Mortgagor agrees not to allow the
manufacture, storage, transmission, presence or
disposal of any Hazardous Material over or upon
the Premises in violation of applicable Legal
Requirements. Mortgagor shall give Mortgagee and
its agents and employees access to the Premises to
remove Hazardous Material if required of Mortgagor
hereunder and if required by applicable Legal
Requirements and if Mortgagor has failed to so
remove after notice. Mortgagor agrees to defend,
indemnify and hold Mortgagee free and harmless
from and against all loss, costs, damage and
expense (including attorneys' fees and costs and
consequential damages) Mortgagee may sustain by
reason of (i) the imposition or recording of a
lien by any Governmental Authority with respect to
the Mortgaged Property pursuant to any Legal
Requirement relating to hazardous or toxic wastes
or substances or the removal thereof ("Hazardous
Material Laws"); (ii) claims of any private
parties regarding violations of Hazardous Material
Laws with respect to the Mortgaged Property; (iii)
costs and expenses (including, without limitation,
attorneys' fees and fees incidental to the
securing of repayment of such costs and expenses)
incurred by Mortgagor or Mortgagee in connection
with the removal of any such lien with respect to
the Mortgaged Property or in connection with
Mortgagor's or Mortgagee's compliance with any
Hazardous Material Laws with respect to the
Mortgaged Property; and (iv) the assertion against
Mortgagee by any party of any claim in connection
with Hazardous Material with respect to the
Mortgaged Property.
(b) For the purposes of this Mortgage,
"Hazardous Material" means and includes any
hazardous, nuclear, toxic or dangerous waste,
substance or material defined as such in (or for
purposes of) the Comprehensive Environmental
Response, Compensation, and Liability Act, any so-
called "Superfund" or "Superlien" law, or any
other Legal Requirement regulating, relating to,
or imposing liability or standards of conduct
concerning, any hazardous, nuclear, toxic or
dangerous waste, substance or material, as now or
at any time in effect.
(c) The foregoing indemnification shall
be a recourse obligation of Mortgagor and shall
survive repayment of the Obligations,
notwithstanding any limitations on recourse which
may be contained herein or in any Security
Documents or the delivery of any satisfaction,
release or release deed, discharge or deed of
reconveyance, or the assignment of this Mortgage
by Mortgagee; provided, however, that the
foregoing indemnification shall apply only to
matters arising prior to any taking of possession
of the Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
14. Asbestos. Mortgagor shall not
install or permit to be installed in the Premises
friable asbestos or any substance containing
asbestos and deemed hazardous by any Legal
Requirement respecting such material, and, with
respect to any such material currently present in
the Premises, shall promptly comply with such
Legal Requirements, at Mortgagor's expense. If
Mortgagor shall fail to so comply, Mortgagee may
do whatever is necessary to comply with the
applicable Legal Requirement, and the costs
thereof, with interest at the Default Rate, shall
be immediately due from Mortgagor to Mortgagee and
the same shall be added to the Obligations and be
secured by this Mortgage. Mortgagor shall give
Mortgagee and its agents and employees, upon prior
notice and at reasonable times, access to the
Premises to remove such asbestos or substances if
required by Mortgagor hereunder and if required by
applicable Legal Requirements and if Mortgagor has
failed to so remove after notice. Mortgagor shall
defend, indemnify, and save Mortgagee harmless
from all loss, costs, damages and expense
(including attorneys' fees and costs and
consequential damages) asserted or proven against
Mortgagee by any party, as a result of the
presence of such substances or any removal or
compliance with such Legal Requirements. The
foregoing indemnification shall be a recourse
obligation of Mortgagor and shall survive
repayment of the Obligations, notwithstanding any
limitation on recourse which may be contained
herein or in any of the Security Documents or the
delivery of any satisfaction, release or release
deed, discharge or deed of reconveyance, or the
assignment of this Mortgage by Mortgagee;
provided, however, that the foregoing
indemnification shall apply only to matters
arising prior to any taking of possession of the
Premises by Mortgagee or any other person
succeeding to the interest of Mortgagee pursuant
to the terms hereof; further provided, that the
foregoing indemnification shall not apply to loss,
costs and the like arising from the gross
negligence or wilful misconduct of the party
seeking indemnification.
15. Event of Default. The occurrence
of an "Event of Default" (as defined in the
Indenture) shall constitute an Event of Default
hereunder.
16. Remedies. (a) Upon the occurrence
of any Event of Default, in addition to any other
rights and remedies Mortgagee may have pursuant to
the Security Documents, or as provided by law, and
without limitation, (a) if such event is an Event
of Default described in subsections 8.1(ix) or
8.1(x) of the Indenture, automatically the
Obligations immediately shall become due and
payable, and (b) if such event is any other Event
of Default, by notice to Mortgagor, Mortgagee may
declare the Obligations to be immediately due and
payable. Except as expressly provided above in
this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly
waived. In addition, upon 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 Intercompany Note,
(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
Security 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.
(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.
(iii) It is further agreed that if
default be made in the payment of any part of
the Obligations, as an alternative to the
right of foreclosure for the full secured
Obligations after acceleration thereof,
Mortgagee shall have the right to institute
partial foreclosure proceedings with respect
to the portion of said Obligations so in
default, as if under a full foreclosure, and
without declaring the entire secured
Obligations due (such proceeding being
hereinafter referred to as a "partial
foreclosure"), and provided that if a partial
foreclosure sale is consummated as provided
herein, such sale may be made subject to the
continuing lien of this Mortgage for the
unmatured portion of the secured Obligations,
but as to such unmatured part, this Mortgage,
and the lien hereof, shall remain in full
force and effect just as though no partial
foreclosure sale had been made under the
provisions of this Section. Notwithstanding
the filing of any partial foreclosure or
entry of a decree of sale therein, Mortgagee
may elect at any time prior to a partial
foreclosure sale pursuant to such decree, to
discontinue such partial foreclosure and to
accelerate the Obligations secured hereby by
reason of any uncured Event of Default upon
which such partial foreclosure was predicated
or by reason of any other Event of Default,
and proceed with full foreclosure
proceedings. It is further agreed that one
or more foreclosure sales may be made
pursuant to partial foreclosures without
exhausting the right of full or partial
foreclosure sale for any unmatured part of
the secured Obligations, it being the purpose
to provide for a partial foreclosure sale of
the Obligations secured hereby without
exhausting the power to foreclose for any
other part of the Obligations whether matured
at the time or subsequently maturing, and
without exhausting any right of acceleration
and full foreclosure.
(iv) Without affecting any right, power
or remedy herein given to Mortgagee and in
addition to every other right, power and
remedy herein specifically given or now or
hereafter existing in equity, law or statute,
Mortgagor hereby grants to Mortgagee the non-
judicial Power of Sale. Such Power of Sale
shall be exercised by giving Mortgagor Notice
of Intent to Foreclose by Power of Sale and
setting forth, among other things, the nature
of the breach(es) or default(s) and the
action required to effect a cure thereof and
the time period within which such cure may be
effected all in compliance with Title 46
Oklahoma Statutes sectionsection 40 et. seq. (Oklahoma
Power of Sale Mortgage Foreclosure Act)
effective November 1, 1986, as the same may
be amended from time to time or other
applicable statutory or judicial authority
(the "Act"). If no cure is effected within
the statutory time limits, Mortgagee may
accelerate the Obligations secured hereby
without further notice (the aforementioned
statutory cure period shall run concurrently
with any contractual provision for notice
before acceleration of debt) and may then
proceed in the manner and subject to the
conditions of the Act to send to Mortgagor
and other necessary parties a Notice of Sale
and to sell and convey the Mortgaged Property
in accordance with such Act. The sale shall
be made at one or more sales, as an entirety
or in parcels upon such notice, at such times
and places, subject to all conditions and
with the proceeds thereof to be applied all
as provided in the Act. No action of
Mortgagee based upon the provisions contained
herein or in the Act, including, without
limitation, the giving of the Notice of
Intent to Foreclose by Power of Sale or the
Notice of Sale, shall constitute an election
of remedies which would preclude Mortgagee
from pursuing judicial foreclosure before or
at any time after commencement of the Power
of Sale foreclosure procedure. Whether or
not proceedings have commenced by the
exercise of the Power of Sale above given,
Mortgagee or the holder or holders of any of
the Obligations, in lieu of proceeding with
the Power of Sale (or in the event of
homestead property where Mortgagor has
elected judicial foreclosure, as provided in
the Act) may at its or their option, as
applicable, following acceleration of the
Obligations as set forth above, proceed by
suit or suits in equity or at law to
foreclose this Mortgage. If Mortgagee
institutes judicial proceedings to foreclose
this Mortgage, Mortgagor hereby waives or
does not waive, at the sole option of
Mortgagee, appraisement of the Mortgaged
Property, said option to be exercised by
Mortgagee at or prior to the time judgment is
rendered in such judicial foreclosure.
Mortgagor fully understands the consequences
of conferring on Mortgagee the above-
described Power of Sale, and if Mortgagee
elects to enforce this Mortgage by exercising
said Power of Sale, Mortgagor hereby
expressly waives to the fullest extent
permitted by law any right to a judicial
hearing prior to the sale of the Mortgaged
Property. As often as any proceedings may be
taken to foreclose this Mortgage, whether
pursuant to the Power of Sale herein
conferred or by judicial proceedings, or to
foreclose the security interest herein
granted to Mortgagee, Mortgagor agrees to pay
to Mortgagee, in addition to all other sums
due, all costs and expenses, including
reasonable attorney fees, incurred by
Mortgagee.
(b) The holder of this Mortgage, in any
action to foreclose it, shall be entitled to the
appointment of a receiver. In case of a
foreclosure sale, Mortgagor's estate in 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) In the event of any breach of any
of the covenants, agreements, terms or conditions
contained in this Mortgage, and notwithstanding to
the contrary any exculpatory or non-recourse
language which may be contained herein, 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) The proceeds of any foreclosure or
sale of the Mortgaged Property, or any portion
thereof, shall be distributed and applied in
accordance with all applicable provisions of the
Indenture.
(e) In case of foreclosure of this
Mortgage or the exercise of Power of Sale, and as
often as any proceedings shall be instituted
relating thereto, Mortgagor will pay to Mortgagee
a reasonable attorney's fee, together with the
cost of continuing the abstract of title to the
Real Estate to the date of filing such
foreclosure, court costs and all other expenses
incurred in connection with such proceedings, all
of which will be due and payable when suit is
filed and will be and become a part of the
Obligations to be paid or collected in such
foreclosure.
17. 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 therefor,
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
Intercompany Note 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.
18. 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
Property or any other collateral as security for
the Obligations or the interest of Mortgagor
therein, shall have the right to apply to any
court having jurisdiction to appoint a receiver or
receivers or other manager of the Mortgaged
Property, and Mortgagor hereby irrevocably
consents to such appointment and waives notice of
any application therefor (except as may be
required by law). Any such receiver or receivers
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.
19. 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, from time to time and without
notice, agree to (i) release any person liable for
the Obligations, (ii) extend the maturity or alter
any of the terms of the Obligations or any
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. 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.
(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, Mortgagor authorizes
Mortgagee at its option to foreclose the lien of
this Mortgage 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 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.
20. Assignment of Rents. Mortgagor
hereby assigns to Mortgagee the Rents and
Additional Rents as further security for the
payment of the Obligations 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 and Additional Rents on account of
the Obligations. The foregoing assignment and
grant is present and absolute and shall continue
in effect until the Obligations are paid in full,
but Mortgagee hereby waives the right to enter the
Mortgaged Property for the purpose of collecting
the Rents and Additional Rents and Mortgagor shall
be entitled to collect, receive, use and retain
the Rents and Additional Rents; such right of
Mortgagor to collect, receive, use and retain the
Rents and Additional Rents may be revoked by
Mortgagee upon 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, 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 the
Mortgaged Property or such part thereof 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).
21. Trust Funds. All lease security
deposits of the Real Estate held by Mortgagor
shall be treated as trust funds not to be
commingled with any other funds of Mortgagor.
Within 10 days after request by Mortgagee,
Mortgagor shall furnish Mortgagee satisfactory
evidence of compliance with this subsection,
together with a statement of all lease security
deposits by lessees and copies of all Leases not
previously delivered to Mortgagee, which statement
shall be certified by Mortgagor.
22. Additional Rights. The holder of
any subordinate lien on the Mortgaged Property
shall have no right to terminate any Lease whether
or not such Lease is subordinate to this Mortgage
nor shall any holder of any subordinate lien join
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 are subject to and
notified of this provision, and any action taken
by any such lienholder contrary to this provision
shall be null and void. Upon 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.
23. Changes in Method of Taxation. In
the event of the passage after the date hereof of
any law of any Governmental Authority deducting
from the value of the Premises for the purposes of
taxation any lien thereon, or changing in any way
the laws for the taxation of mortgages or debts
secured thereby for federal, state or local
purposes, or the manner of collection of any such
taxes, and imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby,
Mortgagor shall, if permitted by applicable law,
assume as an Obligation hereunder the payment of
any tax so imposed until full payment of the
Obligations.
24. Notices. All notices, requests,
demands and other communications hereunder shall
be given in the manner provided in the Indenture.
25. No Oral Modification. This
Mortgage may not be changed or terminated orally.
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.
26. 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 anything to the
contrary contained in this Mortgage or in any
provisions of the Obligations or Security
Documents, the obligations of Mortgagor and of any
other obligor under the Obligations or Security
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.
27. Waiver of Right of Redemption and
Other Rights. (a) Mortgagor hereby voluntarily
and knowingly releases and waives any and all
rights to retain possession of the Mortgaged
Property upon and during the continuance 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), 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 of 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 the 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 or declare
due the whole of the secured indebtedness and
marshalling in the event of foreclosure of the
liens hereby created.
28. Remedies Not Exclusive. Mortgagee
shall be entitled to enforce payment of the
Obligations and performance of the Obligations and
to exercise all rights and powers under this
Mortgage or under any of the other Security
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 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 right 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 Security Documents to Mortgagee or to which it
may otherwise be entitled, may be exercised,
concurrently or independently, from time to time
and as often as may be deemed expedient by
Mortgagee. 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.
29. 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 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
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
Obligations, 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 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
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
proceedings or exercise of any remedies in such
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
proceedings or any 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.
30. Expenses; Indemnification. (a)
Mortgagor shall pay or reimburse Mortgagee for all
expenses incurred by Mortgagee before and after
the date of this Mortgage with respect to any and
all transactions contemplated by this Mortgage
including without limitation, the preparation of
any document reasonably required hereunder or any
amendment, modification, restatement or supplement
to this Mortgage, the delivery of any consent,
non-disturbance agreement or similar document in
connection with this Mortgage or the enforcement
of any of Mortgagee's rights. Such expenses shall
include, without limitation, all title and
conveyancing charges, recording and filing fees
and taxes, mortgage taxes, intangible personal
property taxes, escrow fees, revenue and tax stamp
expenses, insurance premiums (including title
insurance premiums), title search and title
rundown charges, brokerage commissions, finders'
fees, placement fees, court costs, surveyors',
photographers', appraisers', architects',
engineers', consulting professional's,
accountants' and attorneys' fees and
disbursements. Mortgagor acknowledges that from
time to time Mortgagor may receive statements for
such expenses, including without limitation
attorneys' fees and disbursements. Mortgagor
shall pay such statements promptly upon receipt.
(b) If (i) any action or proceeding
shall be commenced by Mortgagee (including but not
limited to any action to foreclose this Mortgage
or to collect the Obligations), or any action or
proceeding is commenced to which Mortgagee is made
a party, or in which it becomes necessary to
defend or uphold the lien of this Mortgage
(including, without limitation, any proceeding or
other action relating to the bankruptcy,
insolvency or reorganization of Mortgagor and/or
any Subsidiary), or in which Mortgagee is served
with any legal process, discovery notice or
subpoena and (ii) in each of the foregoing
instances such action or proceeding in any manner
relates to or arises out of this Mortgage or
Mortgagee's acceptance of the Intercompany Note,
then Mortgagor will promptly reimburse or pay to
Mortgagee all of the expenses which have been
incurred by Mortgagee with respect to the
foregoing (including reasonable counsel fees and
disbursements), together with interest thereon at
the Default Rate, and any such sum and the
interest thereon shall be a lien on the Mortgaged
Property, prior to any right, or title to,
interest in or claim upon the Mortgaged Property
attaching or accruing subsequent to the lien of
this Mortgage, and shall be deemed to be secured
by this Mortgage. In any action or proceeding to
foreclose this Mortgage, or to recover or collect
the Obligations, the provisions of law respecting
the recovering of costs, disbursements and
allowances shall prevail unaffected by this
covenant.
(c) Mortgagor shall indemnify and hold
harmless Mortgagee and Mortgagee's affiliates, and
the respective directors, officers, agents and
employees of Mortgagee and its affiliates from and
against all claims, damages, losses and
liabilities (including, without limitation,
reasonable attorneys' fees and expenses) arising
out of or based upon any matter related to this
Mortgage, the Mortgaged Property or the occupancy,
ownership, maintenance or management of the
Mortgaged Property by Mortgagor, including,
without limitation, any claims based on the
alleged acts or omissions of any employee or agent
of Mortgagor; provided, however, that the
foregoing indemnification shall not apply to
claims, damages and the like arising from the
gross negligence or wilful misconduct of the party
seeking indemnification. This indemnification
shall be in addition to any other liability which
Mortgagor may otherwise have to Mortgagee.
31. 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 its sole discretion it
deems such waiver 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, 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.
32. 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 anywise
impairing or affecting the lien of this Mortgage
or the priority of such lien over any subordinate
lien.
33. Governing Law, etc. This Mortgage
shall be governed by and construed in accordance
with the laws of the State where the Real Estate
is located, except that Mortgagor expressly
acknowledges that by its terms the Indenture shall
be governed and construed in accordance with the
laws of the State of New York, without regard to
principles of conflict of law, 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,
without regard to principles of conflict of law.
34. Waiver of Trial by Jury. Mortgagor
and Mortgagee each hereby irrevocably and
unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this
Mortgage and for any counterclaim brought therein.
Mortgagor hereby waives all rights to interpose
any counterclaim in any suit brought by Mortgagee
hereunder (other than compulsory counterclaims and
other counterclaims that must be interposed in
connection with such suit under applicable law)
and all rights to have any such suit consolidated
with any separate suit, action or proceeding (it
being understood and agreed, however, that
Mortgagor shall have the right to raise any such
claim in a separate suit, action or proceeding).
35. 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 collateral agent to the Mortgagee," the
word "person" shall include any individual,
corporation, partnership, 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 of reference only and in no way limit
or amplify the provisions hereof.
36. 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 the
Code. 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 five 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; and (iii) the addresses of
Mortgagor and Mortgagee are as set forth on the
first page of this Mortgage.
(c) Mortgagor, upon request by Mortgagee
from time to time, shall execute, acknowledge and
deliver to Mortgagee one or more separate security
agreements, in form satisfactory to Mortgagee,
covering all or any part of the Mortgaged Property
and will further execute, acknowledge and deliver,
or cause to be executed, acknowledged and
delivered, any financing statement, affidavit,
continuation statement or certificate or other
document as Mortgagee may request in order to
perfect, preserve, maintain, continue or extend
the security interest under and the priority of
this Mortgage and such security instrument.
Mortgagor further agrees to pay to Mortgagee on
demand all costs and expenses incurred by
Mortgagee in connection with the preparation,
execution, recording, filing and re-filing of any
such document and all reasonable costs and
expenses of any record searches for financing
statements Mortgagee shall reasonably require.
Mortgagor shall from time to time, on request of
Mortgagee, deliver to Mortgagee an inventory in
reasonable detail of any of the Mortgaged Property
which constitutes personal property. If Mortgagor
shall fail to furnish any financing or
continuation statement within 10 days after
request by Mortgagee, then pursuant to the
provisions of the Code, Mortgagor hereby
authorizes Mortgagee, without the signature of
Mortgagor, to execute and file any such financing
and continuation statements. The filing of any
financing or continuation statements in the
records relating to personal property or chattels
shall not be construed as in any way impairing the
right of Mortgagee to proceed against any personal
property encumbered by this Mortgage as real
property, as set forth above.
37. Release Upon Payment and Discharge
of Mortgagor's Obligations. Mortgagee shall
release this Mortgage and the lien hereof by
proper instrument upon payment and discharge of
all Obligations secured hereby (including payment
of reasonable expenses incurred by Mortgagee in
connection with the execution of such release) and
upon full and complete performance of all of the
Obligations. Mortgagee shall otherwise release
this Mortgage and the lien hereof in accordance
with Article XII of the Indenture.
38. Consistency with Other Documents.
If any provision hereof conflicts with any
provisions of the Indenture, then the terms of the
Indenture shall control to the extent of such
conflict. If any provision hereof conflicts with
any provision of the Prior Mortgage, or requires
any performance, action or inaction required of
the Mortgagor under the Prior Mortgage, then to
the extent of the conflict or inconsistency, the
Mortgagor shall be excused hereunder by compliance
with the Prior Mortgage.
39. Mortgaged Lease Provisions.
(a) Mortgagor shall pay or cause to be paid all
rent and other charges required under the
Mortgaged Lease as and when the same are due and
shall promptly and faithfully perform or cause to
be performed, all other material obligations,
covenants, agreements, indemnities,
representations, warranties or liabilities
required of Mortgagor under the Mortgaged Lease.
Mortgagor shall not, without the consent of
Mortgagee, (i) either orally or in writing,
modify, amend or permit any modification or
amendment of any of the terms of the Mortgaged
Lease in any material respect, (ii) in any manner,
cancel, terminate or surrender, or permit the
cancellation, termination or surrender of the
Mortgaged Lease, in whole or in part, except,
subject to Section 39(i) hereof, any expiration of
the Mortgaged Lease pursuant to its terms, or
(iii) permit the subordination thereof to any
mortgage; and any attempt to do the foregoing
shall be null and void and of no effect.
(b) Mortgagor shall do, or cause to be
done, all things reasonably necessary to preserve
and keep unimpaired all material rights of
Mortgagor as lessee under the Mortgaged Lease, and
to prevent any material default by Mortgagor under
the Mortgaged Lease, or any termination,
surrender, cancellation, forfeiture or impairment
thereof, except, subject to Section 39(i) hereof,
any expiration of the Mortgaged Lease pursuant to
its terms. Mortgagor hereby authorizes and
irrevocably appoints and constitutes Mortgagee as
its true and lawful attorney-in-fact, which
appointment is coupled with an interest, in its
name, place and stead, upon the occurrence and
continuance of an Event of Default hereunder, to
take any and all actions deemed necessary or
desirable by Mortgagee to perform and comply with
all the obligations of Mortgagor under the
Mortgaged Lease, and to do and take, but without
any obligation so to do, any action which
Mortgagee deems necessary or desirable to cure any
default by Mortgagor under the Mortgaged Lease, to
enter into and upon the Premises or any part
thereof to such extent and as often as Mortgagee,
in its sole reasonable discretion, deems necessary
or desirable in order to cure any default of
Mortgagor pursuant thereto, to the end that the
rights of Mortgagor in and to the leasehold estate
created by the Mortgaged Lease shall be kept
unimpaired and free from default, and all sums so
expended by Mortgagee, with interest thereon at
the Default Rate from the date of each such
expenditure, shall be paid by Mortgagor to
Mortgagee promptly upon demand by Mortgagee.
Mortgagor shall, within five (5) business days
after written request by Mortgagee, execute and
deliver to Mortgagee, or to any person designated
by Mortgagee, such further instruments,
agreements, powers, assignments, conveyances or
the like as may be reasonably necessary to
complete or perfect the interest, rights or powers
of Mortgagee pursuant to this paragraph (b).
(c) Mortgagor shall enforce the
material obligations of the lessor under the
Mortgaged Lease, and shall promptly notify
Mortgagee in writing of any material default by
either the lessor (if known by Mortgagor) or by
Mortgagor in the performance or observance of any
of the terms, covenants and conditions contained
in the Mortgaged Lease. Mortgagor shall deliver
to Mortgagee, within ten (10) business days after
receipt, a copy of any material notice, demand,
complaint or request for compliance made by the
lessor under the Mortgaged Lease. If the lessor
shall deliver to Mortgagee a copy of any notice of
default given to Mortgagor, such notice shall
constitute full authority and protection to
Mortgagee for any actions taken or omitted to be
taken in good faith pursuant to the provisions of
this Mortgage in reliance thereon.
(d) If any action or proceeding shall
be instituted to evict Mortgagor or to recover
possession of the Mortgaged Property from
Mortgagor or any part thereof or interest therein
or any action or proceeding otherwise affecting
the Mortgaged Lease or this Mortgage shall be
instituted, then Mortgagor shall, promptly after
receipt, deliver to Mortgagee a true and complete
copy of each petition, summons, complaint, notice
of motion, order to show cause and all other
provisions, pleadings, and papers, however
designated, served in any such action or
proceeding.
(e) Mortgagor covenants and agrees that
the fee title to the Real Estate and the leasehold
estate created under the Mortgaged Lease shall not
merge but shall always remain separate and
distinct, notwithstanding the union of said
estates either in Mortgagor or a third party by
purchase or otherwise; and in case Mortgagor
acquires the fee title or any other estate, title
or interest in and to the Real Estate, the lien of
this Mortgage shall, without further conveyance,
simultaneously with such acquisition, be spread to
cover and attach to such acquired estate and as so
spread and attached shall be prior to the lien of
any mortgage placed on the acquired estate after
the date of this Mortgage.
(f) No release or forbearance of any of
Mortgagor's obligations under the Mortgaged Lease,
pursuant to the Mortgaged Lease or otherwise,
shall release Mortgagor from any of its
obligations under this Mortgage.
(g) So long as no Event of Default
shall have occurred and be continuing hereunder,
Mortgagor may, without the consent of Mortgagee,
make any election or give any consent or approval
under the Mortgaged Lease. Upon the occurrence
and continuance of any Event of Default hereunder,
all such rights, together with the right of
termination, cancellation, modification, change,
supplement, alteration or amendment of the
Mortgaged Lease, all of which are hereby assigned
for collateral purposes to Mortgagee, shall
automatically vest exclusively in and be
exercisable solely by Mortgagee.
(h) Mortgagor will give Mortgagee
prompt written notice of the commencement of any
arbitration or appraisal proceeding under and
pursuant to the provisions of the Mortgaged Lease
involving amounts in excess of $1,000,000 on a
present value basis. So long as no Event of
Default shall have occurred and be continuing
hereunder, Mortgagor may conduct the proceeding
provided that (i) Mortgagee shall have the right
to intervene and participate in any such
proceeding, (ii) Mortgagor shall confer with
Mortgagee, (iii) Mortgagor shall exercise all
reasonable rights of arbitration conferred upon it
by the Mortgaged Lease and (iv) Mortgagor's
selection of an arbitrator shall be subject to
prior written approval by Mortgagee; provided,
however, upon the occurrence and continuance of an
Event of Default hereunder, Mortgagee shall have
sole authority to conduct the proceeding and
Mortgagor hereby irrevocably appoints and
constitutes Mortgagee as its true and lawful
attorney-in-fact, which appointment is coupled
with any interest, in its name, place and stead,
to exercise, at the expense of Mortgagor, all
right, title and interest of Mortgagor in
connection with such arbitration, including the
right to appoint arbitrators and to conduct
arbitration proceedings on behalf of Mortgagor.
Nothing contained herein shall obligate Mortgagee
to participate in such arbitration.
(i) Mortgagor shall not fail to
exercise any option or right to renew or extend
the term of the Mortgaged Lease without the prior
written consent of Mortgagee, which consent shall
not be unreasonably withheld. Mortgagor shall
give Mortgagee simultaneous written notice of any
such exercise, together with a copy of the notice
or other document given to the lessor, and shall
promptly deliver to Mortgagee a copy of any
acknowledgment by such lessor with respect to the
exercise of such option or right. Upon the
occurrence and continuance of any Event of Default
hereunder, Mortgagee may act in its stead and
Mortgagor hereby irrevocably authorizes and
appoints Mortgagee as its true and lawful
attorney-in-fact, which appointment is coupled
with an interest, in its name, place and stead, to
execute and deliver, for and in the name of
Mortgagor, all of the instruments and agreements
necessary under the Mortgaged Lease or otherwise
to cause any extension of the term of the
Mortgaged Lease. Nothing contained herein shall
affect or limit any rights of Mortgagor or
Mortgagee granted under the Mortgaged Lease.
(j) Mortgagor shall, within ten (10)
days after written demand from Mortgagee, deliver
to Mortgagee proof of payment of all items that
are required to be paid by Mortgagor under the
Mortgaged Lease, including, without limitation,
rent.
(k) (i) The lien of this Mortgage
shall attach to all of Mortgagor's rights and
remedies at any time arising under or pursuant to
Subsection 365(h) of the Bankruptcy Code, 11
U.S.C. section 365(h), as the same may hereafter be
amended (the "Bankruptcy Code"), including,
without limitation, all of Mortgagor's rights to
remain in possession of the Real Estate.
Mortgagor shall not, without Mortgagee's prior
written consent, elect to treat the Mortgaged
Lease as terminated under Subsection 365(h)(1) of
the Bankruptcy Code. Any such election made
without Mortgagee's consent shall be void.
(ii) Mortgagor hereby
unconditionally assigns, transfers and sets
over to Mortgagee all of Mortgagor's claims
and rights to the payment of damages arising
under the Bankruptcy Code from any rejection
of the Mortgaged Lease by the lessor or any
fee owner of the Real Estate or any part
thereof. Upon and during the continuance of
an Event of Default hereunder, Mortgagee
shall have the right to proceed in its own
name or in the name of Mortgagor in respect
of any claim, suit, action or proceeding
relating to the rejection of the Mortgaged
Lease, including, without limitation, the
right to file and prosecute under the
Bankruptcy Code, without joining or the
joinder of Mortgagor, any proofs of claim,
complaints, motions, applications, notices
and other documents, in any case with respect
to the lessor or any fee owner of the Real
Estate or any part thereof. Any amounts
received by Mortgagee as damages arising out
of the rejection of the Mortgaged Lease as
aforesaid shall be applied first to all costs
and expenses of Mortgagee (including, without
limitation, attorneys' fees) incurred in
connection with the exercise of any of its
rights or remedies under this paragraph.
Mortgagor shall, at the request of Mortgagee,
promptly make, execute, acknowledge and
deliver, in form and substance satisfactory
to Mortgagee, a UCC Financing Statement (Form
UCC-1) and all such additional instruments,
agreements and other documents, as may at any
time hereafter be required by Mortgagee to
carry out the assignment pursuant to this
paragraph.
(iii) If pursuant to Subsection
365(h)(2) of the Bankruptcy Code, Mortgagor
shall seek to offset against the rent
reserved in the Mortgaged Lease the amount of
any damages caused by the nonperformance by
the lessor of any of its obligations under
such Mortgaged Lease after the rejection by
the lessor of such Mortgaged Lease under the
Bankruptcy Code, then, upon and during the
continuance of an Event of Default hereunder,
Mortgagor shall, prior to effecting such
offset, notify Mortgagee of its intent to do
so, setting forth the amount proposed to be
so offset and the basis therefor. Upon and
during the continuance of an Event of Default
hereunder, Mortgagee shall have the right to
object to all or any part of such offset
that, in the reasonable judgment of
Mortgagee, would constitute a breach of such
Mortgaged Lease, and in the event of such
objection, Mortgagor shall not effect any
offset of the amounts so objected to by
Mortgagee. Neither Mortgagee's failure to
object as aforesaid nor any objection
relating to such offset shall constitute an
approval of any such offset by Mortgagee.
(iv) If any action, proceeding,
motion or notice shall be commenced or filed
in respect of the lessor or any other fee
owner of the Real Estate, or any portion
thereof or interest therein, or the Mortgaged
Lease in connection with any case under the
Bankruptcy Code, then, upon and during the
continuance of an Event of Default hereunder,
Mortgagee shall have the option, exercisable
upon notice from Mortgagee to Mortgagor, to
conduct and control any such litigation with
counsel of Mortgagee's choice. Upon and
during the continuance of an Event of Default
hereunder, Mortgagee may proceed in its own
name or in the name of Mortgagor in
connection with any such litigation, and
Mortgagor agrees to execute any and all
powers, authorizations, consents or other
documents reasonably required by Mortgagee in
connection therewith. Mortgagor shall, upon
demand, pay to Mortgagee all costs and
expenses (including attorneys' fees) paid or
incurred by Mortgagee in connection with the
prosecution or conduct of any such
proceedings. Upon and during the continuance
of an Event of Default hereunder, Mortgagor
shall not commence any action, suit,
proceeding or case, or file any application
or make any motion, in respect of the
Mortgaged Lease in any such case under the
Bankruptcy Code without the prior written
consent of Mortgagee.
(v) Mortgagor shall, after
obtaining knowledge thereof, promptly notify
Mortgagee of any filing by or against the
lessor or fee owner of the Real Estate of a
petition under the Bankruptcy Code.
Mortgagor shall promptly deliver to
Mortgagee, following receipt, copies of any
and all notices, summonses, pleadings,
applications and other documents received by
Mortgagor in connection with any such
petition and any proceedings relating
thereto.
(vi) If there shall be filed by or
against Mortgagor a petition under the
Bankruptcy Code and Mortgagor, as lessee
under the Mortgaged Lease, shall determine to
reject the Mortgaged Lease pursuant to
Section 365(a) of the Bankruptcy Code, then
Mortgagor shall give Mortgagee not less than
twenty (20) days' prior notice of the date on
which Mortgagor shall apply to the Bankruptcy
Court for authority to reject the Mortgaged
Lease. Mortgagee shall have the right, but
not the obligation, to serve upon Mortgagor
within such twenty (20) day period a notice
stating that Mortgagee demands that Mortgagor
assume and assign the Mortgaged Lease to
Mortgagee pursuant to Section 365 of the
Bankruptcy Code. If Mortgagee shall serve
upon Mortgagor the notice described in the
preceding sentence, Mortgagor shall not seek
to reject such Mortgaged Lease and shall
comply with the demand provided for in the
preceding sentence; provided, however, that
in connection with any such assumption and
assignment, Mortgagee shall provide Mortgagor
with the funds necessary to comply with the
cure obligations and other monetary
obligations described under subsection 365(b)
of the Bankruptcy Code, and the amount of any
such sums so provided shall be secured hereby
and shall be included as claims against
Mortgagor in the bankruptcy proceeding. In
addition, effective upon the entry of an
order for relief with respect to Mortgagor
under the Bankruptcy Code, Mortgagor hereby
assigns and transfers to Mortgagee a non-
exclusive right to apply to the Bankruptcy
Court under subsection 365(d)(4) of the
Bankruptcy Code for an order extending the
period during which the Mortgaged Lease may
be rejected or assumed.
(l) If the Mortgaged Lease shall be
terminated prior to the natural expiration of its
term, and if, pursuant to any provision of the
Mortgaged Lease or otherwise, Mortgagee or its
designee shall acquire from the lessor under such
Mortgaged Lease a new lease of the Real Estate or
any part hereof, Mortgagor shall have no right,
title or interest in or to such new lease or the
leasehold estate created thereby, or renewal
privileges therein contained.
NOTICE: A POWER OF SALE HAS BEEN
GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY
ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY
AND SELL IT WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR
UNDER THIS MORTGAGE.
This Mortgage has been duly executed by
Mortgagor on the date first above written.
ATTEST:
By: /S/ ELIZABETH B. KELLY
----------------------------
Name: Elizabeth B. Kelly
Title: [Assistant] Secretary
ERLANGER TUBULAR CORPORATION
By: /S/ J. R. PARKER
-------------------------
Name: John R. Parker
Title: [Vice] President
[SEAL]
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
This instrument was acknowledged before
me this 26th day of July, 1995, by John R. Parker
and Elizabeth B. Kelly, [Vice] President and
[Assistant] Secretary, respectively, of Erlanger
Tubular Corporation, an Oklahoma corporation.
/S/ STEVEN MAHER
Notary Public
My Commission Expires:
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
10/15/96
Qualified in New York County
Certificate Filed in
New York County
Commission Expires October 15, 1996
SCHEDULE A
A tract of land that is part of the Southwest
Quarter of the Southwest Quarter (SW/4 SW/4) of
Section Five (5), part of the Southeast Quarter
(SE/4) of the Southeast Quarter (SE/4) of the
Southeast Quarter (SE/4) of Section Six (6), part
of the Northeast Quarter of the Northeast Quarter
of the Northeast Quarter (NE/4) NE/4 NE/4) of
Section Seven (7) and part of the Northwest
Quarter (NW/4) of Section Right (8), all in
Township Twenty (20) North, Range Fifteen (15)
East of the I.B.& M., Rogers County, Oklahoma,
according to the U.S. Government Survey thereof,
said tract of land being further described as
follows, to-wit: Starting at the NW Corner of said
Section 8; thence due North for 325.42 feet;
thence due West for 325.70 feet to the Point of
Beginning of said tract of land; thence N
53 00'17" E for 765.00 feet; thence S 81 59'43" E
for 14.14 feet; thence S 36 59'43" E for 2208.65
feet; thence S 19 50'38" W for 12.38 feet; thence
S 70 06'55" W for 0.00 feet to a point of curve;
thence Southwesterly along a curve to the left
with a central angle of 16 43'31" and a radius of
1205.92 feet, for 352.02 feet to a point of
tangency; thence S 53 23'24" W along said tangency
for 141.18 feet to a point of curve; thence
Southwesterly along a curve to the right, with a
central angle of 00 02'14" and a radius of 512.96
feet for 0.33 feet; thence N 81 36'36" W for
399.86 feet; thence N 12 37'26" W for 0.00 feet to
a point of curve; thence Northwesterly along a
curve to the left, with a central angle of
24 22'17" and a radius of 666.62 feet for 283.55
feet to a point of tangency; thence N 36 59'43" W
along said tangency for 1051.40 feet; thence S
53 00'17" W for 55.00 feet; thence N 36 59'43" W
for 560.00 feet to the Point of Beginning of said
tract of land.
As such premises are more fully described within
Memorandum of Lease and Option executed by and
between City of Tulsa-Rogers County Port
Authority, Sublessor, and Erlanger and Company,
Inc., as Sublessee, dated December 1, 1980, filed
January 27, 1991, recorded at Book 593, Page 610,
as amended and assigned.
SCHEDULE B
EXCLUDED PROPERTY
a) Any and all Collateral (as defined
in that certain Revolving Credit, Guaranty and
Security Agreement dated as of July 28, 1995 by
and between Newport Steel Corporation, Koppel
Steel Corporation and Imperial Adhesives, Inc., as
borrowers, NS Group, Inc., Erlanger Tubular
Corporation, Northern Kentucky Air, Inc. and
Northern Kentucky Management, Inc., as guarantors,
The Bank of New York Commercial Corporation, as
Lender, as ACM Agent and as Co-Agent, and PNC Bank
Ohio, National Association, as Lender and as Co-
Agent, and other lenders parties thereto).
b) Any and all intellectual property
rights and interests, including, without
limitation, any and all trade names, trade marks,
copyrights, trade secrets and patents.
c) Any and all vehicles and rolling
stock.
d) Any and all leased Equipment if and
to the extent the terms and conditions of the
applicable lease documentation prohibit, restrict
or require consent in connection with the creation
of liens and security interests with respect to
such Equipment.
e) Any and all general intangibles.
f) Stripper Crane subject to Contract
for Lease and Rent dated September 6, 1977 between
City of Wilder, Kentucky and Interlake, Inc.,
recorded at Misc. Book 82, page 401, and Sublease
dated April 15, 1981 between Interlake, Inc. and
Newport Steel Corporation, recorded at Misc. Book
95, page 101, provided, however, that such
Stripper Crane shall case to be Excluded Property
at such time (if ever) as all consents required in
connection with the granting of liens and security
interests with respect to such Stripper Crane
under such Lease and Sublease have been obtained.
g) Any and all Equipment described in
a certain Security Agreement, dated as of February
13, 1992, together with all exhibits, supplements,
addenda and amendments thereto in existence or
effect on the date hereof or hereafter.
SUBSIDIARY SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 28, 1995, made by
Newport Steel Corporation, a Kentucky corporation, the Federal
Employer
Identification Number of which is 61-1116686 (the "Company") in
favor of THE
HUNTINGTON NATIONAL BANK, as collateral agent (in such capacity,
the
"Collateral Agent"), the Federal Employer Identification Number
of which is 31-
0966785, under the Indenture dated as of July 28, 1995 (as
amended,
supplemented or otherwise modified from time to time, the
"Indenture")
between the Collateral Agent (acting in its capacity as trustee)
and NS Group,
Inc. (the "Parent"), for the benefit of the Holders of 13 1/2%
Senior Secured Notes
due 2003 (the "Securities") issued by the Parent.
W I T N E S S E T H :
WHEREAS, the Company is the owner of the Collateral (as
hereinafter defined); and
WHEREAS, it is a condition precedent to the purchase of
the
Securities from the Parent that the Company shall have executed
and delivered
this Agreement to the Collateral Agent for the ratable benefit of
the Holders.
NOW, THEREFORE, in consideration of the premises and to
induce the Trustee to enter into the Indenture and to induce the
Holders to
purchase the Securities, the Company hereby agrees with the
Collateral Agent,
for the ratable benefit of the Holders, as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined
herein, terms
defined in the Indenture and used herein shall have the meanings
given to
them in the Indenture and the following terms which are defined
in the
Uniform Commercial Code in effect in the State of New York on the
date
hereof are used herein as so defined: Chattel Paper, Equipment,
Farm
Products and Instruments.
(b) The following terms shall have the following
meanings:
"Agreement" means this Security Agreement, as the same
may be
amended, modified or otherwise supplemented from time to
time.
"Code" means the Uniform Commercial Code as from time
to time
in effect in the State of New York.
"Collateral" has the meaning specified in Section 2 of
this
Agreement.
"Contractual Obligation" means, as to any Person, any
provision of
any security issued by such Person or of any agreement,
instrument or
undertaking to which such Person is a party or by which it
or any of
the property owned by it is bound.
"Fixtures" shall have the meaning assigned to such term
in the
Code and include, without limitation, all goods that after
placement on
the real property described in Schedule 2 hereto become
component
parts of the real property described in Schedule 2 hereto,
buildings and
other constructions and which are used in the conduct of the
Company's trade, business, occupation or other commercial or
industrial
activity.
"Net Insurance Proceeds" has the meaning specified in
Section 4.3
of this Agreement.
"Obligations" means the due and punctual payment and
performance by the Company of all its obligations and
liabilities,
absolute or contingent, liquidated or unliquidated, now
existing or
hereafter incurred under, arising out of and in connection
with the
Subsidiary Guarantee.
"Proceeds" and "Products" shall have the meaning
ascribed to such
terms in the Code and shall include in any event (i)
whatever is
received upon any collection, exchange, sale or other
disposition or
refinancing of any of the Collateral and any property into
which any of
the Collateral is converted (whether cash or non-cash
proceeds), (ii) any
and all proceeds of any insurance, indemnity, warranty or
guarantee
payable to the Company from time to time with respect to any
of the
Collateral, (iii) any and all payments (in any form
whatsoever) made or
due and payable to the Company from time to time in
connection with
any requisition, confiscation, condemnation, seizure or
forfeiture of all
or any part of the Collateral by any governmental authority
(or any
person acting under color of governmental authority) and
(iv) any and
all other amounts from time to time paid or payable under or
in
connection with any of the Collateral.
"Requirement of Law" means, as to any Person, the
Certificate of
Incorporation and By-Laws or other organizational or
governing
documents of such Person, and any law, treaty, rule or
regulation or
determination of an arbitrator or a court or other
governmental
authority, in each case applicable to or binding upon such
Person or any
of its property or to which such Person or any of its
property is subject.
"Subsidiary Guarantee" means the Subsidiary Guarantee
dated an
even date herewith among the Company, Erlanger Tubular
Corporation,
Imperial Adhesives, Inc., Koppel Steel Corporation, Northern
Kentucky
Air, Inc. and Northern Kentucky Management, Inc. and the
Collateral
Agent for the benefit of the Holders, as the same may be
amended,
supplemented or otherwise modified from time to time.
1.2 Other Definitional Provisions. (a) The words
"hereof,"
"herein" and "hereunder" and words of similar import when used in
this
Agreement shall refer to this Agreement as a whole and not to any
particular
provision of this Agreement, and section and paragraph references
are to this
Agreement unless otherwise specified.
(b) All references to the Collateral Agent shall be
deemed to
include a reference to the Trustee, and the reverse thereof shall
similarly
apply.
(c) The meanings given to terms defined herein shall
be
equally applicable to both the singular and plural forms of such
terms.
2. Grant of Security Interest. As collateral
security for the
prompt and complete payment and performance when due (whether at
the
stated maturity, by acceleration or otherwise) of the
Obligations, the Company
hereby grants to the Collateral Agent for the ratable benefit of
the Holders a
security interest in all of the following property now owned or
at any time
hereafter acquired by the Company or in which the Company now has
or at
any time in the future may acquire any right, title or interest
(collectively,
the
"Collateral"):
(a) all Equipment including, without limitation, (i)
furniture,
furnishings, tools, lubricants, spare parts, shelving,
displays, cases,
accessories, motors and engines and (ii) with respect to the
foregoing all
attachments, components, parts, equipment and accessories
installed
thereon or affixed thereto;
(b) all Fixtures;
(c) all books and records pertaining to the
Collateral; and
(d) to the extent not otherwise included, all Proceeds
and
Products of any and all of the foregoing.
3. Representations and Warranties. The Company
hereby
represents and warrants that:
3.1 Title; No Other Liens. Except for (a) the
security interest
granted to the Collateral Agent for the ratable benefit of the
Holders pursuant
to this Agreement, (b) the security interest granted to the
Parent to secure the
Company's obligations under its Intercompany Note and (c) the
other Liens
permitted to exist on the Collateral pursuant to the Indenture,
the Company
owns each item of the Collateral free and clear of any and all
Liens or claims
of others. No security agreement, financing statement or other
public notice
with respect to all or any part of the Collateral is on file or
of record in any
public office, except (a) such as have been filed in favor of the
Collateral
Agent, for the ratable benefit of the Holders, pursuant to this
Agreement, (b)
such as have been filed in favor of the Parent to secure the
Company's
obligations under its Intercompany Note or (c) as are permitted
pursuant to
the Indenture.
3.2 Perfected First Priority Liens. The security
interests
granted pursuant to this Agreement (a) constitute perfected first
security
interests in the Collateral in favor of the Collateral Agent, for
the ratable
benefit of the Holders, (b) are prior to all other Liens on the
Collateral in
existence on the date hereof except for Liens permitted to exist
pursuant to the
Indenture, and (c) are enforceable as such against (1) all
creditors of and
purchasers from the Company and (2) any Person having any
interest in the
real property where any of the Equipment is located.
3.3 Equipment. The Equipment is kept at the locations
listed
on Schedule 1 hereto.
3.4 Chief Executive Office. The Company's chief
executive
office and chief place of business is located at Ninth and Lowell
Streets,
Newport, Kentucky 41072.
3.5 Farm Products. None of the Collateral
constitutes, or is the
Proceeds of, Farm Products.
4. Covenants. The Company covenants and agrees with
the
Collateral Agent that, from and after the date of this Agreement
until this
Agreement is terminated and the security interests created hereby
are released:
4.1 Delivery of Instruments and Chattel Paper. If any
amount
payable under or in connection with any of the Collateral shall
be or become
evidenced by any Instrument or Chattel Paper, such Instrument or
Chattel
Paper shall be promptly delivered to the Collateral Agent, duly
indorsed in a
manner satisfactory to the Collateral Agent, to be held as
Collateral pursuant
to this Agreement.
4.2 Marking of Records. The Company will include in
its
books and records pertaining to the Collateral an appropriate
reference to this
Agreement and the security interests created hereby.
4.3 Maintenance of Insurance. (a) The Company will
maintain, with financially sound and reputable companies,
insurance policies
(1) insuring the Equipment and Fixtures against loss by fire,
explosion, theft
and such other casualties as are usually and customarily carried
with respect
to similar property and or facilities according to their
respective locations
and
(2) insuring the Company, the Collateral Agent and the Holders
against
liability for personal injury and property damage relating to
such Equipment
and Fixtures, such policies to be in such form and amounts and
having such
coverage as are usually and customarily carried with respect to
similar
property and or facilities according to their respective
locations with losses
payable to the Company and the Collateral Agent ("Net Insurance
Proceeds").
(b) All such insurance shall (1) provide that no
cancellation,
material reduction in amount or material change in coverage
thereof shall be
effective until at least 30 days after receipt by the Collateral
Agent of
written
notice thereof, (2) name the Collateral Agent as the insured
party and (3)
subject to paragraph (a) above, be reasonably satisfactory in all
other respects
to the Collateral Agent.
(c) The Company shall deliver to the Collateral Agent
a report
of a reputable insurance broker with respect to such insurance
during the
month of July in each calendar year and such supplemental reports
with
respect thereto as the Collateral Agent may from time to time
reasonably
request.
4.4 Payment of Taxes, Assessments and Governmental
Charges. The Company will pay and discharge or otherwise satisfy
at or
before maturity or before they become delinquent, as the case may
be, all
taxes, assessments and governmental charges or levies imposed
upon the
Collateral or in respect of income or profits therefrom, as well
as all claims
of
any kind (including, without limitation, claims for labor,
materials and
supplies) against or with respect to the Collateral, except that
no such charge
need be paid if the amount, applicability or validity thereof is
currently being
contested in good faith by appropriate proceedings, reserves in
conformity
with GAAP with respect thereto have been provided on the books of
the
Company and such proceedings do not involve any material danger
of the
sale, forfeiture or loss of any of the Collateral or any interest
therein.
4.5 Maintenance of Perfected Security Interest;
Further
Documentation. (a) The Company shall maintain the security
interest created
by this Agreement as a first, perfected security interest subject
only to Liens
permitted to exist pursuant to the Indenture and shall defend
such security
interest against claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the
written
request of the Collateral Agent and at the sole expense of the
Company, the
Company will promptly and duly execute and deliver such further
instruments
and documents and take such further action as the Collateral
Agent may
reasonably request for the purpose of obtaining or preserving the
full benefits
of this Agreement and of the rights and powers herein granted,
including,
without limitation, the filing of any financing or continuation
statements under
the Uniform Commercial Code in effect in any jurisdiction with
respect to the
security interests created hereby.
4.6 Changes in Locations, Name, etc. The Company will
not,
unless it shall have given the Collateral Agent at least 30 days
prior written
notice:
(a) permit any of the Equipment to be kept at a
location other
than those listed on Schedule 1 hereto; or
(b) change the location of its chief executive office
and chief
place of business from that specified in subsection 3.4; or
(c) change its name, identity, Federal taxpayer
identification
number or corporate structure to such an extent that any
financing
statement filed by the Collateral Agent in connection with
this
Agreement would become seriously misleading.
4.7 Further Identification of Collateral. The Company
will
furnish to the Collateral Agent from time to time statements and
schedules
further identifying and describing the Collateral and such other
reports in
connection with the Collateral as the Collateral Agent may
reasonably request,
all in reasonable detail.
4.8 Notices. The Company will advise the Collateral
Agent
promptly, in reasonable detail, at its address set forth in the
Indenture of:
(a) any Lien (other than security interests created
hereby, the
security interest granted to the Parent to secure the
Company's
obligations under its Intercompany Note or Liens permitted
under the
Indenture) on, or claim asserted against, any of the
Collateral; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on
the
aggregate value of the Collateral or on the security
interests created
hereby.
5. Asset Sales and Receipt of Net Insurance Proceeds.
All
cash, checks, instruments and other Proceeds of the Collateral
from Asset Sales
or otherwise, including Net Insurance Proceeds, shall be held by
the Company
in trust for the Collateral Agent and the Holders, segregated
from the other
funds of the Company, and shall, immediately upon receipt by the
Company,
be turned over to the Collateral Agent in the exact form received
by the
Company (duly indorsed by the Company to the Collateral Agent, if
required)
and held by the Collateral Agent in a Collateral Account
maintained under the
sole dominion and control of the Collateral Agent, except as may
be released
to the Company and or applied to the Obligations in accordance
with Article
XIII of the Indenture. All proceeds while held by the Collateral
Agent in a
Collateral Account (or by the Company in trust for the Collateral
Agent and
the Holders) shall continue to be held as collateral security for
all the
Obligations and shall not constitute payment thereof until
applied as provided
in subsection 8.1 or 8.2.
6. Remedies.
6.1 Remedies. Subject to the provisions of Article
VIII of the
Indenture, if an Event of Default shall have occurred and be
continuing, at any
time at the Collateral Agent's election, the Collateral Agent may
apply all or
any part of the Proceeds held in any Collateral Account in
payment of the
Obligations in the manner set forth in Section 8.6 of the
Indenture.
6.2 Code Remedies. Subject to the provisions of
Article VIII of
the Indenture, if an Event of Default shall occur and be
continuing, the
Collateral Agent on behalf of the Holders may exercise, in
addition to all other
rights and remedies granted to them in this Agreement and in any
other
instrument or agreement securing, evidencing or relating to the
Obligations, all
rights and remedies of a secured party under the Code. Without
limiting the
generality of the foregoing, the Collateral Agent without demand
of
performance or other demand, presentment, protest, advertisement
or notice of
any kind (except any notice required by law referred to below) to
or upon the
Company or any other Person (all and each of which demands,
defenses,
advertisements and notices are hereby waived), may in such
circumstances
forthwith collect, receive, appropriate and realize upon the
Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give
option or options
to purchase, or otherwise dispose of and deliver the Collateral
or any part
thereof (or contract to do any of the foregoing), in one or more
parcels at
public or private sale or sales, at any exchange, broker's board
or office of
the Collateral Agent or elsewhere upon such terms and conditions
as it may
deem advisable and at such prices as it may deem best, for cash
or on credit or
for future delivery without assumption of any credit risk. The
Collateral
Agent shall have the right upon any such public sale or sales,
and, to the
extent permitted by law, upon any such private sale or sales, to
purchase the
whole or any part of the Collateral so sold, free of any right or
equity of
redemption in the
Company, which right or equity is hereby waived or released. The
Company
further agrees, at the Collateral Agent's request, to assemble
the Collateral
and make it available to the Collateral Agent at places which the
Collateral
Agent shall reasonably select, whether at the Company's premises
or elsewhere.
The Collateral Agent shall apply the net proceeds of any such
collection,
recovery, receipt, appropriation, realization or sale, after
deducting all
reasonable costs and expenses of every kind incurred therein or
incidental to
the care or safekeeping of any of the Collateral or in any way
relating to the
Collateral, in the manner set forth in Section 8.6 of the
Indenture. To the
extent permitted by applicable law, the Company waives all
claims, damages and
demands it may acquire against the Collateral Agent or any Holder
arising out
of the exercise by them of any rights hereunder, except to the
extent any such
claims, damages or demands were directly caused by the Collateral
Agent's gross
negligence or willful misconduct. If any notice of a proposed
sale or other
disposition of Collateral shall be required by law, such notice
shall be deemed
reasonable and proper if given at least 10 days before such sale
or other
disposition.
6.3 Deficiency. The Company shall remain liable for
any
deficiency if the proceeds of any sale or other disposition of
the Collateral
are
insufficient to pay the Obligations and the fees and
disbursements of any
attorneys employed by the Collateral Agent or any Holder to
collect such
deficiency.
7. Applicable Provisions of the Indenture. Section
12.2
through 12.10 of the Indenture is hereby incorporated by
reference into this
Agreement and made a part of the same as if set forth herein. To
the extent, if
any, that the provisions of this Agreement are inconsistent with
the provisions
of Section 12.2 through 12.10 of the Indenture, the provisions of
the Indenture
shall prevail.
8. Collateral Agent's Appointment as
Attorney-in-Fact;
Collateral Agent's Performance of Company's Obligations.
8.1 Powers. The Company hereby irrevocably
constitutes and
appoints the Collateral Agent and any officer or agent thereof,
with full power
of substitution, as its true and lawful attorney-in-fact with
full irrevocable
power and authority in the place and stead of the Company and in
the name
of the Company or in its own name, from time to time in the
Collateral
Agent's discretion, for the purpose of carrying out the terms of
this
Agreement, to take any and all appropriate action and to execute
any and all
documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting
the
generality of the foregoing, the Company hereby gives the
Collateral Agent the
power and right, on behalf of the Company, without notice to or
assent by the
Company, to do the following:
(a) in the case of any Collateral, at any time when
any Event
of Default shall have occurred and is continuing, in the
name of the
Company or its own name, or otherwise, to take possession of
and
indorse and collect any checks, drafts, notes, acceptances
or other
instruments for the payment of moneys due with respect to
any
Collateral and to file any claim or to take any other action
or proceeding
in any court of law or equity or otherwise deemed
appropriate by the
Collateral Agent for the purpose of collecting any and all
such moneys
due with respect to any Collateral whenever payable;
(b) to pay or discharge taxes and Liens levied or
placed on or
threatened against the Collateral (except as provided by
Section 4.4 of
this Agreement), to effect any repairs or any insurance
called for by the
terms of this Agreement and to pay all or any part of the
premiums
therefor and the costs thereof;
(c) to execute, in connection with any Asset Sale
permitted by
Section 6.15 of the Indenture or otherwise provided for in
Section 8
hereof, any endorsements, assignments or other instruments
of
conveyance or transfer with respect to the Collateral; and
(d) upon the occurrence and during the continuance of
any
Event of Default, (1) to direct any party liable for any
payment under
any of the Collateral to make payment of any and all moneys
due or to
become due thereunder directly to the Collateral Agent or as
the
Collateral Agent shall direct; (2) to ask or demand for,
collect, receive
payment of and receipt for, any and all moneys, claims and
other
amounts due or to become due at any time in respect of or
arising out
of any Collateral; (3) to sign and indorse any invoices,
freight or express
bills, bills of lading, storage or warehouse receipts,
drafts against
debtors, assignments, verifications, notices and other
documents in
connection with any of the Collateral; (4) to commence and
prosecute
any suits, actions or proceedings at law or in equity in any
court of
competent jurisdiction to collect the Collateral or any
portion thereof
and to enforce any other right in respect of any Collateral;
(5) to defend
any suit, action or proceeding brought against the Company
with
respect to any Collateral; (6) to settle, compromise or
adjust any such
suit, action or proceeding and, in connection therewith, to
give such
discharges or releases as the Collateral Agent may deem
appropriate;
and (7) generally, to sell, transfer, pledge and make any
agreement with
respect to or otherwise deal with any of the Collateral as
fully and
completely as though the Collateral Agent were the absolute
owner
thereof for all purposes, and to do, at the Collateral
Agent's option and
the Company's expense, at any time, or from time to time,
all acts and
things which the Collateral Agent deems necessary to
protect, preserve
or realize upon the Collateral and the Collateral Agent's
security
interests therein and to effect the intent of this
Agreement, all as fully
and effectively as the Company might do.
8.2 Performance by Collateral Agent of Company's
Obligations. If the Company fails to perform or comply with any
of its
agreements contained herein, the Collateral Agent, at its option,
but without
any obligation so to do, may perform or comply, or otherwise
cause
performance or compliance, with such agreement.
8.3 Company's Reimbursement Obligation. The expenses
of
the Collateral Agent incurred in connection with actions
undertaken as
provided in this Section, together with interest thereon at a
rate per annum
equal to 13.50% from the date of payment by the Collateral Agent
to the date
reimbursed by the Company, shall be payable by the Company to the
Collateral Agent on demand.
8.4 Ratification; Power Coupled With An Interest. The
Company hereby ratifies all that said attorneys shall lawfully do
or cause to be
done by virtue hereof. All powers, authorizations and agencies
contained in
this Agreement are coupled with an interest and are irrevocable
until this
Agreement is terminated and the security interests created hereby
are released.
9. Duty of Collateral Agent. The Collateral Agent's
sole duty
with respect to the custody, safekeeping and physical
preservation of the
Collateral in its possession, under Section 9-207 of the Code or
otherwise,
shall
be to deal with it in the same manner as the Collateral Agent
deals with
similar property for its own account, except that the Collateral
Agent shall
have no obligation to invest funds held in any Collateral Account
and may
hold the same as demand deposits. Neither the Collateral Agent
nor any of its
directors, officers, employees or agents shall be liable for
failure to demand,
collect or realize upon any of the Collateral or for any delay in
doing so or
shall be under any obligation to sell or otherwise dispose of any
Collateral
upon the request of the Company or any other Person or to take
any other
action whatsoever with regard to the Collateral or any part
thereof. The
powers conferred on the Collateral Agent hereunder are solely to
protect the
Collateral Agent's interests in the Collateral and shall not
impose any duty
upon the Collateral Agent to exercise any such powers. The
Collateral Agent
shall be accountable only for amounts that it actually receives
as a result of
the
exercise of such powers, and neither it nor any of its officers,
directors,
employees or agents shall be responsible to the Company for any
act or failure
to act hereunder, except for their own gross negligence or
willful misconduct.
10. Execution of Financing Statements. Pursuant to
Section 9-
402 of the Code, the Company authorizes the Collateral Agent to
file financing
statements with respect to the Collateral without the signature
of the Company
in such form and in such filing offices as the Collateral Agent
reasonably
determines appropriate to perfect the security interests of the
Collateral Agent
under this Agreement. A carbon, photographic or other
reproduction of this
Agreement shall be sufficient as a financing statement for filing
in any
jurisdiction.
11. Authority of Collateral Agent. The Company
acknowledges that the rights and responsibilities of the
Collateral Agent under
this Agreement with respect to any action taken by the Collateral
Agent or the
exercise or non-exercise by the Collateral Agent of any option,
voting right,
request, judgment or other right or remedy provided for herein or
resulting or
arising out of this Agreement shall, as between the Collateral
Agent and the
Holders be governed by the Indenture and by such other agreements
with
respect thereto as may exist from time to time among them, but,
as between
the Collateral Agent and the Company, the Collateral Agent shall
be
conclusively presumed to be acting as agent for the Holders with
full and
valid authority so to act or refrain from acting, and the Company
shall be
under no obligation, or entitlement, to make any inquiry
respecting such
authority.
12. Indemnity.
12.1 Indemnity. (a) The Company agrees to indemnify,
pay
and hold harmless the Collateral Agent and the officers,
directors, employees,
agents and affiliates of the Collateral Agent (collectively
called the
"Indemnitees") from and against any and all other liabilities,
obligations,
losses,
damages, penalties, actions, judgments, suits, claims, costs
(including, without
limitation, settlement costs), expenses or disbursements of any
kind or nature
whatsoever (including, without limitation, the reasonable fees
and
disbursements of counsel for such Indemnitees in connection with
any
investigative, administrative or judicial proceeding commenced or
threatened,
whether or not such Indemnitee shall be designated a party
thereto), which
may be imposed on, incurred by, or asserted against that
Indemnitee, in any
manner relating to or arising out of this Agreement, the
Indenture, the
Subsidiary Guarantee or the Securities arising in any action
relating to,
directly
or indirectly, the Collateral or the subject of this Agreement
(including
without
limitation, any misrepresentation by the Company in this
Agreement (the
"indemnified liabilities"); provided that the Company shall have
no obligation
to an Indemnitee hereunder with respect to indemnified
liabilities if it has
been
determined by a final decision (after all appeals and the
expiration of time to
appeal) by a court of competent jurisdiction that such
indemnified liability
arose from the negligence or willful misconduct of that
Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless
set forth in
the preceding sentence may be unenforceable because it is
violative of any law
or public policy, the Company shall contribute the maximum
portion which it
is permitted to pay and satisfy under applicable law, to the
payment and
satisfaction of all indemnified liabilities incurred by the
Indemnitees or any
of
them.
(b) The Company agrees to pay, and to save the
Collateral
Agent harmless from, any and all liabilities, costs and expenses
(including,
without limitation, legal fees and expenses) (1) with respect to,
or resulting
from any delay in paying, any and all stamp, excise, sales or
other taxes and
any and all recording and filing fees which may be payable or
determined to
be payable with respect to any of the Collateral, (2) with
respect to, or
resulting from, any delay in complying with any Requirement of
Law
applicable to any of the Collateral and (3) in connection with
any of the
transactions contemplated by this Agreement.
12.2 Survival. The obligations of the Company
contained in
this Section 12 shall survive the termination of this Agreement
and the
discharge of the Company's other obligations under this
Agreement.
12.3 Reimbursements. Any amounts paid by any
Indemnitee as
to which such Indemnitee has the right to reimbursement shall
constitute
Obligations secured by the Collateral.
13. Notices. All notices, requests and demands to or
upon the
Collateral Agent or the Company to be effective shall be in
writing (or by
telex, fax or similar electronic transfer) and shall be deemed to
have been duly
given or made (a) when delivered by hand or (b) if given by mail,
when
deposited in the mails by certified mail, return receipt
requested, or (c) if by
telex, fax or similar electronic transfer, when sent and receipt
has been
confirmed, addressed to the Collateral Agent or the Company at
its address or
transmission number for notices provided in Section 1.5 of the
Indenture or to
the Company at the address set forth below its signature. The
Collateral
Agent and the Company may change their addresses and transmission
numbers for notices by notice in the manner provided in this
Section.
14. Termination of this Agreement. (a)
Notwithstanding any
other provision of this Agreement, and in the absence of a claim
for
indemnification pursuant to Section 12.1 hereof, this Agreement
shall
automatically terminate upon the satisfaction, discharge or
avoidance of the
Obligations pursuant to the terms of the Subsidiary Guarantee and
the
Indenture.
(b) Upon the termination of this Agreement and subject
to the
terms of the Subsidiary Guarantee, the Collateral Agent shall
execute and
deliver to the Company such documents of assignment as are
reasonably
necessary to terminate the Collateral Agent's security interest
in any
Collateral
granted pursuant to this Agreement.
(c) If the Company ceases to be a Subsidiary of the
Parent
pursuant to Article VI of the Indenture and subject to the
satisfaction of the
terms and conditions of the Indenture in general and Article VI
in particular,
the Company shall automatically be released from all of its share
of the
Obligations, and this Agreement shall terminate.
15. Severability. Any provision of this Agreement
which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without
invalidating the remaining provisions hereof, and any such
prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable
such provision in any other jurisdiction.
16. Amendments in Writing; No Waiver; Cumulative
Remedies.
16.1 Amendments in Writing. None of the terms or
provisions
of this Agreement may be waived, amended, supplemented or
otherwise
modified except by a written instrument executed by the Company
and the
Collateral Agent in a manner pursuant to Article VI of the
Indenture or any
other provision therein, or as may be provided for in the
Intercreditor
Agreement with the Bank of New York Commercial Corporation as ACM
Agent ("ACM Agent"), dated an even date herewith, as the same may
be
amended, modified or supplemented from time to time.
16.2 No Waiver by Course of Conduct. Neither the
Collateral
Agent or any Holder shall by any act (except by a written
instrument pursuant
to subsection 16.1 hereof), delay, indulgence, omission or
otherwise be deemed
to have waived any right or remedy hereunder or to have
acquiesced in any
Default or Event of Default or in any breach of any of the terms
and
conditions hereof. No failure to exercise, nor any delay in
exercising, on the
part of the Collateral Agent or any Holder, any right, power or
privilege
hereunder shall operate as a waiver thereof. No single or
partial exercise of
any right, power or privilege hereunder shall preclude any other
or further
exercise thereof or the exercise of any other right, power or
privilege. A
waiver by the Collateral Agent or the Holders of any right or
remedy
hereunder on any one occasion shall not be construed as a bar to
any right or
remedy which the Collateral Agent or the Holders would otherwise
have on
any future occasion.
16.3 Remedies Cumulative. The rights and remedies
herein
provided are cumulative, may be exercised singly or concurrently
and are not
exclusive of any other rights or remedies provided by law.
17. Intercreditor Agreement. The parties hereto
acknowledge
that the terms of this Agreement are subject to the Intercreditor
Agreement
dated as of the date hereof between The Bank of New York
Commercial
Corporation and the Trustee.
18. Section Headings. The section and subsection
headings
used in this Agreement are for convenience of reference only and
are not to
affect the construction hereof or be taken into consideration in
the
interpretation hereof.
19. Successors and Assigns. This Agreement shall be
binding
upon the successors and assigns of the Company and shall inure to
the benefit
of the Collateral Agent and its successors and assigns.
20. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
21. Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or
proceeding relating to this Agreement to which it is a
party, or for
recognition and enforcement of any judgment in respect
thereof, to the
non-exclusive general jurisdiction of the Courts of the
State of New
York, the courts of the United States of America for the
Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now or
hereafter have to the venue of any such action or proceeding
in any
such court or that such action or proceeding was brought in
an
inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action
or
proceeding may be effected by mailing a copy thereof by
registered or
certified mail (or any substantially similar form of mail),
postage
prepaid, to the Company at its address set forth in Section
1.5 of the
Indenture or at such other address of which the Collateral
Agent shall
have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right
to effect
service of process in any other manner permitted by law or
shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by
law, any
right it may have to claim or recover in any legal action or
proceeding
referred to in this subsection any special, exemplary,
punitive or
consequential damages.<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
Security Agreement to be duly executed and delivered as of the
date first
above written.
NEWPORT STEEL CORPORATION
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address: Ninth and Lowell Streets
Newport, Kentucky 41072
Fax: (606) 292-0593
THE HUNTINGTON NATIONAL BANK,
as Collateral Agent
By: /S/ CANDADA J. MOORE
Name: Candada J. Moore
Title: Trust Officer
Address: Trust Department
41 South High Street
Columbus, Ohio 43215
Fax: (614) 480-5223<PAGE>
Schedule 1
[Newport]
EQUIPMENT
List of Locations
Newport Steel Corporation Route 9
Wilder, Kentucky 41071
(Campbell County)
Erlanger Tubular Corporation
5610 Birdcreek Avenue
Catoosa, Oklahoma 74015
(Rogers County)
Ninth & Lowell Streets
Newport, Kentucky 41072
(Campbell County)
<PAGE>
Schedule 2
[Newport]
REAL PROPERTY
OBLIGOR PROPERTY ADDRESS
(DESIGNATE WHETHER
OWNED OR LEASED)
Newport Steel Corporation Route 9
Wilder, Kentucky 41071
(Campbell County)(Owned)
Ninth & Lowell Streets
Newport, Kentucky 41072
(Campbell County)(Owned)
Subsidiary Security Agreement
Between
Newport Steel Corporation
And
The Huntington National Bank,
as Collateral Agent
July 28,
1995
TABLE OF CONTENTS
Page
1. Defined Terms . . . . . . . . . . . . . . . . . . . . . .
. 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . .
. 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . .
. 3
2. Grant of Security Interest. . . . . . . . . . . . . . . .
. 3
3. Representations and Warranties. . . . . . . . . . . . . .
. 3
3.1 Title; No Other Liens . . . . . . . . . . . . . . . . . .
. 3
3.2 Perfected First Priority Liens. . . . . . . . . . . . . .
. 4
3.3 Equipment . . . . . . . . . . . . . . . . . . . . . . . .
. 4
3.4 Chief Executive Office. . . . . . . . . . . . . . . . . .
. 4
3.5 Farm Products . . . . . . . . . . . . . . . . . . . . . .
. 4
4. Covenants . . . . . . . . . . . . . . . . . . . . . . . .
. 4
4.1 Delivery of Instruments and Chattel Paper . . . . . . . .
. 4
4.2 Marking of Records. . . . . . . . . . . . . . . . . . . .
. 4
4.3 Maintenance of Insurance. . . . . . . . . . . . . . . . .
. 4
4.4 Payment of Taxes, Assessments and Governmental Charges. .
. 5
4.5 Maintenance of Perfected Security Interest; Further
Documentation . . . . . . . . . . . . . . . . . . . . . .
. 5
4.6 Changes in Locations, Name, etc.. . . . . . . . . . . . .
. 6
4.7 Further Identification of Collateral. . . . . . . . . . .
. 6
4.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . .
. 6
5. Asset Sales and Receipt of Net Insurance Proceeds . . . .
. 6
6. Remedies. . . . . . . . . . . . . . . . . . . . . . . . .
. 7
6.2 Code Remedies . . . . . . . . . . . . . . . . . . . . . .
. 7
6.3 Deficiency. . . . . . . . . . . . . . . . . . . . . . . .
. 8
7. Applicable Provisions of the Indenture. . . . . . . . . .
. 8
8. Collateral Agent's Appointment as Attorney-in-Fact;
Collateral Agent's
Performance of Company's Obligations . . . . . . . . . . . . .
. 8
8.1 Powers. . . . . . . . . . . . . . . . . . . . . . . . . .
. 8
8.2 Performance by Collateral Agent of Company's Obligations.
. 9
8.3 Company's Reimbursement Obligation. . . . . . . . . . . .
. 9
8.4 Ratification; Power Coupled With An Interest. . . . . . .
. 9
9. Duty of Collateral Agent. . . . . . . . . . . . . . . . .
. 9
10. Execution of Financing Statements . . . . . . . . . . . .
. 10
11. Authority of Collateral Agent . . . . . . . . . . . . . .
. 10
12. Indemnity . . . . . . . . . . . . . . . . . . . . . . . .
. 10
12.1 Indemnity . . . . . . . . . . . . . . . . . . . . . . . .
. 10
12.2 Survival. . . . . . . . . . . . . . . . . . . . . . . . .
. 11
12.3 Reimbursements. . . . . . . . . . . . . . . . . . . . . .
. 11
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . .
. 11
14. Termination of this Agreement . . . . . . . . . . . . . .
. 12
15. Severability. . . . . . . . . . . . . . . . . . . . . . .
. 12
16. Amendments in Writing; No Waiver; Cumulative Remedies . .
. 12
16.1 Amendments in Writing . . . . . . . . . . . . . . . . . .
. 12
16.2 No Waiver by Course of Conduct. . . . . . . . . . . . . .
. 12
16.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . .
. 13
17. Intercreditor Agreement . . . . . . . . . . . . . . . . .
. 13
18. Section Headings. . . . . . . . . . . . . . . . . . . . .
. 13
19. Successors and Assigns. . . . . . . . . . . . . . . . . .
. 13
20. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . .
. 13
21. Submission To Jurisdiction; Waivers . . . . . . . . . . .
. 13
SUBSIDIARY SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 28, 1995, made by
Koppel Steel Corporation, a Pennsylvania corporation, the Federal
Employer
Identification Number of which is 25-1635833 (the "Company") in
favor of THE
HUNTINGTON NATIONAL BANK, as collateral agent (in such capacity,
the
"Collateral Agent"), the Federal Employer Identification Number
of which is 31-
0966785, under the Indenture dated as of July 28, 1995 (as
amended,
supplemented or otherwise modified from time to time, the
"Indenture")
between the Collateral Agent (acting in its capacity as trustee)
and NS Group,
Inc. (the "Parent"), for the benefit of the Holders of 13 1/2%
Senior Secured Notes
due 2003 (the "Securities") issued by the Parent.
W I T N E S S E T H :
WHEREAS, the Company is the owner of the Collateral (as
hereinafter defined); and
WHEREAS, it is a condition precedent to the purchase of
the
Securities from the Parent that the Company shall have executed
and delivered
this Agreement to the Collateral Agent for the ratable benefit of
the Holders.
NOW, THEREFORE, in consideration of the premises and to
induce the Trustee to enter into the Indenture and to induce the
Holders to
purchase the Securities, the Company hereby agrees with the
Collateral Agent,
for the ratable benefit of the Holders, as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined
herein, terms
defined in the Indenture and used herein shall have the meanings
given to
them in the Indenture and the following terms which are defined
in the
Uniform Commercial Code in effect in the State of New York on the
date
hereof are used herein as so defined: Chattel Paper, Equipment,
Farm
Products and Instruments.
(b) The following terms shall have the following
meanings:
"Agreement" means this Security Agreement, as the same
may be
amended, modified or otherwise supplemented from time to
time.
"Code" means the Uniform Commercial Code as from time
to time
in effect in the State of New York.
"Collateral" has the meaning specified in Section 2 of
this
Agreement.
"Contractual Obligation" means, as to any Person, any
provision of
any security issued by such Person or of any agreement,
instrument or
undertaking to which such Person is a party or by which it
or any of
the property owned by it is bound.
"Fixtures" shall have the meaning assigned to such term
in the
Code and include, without limitation, all goods that after
placement on
the real property described in Schedule 2 hereto become
component
parts of the real property described in Schedule 2 hereto,
buildings and
other constructions and which are used in the conduct of the
Company's trade, business, occupation or other commercial or
industrial
activity.
"Net Insurance Proceeds" has the meaning specified in
Section 4.3
of this Agreement.
"Obligations" means the due and punctual payment and
performance by the Company of all its obligations and
liabilities,
absolute or contingent, liquidated or unliquidated, now
existing or
hereafter incurred under, arising out of and in connection
with the
Subsidiary Guarantee.
"Proceeds" and "Products" shall have the meaning
ascribed to such
terms in the Code and shall include in any event (i)
whatever is
received upon any collection, exchange, sale or other
disposition or
refinancing of any of the Collateral and any property into
which any of
the Collateral is converted (whether cash or non-cash
proceeds), (ii) any
and all proceeds of any insurance, indemnity, warranty or
guarantee
payable to the Company from time to time with respect to any
of the
Collateral, (iii) any and all payments (in any form
whatsoever) made or
due and payable to the Company from time to time in
connection with
any requisition, confiscation, condemnation, seizure or
forfeiture of all
or any part of the Collateral by any governmental authority
(or any
person acting under color of governmental authority) and
(iv) any and
all other amounts from time to time paid or payable under or
in
connection with any of the Collateral.
"Requirement of Law" means, as to any Person, the
Certificate of
Incorporation and By-Laws or other organizational or
governing
documents of such Person, and any law, treaty, rule or
regulation or
determination of an arbitrator or a court or other
governmental
authority, in each case applicable to or binding upon such
Person or any
of its property or to which such Person or any of its
property is subject.
"Subsidiary Guarantee" means the Subsidiary Guarantee
dated an
even date herewith among the Company, Erlanger Tubular
Corporation,
Imperial Adhesives, Inc., Newport Steel Corporation,
Northern
Kentucky Air, Inc. and Northern Kentucky Management, Inc.
and the
Collateral Agent for the benefit of the Holders, as the same
may be
amended, supplemented or otherwise modified from time to
time.
1.2 Other Definitional Provisions. (a) The words
"hereof,"
"herein" and "hereunder" and words of similar import when used in
this
Agreement shall refer to this Agreement as a whole and not to any
particular
provision of this Agreement, and section and paragraph references
are to this
Agreement unless otherwise specified.
(b) All references to the Collateral Agent shall be
deemed to
include a reference to the Trustee, and the reverse thereof shall
similarly apply.
(c) The meanings given to terms defined herein shall
be
equally applicable to both the singular and plural forms of such
terms.
2. Grant of Security Interest. As collateral
security for the
prompt and complete payment and performance when due (whether at
the
stated maturity, by acceleration or otherwise) of the
Obligations, the Company
hereby grants to the Collateral Agent for the ratable benefit of
the Holders a
security interest in all of the following property now owned or
at any time
hereafter acquired by the Company or in which the Company now has
or at
any time in the future may acquire any right, title or interest
(collectively, the
"Collateral"):
(a) all Equipment including, without limitation, (i)
furniture,
furnishings, tools, lubricants, spare parts, shelving,
displays, cases,
accessories, motors and engines and (ii) with respect to the
foregoing all
attachments, components, parts, equipment and accessories
installed
thereon or affixed thereto;
(b) all Fixtures;
(c) all books and records pertaining to the
Collateral; and
(d) to the extent not otherwise included, all Proceeds
and
Products of any and all of the foregoing.
3. Representations and Warranties. The Company
hereby
represents and warrants that:
3.1 Title; No Other Liens. Except for (a) the
security interest
granted to the Collateral Agent for the ratable benefit of the
Holders pursuant
to this Agreement, (b) the security interest granted to the
Parent to secure the
Company's obligations under its Intercompany Note and (c) the
other Liens
permitted to exist on the Collateral pursuant to the Indenture,
the Company
owns each item of the Collateral free and clear of any and all
Liens or claims
of others. No security agreement, financing statement or other
public notice
with respect to all or any part of the Collateral is on file or
of record in any
public office, except (a) such as have been filed in favor of the
Collateral
Agent, for the ratable benefit of the Holders, pursuant to this
Agreement, (b)
such as have been filed in favor of the Parent to secure the
Company's
obligations under its Intercompany Note or (c) as are permitted
pursuant to
the Indenture.
3.2 Perfected First Priority Liens. The security
interests
granted pursuant to this Agreement (a) constitute perfected first
security
interests in the Collateral in favor of the Collateral Agent, for
the ratable
benefit of the Holders, (b) are prior to all other Liens on the
Collateral in
existence on the date hereof except for Liens permitted to exist
pursuant to the
Indenture, and (c) are enforceable as such against (1) all
creditors of and
purchasers from the Company and (2) any Person having any
interest in the
real property where any of the Equipment is located.
3.3 Equipment. The Equipment is kept at the locations
listed
on Schedule 1 hereto.
3.4 Chief Executive Office. The Company's chief
executive
office and chief place of business is located at Sixth Avenue and
Mount, P.O.
Box 750, Beaver Falls, PA 15010.
3.5 Farm Products. None of the Collateral
constitutes, or is the
Proceeds of, Farm Products.
4. Covenants. The Company covenants and agrees with
the
Collateral Agent that, from and after the date of this Agreement
until this
Agreement is terminated and the security interests created hereby
are released:
4.1 Delivery of Instruments and Chattel Paper. If any
amount
payable under or in connection with any of the Collateral shall
be or become
evidenced by any Instrument or Chattel Paper, such Instrument or
Chattel
Paper shall be promptly delivered to the Collateral Agent, duly
indorsed in a
manner satisfactory to the Collateral Agent, to be held as
Collateral pursuant
to this Agreement.
4.2 Marking of Records. The Company will include in
its
books and records pertaining to the Collateral an appropriate
reference to this
Agreement and the security interests created hereby.
4.3 Maintenance of Insurance. (a) The Company will
maintain, with financially sound and reputable companies,
insurance policies
(1) insuring the Equipment and Fixtures against loss by fire,
explosion, theft
and such other casualties as are usually and customarily carried
with respect
to similar property and or facilities according to their
respective locations and
(2) insuring the Company, the Collateral Agent and the Holders
against
liability for personal injury and property damage relating to
such Equipment
and Fixtures, such policies to be in such form and amounts and
having such
coverage as are usually and customarily carried with respect to
similar
property and or facilities according to their respective
locations with losses
payable to the Company and the Collateral Agent ("Net Insurance
Proceeds").
(b) All such insurance shall (1) provide that no
cancellation,
material reduction in amount or material change in coverage
thereof shall be
effective until at least 30 days after receipt by the Collateral
Agent of written
notice thereof, (2) name the Collateral Agent as the insured
party and (3)
subject to paragraph (a) above, be reasonably satisfactory in all
other respects
to the Collateral Agent.
(c) The Company shall deliver to the Collateral Agent
a report
of a reputable insurance broker with respect to such insurance
during the
month of July in each calendar year and such supplemental reports
with
respect thereto as the Collateral Agent may from time to time
reasonably
request.
4.4 Payment of Taxes, Assessments and Governmental
Charges. The Company will pay and discharge or otherwise satisfy
at or
before maturity or before they become delinquent, as the case may
be, all
taxes, assessments and governmental charges or levies imposed
upon the
Collateral or in respect of income or profits therefrom, as well
as all claims of
any kind (including, without limitation, claims for labor,
materials and
supplies) against or with respect to the Collateral, except that
no such charge
need be paid if the amount, applicability or validity thereof is
currently being
contested in good faith by appropriate proceedings, reserves in
conformity
with GAAP with respect thereto have been provided on the books of
the
Company and such proceedings do not involve any material danger
of the
sale, forfeiture or loss of any of the Collateral or any interest
therein.
4.5 Maintenance of Perfected Security Interest;
Further
Documentation. (a) The Company shall maintain the security
interest created
by this Agreement as a first, perfected security interest subject
only to Liens
permitted to exist pursuant to the Indenture and shall defend
such security
interest against claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the
written
request of the Collateral Agent and at the sole expense of the
Company, the
Company will promptly and duly execute and deliver such further
instruments
and documents and take such further action as the Collateral
Agent may
reasonably request for the purpose of obtaining or preserving the
full benefits
of this Agreement and of the rights and powers herein granted,
including,
without limitation, the filing of any financing or continuation
statements under
the Uniform Commercial Code in effect in any jurisdiction with
respect to the
security interests created hereby.
4.6 Changes in Locations, Name, etc. The Company will
not,
unless it shall have given the Collateral Agent at least 30 days
prior written
notice:
(a) permit any of the Equipment to be kept at a
location other
than those listed on Schedule 1 hereto; or
(b) change the location of its chief executive office
and chief
place of business from that specified in subsection 3.4; or
(c) change its name, identity, Federal taxpayer
identification
number or corporate structure to such an extent that any
financing
statement filed by the Collateral Agent in connection with
this
Agreement would become seriously misleading.
4.7 Further Identification of Collateral. The Company
will
furnish to the Collateral Agent from time to time statements and
schedules
further identifying and describing the Collateral and such other
reports in
connection with the Collateral as the Collateral Agent may
reasonably request,
all in reasonable detail.
4.8 Notices. The Company will advise the Collateral
Agent
promptly, in reasonable detail, at its address set forth in the
Indenture of:
(a) any Lien (other than security interests created
hereby, the
security interest granted to the Parent to secure the
Company's
obligations under its Intercompany Note or Liens permitted
under the
Indenture) on, or claim asserted against, any of the
Collateral; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on
the
aggregate value of the Collateral or on the security
interests created
hereby.
5. Asset Sales and Receipt of Net Insurance Proceeds.
All
cash, checks, instruments and other Proceeds of the Collateral
from Asset Sales
or otherwise, including Net Insurance Proceeds, shall be held by
the Company
in trust for the Collateral Agent and the Holders, segregated
from the other
funds of the Company, and shall, immediately upon receipt by the
Company,
be turned over to the Collateral Agent in the exact form received
by the
Company (duly indorsed by the Company to the Collateral Agent, if
required)
and held by the Collateral Agent in a Collateral Account
maintained under the
sole dominion and control of the Collateral Agent, except as may
be released
to the Company and or applied to the Obligations in accordance
with Article
XIII of the Indenture. All proceeds while held by the Collateral
Agent in a
Collateral Account (or by the Company in trust for the Collateral
Agent and
the Holders) shall continue to be held as collateral security for
all the
Obligations and shall not constitute payment thereof until
applied as provided
in subsection 8.1 or 8.2.
6. Remedies.
6.1 Remedies. Subject to the provisions of Article
VIII of the
Indenture, if an Event of Default shall have occurred and be
continuing, at any
time at the Collateral Agent's election, the Collateral Agent may
apply all or
any part of the Proceeds held in any Collateral Account in
payment of the
Obligations in the manner set forth in Section 8.6 of the
Indenture.
6.2 Code Remedies. Subject to the provisions of
Article VIII of
the Indenture, if an Event of Default shall occur and be
continuing, the
Collateral Agent on behalf of the Holders may exercise, in
addition to all other
rights and remedies granted to them in this Agreement and in any
other
instrument or agreement securing, evidencing or relating to the
Obligations, all
rights and remedies of a secured party under the Code. Without
limiting the
generality of the foregoing, the Collateral Agent without demand
of
performance or other demand, presentment, protest, advertisement
or notice of
any kind (except any notice required by law referred to below) to
or upon the
Company or any other Person (all and each of which demands,
defenses,
advertisements and notices are hereby waived), may in such
circumstances
forthwith collect, receive, appropriate and realize upon the
Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give
option or options to
purchase, or otherwise dispose of and deliver the Collateral or
any part thereof
(or contract to do any of the foregoing), in one or more parcels
at public or
private sale or sales, at any exchange, broker's board or office
of the Collateral
Agent or elsewhere upon such terms and conditions as it may deem
advisable
and at such prices as it may deem best, for cash or on credit or
for future
delivery without assumption of any credit risk. The Collateral
Agent shall
have the right upon any such public sale or sales, and, to the
extent permitted
by law, upon any such private sale or sales, to purchase the
whole or any part
of the Collateral so sold, free of any right or equity of
redemption in the
Company, which right or equity is hereby waived or released. The
Company
further agrees, at the Collateral Agent's request, to assemble
the Collateral and
make it available to the Collateral Agent at places which the
Collateral Agent
shall reasonably select, whether at the Company's premises or
elsewhere. The
Collateral Agent shall apply the net proceeds of any such
collection, recovery,
receipt, appropriation, realization or sale, after deducting all
reasonable costs
and expenses of every kind incurred therein or incidental to the
care or
safekeeping of any of the Collateral or in any way relating to
the Collateral, in
the manner set forth in Section 8.6 of the Indenture. To the
extent permitted
by applicable law, the Company waives all claims, damages and
demands it
may acquire against the Collateral Agent or any Holder arising
out of the
exercise by them of any rights hereunder, except to the extent
any such claims,
damages or demands were directly caused by the Collateral Agent's
gross
negligence or willful misconduct. If any notice of a proposed
sale or other
disposition of Collateral shall be required by law, such notice
shall be deemed
reasonable and proper if given at least 10 days before such sale
or other
disposition.
6.3 Deficiency. The Company shall remain liable for
any
deficiency if the proceeds of any sale or other disposition of
the Collateral are
insufficient to pay the Obligations and the fees and
disbursements of any
attorneys employed by the Collateral Agent or any Holder to
collect such
deficiency.
7. Applicable Provisions of the Indenture. Section
12.2
through 12.10 of the Indenture is hereby incorporated by
reference into this
Agreement and made a part of the same as if set forth herein. To
the extent, if
any, that the provisions of this Agreement are inconsistent with
the provisions
of Section 12.2 through 12.10 of the Indenture, the provisions of
the Indenture
shall prevail.
8. Collateral Agent's Appointment as
Attorney-in-Fact;
Collateral Agent's Performance of Company's Obligations.
8.1 Powers. The Company hereby irrevocably
constitutes and
appoints the Collateral Agent and any officer or agent thereof,
with full power
of substitution, as its true and lawful attorney-in-fact with
full irrevocable
power and authority in the place and stead of the Company and in
the name
of the Company or in its own name, from time to time in the
Collateral
Agent's discretion, for the purpose of carrying out the terms of
this
Agreement, to take any and all appropriate action and to execute
any and all
documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting
the
generality of the foregoing, the Company hereby gives the
Collateral Agent the
power and right, on behalf of the Company, without notice to or
assent by the
Company, to do the following:
(a) in the case of any Collateral, at any time when
any Event
of Default shall have occurred and is continuing, in the
name of the
Company or its own name, or otherwise, to take possession of
and
indorse and collect any checks, drafts, notes, acceptances
or other
instruments for the payment of moneys due with respect to
any
Collateral and to file any claim or to take any other action
or proceeding
in any court of law or equity or otherwise deemed
appropriate by the
Collateral Agent for the purpose of collecting any and all
such moneys
due with respect to any Collateral whenever payable;
(b) to pay or discharge taxes and Liens levied or
placed on or
threatened against the Collateral (except as provided by
Section 4.4 of
this Agreement), to effect any repairs or any insurance
called for by the
terms of this Agreement and to pay all or any part of the
premiums
therefor and the costs thereof;
(c) to execute, in connection with any Asset Sale
permitted by
Section 6.15 of the Indenture or otherwise provided for in
Section 8
hereof, any endorsements, assignments or other instruments
of
conveyance or transfer with respect to the Collateral; and
(d) upon the occurrence and during the continuance of
any
Event of Default, (1) to direct any party liable for any
payment under
any of the Collateral to make payment of any and all moneys
due or to
become due thereunder directly to the Collateral Agent or as
the
Collateral Agent shall direct; (2) to ask or demand for,
collect, receive
payment of and receipt for, any and all moneys, claims and
other
amounts due or to become due at any time in respect of or
arising out
of any Collateral; (3) to sign and indorse any invoices,
freight or express
bills, bills of lading, storage or warehouse receipts,
drafts against
debtors, assignments, verifications, notices and other
documents in
connection with any of the Collateral; (4) to commence and
prosecute
any suits, actions or proceedings at law or in equity in any
court of
competent jurisdiction to collect the Collateral or any
portion thereof
and to enforce any other right in respect of any Collateral;
(5) to defend
any suit, action or proceeding brought against the Company
with
respect to any Collateral; (6) to settle, compromise or
adjust any such
suit, action or proceeding and, in connection therewith, to
give such
discharges or releases as the Collateral Agent may deem
appropriate;
and (7) generally, to sell, transfer, pledge and make any
agreement with
respect to or otherwise deal with any of the Collateral as
fully and
completely as though the Collateral Agent were the absolute
owner
thereof for all purposes, and to do, at the Collateral
Agent's option and
the Company's expense, at any time, or from time to time,
all acts and
things which the Collateral Agent deems necessary to
protect, preserve
or realize upon the Collateral and the Collateral Agent's
security
interests therein and to effect the intent of this
Agreement, all as fully
and effectively as the Company might do.
8.2 Performance by Collateral Agent of Company's
Obligations. If the Company fails to perform or comply with any
of its
agreements contained herein, the Collateral Agent, at its option,
but without
any obligation so to do, may perform or comply, or otherwise
cause
performance or compliance, with such agreement.
8.3 Company's Reimbursement Obligation. The expenses
of
the Collateral Agent incurred in connection with actions
undertaken as
provided in this Section, together with interest thereon at a
rate per annum
equal to 13.50% from the date of payment by the Collateral Agent
to the date
reimbursed by the Company, shall be payable by the Company to the
Collateral Agent on demand.
8.4 Ratification; Power Coupled With An Interest. The
Company hereby ratifies all that said attorneys shall lawfully do
or cause to be
done by virtue hereof. All powers, authorizations and agencies
contained in
this Agreement are coupled with an interest and are irrevocable
until this
Agreement is terminated and the security interests created hereby
are released.
9. Duty of Collateral Agent. The Collateral Agent's
sole duty
with respect to the custody, safekeeping and physical
preservation of the
Collateral in its possession, under Section 9-207 of the Code or
otherwise, shall
be to deal with it in the same manner as the Collateral Agent
deals with
similar property for its own account, except that the Collateral
Agent shall
have no obligation to invest funds held in any Collateral Account
and may
hold the same as demand deposits. Neither the Collateral Agent
nor any of its
directors, officers, employees or agents shall be liable for
failure to demand,
collect or realize upon any of the Collateral or for any delay in
doing so or
shall be under any obligation to sell or otherwise dispose of any
Collateral
upon the request of the Company or any other Person or to take
any other
action whatsoever with regard to the Collateral or any part
thereof. The
powers conferred on the Collateral Agent hereunder are solely to
protect the
Collateral Agent's interests in the Collateral and shall not
impose any duty
upon the Collateral Agent to exercise any such powers. The
Collateral Agent
shall be accountable only for amounts that it actually receives
as a result of the
exercise of such powers, and neither it nor any of its officers,
directors,
employees or agents shall be responsible to the Company for any
act or failure
to act hereunder, except for their own gross negligence or
willful misconduct.
10. Execution of Financing Statements. Pursuant to
Section 9-
402 of the Code, the Company authorizes the Collateral Agent to
file financing
statements with respect to the Collateral without the signature
of the Company
in such form and in such filing offices as the Collateral Agent
reasonably
determines appropriate to perfect the security interests of the
Collateral Agent
under this Agreement. A carbon, photographic or other
reproduction of this
Agreement shall be sufficient as a financing statement for filing
in any
jurisdiction.
11. Authority of Collateral Agent. The Company
acknowledges that the rights and responsibilities of the
Collateral Agent under
this Agreement with respect to any action taken by the Collateral
Agent or the
exercise or non-exercise by the Collateral Agent of any option,
voting right,
request, judgment or other right or remedy provided for herein or
resulting or
arising out of this Agreement shall, as between the Collateral
Agent and the
Holders be governed by the Indenture and by such other agreements
with
respect thereto as may exist from time to time among them, but,
as between
the Collateral Agent and the Company, the Collateral Agent shall
be
conclusively presumed to be acting as agent for the Holders with
full and
valid authority so to act or refrain from acting, and the Company
shall be
under no obligation, or entitlement, to make any inquiry
respecting such
authority.
12. Indemnity.
12.1 Indemnity. (a) The Company agrees to indemnify,
pay
and hold harmless the Collateral Agent and the officers,
directors, employees,
agents and affiliates of the Collateral Agent (collectively
called the
"Indemnitees") from and against any and all other liabilities,
obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs
(including, without
limitation, settlement costs), expenses or disbursements of any
kind or nature
whatsoever (including, without limitation, the reasonable fees
and
disbursements of counsel for such Indemnitees in connection with
any
investigative, administrative or judicial proceeding commenced or
threatened,
whether or not such Indemnitee shall be designated a party
thereto), which
may be imposed on, incurred by, or asserted against that
Indemnitee, in any
manner relating to or arising out of this Agreement, the
Indenture, the
Subsidiary Guarantee or the Securities arising in any action
relating to, directly
or indirectly, the Collateral or the subject of this Agreement
(including without
limitation, any misrepresentation by the Company in this
Agreement (the
"indemnified liabilities"); provided that the Company shall have
no obligation
to an Indemnitee hereunder with respect to indemnified
liabilities if it has been
determined by a final decision (after all appeals and the
expiration of time to
appeal) by a court of competent jurisdiction that such
indemnified liability
arose from the negligence or willful misconduct of that
Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless
set forth in
the preceding sentence may be unenforceable because it is
violative of any law
or public policy, the Company shall contribute the maximum
portion which it
is permitted to pay and satisfy under applicable law, to the
payment and
satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of
them.
(b) The Company agrees to pay, and to save the
Collateral
Agent harmless from, any and all liabilities, costs and expenses
(including,
without limitation, legal fees and expenses) (1) with respect to,
or resulting
from any delay in paying, any and all stamp, excise, sales or
other taxes and
any and all recording and filing fees which may be payable or
determined to
be payable with respect to any of the Collateral, (2) with
respect to, or
resulting from, any delay in complying with any Requirement of
Law
applicable to any of the Collateral and (3) in connection with
any of the
transactions contemplated by this Agreement.
12.2 Survival. The obligations of the Company
contained in
this Section 12 shall survive the termination of this Agreement
and the
discharge of the Company's other obligations under this
Agreement.
12.3 Reimbursements. Any amounts paid by any
Indemnitee as
to which such Indemnitee has the right to reimbursement shall
constitute
Obligations secured by the Collateral.
13. Notices. All notices, requests and demands to or
upon the
Collateral Agent or the Company to be effective shall be in
writing (or by
telex, fax or similar electronic transfer) and shall be deemed to
have been duly
given or made (a) when delivered by hand or (b) if given by mail,
when
deposited in the mails by certified mail, return receipt
requested, or (c) if by
telex, fax or similar electronic transfer, when sent and receipt
has been
confirmed, addressed to the Collateral Agent or the Company at
its address or
transmission number for notices provided in Section 1.5 of the
Indenture or to
the Company at the address set forth below its signature. The
Collateral
Agent and the Company may change their addresses and transmission
numbers for notices by notice in the manner provided in this
Section.
14. Termination of this Agreement. (a)
Notwithstanding any
other provision of this Agreement, and in the absence of a claim
for
indemnification pursuant to Section 12.1 hereof, this Agreement
shall
automatically terminate upon the satisfaction, discharge or
avoidance of the
Obligations pursuant to the terms of the Subsidiary Guarantee and
the
Indenture.
(b) Upon the termination of this Agreement and subject
to the
terms of the Subsidiary Guarantee, the Collateral Agent shall
execute and
deliver to the Company such documents of assignment as are
reasonably
necessary to terminate the Collateral Agent's security interest
in any Collateral
granted pursuant to this Agreement.
(c) If the Company ceases to be a Subsidiary of the
Parent
pursuant to Article VI of the Indenture and subject to the
satisfaction of the
terms and conditions of the Indenture in general and Article VI
in particular,
the Company shall automatically be released from all of its share
of the
Obligations, and this Agreement shall terminate.
15. Severability. Any provision of this Agreement
which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without
invalidating the remaining provisions hereof, and any such
prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable
such provision in any other jurisdiction.
16. Amendments in Writing; No Waiver; Cumulative
Remedies.
16.1 Amendments in Writing. None of the terms or
provisions
of this Agreement may be waived, amended, supplemented or
otherwise
modified except by a written instrument executed by the Company
and the
Collateral Agent in a manner pursuant to Article VI of the
Indenture or any
other provision therein, or as may be provided for in the
Intercreditor
Agreement with the Bank of New York Commercial Corporation as ACM
Agent ("ACM Agent"), dated an even date herewith, as the same may
be
amended, modified or supplemented from time to time.
16.2 No Waiver by Course of Conduct. Neither the
Collateral
Agent or any Holder shall by any act (except by a written
instrument pursuant
to subsection 16.1 hereof), delay, indulgence, omission or
otherwise be deemed
to have waived any right or remedy hereunder or to have
acquiesced in any
Default or Event of Default or in any breach of any of the terms
and
conditions hereof. No failure to exercise, nor any delay in
exercising, on the
part of the Collateral Agent or any Holder, any right, power or
privilege
hereunder shall operate as a waiver thereof. No single or
partial exercise of
any right, power or privilege hereunder shall preclude any other
or further
exercise thereof or the exercise of any other right, power or
privilege. A
waiver by the Collateral Agent or the Holders of any right or
remedy
hereunder on any one occasion shall not be construed as a bar to
any right or
remedy which the Collateral Agent or the Holders would otherwise
have on
any future occasion.
16.3 Remedies Cumulative. The rights and remedies
herein
provided are cumulative, may be exercised singly or concurrently
and are not
exclusive of any other rights or remedies provided by law.
17. Intercreditor Agreement. The parties hereto
acknowledge
that the terms of this Agreement are subject to the Intercreditor
Agreement
dated as of the date hereof between The Bank of New York
Commercial
Corporation and the Trustee.
18. Section Headings. The section and subsection
headings
used in this Agreement are for convenience of reference only and
are not to
affect the construction hereof or be taken into consideration in
the
interpretation hereof.
19. Successors and Assigns. This Agreement shall be
binding
upon the successors and assigns of the Company and shall inure to
the benefit
of the Collateral Agent and its successors and assigns.
20. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
21. Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or
proceeding relating to this Agreement to which it is a
party, or for
recognition and enforcement of any judgment in respect
thereof, to the
non-exclusive general jurisdiction of the Courts of the
State of New
York, the courts of the United States of America for the
Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now or
hereafter have to the venue of any such action or proceeding
in any
such court or that such action or proceeding was brought in
an
inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action
or
proceeding may be effected by mailing a copy thereof by
registered or
certified mail (or any substantially similar form of mail),
postage
prepaid, to the Company at its address set forth in Section
1.5 of the
Indenture or at such other address of which the Collateral
Agent shall
have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right
to effect
service of process in any other manner permitted by law or
shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by
law, any
right it may have to claim or recover in any legal action or
proceeding
referred to in this subsection any special, exemplary,
punitive or
consequential damages.<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
Security Agreement to be duly executed and delivered as of the
date first
above written.
KOPPEL STEEL CORPORATION
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address: P.O. Box 750
Beaver Falls, PA 15010
Fax: (412) 847-6385
THE HUNTINGTON NATIONAL BANK,
as Collateral Agent
By:/S/ CANDADA J. MOORE
Name: Candada J. Moore
Title: Trust Officer
Address: Trust Department
41 South High Street
Columbus, Ohio 43215
Fax: (614) 480-5223
Schedule 1
[Koppel]
EQUIPMENT
List of Locations
Koppel Steel Corporation Koppel - Plant
6th & Mount Street
Koppel, Pennsylvania 16136
(Beaver County)
Ambridge - Plant
23rd Street & Duss Avenue
Ambridge, Pennsylvania 15003
(Beaver County)
Baytown - Plant
2600 Spur 55
Baytown, Texas 77520
(Chambers County)
<PAGE>
Schedule 2
[Koppel]
REAL PROPERTY
OBLIGOR PROPERTY ADDRESS
(DESIGNATE WHETHER
OWNED OR LEASED)
Koppel Steel Corporation Sixth & Mount
Koppel, PA 16136 (Beaver
County)(Owned)
23 & Duss Avenue
Ambridge, PA 15003 (Beaver
County)(Owned)
2600 Spur 55 Road
Baytown, Texas 77522
(Chambers County)(Owned)
Subsidiary Security Agreement
Between
Koppel Steel Corporation
And
The Huntington National Bank,
as Collateral Agent
July 28, 1995
TABLE OF CONTENTS
Page
1. Defined Terms . . . . . . . . . . . . . . . . . . . . . .
1
1.1 Definitions . . . . . . . . . . . . . . . . . . . .
1
1.2 Other Definitional Provisions . . . . . . . . . . .
3
2. Grant of Security Interest. . . . . . . . . . . . . . . .
3
3. Representations and Warranties. . . . . . . . . . . . . .
3
3.1 Title; No Other Liens . . . . . . . . . . . . . . .
3
3.2 Perfected First Priority Liens. . . . . . . . . . .
4
3.3 Equipment . . . . . . . . . . . . . . . . . . . . .
4
3.4 Chief Executive Office. . . . . . . . . . . . . . .
4
3.5 Farm Products . . . . . . . . . . . . . . . . . . .
4
4. Covenants . . . . . . . . . . . . . . . . . . . . . . . .
4
4.1 Delivery of Instruments and Chattel Paper . . . . .
4
4.2 Marking of Records. . . . . . . . . . . . . . . . .
4
4.3 Maintenance of Insurance. . . . . . . . . . . . . .
4
4.4 Payment of Taxes, Assessments and Governmental
Charges . . . . . . . . . . . . . . . . . . . . . . .
5
4.5 Maintenance of Perfected Security Interest; Further
Documentation . . . . . . . . . . . . . . . . . .
5
4.6 Changes in Locations, Name, etc.. . . . . . . . . .
6
4.7 Further Identification of Collateral. . . . . . . .
6
4.8 Notices . . . . . . . . . . . . . . . . . . . . . .
6
5. Asset Sales and Receipt of Net Insurance Proceeds . . . .
6
6. Remedies. . . . . . . . . . . . . . . . . . . . . . . . .
7
6.2 Code Remedies . . . . . . . . . . . . . . . . . . .
7
6.3 Deficiency. . . . . . . . . . . . . . . . . . . . .
8
7. Applicable Provisions of the Indenture. . . . . . . . . .
8
8. Collateral Agent's Appointment as Attorney-in-Fact;
Collateral Agent's Performance of Company's Obligations
8
8.1 Powers. . . . . . . . . . . . . . . . . . . . . . .
8
8.2 Performance by Collateral Agent of Company's
Obligations . . . . . . . . . . . . . . . . . . . . .
9
8.3 Company's Reimbursement Obligation. . . . . . . . .
9
8.4 Ratification; Power Coupled With An Interest. . . .
9
9. Duty of Collateral Agent. . . . . . . . . . . . . . . . .
9
10. Execution of Financing Statements . . . . . . . . . . . .
10
11. Authority of Collateral Agent . . . . . . . . . . . . . .
10
12. Indemnity . . . . . . . . . . . . . . . . . . . . . . . .
10
12.1 Indemnity . . . . . . . . . . . . . . . . . . . . .
10
12.2 Survival. . . . . . . . . . . . . . . . . . . . . .
11
12.3 Reimbursements. . . . . . . . . . . . . . . . . . .
11
13. Notices . . . . . . . . . . . . . . . . . . . . . . . . .
11
14. Termination of this Agreement . . . . . . . . . . . . . .
12
15. Severability. . . . . . . . . . . . . . . . . . . . . . .
12
16. Amendments in Writing; No Waiver; Cumulative Remedies . .
12
16.1 Amendments in Writing . . . . . . . . . . . . . . .
12
16.2 No Waiver by Course of Conduct. . . . . . . . . . .
12
16.3 Remedies Cumulative . . . . . . . . . . . . . . . .
13
17. Intercreditor Agreement . . . . . . . . . . . . . . . . .
13
18. Section Headings. . . . . . . . . . . . . . . . . . . . .
13
19. Successors and Assigns. . . . . . . . . . . . . . . . . .
13
20. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . .
13
21. Submission To Jurisdiction; Waivers . . . . . . . . . . .
13
SUBSIDIARY SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 28, 1995, made
by Erlanger Tubular Corporation, an Oklahoma corporation, the
Federal
Employer Identification Number of which is 73-1281150 (the
"Company")
in favor of THE HUNTINGTON NATIONAL BANK, as collateral agent
(in such capacity, the "Collateral Agent"), the Federal Employer
Identification Number of which is 31-0966785, under the Indenture
dated as of July 28, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Indenture") between the
Collateral
Agent (acting in its capacity as trustee) and NS Group, Inc. (the
"Parent"), for the benefit of the Holders of 13 1/2% Senior
Secured
Notes
due 2003 (the "Securities") issued by the Parent.
W I T N E S S E T H :
WHEREAS, the Company is the owner of the Collateral (as
hereinafter defined); and
WHEREAS, it is a condition precedent to the purchase of
the Securities from the Parent that the Company shall have
executed
and delivered this Agreement to the Collateral Agent for the
ratable
benefit of the Holders.
NOW, THEREFORE, in consideration of the premises and
to induce the Trustee to enter into the Indenture and to induce
the
Holders to purchase the Securities, the Company hereby agrees
with the
Collateral Agent, for the ratable benefit of the Holders, as
follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined
herein,
terms defined in the Indenture and used herein shall have the
meanings
given to them in the Indenture and the following terms which are
defined in the Uniform Commercial Code in effect in the State of
New
York on the date hereof are used herein as so defined: Chattel
Paper,
Equipment, Farm Products and Instruments.
(b) The following terms shall have the following
meanings:
"Agreement" means this Security Agreement, as the same
may be amended, modified or otherwise supplemented from time
to time.
"Code" means the Uniform Commercial Code as from time
to time in effect in the State of New York.
"Collateral" has the meaning specified in Section 2 of
this
Agreement.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is
a
party or by which it or any of the property owned by it is
bound.
"Fixtures" shall have the meaning assigned to such term
in
the Code and include, without limitation, all goods that
after
placement on the real property described in Schedule 2
hereto
become component parts of the real property described in
Schedule 2 hereto, buildings and other constructions and
which
are used in the conduct of the Company's trade, business,
occupation or other commercial or industrial activity.
"Net Insurance Proceeds" has the meaning specified in
Section 4.3 of this Agreement.
"Obligations" means the due and punctual payment and
performance by the Company of all its obligations and
liabilities,
absolute or contingent, liquidated or unliquidated, now
existing
or hereafter incurred under, arising out of and in
connection with
the Subsidiary Guarantee.
"Proceeds" and "Products" shall have the meaning
ascribed
to such terms in the Code and shall include in any event (i)
whatever is received upon any collection, exchange, sale or
other
disposition or refinancing of any of the Collateral and any
property into which any of the Collateral is converted
(whether
cash or non-cash proceeds), (ii) any and all proceeds of any
insurance, indemnity, warranty or guarantee payable to the
Company from time to time with respect to any of the
Collateral,
(iii) any and all payments (in any form whatsoever) made or
due
and payable to the Company from time to time in connection
with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any
governmental
authority (or any person acting under color of governmental
authority) and (iv) any and all other amounts from time to
time
paid or payable under or in connection with any of the
Collateral.
"Requirement of Law" means, as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational
or governing documents of such Person, and any law, treaty,
rule
or regulation or determination of an arbitrator or a court
or other
governmental authority, in each case applicable to or
binding
upon such Person or any of its property or to which such
Person
or any of its property is subject.
"Subsidiary Guarantee" means the Subsidiary Guarantee
dated an even date herewith among the Company, Koppel Steel
Corporation, Imperial Adhesives, Inc., Newport Steel
Corporation,
Northern Kentucky Air, Inc. and Northern Kentucky
Management, Inc. and the Collateral Agent for the benefit of
the
Holders, as the same may be amended, supplemented or
otherwise modified from time to time.
1.2 Other Definitional Provisions. (a) The words
"hereof," "herein" and "hereunder" and words of similar import
when
used in this Agreement shall refer to this Agreement as a whole
and not
to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise
specified.
(b) All references to the Collateral Agent shall be
deemed to include a reference to the Trustee, and the reverse
thereof
shall similarly apply.
(c) The meanings given to terms defined herein shall
be
equally applicable to both the singular and plural forms of such
terms.
2. Grant of Security Interest. As collateral
security for
the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the
Obligations,
the Company hereby grants to the Collateral Agent for the ratable
benefit of the Holders a security interest in all of the
following property
now owned or at any time hereafter acquired by the Company or in
which the Company now has or at any time in the future may
acquire
any right, title or interest (collectively, the "Collateral"):
(a) all Equipment including, without limitation, (i)
furniture, furnishings, tools, lubricants, spare parts,
shelving,
displays, cases, accessories, motors and engines and (ii)
with
respect to the foregoing all attachments, components, parts,
equipment and accessories installed thereon or affixed
thereto;
(b) all Fixtures;
(c) all books and records pertaining to the
Collateral;
and
(d) to the extent not otherwise included, all Proceeds
and Products of any and all of the foregoing.
3. Representations and Warranties. The Company
hereby represents and warrants that:
3.1 Title; No Other Liens. Except for (a) the
security
interest granted to the Collateral Agent for the ratable benefit
of the
Holders pursuant to this Agreement, (b) the security interest
granted to
the Parent to secure the Company's obligations under its
Intercompany
Note and (c) the other Liens permitted to exist on the Collateral
pursuant to the Indenture, the Company owns each item of the
Collateral free and clear of any and all Liens or claims of
others. No
security agreement, financing statement or other public notice
with
respect to all or any part of the Collateral is on file or of
record in any
public office, except (a) such as have been filed in favor of the
Collateral
Agent, for the ratable benefit of the Holders, pursuant to this
Agreement, (b) such as have been filed in favor of the Parent to
secure
the Company's obligations under its Intercompany Note or (c) as
are
permitted pursuant to the Indenture.
3.2 Perfected First Priority Liens. The security
interests
granted pursuant to this Agreement (a) constitute perfected first
security
interests in the Collateral in favor of the Collateral Agent, for
the ratable
benefit of the Holders, (b) are prior to all other Liens on the
Collateral
in existence on the date hereof except for Liens permitted to
exist
pursuant to the Indenture, and (c) are enforceable as such
against (1) all
creditors of and purchasers from the Company and (2) any Person
having any interest in the real property where any of the
Equipment is
located.
3.3 Equipment. The Equipment is kept at the locations
listed on Schedule 1 hereto.
3.4 Chief Executive Office. The Company's chief
executive office and chief place of business is located at 5610
Bird Creek
Avenue, Catoosa, Oklahoma 74015.
3.5 Farm Products. None of the Collateral
constitutes,
or is the Proceeds of, Farm Products.
4. Covenants. The Company covenants and agrees
with the Collateral Agent that, from and after the date of this
Agreement until this Agreement is terminated and the security
interests
created hereby are released:
4.1 Delivery of Instruments and Chattel Paper. If any
amount payable under or in connection with any of the Collateral
shall
be or become evidenced by any Instrument or Chattel Paper, such
Instrument or Chattel Paper shall be promptly delivered to the
Collateral Agent, duly indorsed in a manner satisfactory to the
Collateral Agent, to be held as Collateral pursuant to this
Agreement.
4.2 Marking of Records. The Company will include in
its books and records pertaining to the Collateral an appropriate
reference to this Agreement and the security interests created
hereby.
4.3 Maintenance of Insurance. (a) The Company will
maintain, with financially sound and reputable companies,
insurance
policies (1) insuring the Equipment and Fixtures against loss by
fire,
explosion, theft and such other casualties as are usually and
customarily
carried with respect to similar property and or facilities
according to
their respective locations and (2) insuring the Company, the
Collateral
Agent and the Holders against liability for personal injury and
property
damage relating to such Equipment and Fixtures, such policies to
be in
such form and amounts and having such coverage as are usually and
customarily carried with respect to similar property and or
facilities
according to their respective locations with losses payable to
the
Company and the Collateral Agent ("Net Insurance Proceeds").
(b) All such insurance shall (1) provide that no
cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after
receipt by
the Collateral Agent of written notice thereof, (2) name the
Collateral
Agent as the insured party and (3) subject to paragraph (a)
above, be
reasonably satisfactory in all other respects to the Collateral
Agent.
(c) The Company shall deliver to the Collateral Agent
a
report of a reputable insurance broker with respect to such
insurance
during the month of July in each calendar year and such
supplemental
reports with respect thereto as the Collateral Agent may from
time to
time reasonably request.
4.4 Payment of Taxes, Assessments and Governmental
Charges. The Company will pay and discharge or otherwise satisfy
at
or before maturity or before they become delinquent, as the case
may
be, all taxes, assessments and governmental charges or levies
imposed
upon the Collateral or in respect of income or profits therefrom,
as well
as all claims of any kind (including, without limitation, claims
for labor,
materials and supplies) against or with respect to the
Collateral, except
that no such charge need be paid if the amount, applicability or
validity
thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect
thereto
have been provided on the books of the Company and such
proceedings
do not involve any material danger of the sale, forfeiture or
loss of any
of the Collateral or any interest therein.
4.5 Maintenance of Perfected Security Interest;
Further
Documentation. (a) The Company shall maintain the security
interest
created by this Agreement as a first, perfected security interest
subject
only to Liens permitted to exist pursuant to the Indenture and
shall
defend such security interest against claims and demands of all
Persons
whomsoever.
(b) At any time and from time to time, upon the
written
request of the Collateral Agent and at the sole expense of the
Company,
the Company will promptly and duly execute and deliver such
further
instruments and documents and take such further action as the
Collateral Agent may reasonably request for the purpose of
obtaining or
preserving the full benefits of this Agreement and of the rights
and
powers herein granted, including, without limitation, the filing
of any
financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the security
interests
created hereby.
4.6 Changes in Locations, Name, etc. (a) The Company
will not, unless it shall have given the Collateral Agent at
least 30 days
prior written notice:
(i) permit any of the Equipment to be kept at a
location
other than those listed on Schedule 1 hereto; or
(ii) change the location of its chief executive office
and
chief place of business from that specified in subsection
3.4; or
(iii) change its name, identity, Federal taxpayer
identification number or corporate structure to such an
extent
that any financing statement filed by the Collateral Agent
in
connection with this Agreement would become seriously
misleading.
(b) In the case of transfers of the assets of Erlanger
pursuant to the proviso of Section 6.12 of the Indenture, the
Company
shall notify the Trustee of such transfer no later than 30 days
thereafter.
4.7 Further Identification of Collateral. The Company
will furnish to the Collateral Agent from time to time statements
and
schedules further identifying and describing the Collateral and
such
other reports in connection with the Collateral as the Collateral
Agent
may reasonably request, all in reasonable detail.
4.8 Notices. The Company will advise the Collateral
Agent promptly, in reasonable detail, at its address set forth in
the
Indenture of:
(a) any Lien (other than security interests created
hereby, the security interest granted to the Parent to
secure the
Company's obligations under its Intercompany Note or Liens
permitted under the Indenture) on, or claim asserted
against, any
of the Collateral; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on
the
aggregate value of the Collateral or on the security
interests
created hereby.
5. Asset Sales and Receipt of Net Insurance Proceeds.
All cash, checks, instruments and other Proceeds of the
Collateral from
Asset Sales or otherwise, including Net Insurance Proceeds, shall
be
held by the Company in trust for the Collateral Agent and the
Holders,
segregated from the other funds of the Company, and shall,
immediately upon receipt by the Company, be turned over to the
Collateral Agent in the exact form received by the Company (duly
indorsed by the Company to the Collateral Agent, if required) and
held
by the Collateral Agent in a Collateral Account maintained under
the
sole dominion and control of the Collateral Agent, except as may
be
released to the Company and or applied to the Obligations in
accordance with Article XIII of the Indenture. All proceeds
while held
by the Collateral Agent in a Collateral Account (or by the
Company in
trust for the Collateral Agent and the Holders) shall continue to
be held
as collateral security for all the Obligations and shall not
constitute
payment thereof until applied as provided in subsection 8.1 or
8.2.
6. Remedies.
6.1 Remedies. Subject to the provisions of Article
VIII
of the Indenture, if an Event of Default shall have occurred and
be
continuing, at any time at the Collateral Agent's election, the
Collateral
Agent may apply all or any part of the Proceeds held in any
Collateral
Account in payment of the Obligations in the manner set forth in
Section 8.6 of the Indenture.
6.2 Code Remedies. Subject to the provisions of
Article
VIII of the Indenture, if an Event of Default shall occur and be
continuing, the Collateral Agent on behalf of the Holders may
exercise,
in addition to all other rights and remedies granted to them in
this
Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and
remedies of a
secured party under the Code. Without limiting the generality of
the
foregoing, the Collateral Agent without demand of performance or
other
demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon
the
Company or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in
such
circumstances forthwith collect, receive, appropriate and realize
upon
the Collateral, or any part thereof, and/or may forthwith sell,
lease,
assign, give option or options to purchase, or otherwise dispose
of and
deliver the Collateral or any part thereof (or contract to do any
of the
foregoing), in one or more parcels at public or private sale or
sales, at
any exchange, broker's board or office of the Collateral Agent or
elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or
for
future delivery without assumption of any credit risk. The
Collateral
Agent shall have the right upon any such public sale or sales,
and, to
the extent permitted by law, upon any such private sale or sales,
to
purchase the whole or any part of the Collateral so sold, free of
any
right or equity of redemption in the Company, which right or
equity is
hereby waived or released. The Company further agrees, at the
Collateral Agent's request, to assemble the Collateral and make
it
available to the Collateral Agent at places which the Collateral
Agent
shall reasonably select, whether at the Company's premises or
elsewhere. The Collateral Agent shall apply the net proceeds of
any
such collection, recovery, receipt, appropriation, realization or
sale, after
deducting all reasonable costs and expenses of every kind
incurred
therein or incidental to the care or safekeeping of any of the
Collateral
or in any way relating to the Collateral, in the manner set forth
in
Section 8.6 of the Indenture. To the extent permitted by
applicable law,
the Company waives all claims, damages and demands it may acquire
against the Collateral Agent or any Holder arising out of the
exercise by
them of any rights hereunder, except to the extent any such
claims,
damages or demands were directly caused by the Collateral Agent's
gross negligence or willful misconduct. If any notice of a
proposed sale
or other disposition of Collateral shall be required by law, such
notice
shall be deemed reasonable and proper if given at least 10 days
before
such sale or other disposition.
6.3 Deficiency. The Company shall remain liable for
any deficiency if the proceeds of any sale or other disposition
of the
Collateral are insufficient to pay the Obligations and the fees
and
disbursements of any attorneys employed by the Collateral Agent
or
any Holder to collect such deficiency.
7. Applicable Provisions of the Indenture. Section
12.2
through 12.10 of the Indenture is hereby incorporated by
reference into
this Agreement and made a part of the same as if set forth
herein. To
the extent, if any, that the provisions of this Agreement are
inconsistent
with the provisions of Section 12.2 through 12.10 of the
Indenture, the
provisions of the Indenture shall prevail.
8. Collateral Agent's Appointment as
Attorney-in-Fact;
Collateral Agent's Performance of Company's Obligations.
8.1 Powers. The Company hereby irrevocably
constitutes and appoints the Collateral Agent and any officer or
agent
thereof, with full power of substitution, as its true and lawful
attorney-
in-fact with full irrevocable power and authority in the place
and stead
of the Company and in the name of the Company or in its own name,
from time to time in the Collateral Agent's discretion, for the
purpose of
carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality
of the
foregoing, the Company hereby gives the Collateral Agent the
power
and right, on behalf of the Company, without notice to or assent
by the
Company, to do the following:
(a) in the case of any Collateral, at any time when
any
Event of Default shall have occurred and is continuing, in
the
name of the Company or its own name, or otherwise, to take
possession of and indorse and collect any checks, drafts,
notes,
acceptances or other instruments for the payment of moneys
due
with respect to any Collateral and to file any claim or to
take any
other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Collateral Agent for the
purpose of collecting any and all such moneys due with
respect
to any Collateral whenever payable;
(b) to pay or discharge taxes and Liens levied or
placed
on or threatened against the Collateral (except as provided
by
Section 4.4 of this Agreement), to effect any repairs or any
insurance called for by the terms of this Agreement and to
pay all
or any part of the premiums therefor and the costs thereof;
(c) to execute, in connection with any Asset Sale
permitted by Section 6.15 of the Indenture or otherwise
provided
for in Section 8 hereof, any endorsements, assignments or
other
instruments of conveyance or transfer with respect to the
Collateral; and
(d) upon the occurrence and during the continuance of
any Event of Default, (1) to direct any party liable for any
payment under any of the Collateral to make payment of any
and
all moneys due or to become due thereunder directly to the
Collateral Agent or as the Collateral Agent shall direct;
(2) to ask
or demand for, collect, receive payment of and receipt for,
any
and all moneys, claims and other amounts due or to become
due
at any time in respect of or arising out of any Collateral;
(3) to
sign and indorse any invoices, freight or express bills,
bills of
lading, storage or warehouse receipts, drafts against
debtors,
assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) to commence and
prosecute any suits, actions or proceedings at law or in
equity in
any court of competent jurisdiction to collect the
Collateral or any
portion thereof and to enforce any other right in respect of
any
Collateral; (5) to defend any suit, action or proceeding
brought
against the Company with respect to any Collateral; (6) to
settle,
compromise or adjust any such suit, action or proceeding
and, in
connection therewith, to give such discharges or releases as
the
Collateral Agent may deem appropriate; and (7) generally, to
sell,
transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and
completely
as though the Collateral Agent were the absolute owner
thereof
for all purposes, and to do, at the Collateral Agent's
option and
the Company's expense, at any time, or from time to time,
all acts
and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the
Collateral
Agent's security interests therein and to effect the intent
of this
Agreement, all as fully and effectively as the Company might
do.
8.2 Performance by Collateral Agent of Company's
Obligations. If the Company fails to perform or comply with any
of its
agreements contained herein, the Collateral Agent, at its option,
but
without any obligation so to do, may perform or comply, or
otherwise
cause performance or compliance, with such agreement.
8.3 Company's Reimbursement Obligation. The
expenses of the Collateral Agent incurred in connection with
actions
undertaken as provided in this Section, together with interest
thereon at
a rate per annum equal to 13.50% from the date of payment by the
Collateral Agent to the date reimbursed by the Company, shall be
payable by the Company to the Collateral Agent on demand.
8.4 Ratification; Power Coupled With An Interest. The
Company hereby ratifies all that said attorneys shall lawfully do
or
cause to be done by virtue hereof. All powers, authorizations
and
agencies contained in this Agreement are coupled with an interest
and
are irrevocable until this Agreement is terminated and the
security
interests created hereby are released.
9. Duty of Collateral Agent. The Collateral Agent's
sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section
9-207 of
the Code or otherwise, shall be to deal with it in the same
manner as
the Collateral Agent deals with similar property for its own
account,
except that the Collateral Agent shall have no obligation to
invest funds
held in any Collateral Account and may hold the same as demand
deposits. Neither the Collateral Agent nor any of its directors,
officers,
employees or agents shall be liable for failure to demand,
collect or
realize upon any of the Collateral or for any delay in doing so
or shall
be under any obligation to sell or otherwise dispose of any
Collateral
upon the request of the Company or any other Person or to take
any
other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Collateral Agent hereunder
are
solely to protect the Collateral Agent's interests in the
Collateral and
shall not impose any duty upon the Collateral Agent to exercise
any
such powers. The Collateral Agent shall be accountable only for
amounts that it actually receives as a result of the exercise of
such
powers, and neither it nor any of its officers, directors,
employees or
agents shall be responsible to the Company for any act or failure
to act
hereunder, except for their own gross negligence or willful
misconduct.
10. Execution of Financing Statements. Pursuant to
Section 9-402 of the Code, the Company authorizes the Collateral
Agent
to file financing statements with respect to the Collateral
without the
signature of the Company in such form and in such filing offices
as the
Collateral Agent reasonably determines appropriate to perfect the
security interests of the Collateral Agent under this Agreement.
A
carbon, photographic or other reproduction of this Agreement
shall be
sufficient as a financing statement for filing in any
jurisdiction.
11. Authority of Collateral Agent. The Company
acknowledges that the rights and responsibilities of the
Collateral Agent
under this Agreement with respect to any action taken by the
Collateral
Agent or the exercise or non-exercise by the Collateral Agent of
any
option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement
shall,
as between the Collateral Agent and the Holders be governed by
the
Indenture and by such other agreements with respect thereto as
may
exist from time to time among them, but, as between the
Collateral
Agent and the Company, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Holders with full and
valid
authority so to act or refrain from acting, and the Company shall
be
under no obligation, or entitlement, to make any inquiry
respecting such
authority.
12. Indemnity.
12.1 Indemnity. (a) The Company agrees to indemnify,
pay and hold harmless the Collateral Agent and the officers,
directors,
employees, agents and affiliates of the Collateral Agent
(collectively
called the "Indemnitees") from and against any and all other
liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims,
costs (including, without limitation, settlement costs), expenses
or
disbursements of any kind or nature whatsoever (including,
without
limitation, the reasonable fees and disbursements of counsel for
such
Indemnitees in connection with any investigative, administrative
or
judicial proceeding commenced or threatened, whether or not such
Indemnitee shall be designated a party thereto), which may be
imposed
on, incurred by, or asserted against that Indemnitee, in any
manner
relating to or arising out of this Agreement, the Indenture, the
Subsidiary Guarantee or the Securities arising in any action
relating to,
directly or indirectly, the Collateral or the subject of this
Agreement
(including without limitation, any misrepresentation by the
Company in
this Agreement (the "indemnified liabilities"); provided that the
Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities if it has been determined by a
final
decision (after all appeals and the expiration of time to appeal)
by a
court of competent jurisdiction that such indemnified liability
arose
from the negligence or willful misconduct of that Indemnitee. To
the
extent that the undertaking to indemnify, pay and hold harmless
set
forth in the preceding sentence may be unenforceable because it
is
violative of any law or public policy, the Company shall
contribute the
maximum portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all
indemnified
liabilities incurred by the Indemnitees or any of them.
(b) The Company agrees to pay, and to save the
Collateral Agent harmless from, any and all liabilities, costs
and
expenses (including, without limitation, legal fees and expenses)
(1) with
respect to, or resulting from any delay in paying, any and all
stamp,
excise, sales or other taxes and any and all recording and filing
fees
which may be payable or determined to be payable with respect to
any
of the Collateral, (2) with respect to, or resulting from, any
delay in
complying with any Requirement of Law applicable to any of the
Collateral and (3) in connection with any of the transactions
contemplated by this Agreement.
12.2 Survival. The obligations of the Company
contained
in this Section 12 shall survive the termination of this
Agreement and
the discharge of the Company's other obligations under this
Agreement.
12.3 Reimbursements. Any amounts paid by any
Indemnitee as to which such Indemnitee has the right to
reimbursement
shall constitute Obligations secured by the Collateral.
13. Notices. All notices, requests and demands to or
upon the Collateral Agent or the Company to be effective shall be
in
writing (or by telex, fax or similar electronic transfer) and
shall be
deemed to have been duly given or made (a) when delivered by hand
or (b) if given by mail, when deposited in the mails by certified
mail,
return receipt requested, or (c) if by telex, fax or similar
electronic
transfer, when sent and receipt has been confirmed, addressed to
the
Collateral Agent or the Company at its address or transmission
number
for notices provided in Section 1.5 of the Indenture or to the
Company
at the address set forth below its signature. The Collateral
Agent and
the Company may change their addresses and transmission numbers
for
notices by notice in the manner provided in this Section.
14. Termination of this Agreement. (a)
Notwithstanding any other provision of this Agreement, and in the
absence of a claim for indemnification pursuant to Section 12.1
hereof,
this Agreement shall automatically terminate upon the
satisfaction,
discharge or avoidance of the Obligations pursuant to the terms
of the
Subsidiary Guarantee and the Indenture.
(b) Upon the termination of this Agreement and subject
to
the terms of the Subsidiary Guarantee, the Collateral Agent shall
execute
and deliver to the Company such documents of assignment as are
reasonably necessary to terminate the Collateral Agent's security
interest
in any Collateral granted pursuant to this Agreement.
(c) If the Company ceases to be a Subsidiary of the
Parent
pursuant to Article VI of the Indenture and subject to the
satisfaction of
the terms and conditions of the Indenture in general and Article
VI in
particular, the Company shall automatically be released from all
of its
share of the Obligations, and this Agreement shall terminate.
15. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof,
and any such prohibition or unenforceability in any jurisdiction
shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
16. Amendments in Writing; No Waiver; Cumulative
Remedies.
16.1 Amendments in Writing. None of the terms or
provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by
the
Company and the Collateral Agent in a manner pursuant to Article
VI
of the Indenture or any other provision therein, or as may be
provided
for in the Intercreditor Agreement with the Bank of New York
Commercial Corporation as ACM Agent ("ACM Agent"), dated an even
date herewith, as the same may be amended, modified or
supplemented
from time to time.
16.2 No Waiver by Course of Conduct. Neither the
Collateral Agent or any Holder shall by any act (except by a
written
instrument pursuant to subsection 16.1 hereof), delay,
indulgence,
omission or otherwise be deemed to have waived any right or
remedy
hereunder or to have acquiesced in any Default or Event of
Default or
in any breach of any of the terms and conditions hereof. No
failure to
exercise, nor any delay in exercising, on the part of the
Collateral Agent
or any Holder, any right, power or privilege hereunder shall
operate as
a waiver thereof. No single or partial exercise of any right,
power or
privilege hereunder shall preclude any other or further exercise
thereof
or the exercise of any other right, power or privilege. A waiver
by the
Collateral Agent or the Holders of any right or remedy hereunder
on
any one occasion shall not be construed as a bar to any right or
remedy
which the Collateral Agent or the Holders would otherwise have on
any
future occasion.
16.3 Remedies Cumulative. The rights and remedies
herein provided are cumulative, may be exercised singly or
concurrently
and are not exclusive of any other rights or remedies provided by
law.
17. Intercreditor Agreement. The parties hereto
acknowledge that the terms of this Agreement are subject to the
Intercreditor Agreement dated as of the date hereof between The
Bank
of New York Commercial Corporation and the Trustee.
18. Section Headings. The section and subsection
headings used in this Agreement are for convenience of reference
only
and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of the Company and shall
inure to the benefit of the Collateral Agent and its successors
and
assigns.
20. GOVERNING LAW. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
21. Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action
or proceeding relating to this Agreement to which it is a
party, or
for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the
Courts of
the State of New York, the courts of the United States of
America
for the Southern District of New York, and appellate courts
from
any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now
or hereafter have to the venue of any such action or
proceeding
in any such court or that such action or proceeding was
brought
in an inconvenient court and agrees not to plead or claim
the
same;
(c) agrees that service of process in any such action
or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of
mail), postage prepaid, to the Company at its address set
forth in
Section 1.5 of the Indenture or at such other address of
which the
Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right
to
effect service of process in any other manner permitted by
law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any legal
action
or proceeding referred to in this subsection any special,
exemplary, punitive or consequential damages.
IN WITNESS WHEREOF, the undersigned has caused this
Security Agreement to be duly executed and delivered as of the
date
first above written.
ERLANGER TUBULAR CORPORATION
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address: 5610 Bird Creek Avenue
Catoosa, Oklahoma 74015
Fax: (918) 266-6116
THE HUNTINGTON NATIONAL BANK,
as Collateral Agent
By: /S/ CANDADA J. MOORE
Name: Candada J. Moore
Title: Trust Officer
Address:
Trust Department
41 South High Street
Columbus, Ohio 43215
Fax: (614) 480-5223<PAGE>
Schedule 1
[Erlanger]
EQUIPMENT
List of Locations
Erlanger Tubular Corporation 5610 Birdcreek Avenue
Catoosa, Oklahoma 74015
(Rogers County)
Schedule 2
[Erlanger]
REAL PROPERTY
OBLIGOR PROPERTY ADDRESS
(DESIGNATE
WHETHER
OWNED OR LEASED)
Erlanger Tubular Corporation 5610 Birdcreek Avenue
Catoosa, Oklahoma 74015
(Rogers County)(Leased)
Subsidiary Security Agreement
Between
Erlanger Tubular Corporation
And
The Huntington National Bank,
as Collateral Agent
July 28, 1995
TABLE OF CONTENTS
Page
1. Defined Terms . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . 3
2. Grant of Security Interest. . . . . . . . . . . 3
3. Representations and Warranties. . . . . . . . . 3
3.1 Title; No Other Liens . . . . . . . . . . 3
3.2 Perfected First Priority Liens. . . . . . 4
3.3 Equipment . . . . . . . . . . . . . . . . 4
3.4 Chief Executive Office. . . . . . . . . . 4
3.5 Farm Products . . . . . . . . . . . . . . 4
4. Covenants . . . . . . . . . . . . . . . . . . . 4
4.1 Delivery of Instruments and Chattel
Paper . . . . . . . . . . . . . . . . . . . 4
4.2 Marking of Records. . . . . . . . . . . . 4
4.3 Maintenance of Insurance. . . . . . . . . 4
4.4 Payment of Taxes, Assessments and
Governmental Charges. . . . . . . . . . . . 5
4.5 Maintenance of Perfected Security
Interest; Further Documentation . . . . . . 5
4.6 Changes in Locations, Name, etc.. . . . . 5
4.7 Further Identification of Collateral. . . 6
4.8 Notices . . . . . . . . . . . . . . . . . 6
5. Asset Sales and Receipt of Net Insurance
Proceeds. . . . . . . . . . . . . . . . . . . 6
6. Remedies. . . . . . . . . . . . . . . . . . . . 6
6.2 Code Remedies . . . . . . . . . . . . . . 7
6.3 Deficiency. . . . . . . . . . . . . . . . 7
7. Applicable Provisions of the Indenture. . . . . 8
8. Collateral Agent's Appointment as Attorney-in-
Fact; Collateral Agent's Performance of
Company's Obligations . . . . . . . . . . . . 8
8.1 Powers. . . . . . . . . . . . . . . . . . 8
8.2 Performance by Collateral Agent of
Company's Obligations . . . . . . . . . . . 9
8.3 Company's Reimbursement Obligation. . . . 9
8.4 Ratification; Power Coupled With An
Interest. . . . . . . . . . . . . . . . . . 9
9. Duty of Collateral Agent. . . . . . . . . . . . 9
10. Execution of Financing Statements . . . . . . . 10
11. Authority of Collateral Agent . . . . . . . . . 10
12. Indemnity . . . . . . . . . . . . . . . . . . . 10
12.1 Indemnity . . . . . . . . . . . . . . . . 10
12.2 Survival. . . . . . . . . . . . . . . . . 11
12.3 Reimbursements. . . . . . . . . . . . . . 11
13. Notices . . . . . . . . . . . . . . . . . . . . 11
14. Termination of this Agreement . . . . . . . . . 11
15. Severability. . . . . . . . . . . . . . . . . . 12
16. Amendments in Writing; No Waiver;
Cumulative Remedies . . . . . . . . . . . . . 12
16.1 Amendments in Writing . . . . . . . . . . 12
16.2 No Waiver by Course of Conduct. . . . . . 12
16.3 Remedies Cumulative . . . . . . . . . . . 13
17. Intercreditor Agreement . . . . . . . . . . . . 13
18. Section Headings. . . . . . . . . . . . . . . . 13
19. Successors and Assigns. . . . . . . . . . . . . 13
20. GOVERNING LAW . . . . . . . . . . . . . . . . . 13
21. Submission To Jurisdiction; Waivers . . . . . . 13
NEWPORT ICN SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 28,
1995, made by Newport Steel Corporation, a Kentucky
corporation, the Federal Employer Identification Number
of which is 61-1116686 (the "Company") in favor of NS
GROUP, INC. ("NS"), the Federal Employer Identification
Number of which is 61-0985936, as holder of a secured
Intercompany Note dated as of July 28, 1995 made by the
Company in favor of NS (the "Intercompany Note") to
secure the Company's obligation, arising under and in
connection with the Intercompany Note.
W I T N E S S E T H :
WHEREAS, the Company is the owner of the
Collateral (as hereinafter defined);
WHEREAS, NS has issued (the "Offering")
$131,096,000 principal amount of 13 1/2% Senior Secured
Notes due 2003 (the "Securities") and in connection
with the Offering and refinancing transactions entered
into in connection therewith, NS has advanced certain
funds to the Company as evidenced by the Intercompany
Note;
WHEREAS, the Intercompany Note is to be
secured by real property, fixtures and equipment of the
Company; and
WHEREAS, it is a condition precedent to the
purchase of the Securities from NS that the Company
shall have executed and delivered this Agreement to NS
and NS, in turn, pursuant to a Pledge and Security
Agreement dated of even date herewith between NS and
the Collateral Agent (the "Pledge Agreement"), shall
have pledged the Intercompany Note and granted a
security interest to the Collateral Agent in the
Intercompany Note, the documents and interests securing
the Intercompany Note and the Proceeds thereof to
secure NS's obligations arising in connection with the
Securities.
NOW, THEREFORE, in consideration of the
premises and to induce the advancing of a portion of
the proceeds of the Offering and other monies to the
Company by NS and to induce the purchase of the
Securities, the Company hereby agrees with NS as
follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise
defined herein, terms defined in the Indenture and used
herein shall have the meanings given to them in the
Indenture and the following terms which are defined in
the Uniform Commercial Code in effect in the State of
New York on the date hereof are used herein as so
defined: Chattel Paper, Equipment, Farm Products and
Instruments.
(b) The following terms shall have the
following meanings:
"Agreement" means this Security Agreement, as
the same may be amended, modified or otherwise
supplemented from time to time.
"Code" means the Uniform Commercial Code as
from time to time in effect in the State of New York.
"Collateral" has the meaning specified in
Section 2 of this Agreement.
"Contractual Obligation" means, as to any
Person, any provision of any security issued by such
Person or of any agreement, instrument or undertaking
to which such Person is a party or by which it or any
of the property owned by it is bound.
"Default" means, with respect to the
Intercompany Note, any
event which is, or after the giving of notice or
passage of time or both
would be, an Event of Default under the
Intercompany Note.
"Event of Default" shall have the meaning set
forth in Section 8.1
of the Indenture.
"Fixtures" shall have the meaning assigned to
such term in the
Code and include, without limitation, all goods
that after placement on
the real property described in Schedule 2 hereto
become component
parts of the real property described in Schedule 2
hereto, buildings and
other constructions and which are used in the
conduct of the
Company's trade, business, occupation or other
commercial or industrial
activity.
"Indenture" means the Indenture, dated of
even date herewith,
between NS and The Huntington National Bank,
acting in its capacity as
trustee, relating to the Securities, as the same
may be amended,
supplemented or otherwise modified from time to
time.
"Net Insurance Proceeds" has the meaning
specified in Section 4.3
of this Agreement.
"Obligations" means the collective reference
to the unpaid
principal of and interest (and premium, if any) on
the Intercompany
Note and all other obligations and liabilities of
the Company with
respect to the Intercompany Note (including,
without limitation, interest
accruing at the then applicable rate provided in
the Intercompany Note
after the maturity of the Intercompany Note and
interest accruing at the
then applicable rate provided in the Intercompany
Note after the filing
of any petition in bankruptcy, or the commencement
of any insolvency,
reorganization or like proceeding, relating to the
Company, whether or
not a claim for post-filing or post-petition
interest is allowed in such
proceeding and, to the extent permitted by law,
interest accruing on
unpaid interest), whether direct or indirect,
absolute or contingent, due
or to become due, now existing or hereafter
incurred, which may arise
under, out of, or in connection with, the
Intercompany Note, this
Agreement or any other document made, delivered or
given in
connection therewith, in each case whether on
account of principal,
premium, interest, reimbursement obligations,
fees, indemnities, costs,
expenses or otherwise (including, without
limitation, all fees and
disbursements of counsel to NS that are required
to be paid by the
Company pursuant to the terms of the Intercompany
Note or this
Agreement).
"Proceeds" and "Products" shall have the
meaning ascribed to such
terms in the Code and shall include in any event
(i) whatever is
received upon any collection, exchange, sale or
other disposition or
refinancing of any of the Collateral and any
property into which any of
the Collateral is converted (whether cash or
non-cash proceeds), (ii) any
and all proceeds of any insurance, indemnity,
warranty or guarantee
payable to the Company from time to time with
respect to any of the
Collateral, (iii) any and all payments (in any
form whatsoever) made or
due and payable to the Company from time to time
in connection with
any requisition, confiscation, condemnation,
seizure or forfeiture of all
or any part of the Collateral by any governmental
authority (or any
person acting under color of governmental
authority) and (iv) any and
all other amounts from time to time paid or
payable under or in
connection with any of the Collateral.
"Requirement of Law" means, as to any Person,
the Certificate of
Incorporation and By-Laws or other organizational
or governing
documents of such Person, and any law, treaty,
rule or regulation or
determination of an arbitrator or a court or other
governmental
authority, in each case applicable to or binding
upon such Person or any
of its property or to which such Person or any of
its property is subject.
"Senior Obligations" means the obligations
and liabilities, absolute
or contingent, liquidated or unliquidated, now
existing or hereafter
incurred under, arising out of and in connection
with the Subsidiary
Guarantee.
"Subsidiary Guarantee" means the Subsidiary
Guarantee, dated of
even date herewith, among the Company, Erlanger
Tubular
Corporation, Imperial Adhesives, Inc., Koppel
Steel Corporation,
Northern Kentucky Air, Inc. and Northern Kentucky
Management, Inc.
and the Collateral Agent for the benefit of the
Holders, as the same may
be amended, supplemented or otherwise modified
from time to time.
1.2 Other Definitional Provisions. (a) The
words "hereof,"
"herein" and "hereunder" and words of similar import
when used in this
Agreement shall refer to this Agreement as a whole and
not to any particular
provision of this Agreement, and section and paragraph
references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined
herein shall be
equally applicable to both the singular and plural
forms of such terms.
2. Grant of Security Interest. (a) As
collateral security for the
prompt and complete payment and performance when due
(whether at the
stated maturity, by acceleration or otherwise) of the
Obligations, the Company
hereby grants to NS a security interest in all of the
following property now
owned or at any time hereafter acquired by the Company
or in which the
Company now has or at any time in the future may
acquire any right, title or
interest (collectively, the "Collateral"):
(i) all Equipment including, without
limitation, (i) furniture,
furnishings, tools, lubricants, spare parts,
shelving, displays, cases,
accessories, motors and engines, and (ii) with
respect to the foregoing all
attachments, components, parts, equipment and
accessories installed
thereon or affixed thereto;
(ii) all Fixtures;
(iii) all books and records pertaining to
the Collateral; and
(iv) to the extent not otherwise included,
all Proceeds and
Products of any and all of the foregoing.
(b) NS, for itself, its successors and
assigns, covenants and
agrees, that the security interests granted hereby and
the Liens created to
perfect such security interests shall be expressly
subordinate and junior in right
of payment to all of the security interests granted by
the Company in favor of
the Collateral Agent to secure the Senior Obligations
and all Liens created to
perfect such security interests.
3. Representations and Warranties. The
Company hereby
represents and warrants that:
3.1 Title; No Other Liens. Except for (a)
the security interest
granted to NS pursuant to this Agreement, (b) the
security interest granted in
favor of the Collateral Agent to secure the Company's
obligations with respect
to the Subsidiary Guarantee and (c) the other Liens
permitted to exist on the
Collateral pursuant to the Indenture, the Company owns
each item of the
Collateral free and clear of any and all Liens or
claims of others. No security
agreement, financing statement or other public notice
with respect to all or any
part of the Collateral is on file or of record in any
public office, except (a) such
as have been filed in favor of NS pursuant to this
Agreement, (b) such as have
been filed in favor of the Collateral Agent to secure
the Company's obligations
with respect to the Subsidiary Guarantee or (c) as are
permitted pursuant to
the Indenture.
3.2 Perfected Second Priority Liens. The
security interests
granted pursuant to this Agreement (a) constitute
perfected second security
interests in the Collateral in favor of NS, (b) are
prior to all other Liens on the
Collateral in existence on the date hereof except for
(i) security interests
granted in favor of the Collateral Agent to secure the
Company's obligations
with respect to the Subsidiary Guarantee and (ii) Liens
permitted to exist
pursuant to the Indenture, and (c) are enforceable as
such against (1) all
creditors of and purchasers from the Company and (2)
any Person having any
interest in the real property where any of the
Equipment is located.
3.3 Equipment. The Equipment is kept at the
locations listed
on Schedule 1 hereto.
3.4 Chief Executive Office. The Company's
chief executive
office and chief place of business is located at Ninth
and Lowell Streets,
Newport, Kentucky 41072.
3.5 Farm Products. None of the Collateral
constitutes, or is the
Proceeds of, Farm Products.
4. Covenants. The Company covenants and
agrees with NS
that, from and after the date of this Agreement until
this Agreement is
terminated and the security interests created hereby
are released:
4.1 Delivery of Instruments and Chattel
Paper. Subject to the
terms of the Pledge Agreement, if any amount payable
under or in connection
with any of the Collateral shall be or become evidenced
by any Instrument or
Chattel Paper, such Instrument or Chattel Paper shall
be promptly delivered to
NS, duly indorsed in a manner satisfactory to NS, to be
held as Collateral
pursuant to this Agreement.
4.2 Marking of Records. The Company will
include in its
books and records pertaining to the Collateral an
appropriate reference to this
Agreement and the security interests created hereby.
4.3 Maintenance of Insurance. (a) The
Company will
maintain, with financially sound and reputable
companies, insurance policies
(1) insuring the Equipment and Fixtures against loss by
fire, explosion, theft
and such other casualties as are usually and
customarily carried with respect
to similar property and or facilities according to
their respective locations and
(2) insuring the Company and, upon satisfaction,
discharge or avoidance of the
Senior Obligations in full, NS against liability for
personal injury and property
damage relating to such Equipment and Fixtures, such
policies to be in such
form and amounts and having such coverage as are
usually and customarily
carried with respect to similar property and or
facilities according to their
respective locations with losses payable to the Company
and, upon
satisfaction, discharge or avoidance of the Senior
Obligations in full, NS ("Net
Insurance Proceeds").
(b) All such insurance shall (1) provide
that no cancellation,
material reduction in amount or material change in
coverage thereof shall be
effective until at least 30 days after receipt by NS of
written notice thereof, (2)
name, upon satisfaction, discharge or avoidance of the
Senior Obligations in
full, NS as the insured party and (3) subject to
paragraph (a) above, be
reasonably satisfactory in all other respects to NS.
(c) The Company shall deliver to NS a report
of a reputable
insurance broker with respect to such insurance during
the month of July in
each calendar year and such supplemental reports with
respect thereto as NS
may from time to time reasonably request.
4.4 Payment of Taxes, Assessments and
Governmental
Charges. The Company will pay and discharge or
otherwise satisfy at or
before maturity or before they become delinquent, as
the case may be, all
taxes, assessments and governmental charges or levies
imposed upon the
Collateral or in respect of income or profits
therefrom, as well as all claims of
any kind (including, without limitation, claims for
labor, materials and
supplies) against or with respect to the Collateral,
except that no such charge
need be paid if the amount, applicability or validity
thereof is currently being
contested in good faith by appropriate proceedings,
reserves in conformity
with GAAP with respect thereto have been provided on
the books of the
Company and such proceedings do not involve any
material danger of the
sale, forfeiture or loss of any of the Collateral or
any interest therein.
4.5 Maintenance of Perfected Security
Interest; Further
Documentation. (a) The Company shall maintain the
security interest created
by this Agreement as a second, perfected security
interest subject only to (i)
security interests granted in favor of the Collateral
Agent to secure the
Company's obligations with respect to the Subsidiary
Guarantee and (ii) Liens
permitted to exist pursuant to the Indenture and shall
defend such security
interest against claims and demands of all Persons
whomsoever.
(b) At any time and from time to time, upon
the written
request of NS and at the sole expense of the Company,
the Company will
promptly and duly execute and deliver such further
instruments and
documents and take such further action as NS may
reasonably request for the
purpose of obtaining or preserving the full benefits of
this Agreement and of
the rights and powers herein granted, including,
without limitation, the filing
of any financing or continuation statements under the
Uniform Commercial
Code in effect in any jurisdiction with respect to the
security interests created
hereby.
4.6 Changes in Locations, Name, etc. The
Company will not,
unless it shall have given NS at least 30 days prior
written notice:
(a) permit any of the Equipment to be kept
at a location other
than those listed on Schedule 1 hereto; or
(b) change the location of its chief
executive office and chief
place of business from that specified in
subsection 3.4; or
(c) change its name, identity, Federal
taxpayer identification
number or corporate structure to such an extent
that any financing
statement filed by NS in connection with this
Agreement would become
seriously misleading.
4.7 Further Identification of Collateral.
The Company will
furnish to NS from time to time statements and
schedules further identifying
and describing the Collateral and such other reports in
connection with the
Collateral as NS may reasonably request, all in
reasonable detail.
4.8 Notices. The Company will advise NS
promptly, in
reasonable detail, at its address set forth in the
Indenture of:
(a) any Lien (other than security interests
created hereby,
security interests granted in favor of the
Collateral Agent to secure the
Company's obligations with respect to the
Subsidiary Guarantee, or
Liens permitted under the Indenture) on, or claim
asserted against, any
of the Collateral; and
(b) of the occurrence of any other event
which could
reasonably be expected to have a material adverse
effect on the
aggregate value of the Collateral or on the
security interests created
hereby.
5. [Reserved]
6. Remedies.
6.1 Code Remedies. If an Event of Default
shall occur and be
continuing, NS may exercise, in addition to all other
rights and remedies
granted to them in this Agreement and in any other
instrument or agreement
securing, evidencing or relating to the Obligations,
all rights and remedies of a
secured party under the Code. Without limiting the
generality of the
foregoing, NS without demand of performance or other
demand, presentment,
protest, advertisement or notice of any kind (except
any notice required by law
referred to below) to or upon the Company or any other
Person (all and each
of which demands, defenses, advertisements and notices
are hereby waived),
may in such circumstances forthwith collect, receive,
appropriate and realize
upon the Collateral, or any part thereof, and/or may
forthwith sell, lease,
assign, give option or options to purchase, or
otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do
any of the foregoing), in
one or more parcels at public or private sale or sales,
at any exchange, broker's
board or office of NS or elsewhere upon such terms and
conditions as it may
deem advisable and at such prices as it may deem best,
for cash or on credit or
for future delivery without assumption of any credit
risk. NS shall have the
right upon any such public sale or sales, and, to the
extent permitted by law,
upon any such private sale or sales, to purchase the
whole or any part of the
Collateral so sold, free of any right or equity of
redemption in the Company,
which right or equity is hereby waived or released.
The Company further
agrees, at NS's request, to assemble the Collateral and
make it available to NS
at places which NS shall reasonably select, whether at
the Company's premises
or elsewhere. NS shall apply the net proceeds of any
such collection, recovery,
receipt, appropriation, realization or sale, after
deducting all reasonable costs
and expenses of every kind incurred therein or
incidental to the care or
safekeeping of any of the Collateral in the manner
prescribed in the Indenture.
To the extent permitted by applicable law, the Company
waives all claims,
damages and demands it may acquire against NS arising
out of the exercise by
it of any rights hereunder, except to the extent any
such claims, damages or
demands were directly caused by NS's gross negligence
or willful misconduct.
If any notice of a proposed sale or other disposition
of Collateral shall be
required by law, such notice shall be deemed reasonable
and proper if given at
least 10 days before such sale or other disposition.
6.2 Deficiency. The Company shall remain
liable for any
deficiency if the proceeds of any sale or other
disposition of the Collateral are
insufficient to pay the Obligations and the fees and
disbursements of any
attorneys employed by NS to collect such deficiency.
7. Applicable Provisions of the Indenture.
Sections 12.2
through 12.10 of the Indenture are hereby incorporated
by reference into this
Agreement and made a part of the same as if set forth
herein. To the extent, if
any, that the provisions of this Agreement are
inconsistent with the provisions
of Sections 12.2 through 12.10 of the Indenture, the
provisions of the Indenture
shall prevail.
8. NS's Appointment as Attorney-in-Fact;
NS's Performance
of Company's Obligations.
8.1 Powers. Subject to the terms of the
Pledge Agreement, the
Company hereby irrevocably constitutes and appoints NS
and any officer or
agent thereof, with full power of substitution, as its
true and lawful attorney-
in-fact with full irrevocable power and authority in
the place and stead of the
Company and in the name of the Company or in its own
name, from time to
time in NS's discretion, for the purpose of carrying
out the terms of this
Agreement, to take any and all appropriate action and
to execute any and all
documents and instruments which may be necessary or
desirable to
accomplish the purposes of this Agreement, and, without
limiting the
generality of the foregoing, the Company hereby gives
NS the power and
right, on behalf of the Company, without notice to or
assent by the Company,
to do the following:
(a) in the case of any Collateral, at any
time when any Event
of Default shall have occurred and is continuing,
in the name of the
Company or its own name, or otherwise, to take
possession of and
indorse and collect any checks, drafts, notes,
acceptances or other
instruments for the payment of moneys due with
respect to any
Collateral and to file any claim or to take any
other action or proceeding
in any court of law or equity or otherwise deemed
appropriate by NS
for the purpose of collecting any and all such
moneys due with respect
to any Collateral whenever payable;
(b) to pay or discharge taxes and Liens
levied or placed on or
threatened against the Collateral (except as
provided by Section 4.4 of
this Agreement), to effect any repairs or any
insurance called for by the
terms of this Agreement and to pay all or any part
of the premiums
therefor and the costs thereof;
(c) upon the occurrence and during the
continuance of any
Event of Default, (1) to direct any party liable
for any payment under
any of the Collateral to make payment of any and
all moneys due or to
become due thereunder directly to NS or as NS
shall direct; (2) to ask or
demand for, collect, receive payment of and
receipt for, any and all
moneys, claims and other amounts due or to become
due at any time in
respect of or arising out of any Collateral; (3)
to sign and indorse any
invoices, freight or express bills, bills of
lading, storage or warehouse
receipts, drafts against debtors, assignments,
verifications, notices and
other documents in connection with any of the
Collateral; (4) to
commence and prosecute any suits, actions or
proceedings at law or in
equity in any court of competent jurisdiction to
collect the Collateral or
any portion thereof and to enforce any other right
in respect of any
Collateral; (5) to defend any suit, action or
proceeding brought against
the Company with respect to any Collateral; (6) to
settle, compromise or
adjust any such suit, action or proceeding and, in
connection therewith,
to give such discharges or releases as NS may deem
appropriate; and (7)
generally, to sell, transfer, pledge and make any
agreement with respect
to or otherwise deal with any of the Collateral as
fully and completely
as though NS were the absolute owner thereof for
all purposes, and to
do, at NS's option and the Company's expense, at
any time, or from
time to time, all acts and things which NS deems
necessary to protect,
preserve or realize upon the Collateral and NS's
security interests
therein and to effect the intent of this
Agreement, all as fully and
effectively as the Company might do.
8.2 Performance by NS of Company's
Obligations. If the
Company fails to perform or comply with any of its
agreements contained
herein, NS, at its option, but without any obligation
so to do, may perform or
comply, or otherwise cause performance or compliance,
with such agreement.
8.3 Company's Reimbursement Obligation. The
expenses of
NS incurred in connection with actions undertaken as
provided in this Section,
together with interest thereon at a rate per annum
equal to 13.50% from the
date of payment by NS to the date reimbursed by the
Company, shall be
payable by the Company to NS on demand.
8.4 Ratification; Power Coupled With An
Interest. The
Company hereby ratifies all that said attorneys shall
lawfully do or cause to be
done by virtue hereof. All powers, authorizations and
agencies contained in
this Agreement are coupled with an interest and are
irrevocable until this
Agreement is terminated and the security interests
created hereby are released.
9. Duty of NS. NS's sole duty with respect
to the custody,
safekeeping and physical preservation of the Collateral
in its possession, under
Section 9-207 of the Code or otherwise, shall be to
deal with it in the same
manner as NS deals with similar property for its own
account. Neither NS nor
any of its directors, officers, employees or agents
shall be liable for failure to
demand, collect or realize upon any of the Collateral
or for any delay in doing
so or shall be under any obligation to sell or
otherwise dispose of any
Collateral upon the request of the Company or any other
Person or to take any
other action whatsoever with regard to the Collateral
or any part thereof. The
powers conferred on NS hereunder are solely to protect
NS's interests in the
Collateral and shall not impose any duty upon NS to
exercise any such
powers. NS shall be accountable only for amounts that
it actually receives as a
result of the exercise of such powers, and neither it
nor any of its officers,
directors, employees or agents shall be responsible to
the Company for any act
or failure to act hereunder, except for their own gross
negligence or willful
misconduct.
10. Execution of Financing Statements.
Pursuant to Section 9-
402 of the Code, the Company authorizes NS to file
financing statements with
respect to the Collateral without the signature of the
Company in such form
and in such filing offices as NS reasonably determines
appropriate to perfect
the security interests of NS under this Agreement. A
carbon, photographic or
other reproduction of this Agreement shall be
sufficient as a financing
statement for filing in any jurisdiction.
11. Indemnity.
11.1 Indemnity. (a) The Company agrees to
indemnify, pay
and hold harmless NS and the officers, directors,
employees, agents and
affiliates of NS (collectively called the
"Indemnitees") from and against any and
all other liabilities, obligations, losses, damages,
penalties, actions, judgments,
suits, claims, costs (including, without limitation,
settlement costs), expenses or
disbursements of any kind or nature whatsoever
(including, without limitation,
the reasonable fees and disbursements of counsel for
such Indemnitees in
connection with any investigative, administrative or
judicial proceeding
commenced or threatened, whether or not such Indemnitee
shall be designated
a party thereto), which may be imposed on, incurred by,
or asserted against
that Indemnitee, in any manner relating to or arising
out of this Agreement or
the Intercompany Note arising in any action relating
to, directly or indirectly,
the Collateral or the subject of this Agreement
(including without limitation,
any misrepresentation by the Company in this Agreement
(the "indemnified
liabilities"); provided that the Company shall have no
obligation to an
Indemnitee hereunder with respect to indemnified
liabilities if it has been
determined by a final decision (after all appeals and
the expiration of time to
appeal) by a court of competent jurisdiction that such
indemnified liability
arose from the negligence or willful misconduct of that
Indemnitee. To the
extent that the undertaking to indemnify, pay and hold
harmless set forth in
the preceding sentence may be unenforceable because it
is violative of any law
or public policy, the Company shall contribute the
maximum portion which it
is permitted to pay and satisfy under applicable law,
to the payment and
satisfaction of all indemnified liabilities incurred by
the Indemnitees or any of
them.
(b) The Company agrees to pay, and to save
NS harmless
from, any and all liabilities, costs and expenses
(including, without limitation,
legal fees and expenses) (1) with respect to, or
resulting from any delay in
paying, any and all stamp, excise, sales or other taxes
and any and all
recording and filing fees which may be payable or
determined to be payable
with respect to any of the Collateral, (2) with respect
to, or resulting from, any
delay in complying with any Requirement of Law
applicable to any of the
Collateral and (3) in connection with any of the
transactions contemplated by
this Agreement.
11.2 Survival. The obligations of the
Company contained in
this Section 11 shall survive the termination of this
Agreement and the
discharge of the Company's other obligations under this
Agreement.
11.3 Reimbursements. Any amounts paid by any
Indemnitee as
to which such Indemnitee has the right to reimbursement
shall constitute
Obligations secured by the Collateral.
12. Notices. All notices, requests and
demands to or upon NS
or the Company to be effective shall be in writing (or
by telex, fax or similar
electronic transfer) and shall be deemed to have been
duly given or made
(a) when delivered by hand or (b) if given by mail,
when deposited in the
mails by certified mail, return receipt requested, or
(c) if by telex, fax or similar
electronic transfer, when sent and receipt has been
confirmed, addressed to NS
or the Company at its address or transmission number
for notices set forth
below its signature. NS and the Company may change
their addresses and
transmission numbers for notices by notice in the
manner provided in this
Section.
13. Termination of this Agreement. (a)
Notwithstanding any
other provision of this Agreement, this Agreement shall
terminate upon the
satisfaction, discharge or avoidance of the Obligations
pursuant to the terms of
the Pledge Agreement and the Indenture.
(b) Upon the termination of this Agreement,
and subject to the
terms of the Pledge Agreement, NS shall execute and
deliver to the Company
such documents of assignment as are reasonably
necessary to terminate NS's
security interest in any Collateral granted pursuant to
this Agreement.
(c) If the Company ceases to be a Subsidiary
of NS pursuant to
Article VI of the Indenture and subject to the
satisfaction of the terms and
conditions of the Indenture in general and Article VI
in particular, the
Company shall automatically be released from all of its
share of the
Obligations, and this Agreement shall terminate.
14. Severability. Any provision of this
Agreement which is
prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without
invalidating the remaining provisions hereof, and any
such prohibition or
unenforceability in any jurisdiction shall not
invalidate or render unenforceable
such provision in any other jurisdiction.
15. Amendments in Writing; No Waiver;
Cumulative
Remedies.
15.1 Amendments in Writing. None of the
terms or provisions
of this Agreement may be waived, amended, supplemented
or otherwise
modified except by a written instrument executed by the
Company and NS in
a manner pursuant to Article VI of the Indenture or any
other provision
therein, or as may be provided for in the Intercreditor
Agreement with the
Bank of New York Commercial Corporation as ACM Agent
("ACM Agent"),
dated an even date herewith, as the same may be
amended, modified or
supplemented from time to time.
15.2 No Waiver by Course of Conduct. NS
shall not by any act
(except by a written instrument pursuant to subsection
15.1 hereof), delay,
indulgence, omission or otherwise be deemed to have
waived any right or
remedy hereunder or to have acquiesced in any Default
or Event of Default or
in any breach of any of the terms and conditions
hereof. No failure to
exercise, nor any delay in exercising, on the part of
NS, any right, power or
privilege hereunder shall operate as a waiver thereof.
No single or partial
exercise of any right, power or privilege hereunder
shall preclude any other or
further exercise thereof or the exercise of any other
right, power or privilege.
A waiver by NS of any right or remedy hereunder on any
one occasion shall
not be construed as a bar to any right or remedy which
NS would otherwise
have on any future occasion.
15.3 Remedies Cumulative. The rights and
remedies herein
provided are cumulative, may be exercised singly or
concurrently and are not
exclusive of any other rights or remedies provided by
law.
16. Intercreditor Agreement. The parties
hereto acknowledge
that the terms of this Agreement are subject to the
Intercreditor Agreement
dated as of the date hereof between The Bank of New
York Commercial
Corporation and NS.
17. Section Headings. The section and
subsection headings
used in this Agreement are for convenience of reference
only and are not to
affect the construction hereof or be taken into
consideration in the
interpretation hereof.
18. Successors and Assigns. This Agreement
shall be binding
upon the successors and assigns of the Company and
shall inure to the benefit
of NS and its successors and assigns. Pursuant to a
Pledge and Security
Agreement dated of even date herewith between NS and
the Collateral Agent,
NS is pledging the Intercompany Note and assigning and
granting a security
interest in this Agreement and any and all documents
and instruments that
from time to time secure payment of the pledged
Intercompany Note,
including without limitation, the documents described
on Schedule I to the
Pledge Agreement to secure its obligations arising with
respect to the
Securities and the documents entered into in connection
therewith. Upon the
occurrence of an Event of Default under the Indenture
or with respect to the
Securities, the Collateral Agent or, as permitted by
the Indenture, the Holders
of the Securities, shall be substituted in all respects
for NS and each of the
rights and obligations of NS set forth in this
Agreement shall inure to the
exclusive benefit of the Collateral Agent and the
Holders without interference
from or challenge by NS or the Company.
19. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
20. Submission To Jurisdiction; Waivers.
The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in
any legal action or
proceeding relating to this Agreement to which it
is a party, or for
recognition and enforcement of any judgment in
respect thereof, to the
non-exclusive general jurisdiction of the Courts
of the State of New
York, the courts of the United States of America
for the Southern
District of New York, and appellate courts from
any thereof;
(b) consents that any such action or
proceeding may be
brought in such courts and waives any objection
that it may now or
hereafter have to the venue of any such action or
proceeding in any
such court or that such action or proceeding was
brought in an
inconvenient court and agrees not to plead or
claim the same;
(c) agrees that service of process in any
such action or
proceeding may be effected by mailing a copy
thereof by registered or
certified mail (or any substantially similar form
of mail), postage
prepaid, to the Company at its address set forth
below its signature or
at such other address of which NS shall have been
notified pursuant
thereto;
(d) agrees that nothing herein shall affect
the right to effect
service of process in any other manner permitted
by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not
prohibited by law, any
right it may have to claim or recover in any legal
action or proceeding
referred to in this subsection any special,
exemplary, punitive or
consequential damages.
<PAGE>
IN WITNESS WHEREOF, the undersigned has
caused this
Security Agreement to be duly executed and delivered as
of the date first
above written.
NEWPORT STEEL CORPORATION
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address:
Ninth and Lowell Streets
Newport, Kentucky 41072
Fax: (606) 292-0593
NS GROUP, INC.
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address:
Ninth and Lowell Streets
Newport, Kentucky 41072
Fax: (606) 292-0593
Schedule 1
[Newport]
EQUIPMENT
List of Locations
Newport Steel Corporation Route 9
Wilder, Kentucky 41071
(Campbell County)
Erlanger Tubular Corporation
5610 Birdcreek Avenue
Catoosa, Oklahoma 74015
(Rogers County)
Ninth & Lowell Streets
Newport, Kentucky 41072
(Campbell County)
Schedule 2
[Newport]
REAL PROPERTY
OBLIGOR PROPERTY ADDRESS
(DESIGNATE WHETHER
OWNED OR LEASED)
Newport Steel Corporation Route 9
Wilder, Kentucky
41071
(Campbell County)
(Owned)
Ninth & Lowell
Streets
Newport, Kentucky
41072
(Campbell County)
(Owned)
NEWPORT ICN Security Agreement
Between
Newport Steel Corporation
And
NS Group, Inc.
July 28, 1995
TABLE OF CONTENTS
Page
1. Defined Terms . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . 1
1.2 Other Definitional Provisions .. . . 4
2. Grant of Security Interest. . . . . .. . . 4
3. Representations and Warranties. . . .. . . 4
3.1 Title; No Other Liens . . . . .. . . 4
3.2 Perfected Second Priority Liens. . . 5
3.3 Equipment . . . . . . . . . . .. . . 5
3.4 Chief Executive Office. . . . .. . . 5
3.5 Farm Products . . . . . . . . .. . . 5
4. Covenants . . . . . . . . . . . . . .. . . 5
4.1 Delivery of Instruments and Chattel
Paper . . . 5
4.2 Marking of Records. . . . . . .. . . 5
4.3 Maintenance of Insurance. . . .. . . 5
4.4 Payment of Taxes, Assessments and
Governmental Charges. . . . . . .. . . 6
4.5 Maintenance of Perfected Security
Interest;
Further
Documentation . . . . . . . .. . . 6
4.6 Changes in Locations, Name, etc. . . 7
4.7 Further Identification of Collateral. 7
4.8 Notices . . . . . . . . . . . . . . 7
5. [Reserved]. . . . . . . . . . . . . . . . 7
6. Remedies. . . . . . . . . . . . . . . . . 7
6.1 Code Remedies . . . . . . . . . . . 7
6.2 Deficiency. . . . . . . . . . . . . 8
7. Applicable Provisions of the Indenture. . 8
8. NS's Appointment as Attorney-in-Fact; NS's
Performance of Company's Obligations. . 8
8.1 Powers. . . . . . . . . . . . . . . 8
8.2 Performance by NS of Company's
Obligations . . . 9
8.3 Company's Reimbursement Obligation. 9
8.4 Ratification; Power Coupled With An
Interest . . 10
9. Duty of NS. . . . . . . . . . . . . . .. . 10
10. Execution of Financing Statements . . .. . 10
11. Indemnity . . . . . . . . . . . . . . . . 10
11.1 Indemnity . . . . . . . . . . . . . 10
11.2 Survival. . . . . . . . . . . . . . 11
11.3 Reimbursements. . . . . . . . . . . . . . 11
12. Notices . . . . . . . . . . . . . . . . . 11
13. Termination of this Agreement . . . . . . 11
14. Severability. . . . . . . . . .. . . . . . 12
15. Amendments in Writing; No Waiver; Cumulative
Remedies. . . . . . . . . . .. . . . . . 12
15.1 Amendments in Writing . .. . . . . . 12
15.2 No Waiver by Course of Conduct. . . 12
15.3 Remedies Cumulative . . . . . . . . 12
16. Intercreditor Agreement . . . . . . . . . 12
17. Section Headings. . . . . . . . . . . . . 13
18. Successors and Assigns. . . . . . . . . . 13
19. GOVERNING LAW . . . . . . . . . . . . . . 13
20. Submission To Jurisdiction; Waivers . . . 13
KOPPEL ICN SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 28, 1995, made by
Koppel Steel Corporation, a Pennsylvania corporation, the Federal
Employer
Identification Number of which is 25-1635833 (the "Company") in
favor of NS
GROUP, INC. ("NS"), the Federal Employer Identification Number of
which is
61-0985936, as holder of a secured Intercompany Note dated as of
July 28, 1995
made by the Company in favor of NS (the "Intercompany Note") to
secure the
Company's obligation, arising under and in connection with the
Intercompany
Note.
W I T N E S S E T H :
WHEREAS, the Company is the owner of the Collateral (as
hereinafter defined);
WHEREAS, NS has issued (the "Offering") $131,096,000
principal
amount of 13 1/2% Senior Secured Notes due 2003 (the
"Securities")
and in
connection with the Offering and refinancing transactions entered
into in
connection therewith, NS has advanced certain funds to the
Company as
evidenced by the Intercompany Note;
WHEREAS, the Intercompany Note is to be secured by real
property, fixtures and equipment of the Company; and
WHEREAS, it is a condition precedent to the purchase of
the
Securities from NS that the Company shall have executed and
delivered this
Agreement to NS and NS, in turn, pursuant to a Pledge and
Security
Agreement dated of even date herewith between NS and the
Collateral Agent
(the "Pledge Agreement"), shall have pledged the Intercompany
Note and
granted a security interest to the Collateral Agent in the
Intercompany Note,
the documents and interests securing the Intercompany Note and
the Proceeds
thereof to secure NS's obligations arising in connection with the
Securities.
NOW, THEREFORE, in consideration of the premises and to
induce the advancing of a portion of the proceeds of the Offering
and other
monies to the Company by NS and to induce the purchase of the
Securities,
the Company hereby agrees with NS as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined
herein, terms
defined in the Indenture and used herein shall have the meanings
given to
them in the Indenture and the following terms which are defined
in the
Uniform Commercial Code in effect in the State of New York on the
date
hereof are used herein as so defined: Chattel Paper, Equipment,
Farm
Products and Instruments.
(b) The following terms shall have the following
meanings:
"Agreement" means this Security Agreement, as the same
may be
amended, modified or otherwise supplemented from time to
time.
"Code" means the Uniform Commercial Code as from time
to time
in effect in the State of New York.
"Collateral" has the meaning specified in Section 2 of
this
Agreement.
"Contractual Obligation" means, as to any Person, any
provision of
any security issued by such Person or of any agreement,
instrument or
undertaking to which such Person is a party or by which it
or any of
the property owned by it is bound.
"Default" means, with respect to the Intercompany Note,
any
event which is, or after the giving of notice or passage of
time or both
would be, an Event of Default under the Intercompany Note.
"Event of Default" shall have the meaning set forth in
Section 8.1
of the Indenture.
"Fixtures" shall have the meaning assigned to such term
in the
Code and include, without limitation, all goods that after
placement on
the real property described in Schedule 2 hereto become
component
parts of the real property described in Schedule 2 hereto,
buildings and
other constructions and which are used in the conduct of the
Company's trade, business, occupation or other commercial or
industrial
activity.
"Indenture" means the Indenture, dated of even date
herewith,
between NS and The Huntington National Bank, acting in its
capacity as
trustee, relating to the Securities, as the same may be
amended,
supplemented or otherwise modified from time to time.
"Net Insurance Proceeds" has the meaning specified in
Section 4.3
of this Agreement.
"Obligations" means the collective reference to the
unpaid
principal of and interest (and premium, if any) on the
Intercompany
Note and all other obligations and liabilities of the
Company with
respect to the Intercompany Note (including, without
limitation, interest
accruing at the then applicable rate provided in the
Intercompany Note
after the maturity of the Intercompany Note and interest
accruing at the
then applicable rate provided in the Intercompany Note after
the filing
of any petition in bankruptcy, or the commencement of any
insolvency,
reorganization or like proceeding, relating to the Company,
whether or
not a claim for post-filing or post-petition interest is
allowed in such
proceeding and, to the extent permitted by law, interest
accruing on
unpaid interest), whether direct or indirect, absolute or
contingent, due
or to become due, now existing or hereafter incurred, which
may arise
under, out of, or in connection with, the Intercompany Note,
this
Agreement or any other document made, delivered or given in
connection therewith, in each case whether on account of
principal,
premium, interest, reimbursement obligations, fees,
indemnities, costs,
expenses or otherwise (including, without limitation, all
fees and
disbursements of counsel to NS that are required to be paid
by the
Company pursuant to the terms of the Intercompany Note or
this
Agreement).
"Proceeds" and "Products" shall have the meaning
ascribed to such
terms in the Code and shall include in any event (i)
whatever is
received upon any collection, exchange, sale or other
disposition or
refinancing of any of the Collateral and any property into
which any of
the Collateral is converted (whether cash or non-cash
proceeds), (ii) any
and all proceeds of any insurance, indemnity, warranty or
guarantee
payable to the Company from time to time with respect to any
of the
Collateral, (iii) any and all payments (in any form
whatsoever) made or
due and payable to the Company from time to time in
connection with
any requisition, confiscation, condemnation, seizure or
forfeiture of all
or any part of the Collateral by any governmental authority
(or any
person acting under color of governmental authority) and
(iv) any and
all other amounts from time to time paid or payable under or
in
connection with any of the Collateral.
"Requirement of Law" means, as to any Person, the
Certificate of
Incorporation and By-Laws or other organizational or
governing
documents of such Person, and any law, treaty, rule or
regulation or
determination of an arbitrator or a court or other
governmental
authority, in each case applicable to or binding upon such
Person or any
of its property or to which such Person or any of its
property is subject.
"Senior Obligations" means the obligations and
liabilities, absolute
or contingent, liquidated or unliquidated, now existing or
hereafter
incurred under, arising out of and in connection with the
Subsidiary
Guarantee.
"Subsidiary Guarantee" means the Subsidiary Guarantee,
dated of
even date herewith, among the Company, Erlanger Tubular
Corporation, Imperial Adhesives, Inc., Newport Steel
Corporation,
Northern Kentucky Air, Inc. and Northern Kentucky
Management, Inc.
and the Collateral Agent for the benefit of the Holders, as
the same may
be amended, supplemented or otherwise modified from time to
time.
1.2 Other Definitional Provisions. (a) The words
"hereof,"
"herein" and "hereunder" and words of similar import when used in
this
Agreement shall refer to this Agreement as a whole and not to any
particular
provision of this Agreement, and section and paragraph references
are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall
be
equally applicable to both the singular and plural forms of such
terms.
2. Grant of Security Interest. (a) As collateral
security for the
prompt and complete payment and performance when due (whether at
the
stated maturity, by acceleration or otherwise) of the
Obligations, the Company
hereby grants to NS a security interest in all of the following
property now
owned or at any time hereafter acquired by the Company or in
which the
Company now has or at any time in the future may acquire any
right, title or
interest (collectively, the "Collateral"):
(i) all Equipment including, without limitation, (i)
furniture,
furnishings, tools, lubricants, spare parts, shelving,
displays, cases,
accessories, motors and engines, and (ii) with respect to
the foregoing all
attachments, components, parts, equipment and accessories
installed
thereon or affixed thereto;
(ii) all Fixtures;
(iii) all books and records pertaining to the
Collateral; and
(iv) to the extent not otherwise included, all Proceeds
and
Products of any and all of the foregoing.
(b) NS, for itself, its successors and assigns,
covenants and
agrees, that the security interests granted hereby and the Liens
created to
perfect such security interests shall be expressly subordinate
and junior in right
of payment to all of the security interests granted by the
Company in favor of
the Collateral Agent to secure the Senior Obligations and all
Liens created to
perfect such security interests.
3. Representations and Warranties. The Company
hereby
represents and warrants that:
3.1 Title; No Other Liens. Except for (a) the
security interest
granted to NS pursuant to this Agreement, (b) the security
interest granted in
favor of the Collateral Agent to secure the Company's obligations
with respect
to the Subsidiary Guarantee and (c) the other Liens permitted to
exist on the
Collateral pursuant to the Indenture, the Company owns each item
of the
Collateral free and clear of any and all Liens or claims of
others. No security
agreement, financing statement or other public notice with
respect to all or any
part of the Collateral is on file or of record in any public
office, except (a) such
as have been filed in favor of NS pursuant to this Agreement, (b)
such as have
been filed in favor of the Collateral Agent to secure the
Company's obligations
with respect to the Subsidiary Guarantee or (c) as are permitted
pursuant to
the Indenture.
3.2 Perfected Second Priority Liens. The security
interests
granted pursuant to this Agreement (a) constitute perfected
second security
interests in the Collateral in favor of NS, (b) are prior to all
other Liens on the
Collateral in existence on the date hereof except for (i)
security interests
granted in favor of the Collateral Agent to secure the Company's
obligations
with respect to the Subsidiary Guarantee and (ii) Liens permitted
to exist
pursuant to the Indenture, and (c) are enforceable as such
against (1) all
creditors of and purchasers from the Company and (2) any Person
having any
interest in the real property where any of the Equipment is
located.
3.3 Equipment. The Equipment is kept at the locations
listed
on Schedule 1 hereto.
3.4 Chief Executive Office. The Company's chief
executive
office and chief place of business is located at Sixth Avenue and
Mount, P.O.
Box 750, Beaver Falls, PA 15010.
3.5 Farm Products. None of the Collateral
constitutes, or is the
Proceeds of, Farm Products.
4. Covenants. The Company covenants and agrees with
NS
that, from and after the date of this Agreement until this
Agreement is
terminated and the security interests created hereby are
released:
4.1 Delivery of Instruments and Chattel Paper.
Subject to the
terms of the Pledge Agreement, if any amount payable under or in
connection
with any of the Collateral shall be or become evidenced by any
Instrument or
Chattel Paper, such Instrument or Chattel Paper shall be promptly
delivered to
NS, duly indorsed in a manner satisfactory to NS, to be held as
Collateral
pursuant to this Agreement.
4.2 Marking of Records. The Company will include in
its
books and records pertaining to the Collateral an appropriate
reference to this
Agreement and the security interests created hereby.
4.3 Maintenance of Insurance. (a) The Company will
maintain, with financially sound and reputable companies,
insurance policies
(1) insuring the Equipment and Fixtures against loss by fire,
explosion, theft
and such other casualties as are usually and customarily carried
with respect
to similar property and or facilities according to their
respective locations and
(2) insuring the Company and, upon satisfaction, discharge or
avoidance of the
Senior Obligations in full, NS against liability for personal
injury and property
damage relating to such Equipment and Fixtures, such policies to
be in such
form and amounts and having such coverage as are usually and
customarily
carried with respect to similar property and or facilities
according to their
respective locations with losses payable to the Company and, upon
satisfaction, discharge or avoidance of the Senior Obligations in
full, NS ("Net
Insurance Proceeds").
(b) All such insurance shall (1) provide that no
cancellation,
material reduction in amount or material change in coverage
thereof shall be
effective until at least 30 days after receipt by NS of written
notice thereof, (2)
name, upon satisfaction, discharge or avoidance of the Senior
Obligations in
full, NS as the insured party and (3) subject to paragraph (a)
above, be
reasonably satisfactory in all other respects to NS.
(c) The Company shall deliver to NS a report of a
reputable
insurance broker with respect to such insurance during the month
of July in
each calendar year and such supplemental reports with respect
thereto as NS
may from time to time reasonably request.
4.4 Payment of Taxes, Assessments and Governmental
Charges. The Company will pay and discharge or otherwise satisfy
at or
before maturity or before they become delinquent, as the case may
be, all
taxes, assessments and governmental charges or levies imposed
upon the
Collateral or in respect of income or profits therefrom, as well
as all claims of
any kind (including, without limitation, claims for labor,
materials and
supplies) against or with respect to the Collateral, except that
no such charge
need be paid if the amount, applicability or validity thereof is
currently being
contested in good faith by appropriate proceedings, reserves in
conformity
with GAAP with respect thereto have been provided on the books of
the
Company and such proceedings do not involve any material danger
of the
sale, forfeiture or loss of any of the Collateral or any interest
therein.
4.5 Maintenance of Perfected Security Interest;
Further
Documentation. (a) The Company shall maintain the security
interest created
by this Agreement as a second, perfected security interest
subject only to (i)
security interests granted in favor of the Collateral Agent to
secure the
Company's obligations with respect to the Subsidiary Guarantee
and (ii) Liens
permitted to exist pursuant to the Indenture and shall defend
such security
interest against claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the
written
request of NS and at the sole expense of the Company, the Company
will
promptly and duly execute and deliver such further instruments
and
documents and take such further action as NS may reasonably
request for the
purpose of obtaining or preserving the full benefits of this
Agreement and of
the rights and powers herein granted, including, without
limitation, the filing
of any financing or continuation statements under the Uniform
Commercial
Code in effect in any jurisdiction with respect to the security
interests created
hereby.
4.6 Changes in Locations, Name, etc. The Company will
not,
unless it shall have given NS at least 30 days prior written
notice:
(a) permit any of the Equipment to be kept at a
location other
than those listed on Schedule 1 hereto; or
(b) change the location of its chief executive office
and chief
place of business from that specified in subsection 3.4; or
(c) change its name, identity, Federal taxpayer
identification
number or corporate structure to such an extent that any
financing
statement filed by NS in connection with this Agreement
would become
seriously misleading.
4.7 Further Identification of Collateral. The Company
will
furnish to NS from time to time statements and schedules further
identifying
and describing the Collateral and such other reports in
connection with the
Collateral as NS may reasonably request, all in reasonable
detail.
4.8 Notices. The Company will advise NS promptly, in
reasonable detail, at its address set forth in the Indenture of:
(a) any Lien (other than security interests created
hereby,
security interests granted in favor of the Collateral Agent
to secure the
Company's obligations with respect to the Subsidiary
Guarantee, or
Liens permitted under the Indenture) on, or claim asserted
against, any
of the Collateral; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on
the
aggregate value of the Collateral or on the security
interests created
hereby.
5. [Reserved]
6. Remedies.
6.1 Code Remedies. If an Event of Default shall occur
and be
continuing, NS may exercise, in addition to all other rights and
remedies
granted to them in this Agreement and in any other instrument or
agreement
securing, evidencing or relating to the Obligations, all rights
and remedies of a
secured party under the Code. Without limiting the generality of
the
foregoing, NS without demand of performance or other demand,
presentment,
protest, advertisement or notice of any kind (except any notice
required by law
referred to below) to or upon the Company or any other Person
(all and each
of which demands, defenses, advertisements and notices are hereby
waived),
may in such circumstances forthwith collect, receive, appropriate
and realize
upon the Collateral, or any part thereof, and/or may forthwith
sell, lease,
assign, give option or options to purchase, or otherwise dispose
of and deliver
the Collateral or any part thereof (or contract to do any of the
foregoing), in
one or more parcels at public or private sale or sales, at any
exchange, broker's
board or office of NS or elsewhere upon such terms and conditions
as it may
deem advisable and at such prices as it may deem best, for cash
or on credit or
for future delivery without assumption of any credit risk. NS
shall have the
right upon any such public sale or sales, and, to the extent
permitted by law,
upon any such private sale or sales, to purchase the whole or any
part of the
Collateral so sold, free of any right or equity of redemption in
the Company,
which right or equity is hereby waived or released. The Company
further
agrees, at NS's request, to assemble the Collateral and make it
available to NS
at places which NS shall reasonably select, whether at the
Company's premises
or elsewhere. NS shall apply the net proceeds of any such
collection, recovery,
receipt, appropriation, realization or sale, after deducting all
reasonable costs
and expenses of every kind incurred therein or incidental to the
care or
safekeeping of any of the Collateral in the manner prescribed in
the Indenture.
To the extent permitted by applicable law, the Company waives all
claims,
damages and demands it may acquire against NS arising out of the
exercise by
it of any rights hereunder, except to the extent any such claims,
damages or
demands were directly caused by NS's gross negligence or willful
misconduct.
If any notice of a proposed sale or other disposition of
Collateral shall be
required by law, such notice shall be deemed reasonable and
proper if given at
least 10 days before such sale or other disposition.
6.2 Deficiency. The Company shall remain liable for
any
deficiency if the proceeds of any sale or other disposition of
the Collateral are
insufficient to pay the Obligations and the fees and
disbursements of any
attorneys employed by NS to collect such deficiency.
7. Applicable Provisions of the Indenture. Sections
12.2
through 12.10 of the Indenture are hereby incorporated by
reference into this
Agreement and made a part of the same as if set forth herein. To
the extent, if
any, that the provisions of this Agreement are inconsistent with
the provisions
of Sections 12.2 through 12.10 of the Indenture, the provisions
of the Indenture
shall prevail.
8. NS's Appointment as Attorney-in-Fact; NS's
Performance
of Company's Obligations.
8.1 Powers. Subject to the terms of the Pledge
Agreement, the
Company hereby irrevocably constitutes and appoints NS and any
officer or
agent thereof, with full power of substitution, as its true and
lawful attorney-
in-fact with full irrevocable power and authority in the place
and stead of the
Company and in the name of the Company or in its own name, from
time to
time in NS's discretion, for the purpose of carrying out the
terms of this
Agreement, to take any and all appropriate action and to execute
any and all
documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting
the
generality of the foregoing, the Company hereby gives NS the
power and
right, on behalf of the Company, without notice to or assent by
the Company,
to do the following:
(a) in the case of any Collateral, at any time when
any Event
of Default shall have occurred and is continuing, in the
name of the
Company or its own name, or otherwise, to take possession of
and
indorse and collect any checks, drafts, notes, acceptances
or other
instruments for the payment of moneys due with respect to
any
Collateral and to file any claim or to take any other action
or proceeding
in any court of law or equity or otherwise deemed
appropriate by NS
for the purpose of collecting any and all such moneys due
with respect
to any Collateral whenever payable;
(b) to pay or discharge taxes and Liens levied or
placed on or
threatened against the Collateral (except as provided by
Section 4.4 of
this Agreement), to effect any repairs or any insurance
called for by the
terms of this Agreement and to pay all or any part of the
premiums
therefor and the costs thereof;
(c) upon the occurrence and during the continuance of
any
Event of Default, (1) to direct any party liable for any
payment under
any of the Collateral to make payment of any and all moneys
due or to
become due thereunder directly to NS or as NS shall direct;
(2) to ask or
demand for, collect, receive payment of and receipt for, any
and all
moneys, claims and other amounts due or to become due at any
time in
respect of or arising out of any Collateral; (3) to sign and
indorse any
invoices, freight or express bills, bills of lading, storage
or warehouse
receipts, drafts against debtors, assignments,
verifications, notices and
other documents in connection with any of the Collateral;
(4) to
commence and prosecute any suits, actions or proceedings at
law or in
equity in any court of competent jurisdiction to collect the
Collateral or
any portion thereof and to enforce any other right in
respect of any
Collateral; (5) to defend any suit, action or proceeding
brought against
the Company with respect to any Collateral; (6) to settle,
compromise or
adjust any such suit, action or proceeding and, in
connection therewith,
to give such discharges or releases as NS may deem
appropriate; and (7)
generally, to sell, transfer, pledge and make any agreement
with respect
to or otherwise deal with any of the Collateral as fully and
completely
as though NS were the absolute owner thereof for all
purposes, and to
do, at NS's option and the Company's expense, at any time,
or from
time to time, all acts and things which NS deems necessary
to protect,
preserve or realize upon the Collateral and NS's security
interests
therein and to effect the intent of this Agreement, all as
fully and
effectively as the Company might do.
8.2 Performance by NS of Company's Obligations. If
the
Company fails to perform or comply with any of its agreements
contained
herein, NS, at its option, but without any obligation so to do,
may perform or
comply, or otherwise cause performance or compliance, with such
agreement.
8.3 Company's Reimbursement Obligation. The expenses
of
NS incurred in connection with actions undertaken as provided in
this Section,
together with interest thereon at a rate per annum equal to
13.50% from the
date of payment by NS to the date reimbursed by the Company,
shall be
payable by the Company to NS on demand.
8.4 Ratification; Power Coupled With An Interest. The
Company hereby ratifies all that said attorneys shall lawfully do
or cause to be
done by virtue hereof. All powers, authorizations and agencies
contained in
this Agreement are coupled with an interest and are irrevocable
until this
Agreement is terminated and the security interests created hereby
are released.
9. Duty of NS. NS's sole duty with respect to the
custody,
safekeeping and physical preservation of the Collateral in its
possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it
in the same
manner as NS deals with similar property for its own account.
Neither NS nor
any of its directors, officers, employees or agents shall be
liable for failure to
demand, collect or realize upon any of the Collateral or for any
delay in doing
so or shall be under any obligation to sell or otherwise dispose
of any
Collateral upon the request of the Company or any other Person or
to take any
other action whatsoever with regard to the Collateral or any part
thereof. The
powers conferred on NS hereunder are solely to protect NS's
interests in the
Collateral and shall not impose any duty upon NS to exercise any
such
powers. NS shall be accountable only for amounts that it
actually receives as a
result of the exercise of such powers, and neither it nor any of
its officers,
directors, employees or agents shall be responsible to the
Company for any act
or failure to act hereunder, except for their own gross
negligence or willful misconduct.
10. Execution of Financing Statements. Pursuant to
Section 9-
402 of the Code, the Company authorizes NS to file financing
statements with
respect to the Collateral without the signature of the Company in
such form
and in such filing offices as NS reasonably determines
appropriate to perfect
the security interests of NS under this Agreement. A carbon,
photographic or
other reproduction of this Agreement shall be sufficient as a
financing
statement for filing in any jurisdiction.
11. Indemnity.
11.1 Indemnity. (a) The Company agrees to indemnify,
pay
and hold harmless NS and the officers, directors, employees,
agents and
affiliates of NS (collectively called the "Indemnitees") from and
against any and
all other liabilities, obligations, losses, damages, penalties,
actions, judgments,
suits, claims, costs (including, without limitation, settlement
costs), expenses or
disbursements of any kind or nature whatsoever (including,
without limitation,
the reasonable fees and disbursements of counsel for such
Indemnitees in
connection with any investigative, administrative or judicial
proceeding
commenced or threatened, whether or not such Indemnitee shall be
designated
a party thereto), which may be imposed on, incurred by, or
asserted against
that Indemnitee, in any manner relating to or arising out of this
Agreement or
the Intercompany Note arising in any action relating to, directly
or indirectly,
the Collateral or the subject of this Agreement (including
without limitation,
any misrepresentation by the Company in this Agreement (the
"indemnified
liabilities"); provided that the Company shall have no obligation
to an
Indemnitee hereunder with respect to indemnified liabilities if
it has been
determined by a final decision (after all appeals and the
expiration of time to
appeal) by a court of competent jurisdiction that such
indemnified liability
arose from the negligence or willful misconduct of that
Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless
set forth in
the preceding sentence may be unenforceable because it is
violative of any law
or public policy, the Company shall contribute the maximum
portion which it
is permitted to pay and satisfy under applicable law, to the
payment and
satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of
them.
(b) The Company agrees to pay, and to save NS harmless
from, any and all liabilities, costs and expenses (including,
without limitation,
legal fees and expenses) (1) with respect to, or resulting from
any delay in
paying, any and all stamp, excise, sales or other taxes and any
and all
recording and filing fees which may be payable or determined to
be payable
with respect to any of the Collateral, (2) with respect to, or
resulting from, any
delay in complying with any Requirement of Law applicable to any
of the
Collateral and (3) in connection with any of the transactions
contemplated by
this Agreement.
11.2 Survival. The obligations of the Company
contained in
this Section 11 shall survive the termination of this Agreement
and the
discharge of the Company's other obligations under this
Agreement.
11.3 Reimbursements. Any amounts paid by any
Indemnitee as
to which such Indemnitee has the right to reimbursement shall
constitute
Obligations secured by the Collateral.
12. Notices. All notices, requests and demands to or
upon NS
or the Company to be effective shall be in writing (or by telex,
fax or similar
electronic transfer) and shall be deemed to have been duly given
or made
(a) when delivered by hand or (b) if given by mail, when
deposited in the
mails by certified mail, return receipt requested, or (c) if by
telex, fax or similar
electronic transfer, when sent and receipt has been confirmed,
addressed to NS
or the Company at its address or transmission number for notices
set forth
below its signature. NS and the Company may change their
addresses and
transmission numbers for notices by notice in the manner provided
in this
Section.
13. Termination of this Agreement. (a)
Notwithstanding any
other provision of this Agreement, this Agreement shall terminate
upon the
satisfaction, discharge or avoidance of the Obligations pursuant
to the terms of
the Pledge Agreement and the Indenture.
(b) Upon the termination of this Agreement, and
subject to the
terms of the Pledge Agreement, NS shall execute and deliver to
the Company
such documents of assignment as are reasonably necessary to
terminate NS's
security interest in any Collateral granted pursuant to this
Agreement.
(c) If the Company ceases to be a Subsidiary of NS
pursuant to
Article VI of the Indenture and subject to the satisfaction of
the terms and
conditions of the Indenture in general and Article VI in
particular, the
Company shall automatically be released from all of its share of
the
Obligations, and this Agreement shall terminate.
14. Severability. Any provision of this Agreement
which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without
invalidating the remaining provisions hereof, and any such
prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable
such provision in any other jurisdiction.
15. Amendments in Writing; No Waiver; Cumulative
Remedies.
15.1 Amendments in Writing. None of the terms or
provisions
of this Agreement may be waived, amended, supplemented or
otherwise
modified except by a written instrument executed by the Company
and NS in
a manner pursuant to Article VI of the Indenture or any other
provision
therein, or as may be provided for in the Intercreditor Agreement
with the
Bank of New York Commercial Corporation as ACM Agent ("ACM
Agent"),
dated an even date herewith, as the same may be amended, modified
or
supplemented from time to time.
15.2 No Waiver by Course of Conduct. NS shall not by
any act
(except by a written instrument pursuant to subsection 15.1
hereof), delay,
indulgence, omission or otherwise be deemed to have waived any
right or
remedy hereunder or to have acquiesced in any Default or Event of
Default or
in any breach of any of the terms and conditions hereof. No
failure to
exercise, nor any delay in exercising, on the part of NS, any
right, power or
privilege hereunder shall operate as a waiver thereof. No single
or partial
exercise of any right, power or privilege hereunder shall
preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege.
A waiver by NS of any right or remedy hereunder on any one
occasion shall
not be construed as a bar to any right or remedy which NS would
otherwise
have on any future occasion.
15.3 Remedies Cumulative. The rights and remedies
herein
provided are cumulative, may be exercised singly or concurrently
and are not
exclusive of any other rights or remedies provided by law.
16. Intercreditor Agreement. The parties hereto
acknowledge
that the terms of this Agreement are subject to the Intercreditor
Agreement
dated as of the date hereof between The Bank of New York
Commercial
Corporation and NS.
17. Section Headings. The section and subsection
headings
used in this Agreement are for convenience of reference only and
are not to
affect the construction hereof or be taken into consideration in
the
interpretation hereof.
18. Successors and Assigns. This Agreement shall be
binding
upon the successors and assigns of the Company and shall inure to
the benefit
of NS and its successors and assigns. Pursuant to a Pledge and
Security
Agreement dated of even date herewith between NS and the
Collateral Agent,
NS is pledging the Intercompany Note and assigning and granting a
security
interest in this Agreement and any and all documents and
instruments that
from time to time secure payment of the pledged Intercompany
Note,
including without limitation, the documents described on Schedule
I to the
Pledge Agreement to secure its obligations arising with respect
to the
Securities and the documents entered into in connection
therewith. Upon the
occurrence of an Event of Default under the Indenture or with
respect to the
Securities, the Collateral Agent or, as permitted by the
Indenture, the Holders
of the Securities, shall be substituted in all respects for NS
and each of the
rights and obligations of NS set forth in this Agreement shall
inure to the
exclusive benefit of the Collateral Agent and the Holders without
interference
from or challenge by NS or the Company.
19. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
20. Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or
proceeding relating to this Agreement to which it is a
party, or for
recognition and enforcement of any judgment in respect
thereof, to the
non-exclusive general jurisdiction of the Courts of the
State of New
York, the courts of the United States of America for the
Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now or
hereafter have to the venue of any such action or proceeding
in any
such court or that such action or proceeding was brought in
an
inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action
or
proceeding may be effected by mailing a copy thereof by
registered or
certified mail (or any substantially similar form of mail),
postage
prepaid, to the Company at its address set forth below its
signature or
at such other address of which NS shall have been notified
pursuant
thereto;
(d) agrees that nothing herein shall affect the right
to effect
service of process in any other manner permitted by law or
shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by
law, any
right it may have to claim or recover in any legal action or
proceeding
referred to in this subsection any special, exemplary,
punitive or
consequential damages.
IN WITNESS WHEREOF, the undersigned has caused this
Security Agreement to be duly executed and delivered as of the
date first
above written.
KOPPEL STEEL CORPORATION
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address: P.O. Box 750
Beaver Falls, PA 15010
Fax: (412) 847-6385
NS GROUP, INC.
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address:
Ninth and Lowell Streets
Newport, Kentucky 41072
Fax: (606) 292-0593
Schedule 1
[Koppel]
EQUIPMENT
List of Locations
Koppel Steel Corporation Koppel - Plant
6th & Mount Street
Koppel, Pennsylvania 16136
(Beaver County)
Ambridge - Plant
23rd Street & Duss Avenue
Ambridge, Pennsylvania 15003
(Beaver County)
Baytown - Plant
2600 Spur 55
Baytown, Texas 77520
(Chambers County)
Schedule 2
[Koppel]
REAL PROPERTY
OBLIGOR PROPERTY ADDRESS
(DESIGNATE
WHETHER
OWNED OR LEASED)
Koppel Steel Corporation Sixth & Mount
Koppel, PA 16136
(Beaver County)(Owned)
23 & Duss Avenue
Ambridge, PA 15003
(Beaver County)(Owned)
2600 Spur 55 Road
Baytown, Texas 77522
(Chambers
County)(Owned)
KOPPEL ICN Security Agreement
Between
Koppel Steel Corporation
And
NS Group, Inc.
July 28, 1995
TABLE OF CONTENTS
Page
1. Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . 4
2. Grant of Security Interest. . . . . . . . . . . . . . 4
3. Representations and Warranties. . . . . . . . . . . . 4
3.1 Title; No Other Liens . . . . . . . . . . . . . 4
3.2 Perfected Second Priority Liens . . . . . . . . 5
3.3 Equipment . . . . . . . . . . . . . . . . . . . 5
3.4 Chief Executive Office. . . . . . . . . . . . . 5
3.5 Farm Products . . . . . . . . . . . . . . . . . 5
4. Covenants . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Delivery of Instruments and Chattel Paper . . . 5
4.2 Marking of Records. . . . . . . . . . . . . . . 5
4.3 Maintenance of Insurance. . . . . . . . . . . . 5
4.4 Payment of Taxes, Assessments and
Governmental Charges. . . . . . . . . . . . . . . 6
4.5 Maintenance of Perfected Security Interest;
Further
Documentation . . . . . . . . . . . . . . . . 6
4.6 Changes in Locations, Name, etc.. . . . . . . . 7
4.7 Further Identification of Collateral. . . . . . 7
4.8 Notices . . . . . . . . . . . . . . . . . . . . 7
5. [Reserved]. . . . . . . . . . . . . . . . . . . . . . 7
6. Remedies. . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Code Remedies . . . . . . . . . . . . . . . . . 7
6.2 Deficiency. . . . . . . . . . . . . . . . . . . 8
7. Applicable Provisions of the Indenture. . . . . . . . 8
8. NS's Appointment as Attorney-in-Fact; NS's
Performance of Company's Obligations. . . . . . . . 8
8.1 Powers. . . . . . . . . . . . . . . . . . . . . 8
8.2 Performance by NS of Company's Obligations. . . 9
8.3 Company's Reimbursement Obligation. . . . . . . 9
8.4 Ratification; Power Coupled With An Interest. . 10
9. Duty of NS. . . . . . . . . . . . . . . . . . . . . . 10
10. Execution of Financing Statements . . . . . . . . . . 10
11. Indemnity . . . . . . . . . . . . . . . . . . . . . . 10
11.1 Indemnity . . . . . . . . . . . . . . . . . . . 10
11.2 Survival. . . . . . . . . . . . . . . . . . . . 11
11.3 Reimbursements. . . . . . . . . . . . . . . . . 11
12. Notices . . . . . . . . . . . . . . . . . . . . . . . 11
13. Termination of this Agreement . . . . . . . . . . . . 11
14. Severability. . . . . . . . . . . . . . . . . . . . . 12
15. Amendments in Writing; No Waiver; Cumulative
Remedies. . . . . . . . . . . . . . . . . . . . . . 12
15.1 Amendments in Writing . . . . . . . . . . . . . 12
15.2 No Waiver by Course of Conduct. . . . . . . . . 12
15.3 Remedies Cumulative . . . . . . . . . . . . . . 12
16. Intercreditor Agreement . . . . . . . . . . . . . . . 12
17. Section Headings. . . . . . . . . . . . . . . . . . . 13
18. Successors and Assigns. . . . . . . . . . . . . . . . 13
19. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 13
20. Submission To Jurisdiction; Waivers . . . . . . . . . 13
ERLANGER ICN SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 28, 1995, made
by
Erlanger Tubular Corporation, an Oklahoma corporation, the
Federal
Employer Identification Number of which is 73-1281150 (the
"Company")
in favor of NS GROUP, INC. ("NS"), the Federal Employer
Identification
Number of which is 61-0985936, as holder of a secured
Intercompany
Note dated as of July 28, 1995 made by the Company in favor of NS
(the "Intercompany Note") to secure the Company's obligation,
arising
under and in connection with the Intercompany Note.
W I T N E S S E T H :
WHEREAS, the Company is the owner of the Collateral (as
hereinafter defined);
WHEREAS, NS has issued (the "Offering") $131,096,000
principal amount of 13 1/2% Senior Secured Notes due 2003 (the
"Securities") and in connection with the Offering and refinancing
transactions entered into in connection therewith, NS has
advanced
certain funds to the Company as evidenced by the Intercompany
Note;
WHEREAS, the Intercompany Note is to be secured by real
property, fixtures and equipment of the Company; and
WHEREAS, it is a condition precedent to the purchase of
the Securities from NS that the Company shall have executed and
delivered this Agreement to NS and NS, in turn, pursuant to a
Pledge
and Security Agreement dated of even date herewith between NS and
the Collateral Agent (the "Pledge Agreement"), shall have pledged
the
Intercompany Note and granted a security interest to the
Collateral
Agent in the Intercompany Note, the documents and interests
securing
the Intercompany Note and the Proceeds thereof to secure NS's
obligations arising in connection with the Securities.
NOW, THEREFORE, in consideration of the premises and
to induce the advancing of a portion of the proceeds of the
Offering and
other monies to the Company by NS and to induce the purchase of
the
Securities, the Company hereby agrees with NS as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined
herein,
terms defined in the Indenture and used herein shall have the
meanings
given to them in the Indenture and the following terms which are
defined in the Uniform Commercial Code in effect in the State of
New
York on the date hereof are used herein as so defined: Chattel
Paper,
Equipment, Farm Products and Instruments.
(b) The following terms shall have the following
meanings:
"Agreement" means this Security Agreement, as the same
may be amended, modified or otherwise supplemented from time
to time.
"Code" means the Uniform Commercial Code as from time
to time in effect in the State of New York.
"Collateral" has the meaning specified in Section 2 of
this
Agreement.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is
a
party or by which it or any of the property owned by it is
bound.
"Default" means, with respect to the Intercompany Note,
any event which is, or after the giving of notice or passage
of
time or both would be, an Event of Default under the
Intercompany Note.
"Event of Default" shall have the meaning set forth in
Section 8.1 of the Indenture.
"Fixtures" shall have the meaning assigned to such term
in
the Code and include, without limitation, all goods that
after
placement on the real property described in Schedule 2
hereto
become component parts of the real property described in
Schedule 2 hereto, buildings and other constructions and
which
are used in the conduct of the Company's trade, business,
occupation or other commercial or industrial activity.
"Indenture" means the Indenture, dated of even date
herewith, between NS and The Huntington National Bank,
acting
in its capacity as trustee, relating to the Securities, as
the same
may be amended, supplemented or otherwise modified from time
to time.
"Net Insurance Proceeds" has the meaning specified in
Section 4.3 of this Agreement.
"Obligations" means the collective reference to the
unpaid
principal of and interest (and premium, if any) on the
Intercompany Note and all other obligations and liabilities
of the
Company with respect to the Intercompany Note (including,
without limitation, interest accruing at the then applicable
rate
provided in the Intercompany Note after the maturity of the
Intercompany Note and interest accruing at the then
applicable
rate provided in the Intercompany Note after the filing of
any
petition in bankruptcy, or the commencement of any
insolvency,
reorganization or like proceeding, relating to the Company,
whether or not a claim for post-filing or post-petition
interest is
allowed in such proceeding and, to the extent permitted by
law,
interest accruing on unpaid interest), whether direct or
indirect,
absolute or contingent, due or to become due, now existing
or
hereafter incurred, which may arise under, out of, or in
connection with, the Intercompany Note, this Agreement or
any
other document made, delivered or given in connection
therewith, in each case whether on account of principal,
premium, interest, reimbursement obligations, fees,
indemnities,
costs, expenses or otherwise (including, without limitation,
all
fees and disbursements of counsel to NS that are required to
be
paid by the Company pursuant to the terms of the
Intercompany
Note or this Agreement).
"Proceeds" and "Products" shall have the meaning
ascribed
to such terms in the Code and shall include in any event (i)
whatever is received upon any collection, exchange, sale or
other
disposition or refinancing of any of the Collateral and any
property into which any of the Collateral is converted
(whether
cash or non-cash proceeds), (ii) any and all proceeds of any
insurance, indemnity, warranty or guarantee payable to the
Company from time to time with respect to any of the
Collateral,
(iii) any and all payments (in any form whatsoever) made or
due
and payable to the Company from time to time in connection
with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any
governmental
authority (or any person acting under color of governmental
authority) and (iv) any and all other amounts from time to
time
paid or payable under or in connection with any of the
Collateral.
"Requirement of Law" means, as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational
or governing documents of such Person, and any law, treaty,
rule
or regulation or determination of an arbitrator or a court
or other
governmental authority, in each case applicable to or
binding
upon such Person or any of its property or to which such
Person
or any of its property is subject.
"Senior Obligations" means the obligations and
liabilities,
absolute or contingent, liquidated or unliquidated, now
existing
or hereafter incurred under, arising out of and in
connection with
the Subsidiary Guarantee.
"Subsidiary Guarantee" means the Subsidiary Guarantee,
dated of even date herewith, among the Company, Koppel Steel
Corporation, Imperial Adhesives, Inc., Newport Steel
Corporation,
Northern Kentucky Air, Inc. and Northern Kentucky
Management, Inc. and the Collateral Agent for the benefit of
the
Holders, as the same may be amended, supplemented or
otherwise modified from time to time.
1.2 Other Definitional Provisions. (a) The words
"hereof," "herein" and "hereunder" and words of similar import
when
used in this Agreement shall refer to this Agreement as a whole
and not
to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall
be
equally applicable to both the singular and plural forms of such
terms.
2. Grant of Security Interest. (a) As collateral
security
for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of
the
Obligations, the Company hereby grants to NS a security interest
in all
of the following property now owned or at any time hereafter
acquired
by the Company or in which the Company now has or at any time in
the future may acquire any right, title or interest
(collectively, the
"Collateral"):
(i) all Equipment including, without limitation, (i)
furniture, furnishings, tools, lubricants, spare parts,
shelving,
displays, cases, accessories, motors and engines, and (ii)
with
respect to the foregoing all attachments, components, parts,
equipment and accessories installed thereon or affixed
thereto;
(ii) all Fixtures;
(iii) all books and records pertaining to the
Collateral;
and
(iv) to the extent not otherwise included, all Proceeds
and Products of any and all of the foregoing.
(b) NS, for itself, its successors and assigns,
covenants
and agrees, that the security interests granted hereby and the
Liens
created to perfect such security interests shall be expressly
subordinate
and junior in right of payment to all of the security interests
granted by
the Company in favor of the Collateral Agent to secure the Senior
Obligations and all Liens created to perfect such security
interests.
3. Representations and Warranties. The Company
hereby represents and warrants that:
3.1 Title; No Other Liens. Except for (a) the
security
interest granted to NS pursuant to this Agreement, (b) the
security
interest granted in favor of the Collateral Agent to secure the
Company's obligations with respect to the Subsidiary Guarantee
and (c)
the other Liens permitted to exist on the Collateral pursuant to
the
Indenture, the Company owns each item of the Collateral free and
clear
of any and all Liens or claims of others. No security agreement,
financing statement or other public notice with respect to all or
any part
of the Collateral is on file or of record in any public office,
except (a)
such as have been filed in favor of NS pursuant to this
Agreement, (b)
such as have been filed in favor of the Collateral Agent to
secure the
Company's obligations with respect to the Subsidiary Guarantee or
(c)
as are permitted pursuant to the Indenture.
3.2 Perfected Second Priority Liens. The security
interests granted pursuant to this Agreement (a) constitute
perfected
second security interests in the Collateral in favor of NS, (b)
are prior to
all other Liens on the Collateral in existence on the date hereof
except
for (i) security interests granted in favor of the Collateral
Agent to
secure the Company's obligations with respect to the Subsidiary
Guarantee and (ii) Liens permitted to exist pursuant to the
Indenture,
and (c) are enforceable as such against (1) all creditors of and
purchasers from the Company and (2) any Person having any
interest in
the real property where any of the Equipment is located.
3.3 Equipment. The Equipment is kept at the locations
listed on Schedule 1 hereto.
3.4 Chief Executive Office. The Company's chief
executive office and chief place of business is located at 5610
Bird Creek
Avenue, Catoosa, Oklahoma 74015.
3.5 Farm Products. None of the Collateral
constitutes,
or is the Proceeds of, Farm Products.
4. Covenants. The Company covenants and agrees
with NS that, from and after the date of this Agreement until
this
Agreement is terminated and the security interests created hereby
are
released:
4.1 Delivery of Instruments and Chattel Paper.
Subject
to the terms of the Pledge Agreement, if any amount payable under
or
in connection with any of the Collateral shall be or become
evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel
Paper
shall be promptly delivered to NS, duly indorsed in a manner
satisfactory to NS, to be held as Collateral pursuant to this
Agreement.
4.2 Marking of Records. The Company will include in
its books and records pertaining to the Collateral an appropriate
reference to this Agreement and the security interests created
hereby.
4.3 Maintenance of Insurance. (a) The Company will
maintain, with financially sound and reputable companies,
insurance
policies (1) insuring the Equipment and Fixtures against loss by
fire,
explosion, theft and such other casualties as are usually and
customarily
carried with respect to similar property and or facilities
according to
their respective locations and (2) insuring the Company and, upon
satisfaction, discharge or avoidance of the Senior Obligations in
full, NS
against liability for personal injury and property damage
relating to
such Equipment and Fixtures, such policies to be in such form and
amounts and having such coverage as are usually and customarily
carried with respect to similar property and or facilities
according to
their respective locations with losses payable to the Company
and, upon
satisfaction, discharge or avoidance of the Senior Obligations in
full, NS
("Net Insurance Proceeds").
(b) All such insurance shall (1) provide that no
cancellation, material reduction in amount or material change in
coverage thereof shall be effective until at least 30 days after
receipt by
NS of written notice thereof, (2) name, upon satisfaction,
discharge or
avoidance of the Senior Obligations in full, NS as the insured
party and
(3) subject to paragraph (a) above, be reasonably satisfactory in
all other
respects to NS.
(c) The Company shall deliver to NS a report of a
reputable insurance broker with respect to such insurance during
the
month of July in each calendar year and such supplemental reports
with
respect thereto as NS may from time to time reasonably request.
4.4 Payment of Taxes, Assessments and Governmental
Charges. The Company will pay and discharge or otherwise satisfy
at
or before maturity or before they become delinquent, as the case
may
be, all taxes, assessments and governmental charges or levies
imposed
upon the Collateral or in respect of income or profits therefrom,
as well
as all claims of any kind (including, without limitation, claims
for labor,
materials and supplies) against or with respect to the
Collateral, except
that no such charge need be paid if the amount, applicability or
validity
thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect
thereto
have been provided on the books of the Company and such
proceedings
do not involve any material danger of the sale, forfeiture or
loss of any
of the Collateral or any interest therein.
4.5 Maintenance of Perfected Security Interest;
Further
Documentation. (a) The Company shall maintain the security
interest
created by this Agreement as a second, perfected security
interest
subject only to (i) security interests granted in favor of the
Collateral
Agent to secure the Company's obligations with respect to the
Subsidiary Guarantee and (ii) Liens permitted to exist pursuant
to the
Indenture and shall defend such security interest against claims
and
demands of all Persons whomsoever.
(b) At any time and from time to time, upon the
written
request of NS and at the sole expense of the Company, the Company
will promptly and duly execute and deliver such further
instruments
and documents and take such further action as NS may reasonably
request for the purpose of obtaining or preserving the full
benefits of
this Agreement and of the rights and powers herein granted,
including,
without limitation, the filing of any financing or continuation
statements
under the Uniform Commercial Code in effect in any jurisdiction
with
respect to the security interests created hereby.
4.6 Changes in Locations, Name, etc. (a) The Company
will not, unless it shall have given NS at least 30 days prior
written
notice:
(i) permit any of the Equipment to be kept at a
location
other than those listed on Schedule 1 hereto; or
(ii) change the location of its chief executive office
and
chief place of business from that specified in subsection
3.4; or
(iii) change its name, identity, Federal taxpayer
identification number or corporate structure to such an
extent
that any financing statement filed by NS in connection with
this
Agreement would become seriously misleading.
(b) In the case of transfers of the assets of Erlanger
pursuant to the proviso of Section 6.12 of the Indenture, the
Company
shall notify the Trustee of such transfer no later than 30 days
thereafter.
4.7 Further Identification of Collateral. The Company
will furnish to NS from time to time statements and schedules
further
identifying and describing the Collateral and such other reports
in
connection with the Collateral as NS may reasonably request, all
in
reasonable detail.
4.8 Notices. The Company will advise NS promptly, in
reasonable detail, at its address set forth in the Indenture of:
(a) any Lien (other than security interests created
hereby, security interests granted in favor of the
Collateral Agent
to secure the Company's obligations with respect to the
Subsidiary Guarantee, or Liens permitted under the
Indenture)
on, or claim asserted against, any of the Collateral; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on
the
aggregate value of the Collateral or on the security
interests
created hereby.
5. [Reserved].
6. Remedies.
6.1 Code Remedies. If an Event of Default shall occur
and be continuing, NS may exercise, in addition to all other
rights and
remedies granted to them in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the
Code.
Without limiting the generality of the foregoing, NS without
demand of
performance or other demand, presentment, protest, advertisement
or
notice of any kind (except any notice required by law referred to
below)
to or upon the Company or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived),
may
in such circumstances forthwith collect, receive, appropriate and
realize
upon the Collateral, or any part thereof, and/or may forthwith
sell,
lease, assign, give option or options to purchase, or otherwise
dispose of
and deliver the Collateral or any part thereof (or contract to do
any of
the foregoing), in one or more parcels at public or private sale
or sales,
at any exchange, broker's board or office of NS or elsewhere upon
such
terms and conditions as it may deem advisable and at such prices
as it
may deem best, for cash or on credit or for future delivery
without
assumption of any credit risk. NS shall have the right upon any
such
public sale or sales, and, to the extent permitted by law, upon
any such
private sale or sales, to purchase the whole or any part of the
Collateral
so sold, free of any right or equity of redemption in the
Company,
which right or equity is hereby waived or released. The Company
further agrees, at NS's request, to assemble the Collateral and
make it
available to NS at places which NS shall reasonably select,
whether at
the Company's premises or elsewhere. NS shall apply the net
proceeds
of any such collection, recovery, receipt, appropriation,
realization or
sale, after deducting all reasonable costs and expenses of every
kind
incurred therein or incidental to the care or safekeeping of any
of the
Collateral in the manner prescribed in the Indenture. To the
extent
permitted by applicable law, the Company waives all claims,
damages
and demands it may acquire against NS arising out of the exercise
by it
of any rights hereunder, except to the extent any such claims,
damages
or demands were directly caused by NS's gross negligence or
willful
misconduct. If any notice of a proposed sale or other
disposition of
Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale
or other
disposition.
6.2 Deficiency. The Company shall remain liable for
any deficiency if the proceeds of any sale or other disposition
of the
Collateral are insufficient to pay the Obligations and the fees
and
disbursements of any attorneys employed by NS to collect such
deficiency.
7. Applicable Provisions of the Indenture. Sections
12.2 through 12.10 of the Indenture are hereby incorporated by
reference
into this Agreement and made a part of the same as if set forth
herein.
To the extent, if any, that the provisions of this Agreement are
inconsistent with the provisions of Sections 12.2 through 12.10
of the
Indenture, the provisions of the Indenture shall prevail.
8. NS's Appointment as Attorney-in-Fact; NS's
Performance of Company's Obligations.
8.1 Powers. Subject to the terms of the Pledge
Agreement, the Company hereby irrevocably constitutes and
appoints
NS and any officer or agent thereof, with full power of
substitution, as
its true and lawful attorney-in-fact with full irrevocable power
and
authority in the place and stead of the Company and in the name
of the
Company or in its own name, from time to time in NS's discretion,
for
the purpose of carrying out the terms of this Agreement, to take
any
and all appropriate action and to execute any and all documents
and
instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality
of the
foregoing, the Company hereby gives NS the power and right, on
behalf
of the Company, without notice to or assent by the Company, to do
the
following:
(a) in the case of any Collateral, at any time when
any
Event of Default shall have occurred and is continuing, in
the
name of the Company or its own name, or otherwise, to take
possession of and indorse and collect any checks, drafts,
notes,
acceptances or other instruments for the payment of moneys
due
with respect to any Collateral and to file any claim or to
take any
other action or proceeding in any court of law or equity or
otherwise deemed appropriate by NS for the purpose of
collecting any and all such moneys due with respect to any
Collateral whenever payable;
(b) to pay or discharge taxes and Liens levied or
placed
on or threatened against the Collateral (except as provided
by
Section 4.4 of this Agreement), to effect any repairs or any
insurance called for by the terms of this Agreement and to
pay all
or any part of the premiums therefor and the costs thereof;
(c) upon the occurrence and during the continuance of
any Event of Default, (1) to direct any party liable for any
payment under any of the Collateral to make payment of any
and
all moneys due or to become due thereunder directly to NS or
as
NS shall direct; (2) to ask or demand for, collect, receive
payment
of and receipt for, any and all moneys, claims and other
amounts
due or to become due at any time in respect of or arising
out of
any Collateral; (3) to sign and indorse any invoices,
freight or
express bills, bills of lading, storage or warehouse
receipts, drafts
against debtors, assignments, verifications, notices and
other
documents in connection with any of the Collateral; (4) to
commence and prosecute any suits, actions or proceedings at
law
or in equity in any court of competent jurisdiction to
collect the
Collateral or any portion thereof and to enforce any other
right in
respect of any Collateral; (5) to defend any suit, action or
proceeding brought against the Company with respect to any
Collateral; (6) to settle, compromise or adjust any such
suit, action
or proceeding and, in connection therewith, to give such
discharges or releases as NS may deem appropriate; and (7)
generally, to sell, transfer, pledge and make any agreement
with
respect to or otherwise deal with any of the Collateral as
fully
and completely as though NS were the absolute owner thereof
for
all purposes, and to do, at NS's option and the Company's
expense, at any time, or from time to time, all acts and
things
which NS deems necessary to protect, preserve or realize
upon
the Collateral and NS's security interests therein and to
effect the
intent of this Agreement, all as fully and effectively as
the
Company might do.
8.2 Performance by NS of Company's Obligations. If
the Company fails to perform or comply with any of its agreements
contained herein, NS, at its option, but without any obligation
so to do,
may perform or comply, or otherwise cause performance or
compliance,
with such agreement.
8.3 Company's Reimbursement Obligation. The
expenses of NS incurred in connection with actions undertaken as
provided in this Section, together with interest thereon at a
rate per
annum equal to 13.50% from the date of payment by NS to the date
reimbursed by the Company, shall be payable by the Company to NS
on demand.
8.4 Ratification; Power Coupled With An Interest. The
Company hereby ratifies all that said attorneys shall lawfully do
or
cause to be done by virtue hereof. All powers, authorizations
and
agencies contained in this Agreement are coupled with an interest
and
are irrevocable until this Agreement is terminated and the
security
interests created hereby are released.
9. Duty of NS. NS's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral
in its
possession, under Section 9-207 of the Code or otherwise, shall
be to
deal with it in the same manner as NS deals with similar property
for
its own account. Neither NS nor any of its directors, officers,
employees
or agents shall be liable for failure to demand, collect or
realize upon
any of the Collateral or for any delay in doing so or shall be
under any
obligation to sell or otherwise dispose of any Collateral upon
the
request of the Company or any other Person or to take any other
action
whatsoever with regard to the Collateral or any part thereof.
The
powers conferred on NS hereunder are solely to protect NS's
interests in
the Collateral and shall not impose any duty upon NS to exercise
any
such powers. NS shall be accountable only for amounts that it
actually
receives as a result of the exercise of such powers, and neither
it nor
any of its officers, directors, employees or agents shall be
responsible to
the Company for any act or failure to act hereunder, except for
their
own gross negligence or willful misconduct.
10. Execution of Financing Statements. Pursuant to
Section 9-402 of the Code, the Company authorizes NS to file
financing
statements with respect to the Collateral without the signature
of the
Company in such form and in such filing offices as NS reasonably
determines appropriate to perfect the security interests of NS
under this
Agreement. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing
in any
jurisdiction.
11. Indemnity.
11.1 Indemnity. (a) The Company agrees to indemnify,
pay and hold harmless NS and the officers, directors, employees,
agents
and affiliates of NS (collectively called the "Indemnitees") from
and
against any and all other liabilities, obligations, losses,
damages,
penalties, actions, judgments, suits, claims, costs (including,
without
limitation, settlement costs), expenses or disbursements of any
kind or
nature whatsoever (including, without limitation, the reasonable
fees
and disbursements of counsel for such Indemnitees in connection
with
any investigative, administrative or judicial proceeding
commenced or
threatened, whether or not such Indemnitee shall be designated a
party
thereto), which may be imposed on, incurred by, or asserted
against that
Indemnitee, in any manner relating to or arising out of this
Agreement
or the Intercompany Note arising in any action relating to,
directly or
indirectly, the Collateral or the subject of this Agreement
(including
without limitation, any misrepresentation by the Company in this
Agreement (the "indemnified liabilities"); provided that the
Company
shall have no obligation to an Indemnitee hereunder with respect
to
indemnified liabilities if it has been determined by a final
decision (after
all appeals and the expiration of time to appeal) by a court of
competent
jurisdiction that such indemnified liability arose from the
negligence or
willful misconduct of that Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative
of any
law or public policy, the Company shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable
law, to
the payment and satisfaction of all indemnified liabilities
incurred by
the Indemnitees or any of them.
(b) The Company agrees to pay, and to save NS
harmless from, any and all liabilities, costs and expenses
(including,
without limitation, legal fees and expenses) (1) with respect to,
or
resulting from any delay in paying, any and all stamp, excise,
sales or
other taxes and any and all recording and filing fees which may
be
payable or determined to be payable with respect to any of the
Collateral, (2) with respect to, or resulting from, any delay in
complying
with any Requirement of Law applicable to any of the Collateral
and (3)
in connection with any of the transactions contemplated by this
Agreement.
11.2 Survival. The obligations of the Company
contained
in this Section 11 shall survive the termination of this
Agreement and
the discharge of the Company's other obligations under this
Agreement.
11.3 Reimbursements. Any amounts paid by any
Indemnitee as to which such Indemnitee has the right to
reimbursement
shall constitute Obligations secured by the Collateral.
12. Notices. All notices, requests and demands to or
upon NS or the Company to be effective shall be in writing (or by
telex,
fax or similar electronic transfer) and shall be deemed to have
been duly
given or made (a) when delivered by hand or (b) if given by mail,
when
deposited in the mails by certified mail, return receipt
requested, or (c)
if by telex, fax or similar electronic transfer, when sent and
receipt has
been confirmed, addressed to NS or the Company at its address or
transmission number for notices set forth below its signature.
NS and
the Company may change their addresses and transmission numbers
for
notices by notice in the manner provided in this Section.
13. Termination of this Agreement. (a)
Notwithstanding any other provision of this Agreement, this
Agreement
shall terminate upon the satisfaction, discharge or avoidance of
the
Obligations pursuant to the terms of the Pledge Agreement and the
Indenture.
(b) Upon the termination of this Agreement, and
subject to
the terms of the Pledge Agreement, NS shall execute and deliver
to the
Company such documents of assignment as are reasonably necessary
to
terminate NS's security interest in any Collateral granted
pursuant to
this Agreement.
(c) If the Company ceases to be a Subsidiary of NS
pursuant to Article VI of the Indenture and subject to the
satisfaction of
the terms and conditions of the Indenture in general and Article
VI in
particular, the Company shall automatically be released from all
of its
share of the Obligations, and this Agreement shall terminate.
14. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof,
and any such prohibition or unenforceability in any jurisdiction
shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
15. Amendments in Writing; No Waiver; Cumulative
Remedies.
15.1 Amendments in Writing. None of the terms or
provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by
the
Company and NS in a manner pursuant to Article VI of the
Indenture
or any other provision therein, or as may be provided for in the
Intercreditor Agreement with the Bank of New York Commercial
Corporation as ACM Agent ("ACM Agent"), dated an even date
herewith, as the same may be amended, modified or supplemented
from time to time.
15.2 No Waiver by Course of Conduct. NS shall not by
any act (except by a written instrument pursuant to subsection
15.1
hereof), delay, indulgence, omission or otherwise be deemed to
have
waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms
and
conditions hereof. No failure to exercise, nor any delay in
exercising, on
the part of NS, any right, power or privilege hereunder shall
operate as
a waiver thereof. No single or partial exercise of any right,
power or
privilege hereunder shall preclude any other or further exercise
thereof
or the exercise of any other right, power or privilege. A waiver
by NS
of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which NS would
otherwise
have on any future occasion.
15.3 Remedies Cumulative. The rights and remedies
herein provided are cumulative, may be exercised singly or
concurrently
and are not exclusive of any other rights or remedies provided by
law.
16. Intercreditor Agreement. The parties hereto
acknowledge that the terms of this Agreement are subject to the
Intercreditor Agreement dated as of the date hereof between The
Bank
of New York Commercial Corporation and NS.
17. Section Headings. The section and subsection
headings used in this Agreement are for convenience of reference
only
and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
18. Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of the Company and shall
inure to the benefit of NS and its successors and assigns.
Pursuant to a
Pledge and Security Agreement dated of even date herewith between
NS and the Collateral Agent, NS is pledging the Intercompany Note
and
assigning and granting a security interest in this Agreement and
any
and all documents and instruments that from time to time secure
payment of the pledged Intercompany Note, including without
limitation, the documents described on Schedule I to the Pledge
Agreement to secure its obligations arising with respect to the
Securities
and the documents entered into in connection therewith. Upon the
occurrence of an Event of Default under the Indenture or with
respect to
the Securities, the Collateral Agent or, as permitted by the
Indenture,
the Holders of the Securities, shall be substituted in all
respects for NS
and each of the rights and obligations of NS set forth in this
Agreement
shall inure to the exclusive benefit of the Collateral Agent and
the
Holders without interference from or challenge by NS or the
Company.
19. GOVERNING LAW. THIS AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
20. Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action
or proceeding relating to this Agreement to which it is a
party, or
for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the
Courts of
the State of New York, the courts of the United States of
America
for the Southern District of New York, and appellate courts
from
any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now
or hereafter have to the venue of any such action or
proceeding
in any such court or that such action or proceeding was
brought
in an inconvenient court and agrees not to plead or claim
the
same;
(c) agrees that service of process in any such action
or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of
mail), postage prepaid, to the Company at its address set
forth
below its signature or at such other address of which NS
shall
have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right
to
effect service of process in any other manner permitted by
law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by
law, any right it may have to claim or recover in any legal
action
or proceeding referred to in this subsection any special,
exemplary, punitive or consequential damages.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
Security Agreement to be duly executed and delivered as of the
date
first above written.
ERLANGER TUBULAR CORPORATION
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address: 5610 Bird Creek Avenue
Catoosa, Oklahoma 74015
Fax: (918) 266-6116
NS GROUP, INC.
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
Address: Ninth and Lowell Streets
Newport, Kentucky 41072
Fax: (606) 292-0593
Schedule 1
[Erlanger]
EQUIPMENT
List of Locations
Erlanger Tubular Corporation 5610 Birdcreek
Avenue
Catoosa, Oklahoma
74015
(Rogers County)
Schedule 2
[Erlanger]
REAL PROPERTY
OBLIGOR PROPERTY
ADDRESS
(DESIGNATE
WHETHER
OWNED OR
LEASED)
Erlanger Tubular Corporation 5610 Birdcreek Avenue
Catoosa, Oklahoma 74015
(Rogers County)(Leased)
ERLANGER ICN Security Agr eement
Between
Erlanger Tubular Corporat ion
And
NS Group, Inc.
July 28, 1995
TABLE OF CONTENTS
Page
1.Defined Terms 1
1.1Definitions 1
1.2Other Definitional Provisions 4
2.Grant of Security Interest 4
3.Representations and Warranties 4
3.1Title; No Other Liens 4
3.2Perfected Second Priority Liens 5
3.3Equipment 5
3.4Chief Executive Office 5
3.5Farm Products 5
4.Covenants 5
4.1Delivery of Instruments and Chattel Paper 5
4.2Marking of Records 5
4.3Maintenance of Insurance 5
4.4Payment of Taxes, Assessments and Governmental
Charges 6
4.5Maintenance of Perfected Security Interest; Further
Documentation 6
4.6Changes in Locations, Name, etc. 7
4.7Further Identification of Collateral 7
4.8Notices 7
5.[Reserved]. 7
6.Remedies 7
6.1Code Remedies 7
6.2Deficiency 8
7.Applicable Provisions of the Indenture 8
8.NS's Appointment as Attorney-in-Fact; NS's
Performance of Company's Obligations 8
8.1Powers 8
8.2Performance by NS of Company's Obligations 9
8.3Company's Reimbursement Obligation 10
8.4Ratification; Power Coupled With An Interest 10
9.Duty of NS 10
10.Execution of Financing Statements 10
11.Indemnity 10
11.1Indemnity 10
11.2Survival 11
11.3Reimbursements 11
12.Notices 11
13.Termination of this Agreement 12
14.Severability 12
15.Amendments in Writing; No Waiver; Cumulative
Remedies 12
15.1Amendments in Writing 12
15.2No Waiver by Course of Conduct 12
15.3Remedies Cumulative 13
16.Intercreditor Agreement 13
17.Section Headings 13
18.Successors and Assigns 13
19.GOVERNING LAW 13
20.Submission To Jurisdiction; Waivers 13
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of July 28,
1995, made by NS Group, Inc., a Kentucky corporation, the Federal
Employer Identification Number of which is 61-0985936 (the
"Company"), in favor of The Huntington National Bank, as
collateral
agent (in such capacity, the "Collateral Agent"), the Federal
Employer
Identification Number of which is 31-0966785, under the Indenture
dated as of July 28, 1995 (as amended, supplemented or otherwise
modified from time to time, the "Indenture") between the
Collateral
Agent (acting in its capacity as trustee) and the Company for the
benefit
of the Holders of 13 1/2% Senior Secured Notes due 2003 (the
"Securities")
issued by the Company.
W I T N E S S E T H:
WHEREAS, the Company is the owner of the Collateral (as
hereinafter defined); and
WHEREAS, it is a condition precedent to the purchase of the
Securities from the Company that the Company shall have executed
and
delivered this Agreement to the Collateral Agent for the ratable
benefit
of the Holders.
NOW, THEREFORE, in consideration of the premises and to
induce the Trustee to enter into the Indenture and to induce the
Holders
to purchase the Securities, the Company hereby agrees with the
Collateral Agent, for the ratable benefit of the Holders, as
follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms
defined in the Indenture and used herein shall have the meanings
given
to them in the Indenture.
(b) The following terms shall have the following meanings:
"Agreement" means this Pledge and Security Agreement, as the
same may be amended, modified or otherwise supplemented from time
to time.
"Code" means the Uniform Commercial Code from time to time
in effect in the State of New York.
"Collateral" means the collective reference to the Pledged
Notes,
the interests of the holder of each Pledged Note under any and
all
documents and instruments that from time to time secure or
guarantee
payment of such Pledged Note, including, without limitation, the
security agreements and mortgages described on Schedule 1 hereto
together with any additional security agreements and mortgages
which
are required by the terms of the Indenture (collectively, the
"ICN
Security Documents") and in any and all collateral from time to
time
subject to any such documents or instruments and all Proceeds
thereof.
"Collateral Account" has the meaning set forth in Section
4(c).
"Contractual Obligation" means, as to any Person, any
provision
of any security issued by such Person or of any agreement,
instrument
or undertaking to which such Person is a party or by which it or
any of
the property owned by it is bound.
"Obligations" means the collective reference to the unpaid
principal of and interest (and premium, if any) on the Securities
and all
other obligations and liabilities of the Company with respect to
the
Securities (including, without limitation, interest accruing at
the then
applicable rate provided in the Securities after the maturity of
the
Securities and interest accruing at the then applicable rate
provided in
the Securities after the filing of any petition in bankruptcy, or
the
commencement of any insolvency, reorganization or like
proceeding,
relating to the Company, whether or not a claim for post-filing
or post-
petition interest is allowed in such proceeding and, to the
extent
permitted by law, interest accruing on unpaid interest), whether
direct
or indirect, absolute or contingent, due or to become due, now
existing
or hereafter incurred, which may arise under, out of, or in
connection
with, the Indenture, the Securities, this Agreement, the other
Security
Documents or any other document made, delivered or given in
connection therewith, in each case whether on account of
principal,
premium, interest, reimbursement obligations, fees, indemnities,
costs,
expenses or otherwise (including, without limitation, all fees
and
disbursements of counsel to the Trustee or the Collateral Agent
or to the
Holders that are required to be paid by the Company pursuant to
the
terms of Section 9.7 of the Indenture or this Agreement or any
other
Security Document).
"Pledged Notes" means the intercompany notes described on
Schedule 1 attached hereto.
"Proceeds" means all "proceeds" as such term is defined in
Section
9-306(1) of the Uniform Commercial Code in effect in the State of
New
York on the date hereof and, in any event, including, without
limitation,
(i) principal, interest and other income from the Pledged Notes
and all
collections thereon and (ii) any money or property realized or
collected
in connection with the Collateral.
"Requirement of Law" means, as to any Person, the
Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation
or
determination of an arbitrator or a court or other governmental
authority, in each case applicable to or binding upon such Person
or any
of its property or to which such Person or any of its property is
subject.
(c) The words "hereof," "herein" and "hereunder" and words
of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this
Agreement
unless otherwise specified.
(d) All references to the Collateral Agent shall be deemed
to
include a reference to the Trustee, and the reverse thereof shall
similarly
apply.
(e) The meanings given to terms defined herein shall be
equally
applicable to both the singular and plural forms of such terms.
2. Pledge; Grant of Security Interest. The Company hereby
delivers to the Collateral Agent, for the ratable benefit of the
Holders,
the Pledged Notes and hereby grants to the Collateral Agent, for
the
ratable benefit of the Holders, a first security interest in the
Collateral,
as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by
acceleration
or otherwise) of the Obligations.
3. Indorsement; Assignments; Acknowledgment and Consent.
Concurrently with the delivery of each Pledged Note to the
Collateral
Agent pursuant to Section 2 of this Agreement:
(a) such Pledged Note shall be indorsed by the Company as
follows:
Pay to the order of Bearer
NS Group, Inc.
By: _______________________
Title: ____________________
(b) the Company shall deliver to the Collateral Agent an
Assignment of Mortgage in the form of Exhibit A to this Agreement
with respect to each mortgage that secures such Pledged Note,
duly
executed and acknowledged by the Company;
(c) the Company shall deliver to the Collateral Agent duly
executed UCC-1 financing statements by which it shall assign its
security interests that secure the respective Pledged Notes
listed on
Schedule 1;
(d) the Company shall deliver to the Collateral Agent
original
counterparts of each of the security documents described on
Schedule 1
that relate to such Pledged Note, each duly executed by the party
to be
charged thereunder;
(e) the Company shall deliver to the Collateral Agent any
and
all agreements, instruments, documents and papers as the
Collateral
Agent may reasonably request to evidence the assignment to the
Collateral Agent of the Company's negative pledge from the makers
of
the Pledged Notes with respect to all of their Patents, Patent
Licenses,
Trademarks or Trademark Licenses and the goodwill and general
intangibles relating thereto or represented thereby;
(f) the Company shall deliver to the Collateral Agent an
Acknowledgment and Consent, substantially in the form of Exhibit
B to
this Agreement, duly executed by the maker of such Pledged Note.
4. Payments Under the Pledged Notes. (a) Unless an Event
of
Default shall have occurred and be continuing, the Company shall
be
permitted to receive all payments of principal and interest under
the
Pledged Notes, as such payments become due. If an Event of
Default
shall occur and be continuing, and the Collateral Agent shall
have given
notice to the Company of the Collateral Agent's intent to
exercise its
rights pursuant to Section 7(a) below, all payments of principal
and
interest under the Pledged Notes shall be paid to the Collateral
Agent,
who shall hold the same as Collateral hereunder. If the Company
shall
receive any such payments, the Company shall hold the same in
trust
for the Collateral Agent and the Holders, segregated from other
funds
of the Company, and deliver the same forthwith to the Collateral
Agent
in the exact form received, duly indorsed by the Company to the
Collateral Agent, if required.
(b) All Proceeds realized by the Company in connection with
a
default under any Pledged Note and acceleration of the maturity
thereof
and realization upon any security or guarantee therefor shall be
paid to
the Collateral Agent, who shall hold such payments as Collateral
hereunder. If the Company shall receive any such payments, the
Company shall hold the same in trust for the Collateral Agent and
the
Holders, segregated from other funds of the Company, and deliver
the
same forthwith to the Collateral Agent in the exact form
received, duly
indorsed by the Company to the Collateral Agent, if required.
(c) All money Proceeds received by the Collateral Agent
hereunder shall be held by the Collateral Agent for the benefit
of the
Holders in a collateral account maintained under the sole
dominion and
control of the Collateral Agent except as may be applied to the
Obligations in accordance with Article XIII of the Indenture
(each such
account shall be referred to herein as a "Collateral Account").
All
Proceeds while held by the Collateral Agent in a Collateral
Account (or
by the Company in trust for the Collateral Agent and the Holders)
shall
continue to be held as collateral security for all the
Obligations and shall
not constitute payment thereof until applied as provided in
paragraph
7(a) or (b).
5. Representations and Warranties. The Company hereby
represents and warrants (each such representation and warranty to
be
true and correct on the date hereof and each of which expires at
the
close of business on the date hereof) that:
(a) Upon delivery to the Collateral Agent of the Pledged
Notes
and delivery of the documents described in paragraphs 3(b) and
3(c)
and recording and filing thereof in the appropriate
jurisdictions, the
security interest created pursuant to this Agreement will
constitute a
valid, perfected first priority security interest in the
Collateral,
enforceable in accordance with its terms against all creditors of
the
Company and any Persons purporting to purchase any Collateral
from
the Company, except in each case as enforceability may be
affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors'
rights generally, general equitable principles (whether
considered in a
proceeding in equity or at law) and an implied covenant of good
faith
and fair dealing.
(b) The Company is the record and beneficial owner of, and
has
good and marketable title to, the Pledged Notes and the other
Collateral, free of any and all Liens or options in favor of, or
claims of,
any other Person, except the security interest created by this
Agreement.
(c) Each Pledged Note and each document and instrument that
secures or guarantees payment of such Pledged Note is the legal,
valid
and enforceable obligation of the maker thereof, except as
enforceability
may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable
principles
(whether considered in a proceeding in equity or at law) and an
implied
covenant of good faith and fair dealing. None of the Pledged
Notes is
subject to any right of counterclaim or offset whatsoever (except
any
such counterclaim or offset which may arise by operation of law).
(d) There exists no default under any Pledged Note. The
principal amount outstanding under each Pledged Note is as
specified
on Schedule 1. Except as described in Schedule 1, there exists
no
security interest or guarantee that secures or supports payment
of the
indebtedness evidenced by any Pledged Note, and the descriptions
of
such security interests and guarantees in Schedule 1 are complete
and
accurate.
(e) The Company's chief executive office and chief place of
business is located at Ninth and Lowell Streets, Newport,
Kentucky
41072.
6. Covenants. The Company covenants and agrees with the
Collateral Agent and the Holders that, from and after the date of
this
Agreement until this Agreement is terminated and the security
interests
created hereby are released:
(a) The Company will not take or omit to take any action,
the
taking or the omission of which would result in an alteration or
impairment of the Collateral or the security of this Agreement.
(b) The Company will not enter into any agreement amending,
modifying or supplementing the Collateral unless such action is
permitted under Section 6.23 or Article XI of the Indenture.
(c) The Company will not waive or release any obligation of
any
party to the Collateral, except as permitted under the Indenture.
(d) Unless directed otherwise by the Collateral Agent, the
Company will exercise promptly and diligently each and every
right
which it may have under the Collateral (except the right to
release or
cancel the Collateral or to take any actions or agree to take any
actions
that could diminish in any material respect the value of the
Collateral).
(e) The Company will not take or omit to take any action or
suffer or permit any action to be omitted or taken, the taking or
omission of which would result in any right of offset against
sums
payable under the Collateral (unless such right of offset arises
by
operation of law).
(f) The Company will give the Collateral Agent copies of
all
notices (including notices of default) given or received with
respect to
the Collateral, promptly after giving or receiving such notices.
(g) The Company shall maintain the security interest in the
Collateral created by this Agreement as a first, perfected
security
interest and shall defend such security interest against claims
and
demands of all Persons whomsoever. At any time and from time to
time, upon the written request of the Collateral Agent, and at
the sole
expense of the Company, the Company will promptly and duly
execute
and deliver such further instruments and documents and take such
further actions as the Collateral Agent may reasonably request
for the
purpose of obtaining or preserving the full benefits of this
Agreement
and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation
statements under
the Uniform Commercial Code in effect in any jurisdiction with
respect
to the security interests created hereby. If any amount payable
under or
in connection with any of the Collateral shall be or become
evidenced
by any promissory note or other instrument, such note or
instrument
shall be promptly delivered to the Collateral Agent, duly
indorsed in a
manner satisfactory to the Collateral Agent, to be held as
Collateral
under this Agreement.
(h) The Company will include in its books and records
pertaining to the Collateral an appropriate reference to this
Agreement
and the security interests created hereby.
(i) The Company will not, unless it shall have given the
Collateral Agent at least 30 days' prior written notice:
1. change the location of its chief executive office
and
chief place of business from that specified in subsection
5(e); or
2. change its name, identity, Federal taxpayer
identification number or corporate structure to such an
extent
that any financing statement filed by the Collateral Agent
in
connection with this Agreement would become seriously
misleading.
(j) The Company will advise the Collateral Agent promptly,
in
reasonable detail, at its address set forth in the Indenture of:
1. any Lien (other than security interests created
hereby) on, or claim asserted against, any of the
Collateral; and
2. of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on
the
aggregate value of the Collateral or on the security
interests
created hereby.
7. Remedies. (a) Subject to the provisions of Article
VIII of the
Indenture, if an Event of Default shall have occurred and be
continuing,
at any time at the Collateral Agent's election, the Collateral
Agent may
apply all or any part of the Proceeds held in any Collateral
Account in
payment of the Obligations in the manner set forth in Section 8.6
of the
Indenture.
(b) Subject to the provisions of Article VIII of
the
Indenture, if an Event of Default shall occur and be continuing,
the
Collateral Agent on behalf of the Holders, may exercise, in
addition to
all other rights and remedies granted to it in this Agreement and
the
ICN Security Documents and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights
and
remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Collateral Agent, without demand
of
performance or other demand, presentment, protest, advertisement
or
notice of any kind (except any notice required by law referred to
below)
to or upon the Company or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived),
may
in such circumstances forthwith collect, receive, appropriate and
realize
upon the Collateral, or any part thereof, and/or may forthwith
sell,
lease, assign, give option or options to purchase or otherwise
dispose of
and deliver the Collateral or any part thereof (or contract to do
any of
the foregoing), in one or more parcels at public or private sale
or sales,
at any exchange, broker's board or office of the Collateral Agent
or any
Holder or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on
credit
or for future delivery without assumption of any credit risk.
The
Collateral Agent or any Holder shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon
any such
private sale or sales, to purchase the whole or any part of the
Collateral
so sold, free of any right or equity of redemption in the
Company,
which right or equity is hereby waived or released. The
Collateral
Agent shall apply any Proceeds from time to time held by it and
the net
proceeds of any such collection, recovery, receipt,
appropriation,
realization or sale, after deducting all reasonable costs and
expenses of
every kind incurred in respect thereof or incidental to the care
or
safekeeping of any of the Collateral, in the manner set forth in
Section
8.6 of the Indenture. To the extent permitted by applicable law,
the
Company waives all claims, damages and demands it may acquire
against the Collateral Agent or any Holder arising out of the
exercise by
them of any rights hereunder, except to the extent any such
claims,
damages or demands were directly caused by the Collateral Agent's
or
Holder's gross negligence or willful misconduct. If any notice
of a
proposed sale or other disposition of Collateral shall be
required by law,
such notice shall be deemed reasonable and proper if given at
least 10
days before such sale or other disposition. The Company shall
remain
liable for any deficiency if the proceeds of any sale or other
disposition
of Collateral are insufficient to pay the Obligations and the
fees and
disbursements of any attorneys employed by the Collateral Agent
or
any Holder to collect such deficiency.
8. Collateral Agent's Appointment as Attorney-in-Fact. (a)
The
Company hereby irrevocably constitutes and appoints the
Collateral
Agent and any officer or agent of the Collateral Agent, with full
power
of substitution, as its true and lawful attorney-in-fact with
full
irrevocable power and authority in the place and stead of the
Company
and in the name of the Company or in the Collateral Agent's own
name,
from time to time in the Collateral Agent's discretion, for the
purpose of
carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, including, without limitation, any
financing
statements, endorsements, assignments or other instruments of
transfer.
(b) The Company hereby ratifies all that said attorneys
shall
lawfully do or cause to be done pursuant to the power of attorney
granted in paragraph 8(a).
(c) All powers, authorizations and agencies contained in
this
Agreement are coupled with an interest and are irrevocable until
this
Agreement is terminated and the security interests created hereby
are
released.
9. Duty of Collateral Agent. The Collateral Agent's sole
duty
with respect to the custody, safekeeping and physical
preservation of
the Collateral in its possession, under Section 9-207 of the Code
or
otherwise, shall be to deal with it in the same manner as the
Collateral
Agent deals with similar securities and property for its own
account,
except that the Collateral Agent shall have no obligation to
invest funds
held in any Collateral Account and may hold the same as demand
deposits. Neither the Collateral Agent, any Holder nor any of
their
respective directors, officers, employees or agents shall be
liable for
failure to demand, collect or realize upon any of the Collateral
or for
any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the
Company or
any other Person or to take any other action whatsoever with
regard to
the Collateral or any part thereof. The powers conferred on the
Collateral Agent hereunder are solely to protect the Collateral
Agent's
interests in the Collateral and shall not impose any duty upon
the
Collateral Agent to exercise any such powers. The Collateral
Agent
shall be accountable only for amounts that it actually receives
as a result
of the exercise of such powers, and neither it nor any of its
officers,
directors, employees or agents shall be responsible to the
Company for
any act or failure to act hereunder, except for their own gross
negligence
or willful misconduct.
10. Execution of Financing Statements. Pursuant to Section
9-402
of the Code, the Company authorizes the Collateral Agent to file
financing statements with respect to the Collateral without the
signature
of the Company in such form and in such filing offices as the
Collateral
Agent reasonably determines appropriate to perfect the security
interests
of the Collateral Agent under this Agreement. A carbon,
photographic
or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
11. Authority of Collateral Agent. The Company
acknowledges
that the rights and responsibilities of the Collateral Agent
under this
Agreement with respect to any action taken by the Collateral
Agent or
the exercise or non-exercise by the Collateral Agent of any
option,
voting right, request, judgment or other right or remedy provided
for
herein or resulting or arising out of this Agreement shall, as
between the
Collateral Agent and the Holders, be governed by the Indenture
and by
such other agreements with respect thereto as may exist from time
to
time among them, but, as between the Collateral Agent and the
Company, the Collateral Agent shall be conclusively presumed to
be
acting as agent for the Holders with full and valid authority so
to act or
refrain from acting, and the Company shall be under no
obligation, or
entitlement, to make any inquiry respecting such authority.
12. Indemnity. (a)(1) The Company agrees to indemnify,
pay
and hold harmless the Collateral Agent and the officers,
directors,
employees, agents and affiliates of the Collateral Agent
(collectively
called the "Indemnitees") from and against any and all other
liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims,
costs (including, without limitation, settlement costs), expenses
or
disbursements of any kind or nature whatsoever (including,
without
limitation, the reasonable fees and disbursements of counsel for
such
Indemnitees in connection with any investigative, administrative
or
judicial proceeding commenced or threatened, whether or not such
Indemnitee shall be designated a party thereto), which may be
imposed
on, incurred by, or asserted against that Indemnitee, in any
manner
relating to or arising out of this Agreement, the Indenture, the
ICN
Security Documents or the Securities arising in any action
relating to,
directly or indirectly, the Collateral or the subject of this
Agreement
including without limitation, any misrepresentation by the
Company in
this Agreement (the "indemnified liabilities"); provided that the
Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities if it has been determined by a
final
decision (after all appeals and the expiration of time to appeal)
by a
court of competent jurisdiction that such indemnified liability
arose
from the negligence or willful misconduct of that Indemnitee. To
the
extent that the undertaking to indemnify, pay and hold harmless
set
forth in the preceding sentence may be unenforceable because it
is
violative of any law or public policy, the Company shall
contribute the
maximum portion which it is permitted to pay and satisfy under
applicable law, to the payment and satisfaction of all
indemnified
liabilities incurred by the Indemnitees or any of them.
(2) The Company agrees to pay, and to save the
Collateral
Agent harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with
respect
to, or resulting from any delay in paying, any and all stamp,
excise,
sales or other taxes and any and all recording and filing fees
which may
be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay in
complying
with any Requirement of Law applicable to any of the Collateral
and
(iii) in connection with any of the transactions contemplated by
this
Agreement.
(b) The obligations of the Company contained in this
Section 12 shall survive the termination of this Agreement and
the
discharge of the Company's other obligations under this
Agreement.
(c) Any amounts paid by any Indemnitee as to which
such
Indemnitee has the right to reimbursement shall constitute
Obligations
secured by the Collateral.
13. Notices. All notices, requests and demands to or upon
the
Collateral Agent or the Company to be effective shall be in
writing (or
by telex, fax or similar electronic transfer) and shall be deemed
to have
been duly given or made (a) when delivered by hand or (b) if
given by
mail, when deposited in the mails by certified mail, return
receipt
requested, or (c) if by telex, fax or similar electronic
transfer, when sent
and receipt has been confirmed, addressed to the Collateral Agent
or the
Company at its address or transmission number for notices
provided in
Section 1.5 of the Indenture. The Collateral Agent and the
Company
may change their addresses and transmission numbers for notices
by
notice in the manner provided in this Section.
14. Return of Documents; Cooperation. (a) When this
Agreement is terminated and the security interests created hereby
are
released, the Collateral Agent shall (1) return to the Company
the
Pledged Notes with appropriate endorsements, (2) execute and
deliver
to the Company such documents of assignment as are reasonably
necessary to terminate the Collateral Agent's security interest
in the
Collateral and to advise the makers of the Pledged Notes of the
termination of the Collateral Agent's rights and security
interest
hereunder and (3) return to the Company the documents delivered
to
the Collateral Agent as provided in paragraph 3(d).
(b) Upon payment in full of any Pledged Note and payment of
the Proceeds thereof as provided in this Agreement, the
Collateral
Agent shall (1) return to the Company such Pledged Note, indorsed
to
the Company without recourse, representation or warranty and (2)
execute and deliver to the Company such documents of assignment
as
are reasonably necessary to terminate the Collateral Agent's
security
interest in any Collateral related to such Pledged Note.
(c) Upon the occurrence of a default or event of default
under
any Pledged Note, the Collateral Agent shall cooperate reasonably
with
the Company, at the expense of the Company, in the exercise of
the
Company's rights and remedies under such Pledged Note and any
document or instrument securing or supporting the same.
15. Termination of this Agreement. Notwithstanding any
other
provision of this Agreement, and in the absence of any
outstanding
claim for indemnification made pursuant to Section 12, this
Agreement
shall terminate upon the satisfaction, discharge or avoidance of
the
Obligations pursuant to the terms of the Subsidiary Guarantee and
the
Indenture.
16. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof,
and any such prohibition or unenforceability in any jurisdiction
shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Agreement may be
waived,
amended, supplemented or otherwise modified except by a written
instrument executed in a manner pursuant to the Indenture,
provided
that any provision of this Agreement may be waived by the
Collateral
Agent and the Holders in a letter or agreement executed by the
Collateral Agent or by telex or facsimile transmission from the
Collateral
Agent.
(b) Neither the Collateral Agent nor any Holder shall by
any act
(except by a written instrument pursuant to paragraph 17(a)
hereof),
delay, indulgence, omission or otherwise be deemed to have waived
any
right or remedy hereunder or to have acquiesced in any Default or
Event of Default or in any breach of any of the terms and
conditions
hereof. No failure to exercise, nor any delay in exercising, on
the part
of the Collateral Agent or any Holder, any right, power or
privilege
hereunder shall operate as a waiver thereof. No single or
partial
exercise of any right, power or privilege hereunder shall
preclude any
other or further exercise thereof or the exercise of any other
right, power
or privilege. A waiver by the Collateral Agent or any Holder of
any
right or remedy hereunder on any one occasion shall not be
construed
as a bar to any right or remedy which the Collateral Agent or
such
Holder would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may
be exercised singly or concurrently and are not exclusive of any
other
rights or remedies provided by law.
18. Intercreditor Agreement. The parties hereto
acknowledge
that the terms of this Agreement are subject to the Intercreditor
Agreement dated as of the date hereof between The Bank of New
York
Commercial Corporation and NS.
19. Section Headings. The section headings used in this
Agreement are for convenience of reference only and are not to
affect
the construction hereof or be taken into consideration in the
interpretation hereof.
20. Successors and Assigns. This Agreement shall be
binding
upon the successors and assigns of the Company and shall inure to
the
benefit of the Collateral Agent and the Holders and their
successors and
assigns.
21. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
22. Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action
or proceeding relating to this Agreement to which it is a
party, or
for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the
Courts of
the State of New York, the courts of the United States of
America
for the Southern District of New York, and appellate courts
from
any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now
or hereafter have to the venue of any such action or
proceeding
in any such court or that such action or proceeding was
brought
in an inconvenient court and agrees not to plead or claim
the
same;
(c) agrees that service of process in any such action
or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of
mail), postage prepaid, to the Company at its address set
forth in
Section 1.5 of the Indenture or at such other address of
which the
Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right
to effect
service of process in any other manner permitted by law or
shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by
law,
any right it may have to claim or recover in any legal
action or
proceeding referred to in this subsection any special,
exemplary,
punitive or consequential damages.
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed and delivered as of the date first
above
written.
NS GROUP, INC.
By: /S/ J. R. PARKER
Title: V.P. & Treasurer
THE PLEDGED NOTES
Description of Pledged Notes
Intercompany Note dated July 28, 1995, made by Erlanger Tubular
Corporation to the order of NS Group, Inc. in the original
principal
amount of $10,400,000. Intercompany Note dated July 28, 1995,
made
by Koppel Steel Corporation to the order of NS Group, Inc. in the
original principal amount of $81,500,000. Intercompany Note
dated
July 28, 1995 made by Newport Steel Corporation to the order of
NS
Group, Inc. in the original principal amount of $46,900,000.
Collateral Security
The Leashold Junior Mortgage, Assignment of Rents and Leases and
Security Agreement dated as of July 28, 1995 with respect to
certain real
property located in Oklahoma and the Erlanger ICN Security
Agreement
dated July 28, 1995. The Open-End Junior Mortgage Assignment of
Rents and Leases and Security Agreement dated as of July 28, 1995
with
respect to certain real property in the Commonwealth of
Pennsylvania;
the ICN Mortgage and Collateral Assignment of Leases dated as of
July
28, 1995 with respect to certain real property located in the
State of
Texas and the Koppel ICN Security Agreement dated July 28, 1995.
The Junior Leasehold and Fee Mortgage, Assignment of Rents and
Leases and Security Agreement dated as of July 28, 1995 with
respect to
certain property located in the Commonwealth of Kentucky and the
Newport ICN Security Agreement dated as of July 28, 1995.
Principal Amount/ Interest Payment
Outstanding principal amount: $10,400,000. Outstanding principal
amount: $81,500,000. Outstanding principal amount:
$46,900,000.
EXHIBIT A
to Pledge and Security Agreement
ASSIGNMENT OF MORTGAGE
ASSIGNMENT OF MORTGAGE made as of _______________,
1995, by NS Group, Inc., a Kentucky corporation (the "Assignor")
in
favor of The Huntington National Bank, as collateral agent (in
such
capacity, the "Collateral Agent"), under the Indenture, dated as
of
, 1995 (as amended, supplemented or otherwise modified
from
time to time, the "Indenture"), between the Collateral Agent
(acting in its
capacity as trustee) (the "Trustee") and the Assignor for the
benefit of
the Holders of ___% Senior Secured Notes due 2003 issued by the
Assignor.
W I T N E S S E T H:
WHEREAS, the Assignor is the owner and holder of the
Mortgage dated ____________, 1995 (the "Mortgage"), made by
_____________________, as mortgagor, to the Assignor, as
mortgagee,
which was recorded _____________, 1995, in Book ____, page _____,
Instrument No. ______________, Official Records of ____________
County, ___________________, which encumbers the real property
described on Exhibit A attached to this Assignment;
WHEREAS, the Mortgage secured payment of that certain
Intercompany Note of even date therewith (the "Note") made by
said
mortgagor to the order of the Assignor in the principal amount of
$____________;
WHEREAS, by Pledge and Security Agreement of even date
herewith (the "Pledge Agreement"), the Assignor has pledged the
Note
to the Collateral Agent, for the ratable benefit of the Holders,
to secure
obligations of the Assignor arising under the Indenture; and
WHEREAS, in connection with such pledge, the Assignor wishes
to assign to the Collateral Agent, as further collateral
security, the
interest of the Assignor under the Mortgage.
NOW, THEREFORE, in consideration of the premises and to
induce the Trustee to enter into the Indenture and to induce the
Holders
to purchase the Securities, the Assignor hereby agrees with the
Collateral Agent, for the ratable benefit of the Holders, as
follows:
1. The Assignor hereby assigns to the Collateral Agent, for
the
ratable benefit of the Holders, all right, title and interest of
the Assignor
under the Mortgage, upon and subject to the terms and conditions
of
the Pledge Agreement.
2. The address of the Collateral Agent for notices is:
Corporate Trust Office
Attention: Corporate Trustee
The Huntington National Bank
540 Madison Avenue
Covington, Kentucky 41011.
Fax: _________________
Telex: _______________
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed and delivered as of the date first
above
written.
NS GROUP, INC.
By:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the day of , 1995, before me
personally came
to me known, who, being
by me duly
sworn, did depose and say that he/she resides at
; that he/she is the
of NS Group, Inc., the corporation described
in and which
executed the above instrument; and that he/she signed his/her
name
thereto by order of the board of directors of said corporation.
______________________________
Notary Public
EXHIBIT A
to Assignment of Mortgage
DESCRIPTION OF REAL PROPERTY
EXHIBIT B
to Pledge and Security Agreement
_____________, 1995
TO: [Maker of Pledged Note]
___________________________
___________________________
___________________________
Reference is hereby made to the Intercompany Note dated
_________________, 1995 (the "Note"), made by you to the order of
NS
Group, Inc. (the "Company") in the original principal amount of
$____________. By Pledge and Security Agreement, dated as of
__________ __, 1995 (the "Pledge Agreement"), the Company has
pledged the Note and all collateral security therefor and all
guarantees
thereof to The Huntington National Bank, as collateral agent (in
such
capacity, the "Collateral Agent") under the Indenture dated
______ ____,
1995 (as amended, supplemented or otherwise modified from time to
time, the "Indenture") between the Collateral Agent (acting in
its
capacity as trustee) and the Company for the benefit of the
Holders of
__% Senior Secured Notes due 2003 (the "Securities") issued by
the
Company, to secure payment and performance of obligations of the
Securities.
You are hereby irrevocably directed, upon receipt of notice
from
the Collateral Agent that an Event of Default has occurred and is
continuing under such Indenture, to make any and all payments
becoming due under the Note directly to the Collateral Agent,
without
set-off or counterclaim, as provided in the Note at the
Collateral Agent's
office located at The Huntington National Bank, 41 South High
Street,
Columbus, Ohio, 43215, USA.
The instructions contained herein are irrevocable and may
not be
amended, revoked or otherwise modified without the prior written
consent of the Collateral Agent.
NS GROUP, INC.
THE HUNTINGTON NATIONAL BANK,
as Collateral Agent
By:______________________________
By:_______________________________
Title:______________________________
Title:______________________________
ACKNOWLEDGEMENT AND AGREEMENT
The undersigned hereby acknowledges receipt of a copy
of
the Pledge Agreement described in the foregoing letter and agrees
for
the benefit of the Collateral Agent and the Holders to be bound
by the
terms of the Pledge Agreement and to comply with the terms of the
foregoing letter. To the best knowledge of the undersigned, no
representation or warranty of the Company in the Pledge Agreement
is
incomplete or incorrect.
[NAME OF MAKER]
By:
Title:
SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of July 28, 1995 (as
amended, supplemented or otherwise modified from time to time,
the
"Subsidiary Guarantee"), by each of the corporations that are
signatories
hereto and by each of the Persons that may from time to time
become
signatories hereto (collectively the "Guarantors"; individually,
a
"Guarantor") in favor of The Huntington National Bank, a national
banking association, as collateral agent (in such capacity and
together
with any successors in such capacity, the "Collateral Agent")
under the
Indenture described below.
W I T N E S S E T H :
WHEREAS, NS Group, Inc., a Kentucky corporation (the
"Company"), is offering (the "Offering") $131,096,000 aggregate
principal
amount of 13 1/2% Senior Secured Notes due 2003 (the
"Securities");
WHEREAS, the Company is party to an Indenture dated
an even date herewith between the Company and the Collateral
Agent
in its capacity as trustee (in such capacity, the "Trustee")
thereunder (as
amended, supplemented or otherwise modified from time to time,
the
"Indenture");
WHEREAS, the Guarantors are subsidiaries of the
Company;
WHEREAS, the Company and the Guarantors engage in
related businesses and each Guarantor will derive substantial
direct and
indirect benefit from the Offering;
WHEREAS, the completion of the Offering is conditioned
upon, among other things, the execution and delivery by the
Guarantors
of this Subsidiary Guarantee;
NOW, THEREFORE, in consideration of the premises and
to induce the Trustee to enter into the Indenture, the Guarantors
hereby
agree with and for the benefit of the Trustee as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms
defined in the Indenture and used herein shall have the meanings
given
to them in the Indenture.
"Contractual Obligations" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is
a
party or by which it or any of the property owned by it is
bound.
"Obligations" means the collective reference to the
unpaid
principal of and interest (and premium, if any) on the
Securities
and all other obligations and liabilities of the Company
with
respect to the Securities (including, without limitation,
interest
accruing at the then applicable rate provided in the
Securities
after the maturity of the Securities and interest accruing
at the
then applicable rate provided in the Securities after the
filing of
any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to
the
Company, whether or not a claim for post-filing or
post-petition
interest is allowed in such proceeding and, to the extent
permitted by law, interest accruing on unpaid interest),
whether
direct or indirect, absolute or contingent, due or to become
due,
now existing or hereafter incurred, which may arise under,
out
of, or in connection with, the Indenture, the Security
Documents,
the Securities or any other document made, delivered or
given in
connection therewith, whether on account of principal,
premium,
interest, reimbursement obligations, fees, indemnities,
costs,
expenses or otherwise (including, without limitation, all
fees and
disbursements of counsel to the Trustee or the Collateral
Agent or
to the Holders that are required to be paid by the Company
or
the Guarantor pursuant to Section 9.7 of the Indenture, this
Agreement or the other Security Documents).
"Requirement of Law" means, as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational
or governing documents of such Person, and any law, treaty,
rule
or regulation or determination of an arbitrator or a court
or other
governmental authority, in each case applicable to or
binding
upon such Person or any of its property or to which such
Person
or any of its property is subject.
(b) The words "hereof," "herein" and "hereunder" and words
of
similar import when used in this Subsidiary Guarantee shall refer
to this
Subsidiary Guarantee as a whole and not to any particular
provision of
this Subsidiary Guarantee, and section and paragraph references
are to
this Subsidiary Guarantee unless otherwise specified.
(c) All references to the Collateral Agent shall be deemed
to
include a reference to the Trustee, and the reverse thereof shall
similarly
apply.
(d) The meanings given to terms defined herein shall be
equally
applicable to both the singular and plural forms of such terms.
2. Guarantee. (a) Subject to the provisions of paragraph
2(b),
each of the Guarantors hereby, jointly and severally,
unconditionally
and irrevocably, guarantees to the Collateral Agent, for the
ratable
benefit of the Holders and their respective successors,
indorsees,
transferees and assigns, the prompt and complete payment and
performance by the Company when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
(b) Anything herein or in any other Security Document to the
contrary notwithstanding, the maximum liability of each Guarantor
hereunder and under the other Security Documents shall in no
event
exceed the amount which can be guaranteed by such Guarantor under
applicable federal and state laws relating to the insolvency of
debtors.
(c) Each Guarantor further agrees to pay any and all
expenses
(including, without limitation, all fees and disbursements of
counsel)
which may be paid or incurred by the Collateral Agent or any
Holder
pursuant to Section 9.7 of the Indenture in enforcing, or
obtaining
advice of counsel in respect of, any rights with respect to, or
collecting,
any or all of the Obligations and/or enforcing any rights with
respect
to, or collecting against, such Guarantor under this Subsidiary
Guarantee. This Subsidiary Guarantee shall remain in full force
and
effect until the Obligations are paid in full.
(d) Each Guarantor agrees that the Obligations may at any
time
and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing this Subsidiary Guarantee
or
affecting the rights and remedies of the Collateral Agent or any
Holder
hereunder.
(e) No payment or payments made by the Company, any of the
Guarantors, any other guarantor or any other Person or received
or
collected by the Trustee or the Collateral Agent from the
Company, any
of the Guarantors, any other guarantor or any other Person by
virtue of
any action or proceeding or any set-off or appropriation or
application
at any time or from time to time in reduction of or in payment of
the
Obligations shall be deemed to modify, reduce, release or
otherwise
affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment or payments other than payments
made by such Guarantor in respect of the Obligations or payments
received or collected from such Guarantor in respect of the
Obligations,
remain liable for the Obligations up to the maximum liability of
such
Guarantor hereunder until the Obligations are paid in full.
(f) Each Guarantor agrees that whenever, at any time, or
from
time to time, it shall make any payment to the Trustee or the
Collateral
Agent on account of its liability hereunder, it will notify the
Collateral
Agent in writing that such payment is made under this Subsidiary
Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees
that to
the extent that a Guarantor shall have paid more than its
proportionate
share of any payment made hereunder, such Guarantor shall be
entitled
to seek and receive contribution from and against any other
Guarantor
hereunder who has not paid its proportionate share of such
payment in
an amount pro rata based on the net assets of each Guarantor,
determined in accordance with GAAP. Each Guarantor's right of
contribution shall be subject to the terms and conditions of
Section 5
hereof. The provisions of this Section shall in no respect limit
the
obligations and liabilities of any Guarantor to the Trustee, the
Collateral
Agent and the Holders, and each Guarantor shall remain liable to
the
Trustee, the Collateral Agent and the Holders for the full amount
guaranteed by such Guarantor hereunder.
4. Right of Set-off. Upon the occurrence of any Event of
Default,
each Guarantor hereby irrevocably authorizes each Holder at any
time
and from time to time without notice to such Guarantor or any
other
Guarantor, any such notice being expressly waived by each
Guarantor,
to set-off and appropriate and apply any and all deposits
(general or
special, time or demand, provisional or final), in any currency,
and any
other credits, indebtedness or claims, in any currency, in each
case
whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Holder to or for the
credit or the account of such Guarantor, or any part thereof in
such
amounts as such Holder may elect, against and on account of the
obligations and liabilities of such Guarantor to such Holder
hereunder
and claims of every nature and description of such Holder against
such
Guarantor, in any currency, whether arising hereunder, under the
Indenture, the Securities, any Security Documents or otherwise,
as such
Holder may elect, whether or not the Trustee, the Collateral
Agent or
any Holder has made any demand for payment and although such
obligations, liabilities and claims may be contingent or
unmatured. The
Collateral Agent and each Holder shall notify such Guarantor
promptly
of any such set-off and the application made by the Collateral
Agent or
such Holder, provided that the failure to give such notice shall
not
affect the validity of such set-off and application. The rights
of the
Collateral Agent and each Holder under this Section are in
addition to
other rights and remedies (including, without limitation, other
rights of
set-off) which the Collateral Agent or such Holder may have.
5. No Subrogation. Notwithstanding any payment or payments
made by any of the Guarantors hereunder or any set-off or
application
of funds of any of the Guarantors by any Holder, no Guarantor
shall be
entitled to be subrogated to any of the rights of the Trustee,
the
Collateral Agent or any Holder against the Company or any other
Guarantor or any collateral security or guarantee or right of
offset held
by any Holder for the payment of the Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or
reimbursement
from the Company or any other Guarantor in respect of payments
made
by such Guarantor hereunder, until all amounts owing to the
Trustee,
the Collateral Agent and the Holders by the Company on account of
the
Obligations are paid in full. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when
all of
the Obligations shall not have been paid in full, such amount
shall be
held by such Guarantor in trust for the Trustee, the Collateral
Agent
and the Holders, segregated from other funds of such Guarantor,
and
shall, forthwith upon receipt by such Guarantor, be turned over
to the
Collateral Agent in the exact form received by such Guarantor
(duly
indorsed by such Guarantor to the Collateral Agent, if required),
to be
applied against the Obligations, whether matured or unmatured, in
such
order as the Collateral Agent may determine.
6. Amendments, etc. with respect to the Obligations; Waiver
of
Rights. Each Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against
any
Guarantor and without notice to or further assent by any
Guarantor,
any demand for payment of any of the Obligations made by the
Collateral Agent or any Holder may be rescinded by such party and
any
of the Obligations continued, and the Obligations, or the
liability of any
other party upon or for any part thereof, or any collateral
security or
guarantee therefor or right of offset with respect thereto, may,
from time
to time, in whole or in part, be renewed, extended, amended,
modified,
accelerated, compromised, waived, surrendered or released by the
Collateral Agent or any Holder, and the Indenture, the Securities
and
the other Security Documents and any other documents executed and
delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Trustee,
the
Collateral Agent (or the Holders, as the case may be) may deem
advisable from time to time, and any collateral security,
guarantee or
right of offset at any time held by the Collateral Agent or any
Holder
for the payment of the Obligations may be sold, exchanged,
waived,
surrendered or released. Neither the Collateral Agent nor any
Holder
shall have any obligation to protect, secure, perfect or insure
any Lien at
any time held by it as security for the Obligations or for this
Subsidiary
Guarantee or any property subject thereto. When making any
demand
hereunder against any of the Guarantors, the Collateral Agent or
any
Holder may, but shall be under no obligation to, make a similar
demand on the Company or any other Guarantor or guarantor, and
any
failure by the Collateral Agent or any Holder to make any such
demand
or to collect any payments from the Company or any such other
Guarantor or guarantor or any release of the Company or such
other
Guarantor or guarantor shall not relieve any of the Guarantors in
respect of which a demand or collection is not made or any of the
Guarantors not so released of their several obligations or
liabilities
hereunder, and shall not impair or affect the rights and
remedies,
express or implied, or as a matter of law, of the Collateral
Agent or any
Holder against any of the Guarantors. For the purposes hereof
"demand" shall include the commencement and continuance of any
legal
proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or
accrual
of any of the Obligations and notice of or proof of reliance by
the
Collateral Agent or any Holder upon this Subsidiary Guarantee or
acceptance of this Subsidiary Guarantee, the Obligations, and any
of
them, shall conclusively be deemed to have been created,
contracted or
incurred, or renewed, extended, amended or waived, in reliance
upon
this Subsidiary Guarantee; and all dealings between the Company
and
any of the Guarantors, on the one hand, and the Collateral Agent
and
the Holders, on the other hand, likewise shall be conclusively
presumed
to have been had or consummated in reliance upon this Subsidiary
Guarantee. Each Guarantor waives diligence, presentment,
protest,
demand for payment and notice of default or nonpayment to or upon
the Company or any of the Guarantors with respect to the
Obligations.
Each Guarantor understands and agrees that this Subsidiary
Guarantee
shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity,
regularity or
enforceability of the Indenture, any Security or any other
Security
Document, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at
any time
or from time to time held by the Collateral Agent or any Holder,
(b) any
defense, set-off or counterclaim (other than a defense of payment
or
performance) which may at any time be available to or be asserted
by
the Company against the Collateral Agent or any Holder, or (c)
any
other circumstance whatsoever (with or without notice to or
knowledge
of the Company or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the
Company
for the Obligations, or of such Guarantor under this Subsidiary
Guarantee, in bankruptcy or in any other instance. When pursuing
its
rights and remedies hereunder against any Guarantor, the
Collateral
Agent and any Holder may, but shall be under no obligation to,
pursue
such rights and remedies as it may have against the Company or
any
other Person or against any collateral security or guarantee for
the
Obligations or any right of offset with respect thereto, and any
failure
by the Collateral Agent or any Holder to pursue such other rights
or
remedies or to collect any payments from the Company or any such
other Person or to realize upon any such collateral security or
guarantee
or to exercise any such right of offset, or any release of the
Company or
any such other Person or any such collateral security, guarantee
or right
of offset, shall not relieve such Guarantor of any liability
hereunder, and
shall not impair or affect the rights and remedies, whether
express,
implied or available as a matter of law, of the Collateral Agent
and the
Holders against such Guarantor.
8. Reinstatement. This Subsidiary Guarantee shall continue
to be
effective, or be reinstated, as the case may be, if at any time
payment, or
any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Collateral Agent or any
Holder
upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or any Guarantor, or upon or as a
result
of the appointment of a receiver, intervenor or conservator of,
or trustee
or similar officer for, the Company or any Guarantor or any
substantial
part of its property, or otherwise, all as though such payments
had not
been made.
9. Payments. Each Guarantor hereby guarantees that
payments
hereunder will be paid to the Collateral Agent without set-off or
counterclaim in U.S. Dollars at the office of the Collateral
Agent located
at The Huntington National Bank, Trust Department, 41 S. High
Street,
Columbus, Ohio 43215.
10. Representations and Warranties. Each Guarantor hereby
represents and warrants (each such representation and warranty to
be
true and correct on the date hereof and each of which expires at
the
close of business on the date hereof) that:
(a) it is a corporation duly organized, validly existing
and in
good standing under the laws of the jurisdiction of its
incorporation and
has the corporate power and authority and the legal right to own
and
operate its property, to lease the property it operates and to
conduct the
business in which it is currently engaged;
(b) it has the corporate power and authority and the legal
right
to execute and deliver, and to perform its obligations under,
this
Subsidiary Guarantee, and has taken all necessary corporate
action to
authorize its execution, delivery and performance of this
Subsidiary
Guarantee;
(c) this Subsidiary Guarantee constitutes a legal, valid
and
binding obligation of such Guarantor enforceable in accordance
with its
terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating
to or affecting the enforcement of creditors' rights generally,
general
equitable principles and an implied covenant of good faith and
fair
dealing;
(d) the execution, delivery and performance of this
Subsidiary
Guarantee will not violate any provision of any Requirement of
Law or
Contractual Obligation of such Guarantor and will not result in
or
require the creation or imposition of any Lien on any of the
properties
or revenues of such Guarantor pursuant to any Requirement of Law
or
Contractual Obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other
act by or
in respect of, any arbitrator or Governmental Authority and no
consent
of any other Person (including, without limitation, any
stockholder or
creditor of such Guarantor) is required in connection with the
execution,
delivery, performance, validity or enforceability of this
Subsidiary
Guarantee, except for Imperial Adhesives, Inc., such consent as
is
required from the Fifth Third Bank, as Trustee and Bondholder of
the
$3,000,000 Economic Development Bond issued by the County of
Hamilton, Ohio for the benefit of Imperial Adhesives, Inc., and
for
Newport Steel Corporation, such agreement as is required with the
City
of Dayton, Kentucky, in order to subordinate its security
interests in
connection with the note in the original principal amount of
$7,800,000
dated as of January 29, 1985;
(f) no litigation, investigation or proceeding of or before
any
arbitrator or governmental authority is pending or, to the
knowledge of
such Guarantor, threatened by or against such Guarantor or
against any
of its properties or revenues (1) with respect to this Subsidiary
Guarantee or any of the transactions contemplated hereby, (2)
which
could have a material adverse effect on the business, operations,
property or financial or other condition of such Guarantor;
(g) it has good record and marketable title in fee simple
to, or a
valid leasehold interest in, all its real property, and good
title to, or a
valid leasehold interest in, all its other property, and none of
such
property is subject to any Lien of any nature whatsoever except
such as
are permitted pursuant to the Indenture;
11. Authority of Collateral Agent. Each Guarantor
acknowledges
that the rights and responsibilities of the Collateral Agent
under this
Subsidiary Guarantee with respect to any action taken by the
Collateral
Agent or the exercise or non-exercise by the Collateral Agent of
any
option, right, request, judgment or other right or remedy
provided for
herein or resulting or arising out of this Subsidiary Guarantee
shall, as
between the Collateral Agent and the Holders, be governed by the
Indenture and by such other agreements with respect thereto as
may
exist from time to time among them, but, as between the
Collateral
Agent and such Guarantor, the Collateral Agent shall be
conclusively
presumed to be acting as agent for the Holders with full and
valid
authority so to act or refrain from acting, and no Guarantor
shall be
under any obligation, or entitlement, to make any inquiry
respecting
such authority.
12 Termination of this Agreement. (a)
Notwithstanding any other provision of this Agreement, this
Agreement
shall terminate upon the satisfaction, discharge or avoidance of
the
Obligations pursuant to the terms of this Agreement and the
Indenture.
(b) If any Guarantor ceases to be a Subsidiary of the
Company pursuant to Article VI of the Indenture and subject to
the
satisfaction of the terms and conditions of the Indenture in
general and
Article VI in particular, such Guarantor shall be released from
all of its
share of the Obligations, and this Agreement shall terminate with
respect to such Guarantor.
13. Effectiveness of Addendum. Upon execution of an
Addendum (the form of which is attached hereto as Exhibit A) by a
future Subsidiary of the Company, such Subsidiary shall be deemed
to
be a signatory to this Subsidiary Guarantee and such Subsidiary
shall be
deemed to have all the rights and obligations of a Guarantor as
set forth
in this Subsidiary Guarantee.
14. Notices. All notices, requests and demands to or upon
the
Collateral Agent, any Holder or any Guarantor to be effective
shall be in
writing (or by telex, fax or similar electronic transfer
confirmed in
writing) and shall be deemed to have been duly given or made (1)
when
delivered by hand or (2) if given by mail, when deposited in the
mails
by certified mail, return receipt requested, or (3) if by telex,
fax
or similar electronic transfer, when sent and receipt has been
confirmed,
addressed as follows:
(a) if to the Collateral Agent, at its address or
transmission
number for notices provided in subsection 1.5 of the Indenture;
(b) if to the Holders, by the means described in Section
1.6 of the
Indenture; and
(c) if to any Guarantor, by the means described in Section
1.5 of
the Indenture.
The Collateral Agent and each Guarantor may change its
address
and transmission numbers for notices by notice in the manner
provided
in this Section.
15. Counterparts. This Subsidiary Guarantee may be
executed
by one or more of the Guarantors on any number of separate
counterparts, and all of said counterparts taken together shall
be
deemed to constitute one and the same instrument. A set of the
counterparts of this Subsidiary Guarantee signed by all the
Guarantors
shall be lodged with the Collateral Agent.
16. Severability. Any provision of this Subsidiary
Guarantee
which is prohibited or unenforceable in any jurisdiction shall,
as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof,
and any such prohibition or unenforceability in any jurisdiction
shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
17. Integration. This Subsidiary Guarantee represents the
agreement of each Guarantor with respect to the subject matter
hereof
and there are no promises or representations by the Collateral
Agent or
any Holder relative to the subject matter hereof not reflected
herein.
18. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Subsidiary Guarantee
may
be waived, amended, supplemented or otherwise modified except by
a
written instrument executed in a manner pursuant to Article XI of
the
Indenture or any other provision thereof; provided, that any
provision
of this Subsidiary Guarantee may be waived by the Collateral
Agent
and the Holders in a letter or agreement executed by the
Collateral
Agent.
(b) Neither the Collateral Agent nor any Holder shall by
any act
(except by a written instrument pursuant to paragraph 17(a)
hereof),
delay, indulgence, omission or otherwise be deemed to have waived
any
right or remedy hereunder or to have acquiesced in any Default or
Event of Default or in any breach of any of the terms and
conditions
hereof. No failure to exercise, nor any delay in exercising, on
the part
of the Collateral Agent or any Holder, any right, power or
privilege
hereunder shall operate as a waiver thereof. No single or
partial
exercise of any right, power or privilege hereunder shall
preclude any
other or further exercise thereof or the exercise of any other
right, power
or privilege. A waiver by the Collateral Agent or any Holder of
any
right or remedy hereunder on any one occasion shall not be
construed
as a bar to any right or remedy which the Collateral Agent or
such
Holder would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may
be exercised singly or concurrently and are not exclusive of any
other
rights or remedies provided by law.
19. Section Headings. The section headings used in this
Subsidiary Guarantee are for convenience of reference only and
are not
to affect the construction hereof or be taken into consideration
in the
interpretation hereof.
20. Successors and Assigns. This Subsidiary Guarantee
shall be
binding upon the successors and assigns of each Guarantor and
shall
inure to the benefit of the Collateral Agent and the Holders and
their
successors and assigns.
21. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
SUBSIDIARY GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
22. Submission To Jurisdiction; Waivers. Each Guarantor
hereby
irrevocably and unconditionally:
(1) submits for itself and its property in any legal
action or
proceeding relating to this Subsidiary Guarantee to which it
is a
party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction
of the
Courts of the State of New York, the courts of the United
States
of America for the Southern District of New York, and
appellate
courts from any thereof;
(2) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now
or hereafter have to the venue of any such action or
proceeding
in any such court or that such action or proceeding was
brought
in an inconvenient court and agrees not to plead or claim
the
same;
(3) agrees that service of process in any such action
or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of
mail), postage prepaid, to such Guarantor at its address set
forth
below its signature line or at such other address of which
the
Collateral Agent shall have been notified pursuant hereto;
(4) agrees that nothing herein shall affect the right
to effect
service of process in any other manner permitted by law or
shall
limit the right to sue in any other jurisdiction; and
(5) waives, to the maximum extent not prohibited by
law,
any right it may have to claim or recover in any legal
action or
proceeding referred to in this subsection any special,
exemplary,
punitive or consequential damages.
IN WITNESS WHEREOF, each of the undersigned has
caused this Subsidiary Guarantee to be duly executed and
delivered by
its duly authorized officer as of the day and year first above
written.
ERLANGER TUBULAR CORPORATION IMPERIAL ADHESIVES, INC.
By: /S/ J. R. PARKER By: /S/ J. R. PARKER
Title:
Title:
Federal Employer Identification Federal Employer
Identification
Number: 73-1281150 Number: 31-1070331
Address for Notices: Address for Notices:
5610 Bird Creek Avenue 6315 Wiehe Road
Catoosa, Oklahoma 74015 Cincinnati, Ohio 45237
Fax: (918) 266-6116 Fax: ( ) ___-____
KOPPEL STEEL CORPORATION NEWPORT STEEL CORPORATION
By: /S/ J. R. PARKER By:
/S/ J. R. PARKER
Title: Title:
Federal Employer Identification Federal Employer
Identification
Number: 25-1635833 Number: 61-1116686
Address for Notices: Address for Notices:
Sixth Avenue and Mount Ninth & Lowell Streets
P.O. Box 750 Newport, Kentucky
41072
Beaver Falls, PA 15010
Fax: (606) 292-0593
Fax: (412) 847-6385
NORTHERN KENTUCKY NORTHERN KENTUCKY
AIR, INC.
MANAGEMENT, INC:
/S/ J. R. PARKER By: /S/ J. R. PARKER
Title: V.P. & Treasurer Title: V.P. &
Treasurer
Federal Employer Identification Federal Employer
Identification
Number: 62-1208414 Number: 61-1014963
Address for Notices: Address for Notices:
Ninth & Lowell Streets Ninth & Lowell Streets
Newport, Kentucky 41072 Newport, Kentucky 41072
Fax: (606) 292-0593 Fax: (606) 292-0593
ACKNOWLEDGED AND ACCEPTED BY:
THE HUNTINGTON NATIONAL BANK
By: /S/ CANDADA J. MOORE
Title: Trust Officer
ADDENDUM
The undersigned, by its signature below, hereby agrees to be
bound by
all of the terms and provisions of the Subsidiary Guarantee,
dated as of
________ __, 1995 (the "Subsidiary Guarantee"), executed by each
of the
Subsidiaries of NS Group, Inc. in favor of The Huntington
National Bank, a
national banking association, as collateral agent under the
Indenture dated as
of _______ __, 1995, as if the undersigned had been an original
signatory to the
Subsidiary Guarantee.
[Name of Subsidiary]
By:
Name:
Title:
[Federal Employer I.D. #]
[Address]
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of July 28,
1995 between THE HUNTINGTON NATIONAL BANK, a national
banking association ("Huntington"), as trustee (in such
capacity, as "Trustee") under the Indenture dated as of
July 28, 1995 (as amended, supplemented or otherwise
modified form time to time, the "Indenture") between NS
Group, Inc. (the "Company") and Huntington as
collateral agent under certain of the Security
Documents (as defined in the Indenture) (Huntington, in
its capacities as Trustee and Collateral Agent, shall
be referred to herein as "Trustee"), and THE BANK OF
NEW YORK COMMERCIAL CORPORATION, a New York
corporation, as ACM Agent (in such capacity, the "Bank
Agent") under the Revolving Credit, Guaranty and
Security Agreement dated as of July 28, 1995, among the
Borrowers (hereinafter defined), the Lenders as defined
therein (the "Banks") and the Bank Agent (as amended,
supplemented, or otherwise modified from time to time,
the "Loan Agreement"). The Trustee and the Bank Agent
are each hereinafter sometimes referred to individually
as a "Collateral Agent" and collectively as the
"Collateral Agents".
The Banks will make loans (collectively, the
"Revolving Loans") to Newport Steel Corporation
("Newport"), Koppel Steel Corporation ("Koppel") and
Imperial Adhesives, Inc. ("Imperial"; and, together
with Newport and Koppel, the "Borrowers"), guaranteed
by the Company, Erlanger Tubular Corporation
("Erlanger") and the Company's other wholly-owned
subsidiaries (collectively, the "Bank Loan
Guarantors"), and secured principally by accounts
receivable arising in the ordinary course of business,
inventory and the proceeds thereof, as more
particularly described in the Loan Agreement.
The Company issued $131,096,000 13 1/2% Senior
Secured Notes due 2003 (the "Securities") under the
Indenture, and Koppel, Newport and Erlanger
(collectively, the "Senior Secured Note Guarantors")
are each executing a Subsidiary Guarantee of the
Company's obligations under the Indenture and the
Securities (the "Senior Secured Note Guarantee") and
are each executing and delivering to the Company an
Intercompany Note in connection with the issuance of
the Securities (collectively, the "Intercompany
Notes"). The Company is receiving security interests
in certain property of each of the Senior Secured Note
Guarantors in connection with the Intercompany Notes
and is pledging the Intercompany Notes and related
security interests to the Trustee as additional
collateral for the issuance of the Securities. The
Securities, the Intercompany Notes, and the Senior
Secured Note Guarantee are secured principally by
equipment, fixtures and real property, as more
particularly described in the Security Documents (as
defined in the Indenture, but excluding this
Intercreditor Agreement) (collectively, the "Senior
Secured Note Security Documents"). The Indenture and
the Senior Secured Note Security Documents are
collectively referred to herein as the "Trustee
Security Documents." The Company, the Borrowers, the
Bank Loan Guarantors and the Senior Secured Note
Guarantors are sometimes collectively referred to as
"Holdings Group".
NOW, THEREFORE, in consideration of the
premises and for other good and valuable consideration,
the parties hereto hereby agree as follows:
1. Description of Collateral.
(a) The Bank Agent has, pursuant to the Loan
Agreement, a security interest in the "Collateral" as
defined in the Loan Agreement (the "Bank Agent
Collateral") which Bank Agent Collateral includes,
among other items,
(i) Receivables, as defined in the Loan Agreement
(herein, the "Accounts Receivable");
(ii) General Intangibles, as defined in the Loan
Agreement (herein, the "Working Capital
Intangibles");
(iii) Inventory, as defined in the Loan Agreement
(herein, the "Inventory"); and
(iv) The proceeds and products of all the items of
Collateral, in whatever form (herein, the
"Proceeds").
(b) The Trustee has, pursuant to the Trustee
Security Documents, a security interest in the
"Collateral" as defined in the Indenture (the "Trustee
Collateral") which Trustee Collateral includes, among
other items:
(i) The real estate and improvements owned or
leased by the Senior Secured Note Guarantors
(herein, the "Real Property");
(ii) Equipment including, without limitation, (x)
furniture, furnishings, tools, lubricants,
spare parts, shelving, displays, cases,
accessories, motors and engines, and (y) with
respect to the foregoing all attachments,
components, parts, equipment and accessories
installed thereon or affixed thereto (herein,
the "Equipment");
(iii) Fixtures (herein, the "Fixtures");
(iv) The Intercompany Notes and the
collateral securing such Intercompany
Notes pursuant to the Pledge and
Security Agreement (as defined in the
Indenture); and
(v) The proceeds and products of all the
items of Collateral in whatever form
(herein, the "Proceeds").
2. Agreements with Respect to Collateral.
(a) The Bank Agent shall not have a security
interest and shall not exercise any right or remedy or
assert, except as provided for by this Agreement, any
claim with respect to the Trustee Collateral, and the
Trustee shall not have a security interest and shall
not exercise any right or remedy, or assert any claim
with respect to the Bank Agent Collateral.
(b) If either Collateral Agent shall receive
any proceeds or other accounts payable with respect to
any collateral (including, without limitation, any
proceeds of a sale, foreclosure, loss, damage or
otherwise with respect to such collateral), which
collateral, pursuant hereto, is subject to a security
interest in favor of the other Collateral Agent, the
Collateral Agent receiving such proceeds shall promptly
remit the same to the other Collateral Agent.
(c) Each of the Collateral Agents will, upon
request of the other, from time to time execute and
deliver or cause to be executed and delivered such
further instruments and do and cause to be done such
further acts as may be necessary or proper to carry out
more effectively the provisions of this Agreement.
(d) The Trustee will send to the Bank Agent
a copy of each notice of default it sends to
Noteholders pursuant to Section 9.2 of the Indenture.
(e) The Trustee agrees that, at any time
when it has physical possession or control of any of
the Trustee Collateral or any Bank Agent Collateral, it
will at all times allow the Bank Agent the right, at
the cost, risk and expense of the Bank Agent and so
long as such right is exercised in a manner which does
not damage the Trustee Collateral, to enter and use
such Trustee Collateral for the purpose of
repossession, completing the manufacture of, removing,
selling or preparing for shipment any Inventory which
is subject to the Bank Agent's security interest and
otherwise to realize upon the Bank Agent Collateral in
a manner not inconsistent with the provisions of this
Agreement; provided, however, if the Trustee believes
that the Trustee Collateral is not safe for operation
and use, the Trustee and Bank Agent shall jointly
select and hire an outside independent expert to
examine the Trustee Collateral. If the Trustee and the
Bank Agent cannot agree on an outside independent
expert within five days, the Bank Agent may select and
hire the outside independent expert; provided, however,
the Bank Agent may not unreasonably object to a
qualified expert proposed by the Trustee. If such
expert agrees that the Trustee Collateral is not safe
for operation and use, the Bank Agent agrees not to
enter and use such Trustee Collateral, without
Trustee's consent. Notwithstanding the foregoing
provisions, the Bank Agent may always have limited
access to the Trustee Collateral for the purpose of
retrieving the books and records relating to the Bank
Agent Collateral. In addition, the Trustee will allow
the Bank Agent to store any such collateral or take the
actions referred to in the preceding sentence on the
premises which comprise the Trustee Collateral for up
to (i) with respect to the Bank Agent's right to store
the Bank Agent Collateral and to take all of the
actions enumerated above other than completing the
manufacture of Inventory, six months after the date, if
ever, on which the Trustee gains physical possession or
control of said premises, and (ii) with respect to the
Bank Agent's right to complete the manufacture of
Inventory, three months after the date, if ever, on
which the Trustee gains physical possession or control
of said premises. The rights of the Bank Agent
enumerated in this Paragraph (e) are effective
notwithstanding any default of the Company under the
Indenture or of the Company or any of the Senior
Secured Note Guarantors under any other agreement
relating to the Senior Secured Notes between the
Trustee and the Company or any of the Senior Secured
Note Guarantors; provided, however, the rights of the
Bank Agent enumerated in this Paragraph (e) do not
preclude the Trustee from proceeding simultaneously
with the foreclosure and sale of the Trustee Collateral
so long as such proceedings are subject to Bank Agent's
rights.
3. Applicability of Priorities. The
priorities provided for in Section 1 of this Agreement
shall apply:
(a) without regard to the time or order of
attachment or perfection of the security interests and
other liens to secure either the Revolving Loans or the
Securities, and without regard to the giving or failure
to give notice of the acquisition of any such security
interest or lien; and
(b) with respect to the relative priority
and attachment of the security interests and liens
perfected by any party hereto, or with respect to the
attachment of such security interests or liens to the
proceeds of the collateral in question or to the
proceeds of the proceeds thereof, notwithstanding
anything to the contrary in the provisions of the
Uniform Commercial Code or the Bankruptcy Code of 1978,
as amended, or any state bankruptcy or creditors act,
and notwithstanding the giving or failure to give
notice of the acquisition or expected acquisition of
any property or security interest.
4. Notice of Default. Each Collateral
Agent agrees that if it declares an obligor to be in
default under its agreements, or makes demand for
payment of all obligations thereunder, such Collateral
Agent will promptly notify the other Collateral Agent
of any such declaration, but the failure to so notify
shall not affect the rights of the parties hereto.
5. No Effect on Others. This Agreement
shall not affect the rights of the Collateral Agents
relative to the rights of any other creditors of any
member of the Holdings Group, provided, that, so long
as this Agreement is in effect, the Bank Agent shall
not exercise its rights under the Intercreditor
Agreement, dated as of even date herewith, by and
between the City of Dayton, Kentucky, a Municipal
Corporation of the fourth class, and the Bank Agent to
the extent such rights are greater than its rights
under this Agreement. Nothing in this Agreement shall
be construed in any way to modify or relieve the
obligations of the members of the Holdings Group to
perform their respective obligations under the Loan
Agreement or the Trustee Security Documents or to
modify the respective obligations and liabilities
contained therein.
6. Amendments. The Bank Agent may amend
the Loan Agreement, and the Trustee may amend the
Trustee Security Documents, without the consent of the
other Collateral Agent; provided, that for the purposes
of this Agreement, the capitalized terms contained in
paragraph 1(a) hereof shall have the meanings given to
them on the date of this Agreement; provided, however,
that any amendment to the Loan Agreement that
materially impairs the ability of the Company to repay
the Securities and any amendment to the Trustee
Security Documents that materially impairs the ability
of the Borrowers to repay the Revolving Loans shall not
be effected without the consent of the other Collateral
Agent.
7. Books and Records. In the event the
Bank Agent elects to exercise its right in connection
with its security interest to remove the books and
records of any member of Holdings Group it will do so
only for the purpose of copying such books and records,
and it will return the original for the benefit of the
Company, the Borrowers or the Guarantors (to the extent
agreed under the Loan Agreement) or the Trustee, as the
case may be.
8. Miscellaneous.
(a) Notices. All notices, requests, demands
and other communications required or permitted to be
given hereunder shall be deemed to have been duly given
or made when delivered or telexed or if deposited in
the United States mail, three days after the day of
deposit, first class postage prepaid, addressed, in the
case of the Bank Agent as provided in the Loan
Agreement and, in the case of the Trustee, as provided
in the Indenture, or to such other address as such
party may hereafter specify in a written notice to the
other parties named herein. A copy of any such notice,
request or demand and any other communication shall be
delivered to Holdings Group at the following address:
John R. Parker
NS Group, Inc.
P.O. Box 1670
Ninth and Lowell Streets
Newport, Kentucky 41072
Telecopier No. (606) 292-0593
(b) Amendments and Successors. No agreement
shall be effective to amend, supplement or discharge in
whole or in part this Agreement unless such agreement
is in writing, signed by the Collateral Agents. This
Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the parties
hereto.
(c) Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be
ineffective to the extent such prohibition or
unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in
any other jurisdiction.
(d) Termination. This Agreement shall
terminate upon the payment in full of all amounts
outstanding under the Loan Agreement and other
obligations of the Company, the Borrowers and the Bank
Loan Guarantors incurred thereunder or the payment in
full of the Securities and other obligations of the
Company and the Senior Secured Note Guarantors incurred
thereunder or under the Senior Secured Note Guaranties.
(e) Headings. The headings in this
Agreement are for convenience of reference only and
shall not define or limit the terms thereof.
9. GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
10. Submission to Jurisdiction; Waivers.
Each of the Collateral Agents hereby irrevocably and
unconditionally:
(i) submits for itself and its
property in any legal action or proceeding
relating to this Agreement to which it is a party,
or for recognition and enforcement of judgment in
respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New
York, the courts of the United States of America
for the Southern District of New York, and
appellate courts from any thereof;
(ii) consents that any such action
or proceeding may be brought in such courts and
waives any objection that it may now or hereafter
have to the venue of any such action or proceeding
in any such court or that such action or
proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(iii) agrees that service of process
in any such action or proceeding may be effected
by mailing a copy thereof by registered or
certified mail (or any substantially similar form
of mail), postage prepaid, to the Collateral Agent
at its address set forth in the Indenture or the
Loan Agreement, respectively, or at such other
address of which the other Collateral Agent shall
have been notified pursuant hereto;
(iv) agrees that nothing herein
shall affect the right to effect service of
process in any other manner permitted by law or
shall limit the right to sue in any other
jurisdiction; and
(v) waives, to the maximum extent
not prohibited by law, any right it may have to
claim or recover in any legal action or proceeding
referred to in this subsection any special,
exemplary, punitive or consequential damages.
IN WITNESS WHEREOF, the parties have caused
this Agreement to be executed and delivered by their
respective officers as of the date first above written.
THE BANK OF NEW YORK COMMERCIAL
CORPORATION, ACM Agent
By: /S/ DANIEL J. MURRAY
Title: Vice President
THE HUNTINGTON NATIONAL BANK, as Trustee
By: /S/ CANDADA J. MOORE
Title: Trust Officer
AGREEMENT
THIS AGREEMENT, made as of the 28th day of July,
1995, by and between KOPPEL STEEL CORPORATION, a
Pennsylvania corporation ("Koppel"), THE COMMONWEALTH OF
PENNSYLVANIA, acting by and through its DEPARTMENT OF
COMMERCE, having its principal place of business in
Harrisburg, Pennsylvania (the "Department"), and THE
HUNTINGTON NATIONAL BANK, a national banking association, as
trustee (in such capacity, the "Trustee") under the
Indenture (defined below) and as collateral agent (in such
capacity, the "Collateral Agent") under certain of the
Security Documents (as defined in the Indenture) (The
Huntington National Bank, in its capacities as Trustee and
Collateral Agent, referred to herein as the "Trustee").
W I T N E S S E T H :
WHEREAS, Koppel and the Department have previously
entered into a Loan Agreement dated as of January 21, 1992
(as amended, supplemented or otherwise modified from time to
time, the "Loan Agreement"), pursuant to which the
Department made a loan to Koppel in the original principal
amount of $4,000,000 (the "Department Loan");
WHEREAS, Koppel secured its obligations to the
Department by executing and delivering to the Department,
among other items, a certain Mortgage dated as of February
13, 1992 (as amended, supplemented or otherwise modified
from time to time, the "Department Mortgage") and recorded
at Book 1200, Page 102 in the Office of the Recorder of
Deeds of Beaver County, Pennsylvania, which Department
Mortgage affects certain of Koppel's real property described
in Exhibit A attached hereto and incorporated herein by
reference (the "Department Premises");
WHEREAS, Section 6 of the Department Mortgage
contains a covenant by Koppel to provide utility and other
services to the Department Premises under certain conditions
as more fully described in the Department Mortgage;
WHEREAS, pursuant to the terms of the Department
Mortgage, Koppel granted the Department an easement to and
over certain real property of Koppel described in Exhibit B
attached hereto and incorporated herein by reference (the
"Residual Parcel") for purposes of inspection, maintenance,
operation and use of certain "Infrastructure Facilities"
located on the Residual Parcel;
WHEREAS, Koppel and the Department also entered
into a Memorandum of Easement and Covenant dated February
13, 1992 with respect to the above-referenced easement and
covenant as well as an access easement over a portion of the
Surrounding Premises (as defined herein), which Memorandum
of Easement and Covenant was recorded in Book 1474, Page 053
of said public records;
WHEREAS, Koppel's parent, NS Group, Inc. ("NS
Group"), is issuing $131,096,000 in Senior Secured Notes
(the "Secured Notes") under an indenture dated as of July
28, 1995, between NS Group and The Huntington National Bank,
a national banking association duly organized and existing
under the laws of the United States, as trustee (as amended,
supplemented or modified from time to time, the
"Indenture");
WHEREAS, in connection with the issuance of the
Secured Notes, Koppel is required to execute and deliver to
the Trustee a certain Subsidiary Guaranty, dated as of July
28, 1995 (as amended, supplemented or otherwise modified
from time to time, the "Guaranty"), which Guaranty is
secured by, among other items, that certain Mortgage,
Assignment of Rents and Leases between Koppel and the
Trustee dated as of July 28, 1995 (as amended, supplemented
or otherwise modified from time to time, the "Subsidiary
Mortgage") pursuant to which Subsidiary Mortgage, Koppel is
granting liens on a portion of Koppel's real property
(including a portion of the Residual Parcel but specifically
excluding the Department Premises) as described on Exhibit C
attached hereto and incorporated herein by reference (the
"Surrounding Premises");
WHEREAS, in connection with the issuance of the
Secured Notes, Koppel is required to execute and deliver to
NS Group a certain Intercompany Note in the amount of
$81,500,000, dated as of July 28, 1995 (the "Intercompany
Note"), which Intercompany Note is secured by, among other
items, that certain Junior Mortgage, Assignment of Rents and
Leases between Koppel and NS Group dated as of July 28, 1995
(as amended, supplemented or otherwise modified from time to
time, the "ICN Mortgage") pursuant to which ICN Mortgage,
Koppel is granting liens on the Surrounding Premises;
WHEREAS, NS Group is assigning its interest in the
Intercompany Note and the ICN Mortgage, among other items,
to the Trustee for the benefit of the noteholders under the
Indenture and any subsequent holder of the Secured Notes
issued thereunder (collectively, the "Noteholders") as
security for its obligations under the Indenture and the
Secured Notes;
WHEREAS, the Department has requested that the
Trustee consent to the provisions of Section 6 of the
Department Mortgage; and
WHEREAS, the Department, the Trustee and Koppel
wish to set forth their agreement with respect to access to
Infrastructure Facilities located on the Department
Premises;
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as
follows:
1. The Trustee hereby consents to the provisions
of Section 6 of the Department Mortgage (pertaining to
utilities and services) as in effect on the date hereof.
2. The Trustee, for itself and its successors
and assigns and successors in interest in and to the
Surrounding Premises, hereby agrees for the benefit of
Koppel and the Department and their respective successors
and assigns and successors in interest in and to the
Department Premises (all of such parties herein,
individually and collectively, a "Department Premises
Benefited Party") that if at any time hereafter the Trustee
or its successors and assigns shall have entered into
possession of the Surrounding Premises (by foreclosure, by
self-help repossession, by deed in lieu of foreclosure, by
confession of judgment, by legal judgment or other judicial
action or otherwise) pursuant to the terms of the Subsidiary
Mortgage or the ICN Mortgage, the Trustee or such successors
and assigns shall permit the Department Premises Benefited
Party to enter into the Surrounding Premises at any
reasonable time or times for the purpose of (i) repairing,
maintaining, replacing, inspecting or using "Infrastructure
Facilities" (as that term is hereinafter defined) which are
located on or under the Surrounding Premises and which are
used in connection with the provision of utilities or like
services (including, without limitation, electricity,
natural gas, other industrial gases, water, telephone,
telex, alarm and data transmission service, fire stand pipes
and sprinklers, steam, compressed air, hydraulics, sewerage,
waste water treatment and electric arc furnished dust
pelletization) to the Department Premises, (ii) repairing,
replacing or restoring any walls or columns, if any, which
are common to the Department Premises and the Surrounding
Premises, (iii) obtaining access from one portion of the
Department Premises to other portions thereof, and (iv)
obtaining ingress to and egress from the Department
Premises. This covenant shall be construed as a covenant
running with the land, binding upon the Trustee and its
successors and assigns and successors in interest in and to
the Surrounding Premises.
3. Koppel, for itself and its successors and
assigns and successors in interest in and to the Department
Premises, hereby agrees for the benefit of the Trustee and
its successors and assigns and successors in interest in and
to the Surrounding Premises (all of such parties herein,
individually and collectively, a "Trustee Benefited Party")
that so long as Koppel or such successors and assigns has
possession of the Department Premises, Koppel or such
successors and assigns shall permit the Trustee Benefited
Party to enter into the Department Premises at any
reasonable time or times for the purpose of (i) repairing,
maintaining, replacing, inspecting or using "Infrastructure
Facilities" (as that term is hereinafter defined) which are
located on or under the Department Premises and which are
used in connection with the provision of utilities or like
services (including, without limitation, electricity,
natural gas, other industrial gases, water, telephone,
telex, alarm and data transmission service, fire stand pipes
and sprinklers, steam, compressed air, hydraulics, sewerage,
waste water treatment and electric arc furnished dust
pelletization) to the Surrounding Premises, (ii) repairing,
replacing or restoring any walls or columns which are common
to the Department Premises and the Surrounding Premises, and
(iii) obtaining access from one portion of the Surrounding
Premises to other portions thereof. This covenant shall be
construed as a covenant running with the land, binding upon
Koppel and its successors and assigns and successors in
interest in and to the Department Premises.
4. The Department, for itself and its successors
and assigns and successors in interest in and to the
Department Premises, hereby agrees for the benefit of Koppel
and the Trustee and their respective successors and assigns
and successors in interest in and to the Surrounding
Premises (all of such parties herein, individually and
collectively, a "Surrounding Premises Benefited Party") that
if at any time hereafter the Department or its successors
and assigns shall have entered into possession of the
Department Premises (by foreclosure, by self-help
repossession, by deed in lieu of foreclosure, by confession
of judgment, by legal judgment or other judicial action or
otherwise) pursuant to the terms of the Department Mortgage,
the Department or such successors and assigns shall permit
the Surrounding Premises Benefited Party to enter into the
Department Premises at any reasonable time or times for the
purpose of (i) repairing, maintaining, replacing, inspecting
or using "Infrastructure Facilities" (as that term is
hereinafter defined) which are located on or under the
Department Premises and which are used in connection with
the provision of utilities or like services (including,
without limitation, electricity, natural gas, other
industrial gases, water, telephone, telex, alarm and data
transmission service, fire stand pipes and sprinklers,
steam, compressed air, hydraulics, sewerage, waste water
treatment and electric arc furnished dust pelletization) to
the Surrounding Premises, (ii) repairing, replacing or
restoring any walls or columns which are common to the
Department Premises and the Surrounding Premises, and (iii)
obtaining access from one portion of the Surrounding
Premises to other portions thereof. This covenant shall be
construed as a covenant running with the land, binding upon
the Department and its successors and assigns and successors
in interest in and to the Department Premises.
For purposes hereof, "Infrastructure Facilities"
shall include those facilities which are used in the
provision of utilities and like services, including, without
limitation, electric lines, transformers, substations,
switching facilities, gas meters, gas cylinders, gas lines,
compressors, valves, water meters, water lines and other
water facilities, stand pipe and sprinkler systems,
including pumps, valves and related hardware, telephone,
telex, computer, alarm and data transmission lines and
facilities, hydraulic pumps, lines and related facilities,
sewers, waste water treatment plants and related facilities
and other pollution control facilities, including, without
limitation, pelletizers for electric arc furnace dust.
5. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the
Trustee, the Department and Koppel.
6. THE PARTIES HERETO WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT.
7. This Agreement may be executed in any number
of counterparts, all of which, taken together, shall
constitute one and the same instrument, and either of the
parties hereto may execute this Agreement by signing any
such counterpart.
8. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO DETERMINED, IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAWS OF
CONFLICTS) OF THE COMMONWEALTH OF PENNSYLVANIA.
9. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
IN WITNESS WHEREOF, this Agreement has been signed
and sealed by the undersigned duly authorized signatories of
the parties hereto as of the date and year first above
written.
KOPPEL STEEL CORPORATION
By: /S/ J. R. PARKER
Name: John R. Parker
Title: V.P. & Treasurer
THE COMMONWEALTH OF PENNSYLVANIA, acting by and through its
DEPARTMENT OF COMMERCE
By: /S/ EMILY J. WHITE
Name:
Title:
THE HUNTINGTON NATIONAL BANK, as trustee
By: /S/ CANDADA J. MOORE
Name: Candada J. Moore
Title: Trust Officer
<PAGE>
STATE OF PENNSYLVANIA :
: SS.
COUNTY OF DAUPHIN :
On this, the 25th day of July, 1995, before me, a
notary public, personally appeared Emily J. White who
acknowledged herself to be the Deputy Secretary of the
Department of Commerce of the Commonwealth of Pennsylvania,
and that she, as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein
contained, by signing the name of the Commonwealth of
Pennsylvania acting by and through its Department of
Commerce by herself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal the day and year aforesaid.
/S/ HEATHER L. HINTON
-----------------------------
Notary Public
My Commission Expires: [NOTARIAL SEAL]
Heather L. Hinton, Notary Public
Harrisburg, Dauphin County
My Commission Expires Jan. 4, 1999
Member, Pennsylvania Association
of Notaries<PAGE>
STATE OF NEW YORK :
: SS.
COUNTY OF NEW YORK :
On this, the 26th day of July, 1995, before me, a
notary public, personally appeared John R. Parker who
acknowledged himself to be a Vice President and Treasurer of
Koppel Steel Corporation, a Pennsylvania corporation, and
that he being authorized to do so as such V.P. and
Treasurer, executed the foregoing instrument for the
purposes therein contained, by signing the name of the
corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal the day and year aforesaid.
/S/ STEVEN MAHER
-----------------------------
Notary Public
My Commission Expires: [NOTARIAL SEAL]
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
Qualified in New York County
Certificate Filed in New York County
Commission Expires October 15, 1996
<PAGE>
STATE OF NEW YORK :
: SS.
COUNTY OF NEW YORK :
On this, the 26th day of July, 1995, before me, a
notary public, personally appeared Candada J. Moore who
acknowledged herself to be a Trust Officer of The Huntington
National Bank, a national Banking association, and that she
being authorized to do so as such Trust Officer, executed
the foregoing instrument for the purposes therein contained,
by signing the name of the corporation by herself as such
officer.
IN WITNESS WHEREOF, I hereunto set my hand and
official seal the day and year aforesaid.
/S/ STEVEN MAHER
-----------------------------
Notary Public
My Commission Expires: [NOTARIAL SEAL]
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
Qualified in New York County
Certificate Filed in New York County
Commission Expires October 15, 1996
EXHIBIT A
[LEGAL DESCRIPTION OF DEPARTMENT PREMISES]
EXHIBIT B
[LEGAL DESCRIPTION OF RESIDUAL PARCEL]
EXHIBIT C
[LEGAL DESCRIPTION OF NOTEHOLDERS' COLLATERAL]
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT made this 28th day of
July, 1995 by and among NEWPORT STEEL CORPORATION, a
Kentucky corporation, with its principal offices at Ninth
and Lowell Streets, Newport, Kentucky ( Newport Steel ),
CITY OF DAYTON, KENTUCKY, a Municipal Corporation of the
Fourth Class, with its principal offices at 514 Sixth
Avenue, Dayton, Kentucky ( Dayton ) and THE HUNTINGTON
NATIONAL BANK, a national banking association, as Trustee
under the Indenture (as defined below)(the "Trustee").
WHEREAS, pursuant to an agreement dated April 15,
1981 and related documents, Dayton, in order to spur
economic development in the Northern Kentucky area, loaned
to NS Group, Inc., a Kentucky corporation formerly known as
Newport Steel Corporation ( NS Group ) $8,000,000.00 in
accordance with the terms and conditions contained in an
Urban Development Action Grant Agreement dated March 24,
1981; and
WHEREAS, the April 15, 1981 note in the amount of
$8,000,000 was subsequently replaced by the Amended and
Restated Promissory Note (the Note ) dated January 29,
1985, from NS Group to Dayton in the original principal
amount of $7,800,000.00; and
WHEREAS, as security for payment of the Note,
Dayton was granted three mortgages on real property of NS
Group located in Campbell County, Kentucky described on
Exhibit A hereto (collectively, the Newport Real Estate )
which mortgages are dated April 15, 1981 and recorded in
Mortgage Book 614, Page 166 of the Mortgage Records of
Campbell County, Kentucky, in Mortgage Book 614, Page 324 of
the Mortgage Records of Campbell County, Kentucky, and in
Mortgage Book 614, Page 151 of the Mortgage Records of
Campbell County, Kentucky (as amended, supplemented or
otherwise modified from time to time, collectively, the
UDAG Mortgages ), and security interests in the fixtures,
machinery, apparatus, equipment, furniture, furnishings,
appliances and other articles of personal property
(collectively, the Equipment ) of NS Group located on the
Newport Real Estate (the Security Interests ) and any other
filings which may have been made by Dayton for purposes of
recording mortgages or security interests granted in
connection with the Note; and
WHEREAS, as part of a corporate reorganization, NS
Group transferred substantially all of its operating assets,
including the Newport Real Estate and Equipment, to its
wholly owned subsidiary, Newport Steel (formerly known as
Newport Steel Pipe Company) on March 27, 1987; and
WHEREAS, pursuant to the May 1, 1987 Assumption
Agreement, which was consented to by resolution of the
Dayton City Council passed May 5, 1987, Newport Steel
assumed all liabilities and obligations under the Note and
UDAG Mortgages; and
WHEREAS, the UDAG Mortgages are now first priority
liens on the Newport Real Estate and the Security Interests
are first priority liens on the Equipment located on the
Newport Real Estate; and
WHEREAS, NS Group is issuing $131,096,000 in
Senior Secured Notes (the "Senior Notes") under an indenture
dated as of July 28, 1995 herewith (as amended, supplemented
or otherwise modified from time to time, the "Indenture"),
between NS Group and the Trustee; and
WHEREAS, in connection with the issuance of the
Senior Notes, Newport Steel is required to execute and
deliver to the Trustee a certain Subsidiary Guarantee, dated
as of July 28, 1995 (the "Guarantee") which is secured by
that certain Subsidiary Security Agreement between Newport
Steel and the Trustee dated as of July 28, 1995 (as amended,
supplemented or otherwise modified from time to time, the
"Subsidiary Security Agreement") and that certain Mortgage,
Assignment of Rents and Leases and Security Agreement
between Newport Steel and the Trustee dated as of July 28,
1995 (as amended, supplemented or otherwise modified from
time to time, the "Subsidiary Mortgage") on property more
fully described on Exhibit "A" attached hereto (the
"Mortgaged Property"); and
WHEREAS, in connection with the issuance of the
Senior Notes, Newport Steel is required to execute and
deliver to NS Group a certain Intercompany Note in the
amount of $46,900,000.00, dated as of July 28, 1995 (the
"Intercompany Note") which Intercompany Note is secured by
that certain Newport ICN Security Agreement between Newport
Steel and NS Group dated as of July 28, 1995 (as amended,
supplemented or otherwise modified from time to time, the
"ICN Security Agreement") and that certain Junior Mortgage,
Assignment of Rents and Leases and Security Agreement
between Newport Steel and NS Group dated as of July 28, 1995
(as amended, supplemented or otherwise modified from time to
time, the "ICN Mortgage") on the Mortgaged Property
(hereinafter, the ICN Security Agreement, ICN Mortgage,
Subsidiary Security Agreement and Subsidiary Mortgage shall
be collectively referred to as the "Newport Steel Security
Documents"); and
WHEREAS, NS Group is assigning its interest in the
Intercompany Note, the ICN Mortgage and the ICN Security
Agreement to the Trustee for the benefit of the noteholders
under the Indenture and any subsequent holder of the Senior
Notes issued thereunder (collectively, the "Noteholders");
and
WHEREAS, Dayton has consistently maintained its
willingness to subordinate the UDAG Mortgages and Security
Interests in order to facilitate the financing of capital
improvements at Newport Steel; and
WHEREAS, Dayton, in order to induce the
Noteholders to purchase the Senior Notes, is willing to
subordinate the Note and the liens of the UDAG Mortgages and
Security Interests to the interests of the Noteholders and
NS Group, as the case may be, as set forth in the Newport
Steel Security Documents.
NOW, THEREFORE, in consideration of the premises
and mutual covenants herein contained, the parties hereto
agree as follows:
I. PRIORITY OF LIENS
1.01 Dayton hereby agrees that the relative
priorities of its Security Interests in the Equipment and
UDAG Mortgages in the Newport Real Estate shall be as set
forth in this Agreement notwithstanding the time of
recordation or filing of the financing statements in
connection with its Security Interests, or the UDAG
Mortgages or the taking of any other steps necessary to
perfect its liens or security interests and notwithstanding
bankruptcy or insolvency proceedings involving Newport Steel
as a debtor.
1.02 Dayton hereby subordinates all of its liens
in any property of Newport Steel or NS Group which were
created in connection with the Note, including the liens of
the UDAG Mortgages and Security Interests, to the liens
created by the Newport Steel Security Documents.
II. SUBORDINATION OF NOTE OF DAYTON REGARDING
EQUIPMENT AND REAL ESTATE
2.01 As used herein, the term Indebtedness
shall mean the collective reference to the unpaid principal
of and interest on the Note and all other obligations and
liabilities of Newport Steel to Dayton (including, without
limitation, interest accruing at the then applicable rate
provided in the documents executed in connection with the
Note (each a "Subordinated Loan Document") after the
maturity of the Note and interest accruing at the then
applicable rate provided in the Subordinated Loan Documents
after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like
proceeding, relating to Newport Steel, whether or not a
claim for post-filing or post-petition interest is allowed
in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in
connection with, the Note, this Agreement, or any other
Subordinated Loan Document, in each case whether on account
of principal, interest, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and
disbursements of counsel to Dayton that are required to be
paid by Newport Steel pursuant to the terms of any
Subordinated Loan Document) and any extensions or
modifications of any Subordinated Loan Document and
substitutions therefore, or under any guarantee, agreement
or otherwise.
2.02 The Indebtedness at all times shall be and
hereby is subordinated and the payment thereof is deferred
(including, without limitation, any payments upon
Indebtedness on an accelerated basis whether resulting from
the occurrence of an event of default under the Note or
otherwise) except as expressly permitted under Section 2.04
hereof until the full and final payment in cash or its
equivalent of any and all obligations (including all
interest accruing after the date of filing of a petition by
or against Newport Steel under any bankruptcy code) of any
nature whatsoever which is due from Newport Steel or which
may hereafter be incurred or become due from Newport Steel
pursuant to the Guarantee, the Senior Notes, the
Intercompany Note, the Indenture and the Newport Steel
Security Documents (the Senior Obligations ).
2.03 Newport Steel and Dayton agree, for itself
and each future holder of the Indebtedness, that the
Indebtedness is expressly subordinate and junior in right of
payment to the Senior Obligations. No part of the
Indebtedness shall have any claim to the assets of Newport
Steel on a parity with or prior to the claim of the Senior
Obligations. Unless and until the Senior Obligations have
been paid in full, without the express prior written consent
of the Trustee, (A) Dayton will not take, demand or receive
from Newport Steel, and Newport Steel will not make, give or
permit, directly or indirectly, by set-off, redemption,
purchase or in any other manner, any payment of or security
for the whole or any part of the Indebtedness, including,
without limitation, any letter of credit or similar credit
support facility to support payment of the Indebtedness.
Dayton and Newport Steel agree that upon the occurrence of
any Insolvency Event (as defined below), any payment or
distribution of assets of Newport Steel, whether in cash,
property or securities, to which Dayton would be entitled
except for the provisions hereof, shall be paid or delivered
by Newport Steel, or any receiver, trustee in bankruptcy,
liquidating trustee, disbursing agent or other person making
such payment or distribution, directly to the Trustee, for
the account of the Noteholders, to the extent necessary to
pay in full the Senior Obligations, before any payment or
distribution shall be made to Dayton. Upon the occurrence
of any event or proceeding described in clause (a) of the
definition of "Insolvency Event" commenced by or against
Newport Steel, Dayton and Newport Steel irrevocably
authorize and empower the Trustee to demand, sue for,
collect and receive every payment or distribution on account
of the Indebtedness payable or deliverable in connection
with such event or proceeding and give acquittance therefor,
and to file claims and proofs of claim in any statutory or
non-statutory proceeding and take such other actions, in its
own name as Trustee, or in the name of Dayton or otherwise,
as the Trustee may deem necessary or advisable for the
enforcement of the provisions of this Agreement; provided,
however, that the foregoing authorization and empowerment
imposes no obligation on the Trustee to take any such
action.
2.04 Newport Steel shall pay and Dayton shall
receive payments when due on a current basis of principal
and interest in accordance with the terms of the Note until
(1) the Trustee or NS Group has notified Dayton in writing
at 514 6th Avenue, Dayton, Kentucky 41074, Attn: The Mayor,
that a subordinating event of default has occurred under the
Senior Note, the Guarantee, the Intercompany Note, Newport
Steel Security Documents or any other loan or guaranty
agreement between Newport Steel and the Trustee or NS Group,
as the case may be, or (2) Newport Steel (a) commences any
case, proceeding or other action (1) under any existing or
future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization,
conservatorship or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, or (2) seeks appointment of a
receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its
assets, or Newport Steel makes a general assignment for the
benefit of its creditors; or (b) there being commenced
against Newport Steel any case, proceeding or other action
of a nature referred to in clause (a) above which (1)
results in the entry of an order for relief of any such
adjudication or appointment or (2) remains undismissed,
undischarged or unbonded for a period of 60 days; or (c)
there being commenced against Newport Steel any case,
proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against
all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (d) Newport
Steel takes any action in furtherance of, or indicates its
consent to, approval of, or acquiescence in, any of the acts
set forth in clause (a), (b) or (c) above; or (e) Newport
Steel generally does not pay, or is unable to pay, or admits
in writing its inability to pay, its debts as they become
due (each of clauses (a) through (e), an "Insolvency
Event"). Resumption of payments to Dayton otherwise
prohibited by clause (a) of this Section shall be permitted
upon cure, satisfactory in all respects to the Trustee and
NS Group, of each and every relevant subordinating event of
default provided such payments do not create, or with the
passage of time or giving of notice, would not create a
subordinating event of default.
2.05 For the purposes of Section 2.04, a
subordinating event of default shall consist of any one or
more of the following: (a) failure by Newport Steel to pay
any principal or interest under the Intercompany Note or the
Guarantee; and (b) a breach by Newport Steel of any material
representation, warranty or covenant in the Intercompany
Note, the Guarantee or the Newport Steel Security Documents.
III. MISCELLANEOUS PROVISIONS
3.01 Dayton agrees to execute all subordination
and intercreditor agreements required by the Trustee and NS
Group; provided, such subordination and intercreditor
agreements are consistent with the terms of this Agreement.
Dayton further agrees to perform all other actions that are
necessary to carry out the terms and conditions of this
Agreement.
3.02 Dayton agrees that in the event it receives
payments pursuant to the Note and UDAG Mortgages which
payments should not have been made pursuant to either this
Agreement, the Indenture, or the Newport Steel Security
Documents, Dayton shall pay to the Trustee the amount of any
such payments.
3.03 Dayton consents that, without notice to or
further assent by Dayton, the Indenture, the Senior Notes,
the Guarantee, the Intercompany Note and any other Newport
Steel Security Document may be amended, modified,
supplemented or terminated, in whole or in part, as the
Trustee or Noteholders or NS Group may deem advisable from
time to time, and any collateral security at any time held
by the Trustee or Noteholders or NS Group for the payment of
any of the Senior Obligations may be sold, exchanged,
waived, surrendered or released, in each case all without
notice to or further assent by Dayton, which will remain
bound under this Agreement, and all without impairing,
abridging, releasing or affecting the subordination provided
for herein, provided however, that the Trustee shall give
Dayton thirty (30) days advance written notice if the
principal amount of the Senior Obligations is to be
increased above $150,000,000. So long as any of the Senior
Obligations shall remain outstanding, Dayton shall not,
without the prior written consent of the Trustee and NS
Group, sell, assign or otherwise transfer, in whole or in
part, the Indebtedness or any interest therein to any other
person, or commence, or join with any creditors other than
the Noteholders or the Trustee in commencing any proceeding
referred to in clause (a) of the definition of "Insolvency
Event."
3.04 To the maximum extent permitted by law,
Dayton waives any claim it might have against the
Noteholders and the Trustee with respect to, or arising out
of, any action or failure to act or any error of judgment,
negligence (but not gross negligence or willful misconduct),
or mistake or oversight whatsoever on the part of the
Trustee, the Noteholders or their respective directors,
officers, employees or agents with respect to any exercise
of rights or remedies arising with respect to the Senior
Obligations or any transaction relating to the Mortgaged
Property or the Equipment. Neither the Trustee, Noteholders
nor any of their respective directors, officers, employees
or agents shall be liable for failure to demand, collect or
realize upon any of the Mortgaged Property or the Equipment
or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Mortgaged
Property or the Equipment upon the request of the Company or
Dayton or any other person or to take any other action
whatsoever with regard to the Mortgaged Property or the
Equipment or any part thereof.
3.05 The provisions of this Agreement shall
continue in full force and effect notwithstanding the
occurrence of any event contemplated under clause (a) of the
definition of "Insolvency Event." To the extent that Dayton
has or acquires any rights under Section 363 or Section 364
of the Bankruptcy Code with respect to the Mortgaged
Property or the Equipment, Dayton hereby agrees not to
assert such rights without the prior written consent of the
Trustee, on behalf of the Noteholders; provided that, if
requested by the Trustee, Dayton shall seek to exercise such
rights in the manner requested by the Trustee, including the
rights in payments in respect of such rights.
3.06 All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and
are irrevocable until the Senior Obligations are paid in
full.
3.07 The parties hereto acknowledge that the
Trustee, NS Group and the Noteholders are third party
beneficiaries of this Agreement.
3.08 No provisions of this Agreement may be
changed or modified except in writing signed by all parties
hereto.
3.09 This Agreement shall be deemed an agreement
made under the internal laws of the Commonwealth of Kentucky
and for all purposes shall be governed by and construed in
accordance with the laws of Kentucky and shall be binding
upon and inure to the benefits of Newport Steel and Dayton
and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed the date and year first
above written.
CITY OF DAYTON KENTUCKY
By /S/ BOBBY E. CRITTENDON
Title Mayor
NEWPORT STEEL CORPORATION
By /S/ RONALD R. NOEL
Title President
THE HUNTINGTON NATIONAL BANK, as Trustee
By /S/ CANDADA J. MOORE
Title Trust Officer
STATE OF KENTUCKY )
) SS:
COUNTY OF CAMPBELL )
On the 17th day of July, 1995, before me
personally came Bobby E. Crittendon to me known, who, being
by me duly sworn, did depose and say that he resides at
Dayton, Kentucky, that he is the Mayor of City of Dayton,
Kentucky, the entity described in and which executed the
foregoing instrument; that he knows the seal of said entity;
that the seal affixed to said instrument is such entity's
seal, that it was so affixed by order of the governing body
of said entity, and that he signed and hereby acknowledges
his name thereto by like order, on behalf of said entity.
[SIGNATURE ILLEGIBLE]
Notary Public
My Commission Expires 4/14/96
STATE OF KENTUCKY )
) SS:
COUNTY OF CAMPBELL )
On the 25th day of July, 1995, before me
personally came Ronald R. Noel to me known, who, being by me
duly sworn, did depose and say that he resides at 9th &
Lowell Streets, that he is the President of Newport Steel
Corporation, the corporation described in and which executed
the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation; and that he signed
and hereby acknowledges his name thereto by like order, on
behalf of said corporation.
PATRICIA A. NELSON
Notary Public, Kentucky State at Large
My Commission expires No. 17, 1997
Notary Public
[SEAL]
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the 26th day of July, 1995, before me
personally came Candada J. Moore to me known, who, being by
me duly sworn, did depose and say that she resides at
[ILLEGIBLE] , that she is the Trust Officer of
The Huntington National Bank, the corporation described in
and which executed the foregoing instrument; that she knows
the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation; and
that she signed and hereby acknowledges her name thereto by
like order, on behalf of said corporation.
/S/ STEVEN MAHER
Notary Public
STEVEN MAHER
NOTARY PUBLIC, State of New York
No. 31-4973136
Qualified in New York County
Certificate Filed in
New York County
Commission Expires October 15, 1996
This instrument was prepared by:
Karen W. Fries, Esquire
Bryan Cave LLP
One Metropolitan Square
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
EXHIBIT A
[Legal Description]
EXHIBIT A
Groups:
41200/A3 41204/A4 41476/A1
41202/A1 41204/A5 41476/Z
41202/Z 41204/Z
41477/A1
41203/A1 41205/A1 41477/Z
41203/A2 41205/Z
41203/A3 1480/A1
41203/A4 41424/A1 1480/Z
41203/A5 41424/A2
41203/Z 1528/A1
41434/A1 1528/A2
41204/A1 1528/A3
41204/A2 41439/A3
41204/A3
EXHIBIT "A" TO SUBORDINATION AGREEMENT
NEWPORT WORKS
Parcel 1
--------
Group No. 1525
RELEASED @ MISC 124/160 (PARCEL "A")
Part of lot 14 in S. J. Walker's Subdivision in the city of
Newport, Campbell County, Kentucky, described as follows:
Beginning at a point in the Southerly line of Eighth Street
3
inches Westwardly of the dividing line between lots 13 and
14 in
said Subdivision; thence Westwardly with the Southerly line
of
Eighth Street 44.84 feet to a point; thence in a
Southeastwardly
direction 102.55 feet to the Northerly line of Sauer Alley;
thence Eastwardly with the Northerly line of Sauer Alley
25.27
feet, more or less, to a point 3 inches Westwardly from the
dividing line between lots 13 and 14; thence at right angles
Northwardly and parallel with the dividing line between lots
13
and 14, 100.67 feet to the Southerly line of Eighth Street,
the
place of beginning, as shown on the recorded plat of said
subdivision in Plat Book 5, Page 35 1/2 in the Campbell
County
Clerk's Office at Newport, Kentucky;
Parcel 2
--------
Group No. 1526-1202-1203
RELEASED @ MISC 125/60 (PARCEL "B")
All of lots 27 and 28 and part of lot 29 in S.J. Walker's
Subdivision in the City of Newport, Campbell County,
Kentucky,
and more particularly described as follows: Beginning at a
point
in the Northerly line of Powell Street at the dividing line
between lots 26 and 27; thence Northwardly with the dividing
between said lots 26 and 27, 100.67 feet to the Southerly
line of
Sauer Alley; thence Westwardly with the Southerly line of
Sauer
Alley 68.58 feet to a point; thence in a Southeasterly
direction
105 feet to a point in the Northerly line of Powell Street;
thence Eastwardly with the Northerly line of Powell Street
50
feet to the place of beginning, as shown on the recorded
plat of
said Subdivision in Plat Book 5, Page 35 1/2 in the Campbell
County Clerk's Office at Newport, Kentucky.
Parcel 3
--------
Situated in the City of Newport, Campbell County, State of
Kentucky and more particularly described as follows: Part
of
Factory Block 1, beginning at the Northwest corner of Sixth
and
Lowell Streets; thence Northwardly with the Westerly line of
Lowell Street 90 feet to a point and from these two points
extending back Westwardly between parallel lines, one of
said
lines being the Northerly line of Sixth Street, (erroneously
called Chestnut Street in former deeds) to low water mark on
the
Licking River.
Parcel 4
--------
A tract of land situated in the City of Newport, Campbell
County,
Kentucky and described as follows: Beginning at the
Southwest
corner of Sixth and Lowell Streets, in said City; thence
continuing Northwardly with the Westerly line of Lowell
Street,
as extended 50 feet to the Northwest corner of Sixth and
Lowell
Streets and from these two points extending Westwardly at
right
angles to Lowell Street to the low water mark of the Licking
River.
Parcel 5
--------
Group No. 1203-1204-1205
Situated in the City of Newport, Campbell County, Kentucky
and
more particularly described as follows: Factory Block 2, as
laid
down and designated on the plat of the Southern Subdivision
of
said City made by H. H. Goodman and others, fronting 200
feet on
the Westerly side of Lowell Street, between Sixth and
Seventh
Streets, binding on each of said streets, and extending back
Westwardly to the low water mark in the Licking River.
Parcel 6
--------
A tract of land situated in the City of Newport, Campbell
County,
Kentucky and described as follows: Beginning at the
Southwest
corner of Seventh and Lowell Streets in said City; thence
continuing Northwardly with the Westerly line of Lowell
Street,
if extended, 50 feet to the Northwest corner of Seventh and
Lowell Streets; and from these two points extending
Westwardly at
right angles to Lowell Street to the low water mark of the
Licking River.
Parcel 7
--------
Situated in the City of Newport, Campbell County Kentucky,
and
more particularly described as follows: Factory Block 3, as
laid
down and designated on the plat of the Southern Subdivision
of
said City made by H. H. Goodman and others, fronting 200
feet on
the Westerly side of Lowell Street, between Seventh and Elm
Streets binding on each of said streets, and extending back
Westwardly to the low water mark in the Licking River.
Parcel 8
--------
Situated in the City of Newport, Campbell County, Kentucky,
and
described as follows:
Beginning at the Southwest corner of Elm and Lowell Streets
in
said City; thence continuing Northwardly with the Westerly
line
of Lowell Street, as extended, 50 feet to the Northwesterly
corner of Elm and Lowell Streets, and from these two points
extending Westwardly at right angles to Elm Street to the
low
water mark of the Licking River.
Parcel 9
--------
Group No. 1205-1527-1528-1480
Situated in the City of Newport, Campbell County, Kentucky,
and
more particularly described as follows: Factory Block 4, as
laid
down and designated on the plat of the Southern Subdivision
of
said City made by H. H. Goodman and others, fronting 200
feet on
the Westerly side of Lowell Street, between Elm and Eighth
Streets, binding on each of said streets, and extending back
Westwardly to the low water mark in the Licking River.
Parcel 10
---------
Beginning at the Southwest corner of Eighth and Lowell
Streets,
in said City, thence continuing Northwardly with the
Westerly
line of Lowell Street, as extended, 50 feet to the
Northwesterly
corner of Eighth and Lowell Streets, and from these two
points
extending Westwardly at right angles to Lowell Street to the
Low
water mark of the Licking River.
Parcel 11
---------
Situated in the City of Newport, Campbell County, Kentucky,
and
more particularly described as follows: A tract of land
beginning at the Southwest corner of Eighth and Lowell
Streets;
thence Southwardly with the Westerly line of Lowell Street
236-
1/3 feet to a point and from these two points extending back
Westwardly at right angles to Lowell Street (the Northerly
line
binding on Eighth Street) to the low water mark in the
Licking
River, which includes Sauer Alley that was laid out as being
10
feet wide.
Parcel 12
---------
Situated in the City of Newport, Campbell County, Kentucky,
and
more particularly described as follows: A tract of land
beginning at the Northwest corner of Ninth and Mill Streets;
thence Northwardly with the Westerly line of Mill Street 350
feet, more or less, to the Southerly line of Powell Street
and
from these two points extending Westwardly at right angles
to the
Westerly line of Mill Street to the low water mark in the
Licking
River, being approximately 563.75 feet deep on the Northerly
side
and 654.5 feet deep on the Southerly side.
Parcel 13
---------
Group No. 1480-1476-1477
A tract of land situated in the City of Newport, Campbell
County,
Kentucky, and described as follows:
Group No. __________
Beginning at the Southwest corner of Ninth and Lowell
Streets in
said City; thence continuing Northwardly with the Westerly
line
of Lowell Street, as extended 66 feet to the Northwest
corner of
Ninth and Lowell Streets, and from these two points
extending
Westwardly at right angles to Lowell Street to the low water
mark
of the Licking River.
Parcel 14
---------
Situated in the City of Newport, Campbell County, Kentucky,
and
more particularly described as follows: Mill Block 1
fronting
480 feet, more or less on the Westerly side of Lowell
Street,
between Ninth and Tenth Streets, binding on each of said
streets
and extending back Westwardly to the low water mark in the
Licking River.
Parcel 15
---------
A tract of land situated in the City of Newport, Campbell
County,
Kentucky and described as follows: Beginning at the
Southwest
corner of Tenth and Lowell Streets in said City; thence
continuing Northwardly with the Westerly line of Lowell
Street 66
feet to the Northwest corner of Tenth and Lowell Streets,
and
from these two points extending Westwardly at right angles
to
Lowell Street to the low water mark of the Licking River.
Parcel 16
---------
Situated in the Trustees Addition to the City of Newport,
Campbell County, Kentucky, and being part of Mill Block 2,
and
bounded thus: Beginning at the Southwest corner of Tenth
and
Lowell Streets, running thence Southwardly with the West
line of
Lowell Street 310 feet to a point; thence Westwardly in a
line
parallel with Tenth Street 433 feet, more or less, to the
Licking
River; thence down said river 310 feet to the Southerly line
of
Tenth Street; thence with the Southerly line of Tenth Street
Eastwardly 413 feet, more or less to the place of beginning.
Parcel 17
---------
Group No. 1195-1198-1200
Lots 43, 44, 75 and 76 in the Southern Subdivision in the
City of
Newport, Campbell County, Kentucky. Lot 43 is located at
the
Southeast corner of Chestnut Street and Lowell Street,
fronting
25 feet on Chestnut Street by 100 feet deep. Lot 44 fronts
25
feet on Chestnut Street by 100 feet deep and joins Lot 43.
Lot
75 is located at the Northeast corner of Sixth and Lowell
Streets
fronting 25 feet on Sixth Street by 100 feet deep on Lowell
Street and Lot 76 adjoins the same, fronting 25 feet on
Sixth
Street by 100 feet deep.
PARCEL 17 RELEASE @MISC 111/560 (SALE TO A. D. COLLINS)
Parcel 18 (GP 1198)
---------
RELEASED @ MISC 128/160 (PARCEL "C")
Lots 137, 138, 139 and 140 in the Southern Subdivision in
the
City of Newport, Campbell County, Kentucky, each of said
Lots
being 25 feet front by 100 feet deep. Said lots forming a
rectangle fronting a total of 50 feet on Sixth Street, 200
feet
on the East side of Lowell Street, and 50 feet on Seventh
Street.
Parcel 19
---------
Lots 201, 202, 203, 204 and 205 in the Southern Subdivision
to
the City of Newport, Campbell County, Kentucky, and bounded
and
described as follows, to-wit:
RELEASED @ MISC 128/160 (PARCEL "D")
Beginning upon the South side of West Seventh Street
(formerly
Locust Street) at the dividing line between lots 200 and 201
of
said Subdivision; thence West with the South side of Seventh
Street, 50 feet to the Southeast corner of Seventh and
Lowell
Streets; thence Southwardly with the East line of Lowell
Street
200 feet to the Northeast corner of Elm and Lowell Streets;
thence East with the Northerly line of Elm Street 75 feet to
the
dividing line between lots 205 and 206 of said Subdivision;
thence Northwardly with said dividing line 100 feet to the
rear
corner of said lots; thence Westwardly with the rear line of
lot
205, 25 feet to the dividing line between lots 200 and 201;
thence Northwardly with said dividing line 100 feet to the
place
of beginning.
Parcel 20
---------
Group No. 1201-1525
RELEASED @ MISC 128/160 (PARCEL "E")
Lots 248, 249, 250, 251, 252, 253 and 254 in the Southern
Subdivision in the City of Newport, Campbell County,
Kentucky.
Each of said lots has a frontage of twenty-five (25) feet by
one
hundred (100) feet deep. Lot No. Two Hundred Fifty (250) is
located at the Southeast corner of Elm and Lowell Streets,
and
Lots Nos. Two Hundred Forty-Eight (248) Two Hundred
Forty-Nine
(249) adjoins the same, fronting on Elm Street. Lot No. Two
Hundred Fifty-One (251) is located at the Northeast corner
of
Eighth and Lowell Streets, and Lots Two Hundred Fifty-Two
(252),
Two Hundred Fifty-Three (253) and Two Hundred Fifty-Four
(254)
adjoin the same and front on Eighth Street.
Parcel 21
---------
[ILLEGIBLE NOTES]
Group No. __________
Beginning at a point at the Northeast corner of Powell and
Lowell
Streets in the City of Newport, Campbell County, Kentucky;
thence
extending in a North and Westerly direction diagonally
across
Lowell Street 248.9 feet to a point at the Northwesterly
corner
of Eighth and Lowell Streets; thence in a South and
Eastwardly
direction and with the Westerly line of Lowell Street,
269.33
feet to a point in the Southerly line of Powell Street;
thence in
a Northeastwardly direction and with the Southerly line of
Powell
Street, 47.5 feet to a point in said Southerly line of
Powell
Street; and where the Easterly line of Powell Street, if
extended
Southwardly would intersect same; thence in a North and
Westwardly direction and coincident with the Easterly line
of
Lowell Street, crossing Powell Street, 25 feet to the place
of
beginning.
Parcel 22
---------
Group No. 1525-1424-1433
Lots 163, 164 and 165 in the Trustees Addition to the City
of
Newport, Campbell County, Kentucky, each of said lots
fronting
thirty (30) feet on the easterly side of Mill Street between
Powell and Ninth Streets and extending back at right angles
one
hundred (100) feet to an alley, as shown on the recorded
plat of
said subdivision in Plat Book 5, Page 57, in the Campbell
County
Clerk's Office at Newport, Kentucky.
Parcel 23
---------
Group No. 1525-1424-1433
Situated in the City of Newport, Campbell County, State of
Kentucky, and more particularly described as follows: Lots
244,
245, 246, 247, 248 and 249 and the Westerly 22 1/2 feet off
of
Lot 243 in the Trustee's Addition to said City of Newport.
Said
lot number Two Hundred Forty-Nine (249) being located at the
southeast corner of Ninth and Lowell Streets, fronting
thirty-
five (35) feet on Lowell Street by one hundred (100) feet
deep,
Lots Number Two Hundred Forty-Four (244) to Two Hundred
Forty-
Eight (248) each fronting thirty (30) feet on the southerly
side
of Ninth Street; and the westerly twenty-two and one-half
(22
1/2) feet off of Lot Number Two Hundred Forty-Three is
described
as follows: Beginning at a point in the southerly line of
Ninth
Street, between Brighton and Lowell Streets at the dividing
line
between Lots Number Two Hundred Forty-Three (243) and Two
Hundred
Forty-Four (244) in said addition; thence eastwardly with
the
southerly line of Ninth Street twenty-two and one-half (22
1/2)
feet, and from these two points extending back southwardly,
in
rectangular shape, one hundred (100) feet deep to an alley.
Parcel 44
---------
Group No. 1434
Lying and being in the City of Newport, Campbell County,
Kentucky, and known and designated as Lot Number Two Hundred
Fifty (250) in the Trustees Addition to the City of Newport
in
Campbell County, Kentucky, said lot being situated on the
Northeast corner of Lindsey and Lowell Streets in said City.
Parcel 45
---------
Group No. 1434
Beginning at the Southeast corner of Sixth and Lowell
Streets in
the City of Newport, Campbell County, Kentucky, thence
southwardly with the easterly line of Lowell Street 733 feet
to
the southeast corner of Eighth and Lowell Streets; thence
extending in a south and easterly direction diagonally with
the
easterly line of Lowell Street 215.9 feet to the northeast
corner
of Powell and Lowell Streets; thence southwardly and
crossing
Powell Street 25 feet to the southerly line of Powell
Street;
thence westwardly with the southerly line of Powell Street
50
feet to a point in said southerly line of Powell Street and
where
the former easterly line of Lowell Street, if extended,
would
intersect the same; thence in a North and Westwardly
direction
and coincident with the former easterly line of Lowell
Street,
crossing Powell Street 25 feet to the Northeast corner of
Powell
and Lowell Streets; thence extending in a north and
westwardly
direction 248.9 feet to the Northwesterly corner of Eighth
and
Lowell Streets; thence Northwardly with the westwardly line
of
Lowell Street 700 feet to the southerly line of Sixth Street
(extended); thence eastwardly with said southerly line of
Sixth
Street, crossing Lowell Street 47.5 feet more or less to the
place of beginning. Being the portion of Lowell Street from
the
South side of Sixth Street to the south side of Powell
Street
forever closed as a public way of the City of Newport by
judgment
of the Campbell Circuit Court in case number 9988.
Parcel 46
---------
Group No. 1434
Situated in the City of Newport, County of Campbell, and
State of
Kentucky, and being all of Lot Numbered Two Hundred and
Fifty-One
(251) in the Trustees' Addition to said City.
Said Lot No. 251 is bounded as follows:
Beginning at a point in the northerly line of Lindsey
Street,
which point is 35 feet eastwardly from the northeasterly
corner
of Lindsey and Lowell Streets; thence it runs eastwardly, in
said
northerly line of Lindsey Street, thirty (30) feet to a
point;
and from such two points extends back northwardly, between
parallel lines, and lines which are parallel with Lowell
Street
aforesaid, one hundred (100) feet to the southerly line of a
16-
foot wide alley.
Parcel 47
---------
Group No. 1435
RELEASED @ MISC 132/109 (SALE TO LUCILE BOSE)
Situated in the City of Newport, Campbell County, Kentucky,
and
being more particularly described as follows: Lot numbered
[ILLEGIBLE] in the Trustees Addition to the City of Newport,
Campbell County, Kentucky, reference being had to the
recorded
plat of said Addition.
Parcel 48
---------
Group No. 1439
Released @ MISC 132/109 (Lucile Bose)
Situated in the City of Newport, Campbell County, Kentucky
and
being more particularly described as follows: Lot numbered
326
in the Trustees Addition to the City of Newport, Campbell
County,
Kentucky, situated on the south side of Lindsey Street, 30
feet
front and 100 feet to an alley between Brighton and Lowell
Streets.
Borrower claims title by or through an instrument dated
April 15,
1981 from Interlake, Inc. and recorded simultaneously
herewith in
Campbell County Court Clerk's Office, Newport, Kentucky.
EXHIBIT B
All machinery, equipment, spare parts, vehicles,
furniture and fixtures (which shall include all machinery
and
equipment, whether or not a fixture under applicable law,
used or
useful in the operation of the premises as a steel
manufacturing
facility, including, without limitation, mobile yard
equipment,
cranes, transformers, barge and unloading cranes, and such
equipment located on the premises of Debtor in Newport,
Kentucky,
all warranties by third parties relating thereto, and all
attachments, accessories and equipment now or hereafter
affixed
thereto or used in connection therewith, and all
substitutions
and replacements thereof, wherever located, whether now
owned or
hereafter acquired (the "Equipment"), and all books, records
and
other property and general intangibles at any time relating
to
the Equipment.
<PAGE>
EXHIBIT "A" TO SUBORDINATION AGREEMENT
Less and except the following Out-Conveyances and/or
Releases:
(1) Deed Book 483, page 173
(2) Deed Book 501, page 474
(3) Deed Book 506, page 369
(4) Deed Book 538, page 329
(5) Deed Book 577, page 20
(6) Deed Book 577, page 24
Also less and except any and all other recorded deeds of
Out-
Conveyances and Releases or Partial Releases of record
executed
by City of Dayton, Kentucky.
Groups:
30760/A2 41553/A1 41596/A1
41553/A2 41596/A2
30768/A1 41553/A3 41596/A3
30768/A2 41553/A4 41596/A4
30768/Z 41596/A5
41595/A1 41596/Z
41372/Y2 41595/A2
41372/Z 41595/A3
41595/Z
41533/A1
41533/A2
41533/Z
<PAGE>
EXHIBIT "A" TO SUBORDINATION AGREEMENT
WILDER WORKS
EXHIBIT A
Parcel E
--------
Group No. 760, 1596, 768, 1553, 1533, 1595, 1372
A parcel of land lying on the southwesterly side of Licking
Pike
(Ky. 9) in Wilder, Campbell County, Kentucky, and being more
particularly described as follows:
BEGINNING at a point, said point being 30.5 feet left of
Licking
Pike Station 50 + 47, said point also being N 0 degrees
57'44" E,
460 feet from the northwesterly right of way line of North
Street, and running thence:
N 85 degrees 34'40" W, along the dividing line between
Interlake
Steel and Union Light, Heat, and Power (ULH&P), a distance
of
648.25 feet, to a point, thence
S 5 degrees 35'23" W, a distance of 250 feet, to a point,
thence
N 85 degrees 35'40" W, a distance of 530 feet, to a point,
thence
N 84 degrees 24'37" W, a distance of 45 feet, to a point, in
a
westerly right of way line of the L & N Railroad, thence
S 14 degrees 43'28" W, along the westerly right of way line
of
the L & N Railroad, a distance of 330.69 feet, to a point,
thence
S 5 degrees 35'23" W. along the westerly right of way line
of the
L & N Railroad, a distance of 1,100 feet, to a point, thence
N 84 degrees 24'37" W, a distance of 41.57 feet to a point,
said
point being S 84"24'37" E 130.93 feet from the most
northwesterly
corner of a parcel previously conveyed by the L & N Railroad
to
the Licking Valley Terminal (D.B. 433, Pg. 179, Campbell
County
Records, Newport), thence
N 5 degrees 32'43" E, a distance of 1,166.05 feet, to a
point,
thence
N 6 degrees 01'37" W, a distance of 195.40 feet to a point,
said
point being near the southerly side of Steel Mill Road,
thence
S 77 degrees 58'23" W, a distance of 300 feet, to a point,
thence
N 35 degrees 01'37" W, a distance of 225 feet, to a point,
thence
N 51 degrees 27'51" W, a distance of 371.71 feet, to a
point, thence
N 23 degrees 06-13" W, a distance of 217.57 feet, to a
point,
thence
N 5 degrees 39'23" E, a distance of 145 feet, to a point,
thence
N 84 degrees 20'37" W, a distance of 155 feet, to a point,
thence
N 5 degrees 39'23" E, a distance of 225 feet, to a point,
thence
S 84 degrees 20'37" E, a distance of 130 feet, to a point,
thence
N 8 degrees 31'E, a distance of 544.70 feet, to a point,
thence
N 54 degrees -31' E, a distance of 120 feet, to a point,
thence
S 35 degrees 29' E, a distance of 50 feet, to a point,
thence
N 43 degrees -31' E, a distance of 235 feet, to a point,
thence
N 27 degrees 00' E, a distance of 280 feet, to a point,
thence
N 80 degrees 12'28" W, a distance of 487.56 feet, to a
point,
thence
N 14 degrees 29'45" E, a distance of 1,261.44 feet, to a
point,
thence
N 11 degrees 13'44" E, a distance of 970.58 feet, to a
point,
thence
N 20 degrees 21'59" W, a distance of 478.53 feet, to a point
in
the southerly right of way line of Howell Street
(unimproved),
thence
N 67 degrees 25'56" E, along the southerly right of way line
of
Howell Street (unimproved), a distance of 74.68 feet, to a
point
in the westerly right of way line of the L & N Railroad,
thence
Southeastwardly, along the westerly right of way line of the
L &
N Railroad a chord bearing of S 27 degrees 01'43" E, a chord
distance of 290.13 feet, to a point, thence
S 25 degrees 25'20" E, along the westerly right of way line
of
the L & N Railroad, a distance of 831.25 feet, to a point,
thence
N 81 degrees 40'20" E, crossing the L & N Railroad, a
distance of
184.85 feet, to a point in the westerly right of way line of
Huling Street, thence
S 8 degrees 19'40" E, along the westerly right of way line
of
Huling Street, a distance of 57.85 feet to a point, thence
N 57 degrees 48'20" E, a distance of 190.32 feet to a point,
said
point being S 32 degrees 11'40" E 244.21 feet from the
center
line of Huling Street and 30.5 feet left of Licking Pike
Station
87 + 86.79, thence
S 32 degrees 11'40" E, along the southwesterly side of
Licking
Pike, a distance of 63.79 feet, to a point 30.5 feet left of
Licking Pike Station 87 + 23, thence
S 72 degrees 46'W, a distance of 92.18 feet, to a point,
thence
S 17 degrees 14'E, a distance of 466.88 feet, to a point,
thence
S 5 degrees 06'20" E, a distance of 330.85 feet, to a point,
thence
S 69 degrees 37'40" W, a distance of 200.71 feet, to a
point,
thence
S 6 degrees 12'20" E, a distance of 759.76 feet, to a point,
thence
S 6 degrees 47' W, a distance of 768.02 feet, to a point,
thence
S 83 degrees 13' E, a distance of 202.29 feet, to a point,
thence
S 5 degrees 03' W, a distance of 326.20 feet, to a point,
thence
N 84 degrees 57' W, a distance of 172.10 feet, to a point,
thence
S 5 degrees 03' W, a distance of 415.70 feet, to a point,
thence
S 85 degrees 54'40" E, a distance of 610.13 feet to a point
in
the westerly side of Steel Mill Road, thence
N 45 degrees 59' E, along the westerly side of Steel Mill
Road, a
distance of 109.31 feet, to a point, thence continuing along
the
westerly side of Steel Mill Road as follows:
N 42 degrees 40'00" E - 209.82 feet
N 35 degrees 41'42" E - 95.78 feet
N 18 degrees 44'12" E - 94.69 feet
N 6 degrees 33'27" E - 533.11 feet
N 12 degrees 42'47" E - 182.67 feet
N 3 degrees 34'17" E - 96.27 feet
N 8 degrees 18'35" W - 97.12 feet
N 12 degrees 54'23" W - 216.84 feet
N 5 degrees 10'53" W - 102.43 feet
N 0 degrees 54'07" E - 81.51 feet
N 13 degrees 03'52" E - 55.62 feet
N 27 degrees 02'44" E - 58.19 feet to a point, thence
S 19 degrees 58'20" E, a distance of 27.34 feet, to a point
in
the center line of Steel Mill Road, thence
S 19 degrees 51'56" E, a distance of 17.12 feet, to a point
in
the easterly side of Steel Mill Road, thence
S 27 degrees 02'44" W, along the easterly side of Steel Mill
Road, a distance of 23.88 feet to a point, thence
S 13 degrees 03'52" W, along the easterly side of Steel Mill
Road, a distance of 48.18 feet, to a point, thence
S 0 degrees 54'07" W, along the easterly side of Steel Mill
Road,
a distance of 76.33 feet, to a point, thence
S 5 degrees 10'53" E, along the easterly side of Steel Mill
Road,
a distance of 98.52 feet, to a point, thence
S 12 degrees 54'23" E, along the easterly side of Steel Mill
Road, a distance of 183.36 feet, to a point, thence
N 63 degrees 43'08" E, a distance of 101.15 feet, to a point
30.5
feet left of Licking Pike Station 67 + 06, thence
S 6 degrees 47'16" E, along the southwesterly side of
Licking
Pike, a distance of 201.90 feet, to a point, thence
S 0 degrees 19'24" W, a distance of 201.00 feet, to a point,
thence
S 0 degrees 57'44" W, a distance of 1,248.80 feet to the
place of
beginning.
EXCEPTING THEREFROM so much of said property as conveyed to
Campbell County Fiscal Court in Deed Book 399, Page 149 and
to
Sanitation District No. 1 of record in Deed Book 375, Page
323,
both in the Office of the Clerk of the County Court of
Campbell
County, Kentucky.
ALSO EXCEPTING THEREFROM an L & N Railroad right of way
running
through Parcel "E", Interlake, Inc. (Wilder Plat) property,
in
Wilder, Campbell County, Kentucky, and being more
particularly
described as follows:
BEGINNING at a point, said point being South 84 degrees 24
minutes 37 seconds East, a distance of 270 feet; thence
North 5
degrees 35 minutes 23 seconds East, a distance of 1,426.5
feet
from an iron monument on the Northwest corner of a parcel
previously conveyed to Licking River Terminal from the L & N
Railroad (D.B. 433, Pg. 179), said point also being Station
5791
+ 26.5 and running thence:
North 84 degrees 24 minutes 37 seconds West, a distance of
45
feet, to a point; thence North 5 degrees 35 minutes 23
seconds
East, a distance of 1,743.44 feet, to a point; thence North
1
degrees 20 minutes 23 seconds East, a distance of 436.40
feet, to
a point; thence North 3 degrees 00 minute 57 seconds West, a
distance of 567.23 feet, to a point; thence North 86 degrees
59
minutes 03 seconds East, a distance of 5.0 feet, to a point;
thence North 3 degrees 00 minute 57 seconds West, a distance
of
266.00 feet, to a point; thence North 15 degrees 13 minutes
51
seconds West, a distance of 597.42 feet, to a point; thence
North
81 degrees 40 minutes 20 seconds East, a distance of 73.24
feet,
to a point; thence South 14 degrees 49 minutes 23 seconds
East, a
distance of 603.44 feet, to a point; thence South 3 degrees
00
minute 57 seconds East, a distance of 492.23 feet, to a
point;
thence South 17 degrees 56 minutes 08 seconds East, a
distance of
155.36 feet, to a point; thence south 3 degrees 00 minutes
57
seconds East, a distance of 191.09 feet, to a point; thence
south
1 degrees 20 minutes 23 seconds West, a distance of 453.45
feet
to a point; thence south 5 degrees 35 minutes 23 seconds
West, a
distance of 565.44 feet, to a point; thence North 84 degrees
24
minutes 37 seconds West, a distance of 5.0 feet, to a point;
thence South 5 degrees 35 minutes 23 seconds West, a
distance of
120.51 feet, to a point; thence North 84 degrees 24 minutes
37
seconds West, a distance of 35 feet, to a point; thence
South 5
degrees 35 minutes 23 seconds West, a distance of 150.0
feet, to
a point; thence South 84 degrees 24 minutes 37 seconds East,
a
distance of 35 feet, to a point; thence South 5 degrees 35
minutes 23 seconds West, a distance of 629.49 feet, to a
point;
thence south 10 degrees 56 minutes 44 seconds West, a
distance of
160.70 feet, to a point; thence North 84 degrees 24 minutes
37
seconds West, a distance of 20 feet, to a point; thence
South 5
degrees 35 minutes 23 seconds West, a distance of 117.39
feet, to
a point; thence North 85 degrees 34 minutes 40 seconds West,
a
distance of 30.01 feet, to the place of beginning.
FURTHER EXCEPTING THEREFROM parcels and rights of way
belonging
to the State of Kentucky and Spanton Parcel recorded in Deed
Book
402 Page 690; Deed Book 439 page 311; Deed Book 439 Page
275;
Deed Book 402 Page 692; Deed Book 402 Page 694; Deed Book
358
Page 191; Deed Book 362 Page 334; Deed Book 361 Page 659;
Deed
Book 14 Page 170, all in the Office of the Clerk aforesaid.
Parcel F
--------
Group No. 1596, 768
A parcel of land situated in the City of Newport (formerly
Clifton) Campbell County, Kentucky, and being part of Lot 2
of
the Jonathan Huling fifty acre tract as shown in Plat Book
1,
Page 57, of the Campbell County Records at Newport,
Kentucky, and
being more particularly described as follows:
BEGINNING at a point where the dividing line between Lots 1
and 2
of said Huling fifty acre tract joins the easterly line of
Licking Pike; thence S 37 degrees 30' E, 269 feet, more or
less,
along the easterly line of Licking Pike to a point where the
northerly line of the property conveyed by Riedinger to
Garrett,
in Deed Book 259, Page 288, of said Campbell County Records,
joins the easterly line of Licking Pike; thence N 65 degrees
30'
E, 420 feet, more or less, along the north line of said
Garrett
property to a point in the rear line of said Lot 2 of the
Huling
fifty acre tract; thence N 23 degrees 45' W 375.80 feet,
more or
less, along the rear line of said Lot 2 to a point in the
dividing line between Lot 1 and Lot 2 of said tract; thence
S 52
degrees 15' W 528.99 feet, more or less, along the dividing
line
between Lots 1 and 2 of said tract to the place of
beginning.
Parcel G
--------
Group No. 2, 768
Lots Numbers One (1), Two (2), Three (3), Four (4), Five
(5), Six
(6), Seven (7), Eight (8), Nine (9), and Ten (10), in George
H.
Ahlering's Rosedale Subdivision in Campbell County,
Kentucky, as
shown by Plat recorded in Deed Book No. 45, Page 425,
together with all appurtenant rights, privileges and
easements
thereunto belonging, including without limitation the
following
described easements:
Parcel H
--------
Group No. 760
A right of way over so much of the Queen City Jockey Club
Roadway
(known as Queen City Avenue) as lies between the Licking
Pike and
property of Newport Steel Corporation in Campbell County,
Kentucky, more particularly described in a deed from Jacob
Hahn
to the Queen City Jockey Club, dated February 13, 1896 and
recorded in Deed Book 68, Page 498, The Andrews Steel
Company to
have the privilege to lay water or gas mains in and under
said
roadway, to erect poles for telephone and electric wires and
to
use the same as a roadway.
Parcel 38:
----------
Group No. 1372, 1533
A perpetual easement, right-of-way or servitude
approximately 38
feet in width for the purpose of constructing, maintaining,
repairing and using a vehicular grade crossing, a pedestrian
overpass or a pedestrian and vehicular overpass or a
combination
thereof, and in the event of the use of any overpass for the
future purposes of erecting, maintaining and using the
necessary
foundations and supports for spans four tracts in width and
having a vertical clearance of not less than 23 feet and a
horizontal clearance of not less than 8 feet. Said easement
is
for the further purpose of installing, maintaining,
repairing and
using underground, grade or overhead water, gas and electric
lines, which lies if overhead and not affixed to a
structure,
shall have a vertical clearance of not less than 30 feet and
a
horizontal clearance of not less than 8 feet. Said easement
being over, upon and across a certain tract or parcel of
land,
situated in the town of Wilder, Campbell County, Kentucky,
and
beginning at a point North 5 degrees 21 minutes 15 seconds
East
109.41 feet distant from the South line of the lands
conveyed to
Andrews Steel Company by James C. Wright, Trustee, October
23,
1918 and recorded in Deed Book 129, Page 400, of the records
in
the County Clerk's Office at Newport, Kentucky, where same
intersects the East line of the L.&N. right of way; thence
North
84 degrees 38 minutes 44 seconds West a distance of 75 feet
to a
point in the West line of the L. & N. right of way; thence
North
5 degrees 21 minutes 16 seconds East along said West line of
said
right of way a distance of 38 feet to a point; thence South
84
degrees 38 minutes 44 seconds East a distance of 75 feet to
a
point in the East line of said right of way; thence South 5
degrees 21 minutes 16 seconds West along said East line of
said
right of way a distance of 38 feet to the point of
beginning.
Parcel 50:
----------
[ILLEGIBLE NOTE]
The rights and easements granted to Interlake, Inc. in the
Easement Agreement dated March 15, 1975, recorded May 14,
1976 in
Misc. Book 78, Page 225, in Campbell County, Kentucky, made
by
and among Interlake, Inc., Louisville and Nashville Railroad
said tracts being shown on the Conveyance Plat attached as
Exhibit E to this Instrument indicating thereon approval by
the
Wilder, Kentucky Planning Commission.
Borrower claims title by or through instrument dated April
15,
1981 from Interlake, Inc. and recorded simultaneously
herewith in
Campbell County Court Clerk's Office, Newport, Kentucky.
EXHIBIT B
All machinery, equipment, spare parts, vehicles,
furniture and fixtures (which shall include all machinery
and
equipment, whether or not a fixture under applicable law,
used or
useful in the operation of the premises as a steel
manufacturing
facility, including, without limitation, mobile yard
equipment,
cranes, transformers, barge and unloading cranes, and such
equipment located on the premises of Debtor in Wilder,
Kentucky,
all warranties by third parties relating thereto, and all
attachments, accessories and equipment now or hereafter
affixed
thereto or used in connection therewith, and all
substitutions
and replacements thereof, wherever located, whether now
owned or
hereafter acquired (the "Equipment"), and all books, records
and
other property and general intangibles at any time relating
to
the Equipment.
EXHIBIT "A" TO SUBORDINATION AGREEMENT
Less and except those five (5) certain tracts of land marked
Exceptions 1, 2, 3, 4 and 5 attached hereto and incorporated
herein by reference.
Also less and except any and all other recorded deeds of
out-
conveyance; and Releases or Partial Releases of record
executed
by the City of Dayton, Kentucky.
EXHIBIT "A" TO SUBORDINATION AGREEMENT
EXCEPTION 1: Groups 41595/Z
41596/A2
41596/A3
41596/A4
41596/Z
41597/Z
A parcel of land lying on the Southwesterly side of Licking
Pike
(KY 9) in Wilder, Campbell County, Kentucky also a portion
of
property as described as "Parcel D" recorded at Deed Book
465,
Page 282 in the Campbell County recorder's office and being
more
particularly described as follows:
Beginning at a point, said point being 30.5 feet left
of
Licking Pike station 87+23 said point also being South 32
degrees
11' 40" East 308.00 feet from the center of Huling Street
and
running thence South 72 degrees 46' 00" West 61.77 feet to
the
TRUE POINT OF BEGINNING of the parcel herein described.
Said
point also being on the westerly right of way line of
Licking
Pike; thence along said right of way the next ten (10)
courses.
1) South 32 degrees 11' 40" East 188.90 feet
2) South 10 degrees 23' 35" East 53.85 feet
3) South 32 degrees 11' 14" East 5.00 feet
4) South 32 degrees 11' 40" East 150.90 feet
5) South 21 degrees 19' 14" East 50.65 feet
6) South 30 degrees 30' 02" East 50.00 feet
7) South 48 degrees 56' 30" East 33.78 feet
8) South 32 degrees 11' 40" East 9.00 feet
9) South 52 degrees 21' 20" East 53.83 feet
10) South 29 degrees 48' 42" East 79.34 feet
to the north property line of a parcel currently deeded to
Elmer
M. Baumann at Deed Book 207, Page 366 of the records of the
Campbell County recorder's office thence along said property
line
South 84 degrees 53' 40" West 229.57 feet; thence North 05
degrees 06' 20" West 132.51 feet; thence North 17 degrees
14'
00" West 466.88 feet; thence North 72 degrees 46' 00" East
30.59
feet to the TRUE POINT OF BEGINNING Contains [ILLEGIBLE]
4835
acres. Subject to all easements and legal rights of ways.
EXHIBIT "A" TO SUBORDINATION AGREEMENT
EXCEPTION 2: Groups 30768/A2
30768/Z
41553/A4
41553/A5
41553/A6
41553/Z
A parcel of land lying on the Southwesterly side of Licking
Pike
(KY 9) in Wilder, Campbell County, Kentucky also a portion
of
property as described as "Parcel D" recorded at Deed Book
465,
Page 282 in the Campbell County recorder's office and being
more
particularly described as follows:
Beginning at a point, said point being 30.5 feet left
of
Licking Pike station 87+23 said point also being South 32
degrees
11' 40" East 308.00 feet from the center of Huling Street
and
running thence South 72 degrees 46' 00" West 92.36 feet
thence
South 17 degrees 14' 00" East 466.88 feet; thence South 05
degrees 06' 20" East 180.82 feet to the TRUE POINT OF
BEGINNING
of the tract herein described. Said point also being the
south
property line of a parcel currently deeded to Elmer M.
Baumann at
Deed Book 207, Page 366 of the records of the Campbell
County
recorder's office thence along said property line North 84
degrees 53' 40" East 150.50 feet to the west property line
of a
parcel currently deeded to Elmer M. and Adrena M. Baumann at
Deed
Book 521, Page 372 of the records of the Campbell County
recorder's office thence along said property line South 05
degrees 06' 20" East 50.00 feet; thence along the south
property
line of the said parcel North 84 degrees 53' 40" East
124.71
feet to a point in the westerly right of way line of Licking
Pike
thence along said right of way line South 29 degrees 48'
42"
East 166.46 feet to the north property line of a parcel
currently
deeded to the Commonwealth of Kentucky at Deed Book 402,
Page 690
of the records of the Campbell County recorder's office
thence
along said property line South 86 degrees 00' 00" West
215.53
feet; thence South 04 degrees 00' 00" East 100.00 feet to a
parcel currently deeded to the Commonwealth of Kentucky at
Deed
Book 439, Page 311 thence along said property South 86
degrees
00' 00" West 51.71 feet; thence South 05 degrees 48' 36"
West
240.85 feet; thence leaving said property line South 87
degrees
47' 11" West 217.42 feet; thence North 06 degrees 12' 20"
West
318.72 feet; thence North 69 degrees 37' 40" East 200.71
feet;
thence North 05 degrees 06' 20" West 150.03 feet to the
TRUE
POINT OF BEGINNING. Contains 3.3315 acres. Subject to all
easements and legal rights of ways.
EXHIBIT "A" TO SUBORDINATION AGREEMENT
EXCEPTION 3: Groups 30760/A2
30768/A1
30768/A2
30768/Z
41372/Y2
41372/Z
41533/A1
41533/A2
41533/Z
41553/A1
41553/A2
41553/A3
41553/A4
41553/Z
A parcel of land lying on the Southwesterly side of Licking
Pike
(KY 9) in Wilder, Campbell County, Kentucky also a portion
of
property as described as "Parcel D" recorded at Deed Book
465,
Page 282 in the Campbell County recorder's office and being
more
particularly described as follows:
Beginning at a point, said point being 30.5 feet left
of
Licking Pike station 87+23 said point also being South 32
degrees
11' 40" East 308.00 feet from the center of Huling Street
and
running thence South 72 degrees 46' 00" West 92.36 feet;
thence
South 17 degrees 14' 00" East 466.88 feet; thence South 05
degrees 06' 20" East 330.85 feet; thence South 69 degrees
37'
40" East 200.71 feet; thence South 06 degrees 12' 20" East
759.76 feet; thence South 06 degrees 47' 00" West 345.68
feet to
the TRUE POINT OF BEGINNING of the tract herein described
and
running thence South 89 degrees 07' 00" East 661.48 feet;
thence
North 24 degrees 29' 33" West 705.32 feet; thence North 87
degrees 47' 11" East 233.12 feet, thence 84 degrees 19'
00"
East 155.34 to a point in the west right of way line of
Licking
Pike thence along said right of way South 19 degrees 55'
40"
East 78.43 feet to the west right of way line of Steel Plant
Road
thence continuing along said right of way line the next
thirteen
(13) courses.
1) South 27 degrees 02' 44" West 8.22 feet
2) South 13 degrees 03' 52" West 55.62 feet
3) South 00 degrees 54' 07" West 81.51 feet
4) South 05 degrees 10' 53" East 102.43 feet
5) South 12 degrees 54' 23" East 216.84 feet
6) South 08 degrees 18' 35" East 97.12 feet
7) South 03 degrees 34' 17" West 96.27 feet
8) South 12 degrees 42' 47" West 182.67 feet
9) South 06 degrees 33' 27" West 553.11 feet
10) South 18 degrees 44' 12" West 94.69 feet
11) South 35 degrees 41' 42" West 95.78 feet
12) South 42 degrees 40' 00" West 209.82 feet
13) South 45 degrees 59' 00" West 109.31 feet
thence North 85 degrees 54' 40" West 510.13 feet; thence
North
05 degrees 03' 00" East 345.70 feet, thence South 84
degrees
57' 00" East 185.00 feet, thence North 05 degrees 03' 00"
East
70.00 feet, thence North 84 degrees 57' 00" West 12.90
feet;
thence North 05 degrees 03' 00" East 325.20 feet, thence
North
83 degrees 13' 00" West 202.29 feet, thence North 06
degrees
47' 00" East 422.34 feet to the TRUE POINT OF BEGINNING.
Contains 23.2954 acres. Subject to all easements and legal
rights of ways.
EXHIBIT "A" TO SUBORDINATION AGREEMENT
EXCEPTION 4:
Groups: 41533/A1
41533/Z
30768/A2
30768/Z
A parcel of land lying on the Southwesterly side of Licking
Pike
(KY 9) in Wilder, Campbell County, Kentucky also a portion
of
property as described as "Parcel D" recorded at Deed Book
465,
Page 282 in the Campbell County recorder's office and being
more
particularly described as follows:
Beginning at a point, said point being 30.5 feet left
of
Licking Pike station 87+23 said point also being South 32
degrees
11' 40" East 308.00 feet from the center of Huling Street
and
running thence South 72 degrees 46' 00" West 92.36 feet;
thence
South 17 degrees 14' 00" East 466.88 feet; thence South 05
degrees 06' 20" East 330.85 feet; thence South 69 degrees
37'
40" East 200.71 feet; thence South 06 degrees 12' 20" East
318.72 to the TRUE POINT OF BEGINNING of the tract herein
described and running thence North 87 degrees 47' 11" East
217.42 to the west property line of a parcel currently
deeded to
the Commonwealth of Kentucky at Deed Book 439, Page 275 of
the
records of the Campbell County recorder's office thence
continuing along said property line the next two (2)
courses:
1) South 05 degrees 48' 36" West 135.79 feet
2) North 87 degrees 47' 11" East 406.48 feet;
thence South 84 degrees 19' 00" East 143.03 feet; to the
westerly right of way line of Licking Pike; thence South 19
degrees 55' 40" East along said right of way line 33.27
feet;
thence North 84 degrees 19' 00" West 155.34 feet; thence
South
87 degrees 47' 11" West 233.12 feet; thence South 24
degrees
29' 33" East 705.32 feet; thence North 89 degrees 07' 00"
West
661.48 feet; thence North 06 degrees 47' 00" East 345.68
feet;
thence North 06 degrees 12' 20" West 441.04 feet to the
TRUE
POINT OF BEGINNING. Contains 8.2763 acres. Together with a
thirty (30') foot access easement described as follows:
Beginning at the northeast most corner of the above
described tract, said point being on the southerly line of
the
Commonwealth of Kentucky, Department of Transportation
property,
and running thence North 87 degrees 47' 11" East 247.48
feet;
thence North 87 degrees 47' 11" East 247.48 feet; thence
South
84 degrees 19' 00" East 143.03 feet to the westerly right
of way
line of Licking Pike; thence South 19 degrees 55' 40" East
along
said right of way line 33.27 feet; thence North 84 degrees
19'
00" West 155.34 feet; thence South 87 degrees 47' 11" West
233.12 feet; thence North 24 degrees 29' 33" West 32.42
feet to
the POINT OF BEGINNING of the access easement herein
described.
EXHIBIT "A" TO SUBORDINATION AGREEMENT (cont'd)
Groups: 30760/A2
41372/Y2
41372/Z
41533/A1
41533/A2
41533/Z
EXCEPTION 5:
A parcel of land lying on the Southwesterly side of Licking
Pike
(KY 9) in Wilder, Campbell County, Kentucky also a portion
of
property as described as "Parcel D" recorded at Deed Book
465,
Page 282 in the Campbell County recorder's office and being
more
particularly described as follows:
Beginning at a point, said point being 30.5 feet left
of
Licking Pike station 87+23 said point also being South 32
degrees
11' 40" East 308.00 feet from the center of Huling Street
and
running thence South 72 degrees 46' 00" West 92.36 feet;
thence
South 17 degrees 14' 00" East 466.88 feet; thence South 05
degrees 06' 20" East 330.85 feet; thence South 69 degrees
37'
40" West 200.71 feet; thence South 06 degrees 12' 20" East
759.76 feet; thence South 06 degrees 47' 00" West 768.02
feet;
thence South 83 degrees 13' 00" East 202.29 feet; thence
South
05 degrees 03'00" West 325.20 feet to the TRUE POINT OF
BEGINNING of the tract herein described and running thence a
South 84 degrees 57' 00" East 12.90 feet; thence South 05
degrees 03' 00" West 70.00 feet; thence North 84 degrees
57'
00" West 185.00 feet; thence North 05 degrees 03' 00" East
70.00
feet; thence South 84 degrees 57' 00" East 172.10 feet to
the
TRUE POINT OF BEGINNING. Contains 0.2973 acres. Together
with a
thirty (30) foot wide access easement described as follows:
Beginning at the southwest most corner of the above
described
tract and running thence South 84 degrees 57' 00" East
30.00
feet; thence South 05 degrees 03' 00" West 315.19 feet;
thence
South 85 degrees 54' 40" East 506.53 feet to the westerly
line
of Steel Plant Road thence South 45 degrees 59' 00" West
along
said westerly line 40.30 feet; thence North 85 degrees 54'
40"
West 510.13 feet; thence North 05 degrees 05' 00" East
345.70
feet to the point of beginning of the access easement herein
described.
REVOLVING CREDIT,
GUARANTY
AND
SECURITY AGREEMENT
THE BANK OF NEW YORK COMMERCIAL CORPORATION
(AS LENDER, AS ACM AGENT AND AS CO-AGENT)
AND
PNC BANK, OHIO, NATIONAL ASSOCIATION
(AS LENDER AND AS CO-AGENT)
WITH
NEWPORT STEEL CORPORATION
KOPPEL STEEL CORPORATION
AND
IMPERIAL ADHESIVES, INC.
(BORROWERS)
AND
NS GROUP, INC.
ERLANGER TUBULAR CORPORATION
NORTHERN KENTUCKY AIR, INC.
AND
NORTHERN KENTUCKY MANAGEMENT, INC.
(GUARANTORS)
July 28, 1995
REVOLVING CREDIT,
GUARANTY
AND
SECURITY AGREEMENT
Revolving Credit, Guaranty and Security
Agreement dated July 28, 1995 among NEWPORT STEEL
CORPORATION, a corporation organized under the laws of
the State of Kentucky ("Newport"), KOPPEL STEEL
CORPORATION, a corporation organized under the laws of
the State of Pennsylvania ("Koppel"), and IMPERIAL
ADHESIVES, INC., a corporation organized under the laws
of the State of Ohio ("Imperial") (each of Newport,
Koppel and Imperial a "Borrower" and, jointly and
severally, the "Borrowers"), NS GROUP, INC., a
corporation organized under the laws of the State of
Kentucky ("Holdings"), ERLANGER TUBULAR CORPORATION, a
corporation organized under the laws of the State of
Oklahoma ("Erlanger"), NORTHERN KENTUCKY AIR, INC., a
corporation organized under the laws of Kentucky
("Air"), NORTHERN KENTUCKY MANAGEMENT, INC., a
corporation organized under the laws of the State of
Kentucky ("Management") (each of Holdings, Erlanger,
Air and Management, a "Guarantor" and, jointly and
severally, the "Guarantors"), the undersigned financial
institutions and any financial institution that
hereafter becomes a lender hereunder (collectively, the
"Lenders" and individually a "Lender"), THE BANK OF NEW
YORK COMMERCIAL CORPORATION ("BNYCC"), a corporation
organized under the laws of the State of New York, PNC
BANK, OHIO, NATIONAL ASSOCIATION ("PNC"), BNYCC and PNC
as co-agents for Lenders (BNYCC and PNC in such
capacity, the "Co-Agents") and BNYCC as administrative
and collateral monitoring agent for the Lenders (BNYCC,
in such capacity, the "ACM Agent").
IN CONSIDERATION of the mutual covenants and
undertakings herein contained, each of Obligors,
Lenders, ACM Agent and Co-Agents hereby agree as
follows:
I. DEFINITIONS.
1.1. Accounting Terms. As used in this
Agreement, the Notes, or any certificate, report or
other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2
or elsewhere in this Agreement and accounting terms
partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to
them under GAAP; provided, however, whenever such
accounting terms are used for the purposes of
determining compliance with financial covenants in this
Agreement, such accounting terms shall be defined in
accordance with GAAP applied in preparation of the
audited financial statements of Holdings on a
Consolidated Basis for the fiscal year ended September
24, 1994.
1.2. General Terms. For purposes of this
Agreement the following terms shall have the following
meanings:
"Accountants" shall have the meaning set
forth in Section 9.6 hereof.
"Advances" shall mean and include the
Revolving Advances and Letters of Credit.
"Advance Rates" shall have the meaning
set forth in Section 2.1(a) hereof.
"Affiliate" of any specified Person shall
mean (a) any other Person (other than a Subsidiary)
which, directly or indirectly, is in control of, is
controlled by, or is under common control with such
specified Person, or (b) any other Person who is a
director or officer (i) of such specified Person, (ii)
of any Subsidiary of such specified Person or (iii) of
any specified Person described in clause (a) above.
For purposes of this definition, control of a Person
shall mean the power, direct or indirect, (x) to vote
5% or more of the securities having ordinary voting
power for the election of directors of such Person, or
(y) to direct or cause the direction of the management
and policies of such Person whether by contract or
otherwise. Notwithstanding the foregoing, so long as
John B. Lally does not own more than 10% of the common
stock of Holdings, L.B. shall not be deemed an
Affiliate of any member of the Holdings Group.
"Alternate Base Rate" shall mean, for any
day, a rate per annum equal to the higher of (i) the
Prime Rate in effect on such day and (ii) the Federal
Funds Rate in effect on such day plus 1/2 of 1%.
"Authority" shall have the meaning set
forth in Section 6.14(d).
"Bank" shall mean The Bank of New York, a
New York banking corporation.
"Blocked Accounts" shall have the meaning
set forth in Section 4.15(h).
"BNYCC" shall have the meaning set forth
in the preamble to this Agreement and shall include its
successors and assigns.
"Borrower" or "Borrowers" shall have the
meaning set forth in the preamble to this Agreement and
shall extend to all permitted successors and assigns of
such Persons.
"Borrowing Agent" shall mean Holdings.
"Business Day" shall mean with respect to
Eurodollar Rate Loans, any day on which commercial
banks are open for domestic and international business,
including dealings in Dollar deposits in London,
England and New York, New York and with respect to
Domestic Rate Loans and other references used herein,
any day other than a day on which commercial banks in
New York are authorized or required by law to close.
"CERCLA" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. sectionsection9601 et seq.
"Change of Ownership" shall mean the
occurrence of one or more of the following events:
(a) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all
of the assets of Holdings to any Person or entity or
group of Persons or entities acting in concert as a
partnership or other group (a "Group of Persons") other
than a Person described in clause (a) of the definition
of Affiliate;
(b) the consummation of any
consolidation or merger of Holdings with or into
another corporation with the effect that the
stockholders of Holdings immediately prior to the date
of the consolidation or merger hold immediately after
such merger or consolidation less than 51% of the
combined voting power of the outstanding voting
securities of the surviving entity of such merger, or
the corporation resulting from such consolidation,
ordinarily having the right to vote in the election of
directors (apart from rights accruing under special
circumstances) immediately after such merger or
consolidation;
(c) the stockholders of Holdings shall
approve any plan or proposal for the liquidation or
dissolution of Holdings;
(d) a Person or Group of Persons acting
in concert as a partnership, limited partnership,
syndicate or other group shall, as a result of a tender
or exchange offer, open market purchases, privately
negotiated purchases or otherwise, have become the
direct or indirect beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act of 1934, as
amended) of securities of Holdings representing 30% or
more of the combined voting power of the then
outstanding securities of Holdings ordinarily (and
apart from rights accruing under special circumstances)
having the right to vote in the election of the
directors; and
(e) a Person or Group of Persons,
together with any Affiliates thereof, shall succeed in
having a sufficient number of its nominees elected to
the Board of Directors of Holdings such that such
nominees, when added to any existing directors
remaining on the Board of Directors of Holdings after
such election who are Affiliates of such Person or
Group of Persons, will constitute a majority of the
Board of Directors of Holdings;
provided that the Person or Group
of Persons referred to in clauses (a), (d) and (e)
shall not mean Clifford Borland or any Group of Persons
the majority of the voting equity interests of which is
beneficially owned by Clifford Borland.
"Charges" shall mean all taxes, charges,
fees, imposts, levies or other assessments, including,
without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp,
occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any
penalties, additions to tax or additional amounts,
imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the PBGC or any
environmental agency or superfund), upon the
Collateral, any Borrower or any of its Affiliates. For
purposes of the definition of "Charges", the term
"Affiliates" shall exclude officers and directors of
any member of the Holdings Group, acting in their
personal financial affairs.
"Closing Date" shall mean July 28, 1995
or such other date as may be agreed to by the parties
hereto.
"Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time and the
regulations promulgated thereunder.
"Collateral" shall mean and include:
(a) all Receivables;
(b) all General Intangibles;
(c) all Inventory;
(d) all of each Obligor's right,
title and interest in and to (i) its respective
merchandise returned or rejected by Customers, relating
to or securing any of the Receivables; (ii) all of each
Obligor's rights as a consignor, a consignee, an unpaid
vendor, mechanic, artisan, or other lienor, including
stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional
amounts due to any Obligor from any Customer relating
to the Receivables; (iv) warranty claims relating to
Inventory; (v) with respect to the Receivables,
Inventory and General Intangibles, all of each
Obligor's contract rights, rights of payment which have
been earned under a contract right, instruments,
documents, chattel paper, warehouse receipts, deposit
accounts, money and securities; and (vi) if and when
obtained by any Obligor, all real and personal property
of third parties in which such Obligor has been granted
a lien or security interest as security for the payment
or enforcement of Receivables;
(e) all of each Obligor's ledger
sheets, ledger cards, files, correspondence, records,
books of account, business papers, computer software
(whether owned by any Obligor or in which it has an
interest), computer programs, tapes, disks and
documents relating to (a), (b), (c), or (d) of this
Paragraph; and
(f) all proceeds and products of
(a), (b), (c), (d), or (e), in whatever form,
including, but not limited to: cash, deposit accounts
(whether or not comprised solely of proceeds),
certificates of deposit, insurance proceeds (including
hazard, flood and credit insurance), negotiable
instruments and other instruments for the payment of
money, chattel paper, security agreements, documents
and tort claim proceeds.
Notwithstanding any provision of the
definition of "Receivables", "Inventory" or "General
Intangibles" or under this definition of "Collateral",
Collateral shall not include Equipment, Real Property
or "general intangibles" (as that term is defined in
the Uniform Commercial Code) not included in the
definition of "General Intangibles" set forth in this
Agreement or the proceeds of any of the foregoing.
"Commitment Percentage" of any Lender
shall mean the percentage set forth below such Lender's
name on the signature page hereof as same may be
adjusted upon any assignment by a Lender pursuant to
Section 17.3(c) hereof.
"Commitment Transfer Supplement" shall
mean a document in the form of Exhibit 17.3 hereto,
properly completed and otherwise in form and substance
satisfactory to ACM Agent by which the Purchasing
Lender purchases and assumes a portion of the
obligation of Lenders to make Advances under this
Agreement.
"Consents" shall mean all filings and all
licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary
to carry on any Obligor's business, including, without
limitation, any consents required under all applicable
federal, state or other applicable law.
"Controlled Group" shall mean all members
of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common
control which, together with any Obligor, are treated
as a single employer under Section 414 of the Code.
"Current Assets" at a particular date,
shall mean all cash, cash equivalents, accounts and
inventory of Holdings on a Consolidated Basis and all
other items which would, in conformity with GAAP, be
included under current assets on a balance sheet of
Holdings on a Consolidated Basis as at such date;
provided, however, that such amounts shall not include
(a) any amounts for any Indebtedness owing by an
Affiliate to any Obligor unless such Indebtedness arose
in connection with the sale of goods or rendition of
services in the ordinary course of business and would
otherwise constitute current assets in conformity with
GAAP, (b) any shares of stock issued by an Affiliate of
any Obligor, or (c) the cash surrender value of any
life insurance policy.
"Current Liabilities" at a particular
date, shall mean all amounts which would, in conformity
with GAAP, be included under current liabilities on a
balance sheet of Holdings on a Consolidated Basis, as
at such date, but in any event including, without
limitation or duplication, the amounts of (a) all
Indebtedness of Holdings on a Consolidated Basis
payable on demand, or, at the option of the Person to
whom such Indebtedness is owed, not more than twelve
(12) months after such date, (b) any payments in
respect of any Indebtedness of any Obligor (whether
installment, serial maturity, sinking fund payment or
otherwise) required to be made not more than twelve
(12) months after such date, (c) all reserves in
respect of liabilities or Indebtedness payable on
demand or, at the option of the Person to whom such
Indebtedness is owed, not more than twelve (12) months
after such date, the validity of which is not contested
at such date, (d) all accruals for federal or other
taxes measured by income payable within twelve (12)
months of such date and (e) all outstanding Revolving
Advances.
"Customer" shall mean and include the
account debtor with respect to any Receivable and/or
the prospective purchaser of goods, services or both
with respect to any contract or contract right, and/or
any party who enters into or proposes to enter into any
contract or other arrangement with any Obligor,
pursuant to which such Obligor is to deliver any
personal property or perform any services.
"Default" shall mean an event which, with
the giving of notice or passage of time or both, would
constitute an Event of Default.
"Default Rate" shall have the meaning set
forth in Section 3.1 hereof.
"Depository Accounts" shall have the
meaning set forth in Section 4.15(h) hereof.
"Documents" shall have the meaning set
forth in Section 8.1(c) hereof.
"Dollars" and the sign "$" shall mean
lawful money of the United States of America.
"Domestic Rate Loan" shall mean any
Advance that bears interest based upon the Alternate
Base Rate.
"EBITDA" shall mean net income of
Holdings on a Consolidated Basis before interest and
taxes exclusive of depreciation, amortization,
extraordinary gains and losses and all other non-cash
charges.
"Eligible Inventory" shall mean and
include, with respect to each Borrower, Inventory of
such Borrower excluding work in process of Imperial,
valued at the lower of cost or market value, determined
on a first-in-first-out basis, which is not, in ACM
Agent's opinion, obsolete, slow moving or
unmerchantable and which ACM Agent, in its reasonable
discretion, shall not deem ineligible Inventory, based
on such considerations as ACM Agent may from time to
time deem appropriate including, without limitation,
whether the Inventory is subject to a perfected, first
priority security interest in favor of ACM Agent and
whether the Inventory conforms to all standards imposed
by any governmental agency, division or department
thereof which has regulatory authority over such goods
or the use or sale thereof.
"Eligible Receivables" shall mean and
include, with respect to each Borrower, each Receivable
of such Borrower arising in the ordinary course of such
Borrower's business and which ACM Agent, in its
reasonable discretion, shall deem to be an Eligible
Receivable, based on such considerations as ACM Agent
may from time to time deem appropriate. A Receivable
shall not be deemed eligible unless such Receivable is
subject to ACM Agent's perfected security interest and
no other Lien other than Permitted Encumbrances, and is
evidenced by an invoice, bill of lading or other
documentary evidence satisfactory to Lender. In
addition, no Receivable shall be an Eligible Receivable
if:
(a) it arises out of a sale made by any
Borrower to an Affiliate of any Borrower or to a Person
controlled by an Affiliate of any Borrower;
(b) it is due or unpaid on the later of
(i) ninety (90) days after the original invoice date or
(ii) sixty (60) days after the original due date;
(c) twenty-five percent (25%) or more
of the Receivables from the Customer are not deemed
Eligible Receivables hereunder;
(d) any covenant, representation or
warranty contained in this Agreement with respect to
such Receivable has been breached;
(e) the Customer shall (i) apply for,
suffer, or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of
its property or call a meeting of its creditors, (ii)
admit in writing its inability, or be generally unable,
to pay its debts as they become due or cease operations
of its present business, (iii) make a general
assignment for the benefit of creditors, (iv) commence
a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent, (vi) file a
petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, any petition which is
filed against it in any involuntary case under such
bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside
the continental United States of America or Canada,
unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to ACM Agent
in its reasonable discretion;
(g) the sale to the Customer is on a
bill-and-hold, guaranteed sale, sale-and-return, sale
on approval, consignment or any other repurchase or
return basis or is evidenced by chattel paper;
(h) ACM Agent believes, in its
reasonable discretion, that collection of such
Receivable is insecure or that such Receivable may not
be paid by reason of the Customer's financial inability
to pay;
(i) the Customer is the United States
of America, any state or any department, agency or
instrumentality of any of them, unless the applicable
Borrower effectuates an assignment of its right to
payment of such Receivable to ACM Agent pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15
et seq.) or has otherwise complied with other
applicable statutes or ordinances;
(j) the goods giving rise to such
Receivable have not been shipped and delivered to and
accepted by the Customer or the services giving rise to
such Receivable have not been performed by the
applicable Borrower and accepted by the Customer or the
Receivable otherwise does not represent a final sale;
(k) the Receivables of the Customer
exceed a credit limit determined by ACM Agent, in its
reasonable discretion, to the extent such Receivable
exceeds such limit, which credit limit for L.B. shall
be $1,000,000 as of the Closing Date;
(l) to the extent that such Receivable
is subject to any offset, deduction, defense, dispute,
or counterclaim, or the Customer is also a creditor or
supplier of a Borrower or the Receivable is contingent
in any respect or for any reason;
(m) the applicable Borrower has made
any agreement with a Customer for any deduction
therefrom, except for discounts or allowances made in
the ordinary course of business for prompt payment, all
of which discounts or allowances are reflected in the
calculation of the face value of each respective
invoice related thereto;
(n) shipment of the merchandise or the
rendition of services has not been completed;
(o) any return, rejection or
repossession of the merchandise has occurred;
(p) such Receivable is not payable to a
Borrower; or
(q) such Receivable is not otherwise
satisfactory to ACM Agent as determined in good faith
by ACM Agent in the exercise of its discretion in a
reasonable manner.
"Environmental Complaint" shall have the
meaning set forth in Section 6.14(d) hereof.
"Environmental Laws" shall mean all
federal, state and local environmental, land use,
zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the
protection of the environment and/or governing the use,
storage, treatment, generation, transportation,
processing, handling, production or disposal of
Hazardous Substances and the rules, regulations,
policies, guidelines, interpretations, decisions,
orders and directives of federal, state and local
governmental agencies and authorities with respect
thereto.
"Equipment" shall mean and include, as to
each Obligor, all of such Obligor's goods (excluding
Inventory) whether now owned or hereafter acquired and
wherever located including, without limitation, all
equipment, machinery, apparatus, motor vehicles,
fittings, furniture, furnishings, fixtures (as that
term is defined in the Uniform Commercial Code and
include, without limitation, all goods that after
placement on the real property become component parts
of real property, buildings and other constructions and
which are used in the conduct of the trade, business,
occupation or other commercial or industrial activity
of the members of the Holdings Group), parts,
accessories and all replacements and substitutions
therefor or accessions thereto, tools, shelving,
displays, cases, accessories, motors and engines and
with respect to the foregoing, all attachments,
components, equipment and accessories installed thereon
or affixed thereto.
"ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended from
time to time and the rules and regulations promulgated
thereunder.
"Eurodollar Rate Loan" shall mean an
Advance at any time that bears interest based on the
Eurodollar Rate.
"Eurodollar Rate" shall mean for any
Eurodollar Rate Loan for the then current Interest
Period relating thereto the rate per annum (such
Eurodollar Rate to be adjusted to the next higher one
hundredth of one (.01%) percent) equal to the quotient
of (a) LIBOR, divided by (b) a number equal to 1.00
minus the aggregate of the rates (expressed as a
decimal) of reserve requirements current on the day
that is two Business Days prior to the beginning of the
Interest Period (including without limitation basic,
supplemental, marginal and emergency reserves) under
any regulation promulgated by the Board of Governors of
the Federal Reserve System (or any other governmental
authority having jurisdiction over the Bank) as in
effect from time to time, dealing with reserve
requirements prescribed for Eurocurrency funding
including any reserve requirements with respect to
"Eurocurrency liabilities" under Regulation D of the
Board of Governors of the Federal Reserve System.
"Event of Default" shall mean the
occurrence of any of the events set forth in Article X
hereof.
"Federal Funds Rate" shall mean, for any
day, the weighted average of the rates on overnight
Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as
published for such day (or if such day is not a
Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or if such rate
is not so published for any day which is a Business
Day, the average of quotations for such day on such
transactions received by the Bank from three Federal
funds brokers of recognized standing selected by the
Bank.
"Formula Amount" shall have the meaning
set forth in Section 2.1(a).
"Funded Debt" shall mean, with respect to
Holdings on a Consolidated Basis, (i) its liabilities
for borrowed money, (ii) guaranties of Indebtedness,
dividends or other obligations of any other Person,
(iv) obligations under leases which are or are required
to be shown in accordance with GAAP as a liability on a
balance sheet of the lessee thereunder, and (v) any
other obligations (other than deferred taxes) which are
required by GAAP to be shown as liabilities on its
balance sheet and which are payable or remain unpaid
more than one year from their creation, provided,
however, that Funded Debt shall not include any amounts
of Indebtedness owing by an Affiliate to any Obligor.
"GAAP" shall mean generally accepted
accounting principles in the United States of America
in effect from time to time.
"General Intangibles" shall mean and
include, as to each Obligor, that portion of such
Obligor's general intangibles, whether now owned or
hereafter acquired, consisting of all (a) choses in
action and causes of action (as same relate to the
Collateral), (b) customer lists, tax refunds and tax
refund claims, (c) computer programs relating to the
Collateral, (d) claims under guaranties relating to any
Receivables, (e) security interests or other security
held by or granted to such Obligor to secure payment of
any of the Receivables by a Customer and (f) rights of
indemnification (as same relate to the Collateral).
"Governmental Body" shall mean any nation
or government, any state or other political subdivision
thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or
pertaining to a government.
"Guarantor" or "Guarantors" shall have
the meaning set forth in the preamble to this Agreement
and shall include any other Person who becomes a party
to a Guaranty or to a separate agreement guaranteeing
the Obligations to ACM Agent for the benefit of
Lenders, and shall further include all permitted
successors and assigns of such Persons.
"Guaranty" shall mean any guaranty
executed by any Person guaranteeing the Obligations to
ACM Agent for the benefit of Lenders, as same may be
amended from time to time.
"Hazardous Discharge" shall have the
meaning set forth in Section 6.14(d) hereof.
"Hazardous Substance" shall mean, without
limitation, any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated byphenyls, petroleum and
petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous
Materials Transportation Act, as amended (49 U.S.C.
Sections 1801, et seq.), RCRA, or any other applicable
Environmental Law and in the regulations adopted
pursuant thereto.
"Hazardous Wastes" shall mean all waste
materials subject to regulation under CERCLA, RCRA or
applicable state law, and any other applicable Federal
and state laws now in force or hereafter enacted
relating to hazardous waste disposal.
"Holdings Group" shall mean Holdings and
each of its Subsidiaries (including each Borrower and
each of its Subsidiaries).
"Holdings on a Consolidated Basis" shall
mean the consolidation in accordance with GAAP of the
accounts or other items of the Holdings Group.
"Indebtedness" of a Person at a
particular date shall mean all obligations of such
Person which in accordance with GAAP would be
classified upon a balance sheet as liabilities (except
capital stock and surplus earned or otherwise) and in
any event, without limitation by reason of enumeration,
shall include all indebtedness, debt and other similar
monetary obligations of such Person whether direct or
guaranteed, and all premiums, if any, due at the
required prepayment dates of such indebtedness, and
all indebtedness secured by a Lien on assets owned by
such Person, whether or not such indebtedness actually
shall have been created, assumed or incurred by such
Person. Any indebtedness of such Person resulting from
the acquisition by such Person of any assets subject to
any Lien shall be deemed, for the purposes hereof, to
be the equivalent of the creation, assumption and
incurring of the indebtedness secured thereby, whether
or not actually so created, assumed or incurred.
"Individual Formula Amount" shall mean at
the date of determination thereof, with respect to each
Borrower an amount equal to: (a) up to the Receivables
Advance Rate of Eligible Receivables of such Borrower,
plus (b) up to the Inventory Advance Rate of the value
of Eligible Inventory of such Borrower; minus (c) the
aggregate amount of Letters of Credit issued, caused to
be issued or created on behalf of such Borrower, minus
(d) such reserves as ACM Agent may reasonably deem
proper and necessary from time to time.
"Individual Maximum Inventory Advance
Amount" shall mean $10,000,000 with respect to Newport,
$10,000,000 with respect to Koppel and $2,700,000 with
respect to Imperial.
"Individual Maximum Revolving Advance
Amount" shall mean (a) on the Closing Date, with
respect to Newport, $20,250,000, with respect to
Koppel, $20,250,000, and with respect to Imperial
$4,500,000 and (b) at such time as the Maximum
Revolving Amount is increased to $50,000,000, with
respect to Newport $22,500,000, with respect to Koppel
$22,500,000 and with respect to Imperial $5,000,000.
"Insolvency Law" shall have the meaning
set forth in Section 16.2 hereof.
"Intercompany Notes" shall mean the
intercompany notes to be issued by Koppel, Newport and
Erlanger in favor of Holdings in connection with the
Public Offering.
"Intercreditor Agreements" shall mean the
respective Intercreditor Agreements dated as of the
Closing Date between ACM Agent and Commonwealth of
Pennsylvania, City of Dayton, and, upon the
consummation of the Public Offering, (i) an
intercreditor agreement with the Trustee or collateral
agent for the holders of the debt issued in connection
with such Public Offering, and (ii) an intercreditor
agreement with Holdings with respect to the collateral
securing the Intercompany Notes.
"Interest Coverage Ratio" shall mean and
include with respect to any fiscal period, the ratio of
(a) EBITDA to (b) interest expense of Holdings on a
Consolidated Basis.
"Interest Period" shall mean the period
provided for any Eurodollar Rate Loan pursuant to
Section 2.2(b) and (c).
"Inventory" shall mean and include, as to
each Obligor, all of such Obligor's now owned or
hereafter acquired goods, merchandise and other
personal property, wherever located, which goods,
merchandise and other personal property are to be
furnished under any contract of service or held for
sale or lease in the ordinary course of such Obligor's
business, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in
such Obligor's business or used in selling or
furnishing such goods, merchandise and other personal
property, and all documents of title or other documents
representing them.
"Inventory Advance Rate" shall have the
meaning set forth in Section 2.1(a)(ii) hereof.
"L.B." shall mean L.B. Industries, Inc.,
an Illinois corporation and its successors and assigns.
"Lender" and "Lenders" shall have the
meaning ascribed to such term in the preamble to this
Agreement and shall include each Person which is a
permitted transferee, successor or assign of any
Lender.
"Letters of Credit" shall have the
meaning set forth in Section 2.8.
"Letter of Credit Fees" shall have the
meaning set forth in Section 3.2.
"LIBOR" shall mean for any Eurodollar
Rate Loan for the then current Interest Period relating
thereto, the rate per annum quoted by the Bank two (2)
Business Days prior to the first day of such Interest
Period for the offering by the Bank to prime commercial
banks in the London interbank Eurodollar market of
Dollar deposits in immediately available funds for a
period equal to such Interest Period and in an amount
equal to the amount of such Eurodollar Rate Loan.
"Lien" shall mean any mortgage, deed of
trust, pledge, hypothecation, assignment, security
interest, lien (whether statutory or otherwise),
Charge, claim or encumbrance, or preference, priority
or other security agreement or preferential arrangement
held or asserted in respect of any asset of any kind or
nature whatsoever including, without limitation, any
conditional sale or other title retention agreement,
any lease having substantially the same economic effect
as any of the foregoing, and the filing of, or
agreement to give, any financing statement under the
Uniform Commercial Code or comparable law of any
jurisdiction.
"Maximum Revolving Advance Amount" shall
mean $45,000,000 on the Closing Date and $50,000,000 at
such time as an additional Lender commits to lend
Borrowers an additional $5,000,000 in the aggregate,
upon the terms and conditions set forth herein, subject
to the provisions of Sections 7.1(a)(i) and 7.1(b)
(iii) hereof.
"Monthly Advances" shall have the meaning
set forth in Section 3.1 hereof.
"Multiemployer Plan" shall mean a
"multiemployer plan" as defined in Sections 3(37) and
4001(a)(3) of ERISA.
"N SUB I" shall mean N SUB I, Inc., a
Kentucky corporation.
"Net Worth" at a particular date, shall
mean (a) the aggregate amount of all assets of Holdings
on a Consolidated Basis as may properly be classified
as such in accordance with GAAP consistently applied
less (b) the aggregate amount of all Indebtedness of
Holdings on a Consolidated Basis.
"Notes" shall mean the Revolving Credit
Notes.
"Obligations" shall mean and include any
and all of each Obligor's Indebtedness and/or
liabilities to ACM Agent, the Co-Agents or Lenders of
every kind, nature and description, direct or indirect,
secured or unsecured, joint, several, joint and
several, absolute or contingent, due or to become due,
now existing or hereafter arising, contractual or
tortious, liquidated or unliquidated, under this
Agreement, the Other Documents or relating to the
Indebtedness incurred hereunder.
"Obligor" or "Obligors" shall mean,
jointly and severally, each Borrower and each
Guarantor.
"Other Documents" shall mean the Note,
any Guaranty, the Questionnaire and any and all other
agreements, instruments and documents, including,
without limitation, guaranties, pledges, powers of
attorney, consents, and all other writings heretofore,
now or hereafter executed by any Obligor and/or
delivered to Co-Agents, ACM Agent or any Lender in
respect of the transactions contemplated by this
Agreement.
"Parent" of any Person shall mean a
corporation or other entity owning, directly or
indirectly, at least 50% of the shares of stock or
other ownership interests having ordinary voting power
to elect a majority of the directors of the Person, or
other Persons performing similar functions for any such
Person.
"PBGC" shall mean the Pension Benefit
Guaranty Corporation.
"Payment Office" shall mean initially
1290 Avenue of the Americas, New York, New York;
thereafter, such other office of ACM Agent, if any,
which it may designate by notice to Borrowing Agent to
be the Payment Office.
"Permitted Encumbrances" shall mean (a)
Liens in favor of ACM Agent for the benefit of Lenders;
(b) Liens for taxes, assessments or other governmental
charges not delinquent, or, being contested in good
faith and by appropriate proceedings and with respect
to which proper reserves have been taken by Obligors;
provided, that, the Lien shall have no effect on the
priority of the Liens in favor of ACM Agent or the
value of the assets in which ACM Agent has such a Lien
and a stay of enforcement of any such Lien shall be in
effect; (c) Liens disclosed in the financial statements
referred to in Section 5.5, the existence of which ACM
Agent has consented to in writing; (d) deposits or
pledges to secure obligations under worker's
compensation, social security or similar laws, or under
unemployment insurance; (e) deposits or pledges to
secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory
obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary
course of Obligors' business; (f) judgment Liens that
have been stayed or bonded and mechanics', workers',
materialmen's or other like Liens arising in the
ordinary course of Obligors' business with respect to
obligations which are not due or which are being
contested in good faith by the applicable Obligor; (g)
Liens placed upon fixed assets hereafter acquired to
secure a portion of the purchase price thereof,
provided that (x) any such lien shall not encumber any
other property of the applicable Obligor and (y) the
aggregate amount of Indebtedness secured by such Liens
incurred as a result of such purchases during any
fiscal year shall not exceed the amount provided for in
Section 7.6; and (h) Liens disclosed on Schedule 1.2.
"Person" shall mean an individual, a
partnership, a corporation, a business trust, a joint
stock company, a trust, an unincorporated association,
a joint venture, a governmental authority or any other
entity of whatever nature.
"Plan" shall mean any employee benefit
plan within the meaning of Section 3(3) of ERISA,
maintained for employees of any Obligor or any member
of the Controlled Group or any such Plan to which such
Obligor or any member of the Controlled Group is
required to contribute on behalf of any of its
employees.
"Prime Rate" shall mean the prime
commercial lending rate of the Bank as publicly
announced to be in effect from time to time, such rate
to be adjusted automatically, without notice, on the
effective date of any change in such rate. This rate
of interest is determined from time to time by the Bank
as a means of pricing some loans to its customers and
is neither tied to any external rate of interest or
index nor does it necessarily reflect the lowest rate
of interest actually charged by the Bank to any
particular class or category of customers of the Bank.
"Pro Forma Balance Sheet" shall have the
meaning set forth in Section 5.5(a) hereof.
"Pro Forma Financial Statements" shall
have the meaning set forth in Section 5.5(b) hereof.
"Projections" shall have the meaning set
forth in Section 5.5(b) hereof.
"Public Offering" shall mean an
underwritten public debt offering by Holdings of at
least $115,000,000 in aggregate principal amount.
"Purchasing Lender" shall have the
meaning set forth in Section 17.3(c) hereof.
"Questionnaire" shall mean the
Documentation Information Questionnaire and the
responses thereto provided by Borrowers and delivered
to ACM Agent.
"RCRA" shall mean the Resource
Conservation and Recovery Act, 42 U.S.C. sectionsection 6901 et
seq., as same may be amended from time to time.
"Real Property" shall mean and include,
as to each Obligor, all of such Obligor's right, title
and interest in and to its premises including, without
limitation, the premises set forth on Schedule 1.2A
attached hereto.
"Receivables" shall mean and include, as
to each Obligor, all of the following assets of such
Obligor which arise out of or in connection with the
sale or lease of Inventory or the rendition of
services: all accounts, contract rights, instruments
(including those evidencing indebtedness among Obligors
and their Affiliates except the Intercompany Notes),
documents, chattel paper, general intangibles relating
to accounts, drafts and acceptances, and all other
forms of obligations owing to such Obligor, including
guarantees and other security therefor, whether secured
or unsecured, now existing or hereafter created, and
whether or not specifically sold or assigned to ACM
Agent hereunder.
"Receivables Advance Rate" shall have the
meaning set forth in Section 2.1(a)(i) hereof.
"Release" shall have the meaning set
forth in Section 5.7(c)(i) hereof.
"Required Lenders" shall mean Lenders
holding at least sixty percent (60%) of the Advances.
"Revolving Advances" shall mean Advances
made other than Letters of Credit.
"Revolving Credit Notes" shall mean the
promissory notes referred to in Section 2.1(a) hereof.
"Revolving Interest Rate" shall mean an
interest rate per annum equal to (a) the sum of the
Alternate Base Rate plus one (1%) percent with respect
to Domestic Rate Loans or (b) the sum of the Eurodollar
Rate plus two and three quarters (2 3/4%) percent with
respect to Eurodollar Rate Loans.
"Settlement Date" shall mean the Closing
Date and thereafter Wednesday of each week unless such
day is not a Business Day in which case it shall be the
next succeeding Business Day.
"Subsidiary" shall mean with respect to a
Person, a corporation or other entity of whose shares
of stock or other ownership interests having ordinary
voting power (other than stock or other ownership
interests having such power only by reason of the
happening of a contingency) to elect a majority of the
directors of such corporation, or other Persons
performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Tangible Net Worth" shall mean, at a
particular date, (a) the aggregate amount of all assets
of Holdings on a Consolidated Basis as may be properly
classified as such in accordance with GAAP consistently
applied excluding such other assets as are properly
classified as intangible assets under GAAP, less (b)
the aggregate amount of all liabilities of Holdings on
a Consolidated Basis.
"Term" shall mean the Closing Date
through July 28, 1998, as same may be extended in
accordance with the provisions of Section 13.1 hereof.
"Termination Date" shall have the meaning
set forth in Section 13.1 hereof.
"Termination Event" shall mean (i) a
reportable event with respect to any Plan or
Multiemployer Plan; (ii) the withdrawal of any Obligor
or any member of the Controlled Group from a Plan or
Multiemployer Plan during a plan year in which such
entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (iii) the providing of
notice of intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA; (iv)
the institution by the PBGC of proceedings to terminate
a Plan or Multiemployer Plan; (v) any event or
condition (a) which might constitute grounds under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (b) that may result in
termination of a Multiemployer Plan pursuant to Section
4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205
of ERISA, of any Obligor or any member of the
Controlled Group from a Multiemployer Plan.
"Toxic Substance" shall mean and include
any material present on the Real Property which has
been shown to have significant adverse effect on human
health or which is subject to regulation under the
Toxic Substances Control Act (TSCA), 15 U.S.C. sectionsection
2601
et seq., applicable state law, or any other applicable
Federal or state laws now in force or hereafter enacted
relating to toxic substances. "Toxic Substance"
includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.
"Transactions" shall have the meaning set
forth in Section 5.5(a) hereof.
"Transferee" shall have the meaning set
forth in Section 17.3(b) hereof.
"Undrawn Availability" at a particular
date shall mean an amount equal to (a) the lesser of
(i) the Formula Amount or (ii) the Maximum Revolving
Advance Amount minus (b) the sum of (i) the outstanding
amount of Advances plus (ii) all amounts due and owing
to Borrowers' trade creditors which are outstanding
beyond normal trade terms.
"Week" shall mean the time period
commencing with a Wednesday and ending on the following
Tuesday.
"Working Capital" at a particular date,
shall mean the excess, if any, of Current Assets over
Current Liabilities at such date.
1.3. Uniform Commercial Code Terms. All terms
used herein and defined in the Uniform Commercial Code
as adopted in the State of New York shall have the
meaning given therein unless otherwise defined herein.
1.4. Certain Matters of Construction. The
terms "herein", "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a
whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover
all genders. Wherever appropriate in the context,
terms used herein in the singular also include the
plural and vice versa. The words "include", "includes"
and "including" shall be deemed to be followed by the
phrase "without limitation". In computing periods of
time from a specified date to a later specified date,
the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding".
All references to statutes and regulations shall
include any amendments of same and any successor
statutes and regulations. All references to any
instrument or agreements to which any Obligor and any
Lender, Co-Agent and/or ACM Agent are parties
including, without limitation, references to any of the
Other Documents shall include any and all modifications
or amendments thereto and any and all extensions or
renewals thereof.
II. ADVANCES, PAYMENTS.
2.1. (a) Total Revolving Advances. Subject
to the terms and conditions set forth in this
Agreement, each Lender, severally and not jointly, will
make Revolving Advances to Borrowers in aggregate
amounts outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x) the
Maximum Revolving Advance Amount less the aggregate
undrawn amount of outstanding Letters of Credit or (y)
an amount equal to:
(i) up to 85%, subject to the
provisions of Section 2.1(c) hereof
("Receivables Advance Rate"), of Eligible
Receivables, plus
(ii) up to 40% on the Closing Date and
50% at such time as ACM Agent is
satisfied in its reasonable discretion
that Borrowers maintain Inventory records
with sufficient detail to permit ACM
Agent or its employees or agents to
perform test counts on the Inventory,
subject to the provisions of Section
2.1(c) hereof ("Inventory Advance Rate"),
of the value of the Eligible Inventory
(the Receivables Advance Rate and the
Inventory Advance Rate shall be referred
to collectively, as the "Advance Rates");
provided, however, the maximum amount of
outstanding Advances against Eligible
Inventory shall not exceed the sum of all
Borrowers' Individual Maximum Inventory
Advance Amounts in the aggregate at any
one time, minus
(iii) the aggregate undrawn amount of
outstanding Letters of Credit minus
(iv) such reserves as ACM Agent may
reasonably deem proper and necessary from
time to time (including without
limitation, reserves due to the existence
of any Hazardous Discharge or
Environmental Complaint to which
Borrowers fail to respond and where such
failure could reasonably be determined to
have a material adverse effect on the
business of the Holdings Group taken as a
whole; provided, however, to the extent
such reserves are established as a result
of Collateral being located on a portion
of the Real Property with respect to
which such Hazardous Discharge or
Environmental Complaint relates, upon
such Collateral no longer being
potentially or actually subject to a lien
in favor of any Authority, such reserves
shall be released).
The amount derived from the sum of Sections
2.1(a)(i) and (ii) minus (iv) at any time and from time
to time shall be referred to as the "Formula Amount".
The Revolving Advances shall be evidenced by the
secured promissory notes ("Revolving Credit Notes")
substantially in the form attached hereto as Exhibit
2.1(a).
(b) Individual Revolving Advances.
Each Lender, severally and not jointly, will make
Revolving Advances to each Borrower in aggregate
amounts outstanding at any time not greater than such
Lender's Commitment Percentage of the lesser of (x)
such Borrower's Individual Maximum Revolving Advance
Amount or (y) such Borrower's Individual Formula
Amount.
(c) Discretionary Rights. The Advance
Rates may be increased or decreased by ACM Agent at any
time and from time to time upon five (5) days notice to
Borrowing Agent in the exercise of its reasonable
business judgment and with the consent of the Required
Lenders; provided, however, the Receivable Advance Rate
shall be decreased only if ACM Agent believes that such
decrease is necessary for reasons relating to either an
increase in dilution or any other deterioration of the
Receivables.
2.2. Procedure for Borrowing Revolving
Advances.
(a) Borrowing Agent on behalf of any
Borrower may notify ACM Agent prior to 11:00 a.m. on a
Business Day of a Borrower's request to incur, on that
day, a Revolving Advance hereunder. Should any amount
required to be paid as interest hereunder, or as fees
or other charges under this Agreement or any Other
Document become due, the same shall be deemed a request
for a Revolving Advance as of the date such payment is
due, in the amount required to pay in full such
interest, fee, charge or Obligation under this
Agreement or any other agreement with ACM Agent, any
Co-Agent or Lenders, and such request shall be
irrevocable.
(b) Notwithstanding the provisions of
(a) above, in the event Borrowing Agent, on behalf of
any Borrower desires to obtain a Eurodollar Rate Loan,
Borrowing Agent shall give ACM Agent at least three (3)
Business Days' prior written notice; specifying (i) the
date of the proposed borrowing (which shall be a
Business Day), (ii) the type of borrowing and the
amount to be borrowed, which amount on the date of such
Advance shall be an integral multiple of $1,000,000 and
(iii) the duration of the first Interest Period
therefor. Interest Periods for Eurodollar Rate Loans
shall be for one, two or three months. There shall not
be an aggregate amount of Eurodollar Rate Loans
outstanding at any time in excess of $20,000,000.
(c) Each Interest Period of a
Eurodollar Rate Loan shall commence on the date such
Eurodollar Rate Loan is made and shall end on such date
as Borrowing Agent may elect as set forth in (b)(iii)
above provided that:
(i) any Interest Period which
would otherwise end on a day which is not a Business
Day shall be the next preceding or succeeding Business
Day as is the Bank's custom in the market to which such
Eurodollar Rate Loan relates;
(ii) no Interest Period shall end
after the last day of the Term; and
(iii) any Interest Period which
begins on a day for which there is no numerically
corresponding day in the calendar month during which
such Interest Period is to end, shall (subject to
clause (i) above) end on the last day of such calendar
month.
Borrowing Agent shall elect the initial Interest
Period applicable to a Eurodollar Rate Loan by its
notice of borrowing given to ACM Agent pursuant to
Section 2.2(b) or by its notice of conversion given to
ACM Agent pursuant to Section 2.2(d), as the case may
be. Borrowing Agent shall elect the duration of each
succeeding Interest Period by giving irrevocable
written notice to ACM Agent of such duration not less
than three (3) Business Days prior to the last day of
the then current Interest Period applicable to such
Eurodollar Rate Loan. If ACM Agent does not receive
timely notice of the Interest Period elected by
Borrowing Agent, each applicable Borrower shall be
deemed to have elected to convert to a Domestic Rate
Loan subject to Section 2.2(d) hereinbelow.
(d) Provided that no Event of Default
shall have occurred and be continuing, any Borrower
may, on the last Business Day of the then current
Interest Period applicable to any outstanding
Eurodollar Rate Loan or Domestic Rate Loan, convert any
such loan into a loan of another type in the same
aggregate principal amount. If a Borrower desires to
convert a loan, Borrowing Agent shall give Lender not
less than three (3) Business Days' prior written
notice, specifying the date of such conversion, the
loans to be converted and, if the conversion is from a
Domestic Rate Loan to any other type of loan, the
duration of the first Interest Period therefor. After
giving effect to each such conversion, there shall not
be outstanding more than nine (9) Eurodollar Rate
Loans, in the aggregate.
(e) Any Borrower may prepay any
Eurodollar Rate Loan in whole at any time, with accrued
interest on the principal being prepaid to the date of
such prepayment. In the event that any prepayment of a
Eurodollar Rate Loan is required or permitted on a date
other than the last Business Day of the then current
Interest Period with respect thereto, each Borrower
shall indemnify ACM Agent and Lenders therefor in
accordance with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify ACM
Agent, Co-Agents and Lenders and hold ACM Agent, Co-
Agents and Lenders harmless from and against any and
all losses or expenses that ACM Agent, Co-Agents and
Lenders may sustain or incur as a consequence of any
prepayment or any default by any Borrower in the
payment of the principal of or interest on any
Eurodollar Rate Loan or failure by any Borrower to
complete a borrowing of, a prepayment of or conversion
of or to a Eurodollar Rate Loan after notice thereof
has been given, including (but not limited to) any
interest payable by ACM Agent, Co-Agents or Lenders to
lenders of funds obtained by it in order to make or
maintain its Eurodollar Rate Loans hereunder. A
certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by ACM
Agent, any Co-Agent or any Lender to Borrowing Agent
shall be conclusive absent manifest error.
(g) Notwithstanding any other provision
hereof, if any new applicable law, treaty, regulation
or directive, or any change in any existing law, treaty
or in the interpretation or application thereof, shall
make it unlawful for any Lender (for purposes of this
subsection (g), the term "Lender" shall include any
Lender and the office or branch where any Lender or any
corporation or bank controlling such Lender makes or
maintains any Eurodollar Rate Loans) to make or
maintain its Eurodollar Rate Loans, the obligation of
Lenders to make Eurodollar Rate Loans hereunder shall
forthwith be cancelled and Borrowers shall, if any
affected Eurodollar Rate Loans are then outstanding,
promptly upon request from ACM Agent, either pay all
such affected Eurodollar Rate Loans or convert such
affected Eurodollar Rate Loans into loans of another
type. If any such payment or conversion of any
Eurodollar Rate Loan is made on a day that is not
applicable to such Eurodollar Rate Loan, Borrowers
shall pay Lenders, within ten (10) days of presentation
of the certification hereinafter referred to, such
amount or amounts as may be necessary to compensate
Lender for any loss or expense sustained or incurred by
Lender in respect of such Eurodollar Rate Loan as a
result of such payment or conversion, including (but
not limited to) any interest or other amounts payable
by Lenders to lenders of funds obtained by Lender in
order to make or maintain such Eurodollar Rate Loan. A
certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by ACM
Agent, any Co-Agent or any Lender to Borrowers shall be
conclusive absent manifest error. Notwithstanding the
provisions of this Section 2.2(g), if Borrowers elect
to terminate this Agreement and repay the Obligations
hereunder solely as a result of the financial impact of
this Section 2.2(g) and within ninety (90) days of the
imposition of such requirements and, if such prepayment
is made either through the proceeds of a public
offering of debt or securities, or through a
refinancing with a financial institution that does not
require Borrowers to make such payments, then Borrowers
shall not be required to pay Lenders the early
termination fee set forth in Section 13.1 hereof.
2.3. Disbursement of Advance Proceeds. All
Advances shall be disbursed from whichever office or
other place ACM Agent may designate from time to time
and, together with any and all other Obligations of
Obligors to ACM Agent, Co-Agents or Lenders, shall be
charged to Borrowers' account on ACM Agent's books.
During the Term, Borrowers may use the Revolving
Advances by borrowing, prepaying and reborrowing, all
in accordance with the terms and conditions of this
Agreement. The proceeds of each Revolving Advance
requested by Borrowers or deemed to have been requested
by the Borrowers under Section 2.2(a) hereof shall,
with respect to requested Revolving Advances to the
extent Lenders make such Revolving Advances, be made
available to the applicable Borrower on the day so
requested by way of credit to such Borrower's operating
account at the Bank, or such other bank as Borrowing
Agent may designate following notification to ACM
Agent, in Federal funds or other immediately available
funds or, with respect to Revolving Advances deemed to
have been requested by any Borrower, be disbursed to
ACM Agent to be applied to the outstanding Obligations
giving rise to such deemed request.
2.4. Maximum Advances. The aggregate balance
of Advances outstanding at any time shall not exceed
the lesser of (a) Maximum Revolving Advance Amount or
(b) the Formula Amount. The aggregate balance of
Advances outstanding to any Borrower at any time shall
not exceed the lesser of such Borrower's (a) Individual
Formula Amount or (b) Individual Maximum Revolving
Advance Amount.
2.5. Repayment of Advances.
(a) The Advances shall be due and
payable in full on the last day of the Term subject to
earlier prepayment as herein provided.
(b) Each Borrower recognizes that the
amounts evidenced by checks, notes, drafts or any other
items of payment relating to and/or proceeds of
Collateral may not be collectible by ACM Agent on the
date received. In consideration of ACM Agent's
agreement to conditionally credit Borrowers' account as
of the Business Day on which ACM Agent receives those
items of payment, each Borrower agrees that, in
computing the charges under this Agreement, all items
of payment shall be deemed applied by ACM Agent on
account of the Obligations one (1) Business Day after
confirmation to ACM Agent by the Blocked Account bank
or Depository Account bank, as provided for in Section
4.15(h) hereof, that such items of payment have been
wire transferred or sent by electronic depository check
and finally credited to ACM Agent's account. ACM Agent
is not, however, required to credit Borrowers' account
for the amount of any item of payment which is
unsatisfactory to ACM Agent and ACM Agent may charge
the Borrowers' account for the amount of any item of
payment which is returned to ACM Agent unpaid.
(c) All payments of principal, interest
and other amounts payable hereunder, or under any of
the related agreements shall be made to ACM Agent at
the Payment Office not later than 1:00 P.M. (New York
Time) on the due date therefor in lawful money of the
United States of America in Federal funds or other
funds immediately available to ACM Agent. ACM Agent
shall have the right to effectuate payment on any and
all Obligations due and owing hereunder by charging
Borrowers' account or by making Advances as provided in
Section 2.2 hereof.
(d) Borrowers shall pay principal,
interest, and all other amounts payable hereunder, or
under any Other Document, without any deduction
whatsoever, including, but not limited to, any
deduction for any setoff or counterclaim.
2.6. Repayment of Excess Advances. The
aggregate balance of Advances outstanding at any time
in excess of the maximum amount of Advances permitted
hereunder shall be immediately due and payable without
the necessity of any demand, at the Payment Office,
whether or not a Default or Event of Default has
occurred.
2.7. Statement of Account. ACM Agent shall
maintain, in accordance with its customary procedures,
a loan account in the name of Borrowers in which shall
be recorded the date and amount of each Advance made by
Lenders and the date and amount of each payment in
respect thereof; provided, however, the failure by ACM
Agent to record the date and amount of any Advance
shall not adversely affect ACM Agent or any Lender.
For each month, ACM Agent shall send to Borrowing Agent
a statement showing the accounting for the Advances
made, payments made or credited in respect thereof, and
other transactions between Lenders and Borrowers,
during such month. The monthly statements shall be
deemed correct and binding upon Borrowers in the
absence of manifest error and shall constitute an
account stated between Lenders and Borrowers unless ACM
Agent receives a written statement of Borrowers'
specific exceptions thereto within thirty (30) days
after such statement is received by Borrowing Agent.
The records of ACM Agent with respect to the loan
account shall be prima facie evidence of the amounts of
Advances and other charges thereto and of payments
applicable thereto.
2.8. Letters of Credit. Subject to the terms
and conditions hereof, the ACM Agent shall issue or
cause the issuance of Letters of Credit ("Letters of
Credit") on behalf of Newport or Koppel, provided,
however, that the ACM Agent will not be required to
issue or cause to be issued any Letters of Credit to
the extent that the face amount of such Letters of
Credit would then cause the sum of (i) the outstanding
Revolving Advances plus (ii) the outstanding Letters of
Credit (with the requested Letter of Credit being
deemed to be outstanding for purposes of this
calculation) to exceed the lesser of (x) the Maximum
Revolving Advance Amount or (y) the Formula Amount;
provided, further, however, that ACM Agent will not be
required to issue or cause to be issued any Letters of
Credit to the extent that the face amount of such
Letters of Credit issued for such Borrower would then
cause the sum of (i) the outstanding Revolving Advances
to such Borrower plus (ii) the outstanding Letters of
Credit issued or caused to be issued on behalf of such
Borrower (with the requested Letter of Credit deemed to
be outstanding for purposes of this calculation) to
exceed the lesser of (x) such Borrower's Individual
Maximum Revolving Advance Amount or (y) such Borrower's
Individual Formula Amount (assuming that (c) of the
definition of Individual Formula Amount is deemed to be
$0). The maximum amount of outstanding Letters of
Credit shall not exceed $6,000,000 for the benefit of
Newport or $2,000,000 for the benefit of Koppel in the
aggregate at any time. The maximum amount of all
outstanding Letters of Credit shall not exceed
$6,000,000 in the aggregate at any time. All
disbursements or payments related to Letters of Credit
shall be deemed to be Revolving Advances and shall bear
interest at the Revolving Interest Rate with respect to
Domestic Rate Loans; Letters of Credit that have not
been drawn upon shall not bear interest. Letters of
Credit shall be subject to the terms and conditions set
forth in the Letter of Credit and Security Agreement
attached hereto as Exhibit 2.8.
2.9. Issuance of Letters of Credit.
(a) Borrowing Agent on behalf of
Newport or Koppel may request ACM Agent to issue or
cause the issuance of a Letter of Credit by delivering
to ACM Agent at the Payment Office, ACM Agent's
standard form of Letter of Credit and Security
Agreement in the form attached hereto as Exhibit 2.8,
together with Bank's standard form of Letter of Credit
Application (collectively, the "Letter of Credit
Application") completed to the satisfaction of ACM
Agent; and, such other certificates, documents and
other papers and information as ACM Agent may
reasonably request.
(b) Each Letter of Credit shall, among
other things, (i) provide for the payment of sight
drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied
by the documents described therein and (ii) have an
expiry date not later than one (1) year after such
Letter of Credit's date of issuance and in no event
later than the last day of the Term; provided, however,
if Borrowing Agent requests Lenders to provide a Letter
of Credit with an expiration date later than the last
day of the Term, Lenders may elect to provide such
Letter of Credit if, among other things to be
determined by Lenders in their reasonable discretion,
at the time of the issuance thereof Borrowers provide
Lenders with cash collateral equal to the face amount
of the Letter of Credit. Each Letter of Credit
Application and each Letter of Credit shall be subject
to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, and any amendments or
revision thereof and, to the extent not inconsistent
therewith, the laws of the State of New York.
2.10. Requirements For Issuance of Letters of
Credit.
(a) In connection with the issuance of
any Letter of Credit, Borrowers shall indemnify, save
and hold ACM Agent and each Lender harmless from any
loss, cost, expense or liability, including, without
limitation, payments made by ACM Agent and any Lender,
and expenses and reasonable attorneys' fees incurred by
ACM Agent or any Lender arising out of, or in
connection with, any Letter of Credit to be issued or
created for Newport or Koppel. Borrowers shall be bound
by ACM Agent's or any issuing or accepting bank's
regulations and good faith interpretations of any
Letter of Credit issued or created for its account,
although this interpretation may be different from its
own; and, neither ACM Agent nor any Lender, the bank
which opened the Letter of Credit, nor any of its
correspondents shall be liable for any error,
negligence, or mistakes, whether of omission or
commission, in following Borrowing Agent's or any
Borrower's instructions or those contained in any
Letter of Credit or of any modifications, amendments or
supplements thereto or in issuing or paying any Letter
of Credit, except for ACM Agent's or any Lender's or
such correspondents' gross (not mere) negligence or
willful misconduct.
(b) Borrowing Agent shall authorize and
direct any bank which issues a Letter of Credit to name
the applicable Borrower as the "Account Party" therein
and to deliver to ACM Agent all instruments, documents,
and other writings and property received by the bank
pursuant to the Letter of Credit and to accept and rely
upon ACM Agent's instructions and agreements with
respect to all matters arising in connection with the
Letter of Credit or the application therefor.
(c) In connection with all Letters of
Credit issued or caused to be issued by ACM Agent under
this Agreement, each Borrower hereby appoints ACM
Agent, or its designee, as its attorney, with full
power and authority (i) to sign and/or endorse such
Borrower's name upon any warehouse or other receipts,
letter of credit applications and acceptances; (ii) to
sign such Borrower's name on bills of lading; (iii) to
clear Inventory through the United States of America
Customs Department ("Customs") in the name of such
Borrower or ACM Agent or ACM Agent's designee, and to
sign and deliver to Customs officials powers of
attorney in the name of such Borrower for such purpose;
and (iv) to complete in such Borrower's name or ACM
Agent's name, or in the name of ACM Agent's designee,
any order, sale or transaction, obtain the necessary
documents in connection therewith, and collect the
proceeds thereof. Neither ACM Agent nor its attorneys
will be liable for any acts or omissions nor for any
error of judgment or mistakes of fact or law, except
for ACM Agent's or its attorney's gross (not mere)
negligence or willful misconduct. This power, being
coupled with an interest, is irrevocable as long as any
Letters of Credit remain outstanding.
(d) Each Lender shall be deemed to have
irrevocably purchased an undivided participation in ACM
Agent's credit support enhancement provided to the
issuing bank of any Letter of Credit and each Revolving
Advance made as a consequence of the issuance of a
Letter of Credit and all disbursements thereunder in an
amount equal to such Lender's applicable Commitment
Percentage times the outstanding amount of the Letters
of Credit and disbursements thereunder. In the event
that at the time a disbursement is made, the unpaid
balance of Revolving Advances exceeds or would exceed,
with the making of such disbursement, the lesser of the
Maximum Revolving Advance Amount or the Formula Amount,
and such disbursement is not reimbursed by Borrowers
within two (2) Business Days, ACM Agent shall promptly
notify each Lender and upon ACM Agent's demand, each
Lender shall pay to ACM Agent such Lender's
proportionate share of such unreimbursed disbursement
together with such Lender's proportionate share of ACM
Agent's unreimbursed costs and expenses relating to
such unreimbursed disbursement. Upon receipt by ACM
Agent of a repayment from any Borrower of any amount
disbursed by ACM Agent for which ACM Agent had already
been reimbursed by Lenders, ACM Agent shall deliver to
each Lender that Lender's pro rata share of such
repayment. Each Lender's participation commitment
shall continue until the last to occur of any of the
following events: (A) ACM Agent ceases to be obligated
to issue Letters of Credit hereunder; (B) no Letter of
Credit issued hereunder remains outstanding and
uncancelled or (C) all Persons (other than the
applicable Borrower) have been fully reimbursed for all
payments made under or relating to Letters of Credit.
2.11. Additional Payments. Any sums expended
by ACM Agent or any Lender due to any Obligor's failure
to perform or comply with its obligations under this
Agreement or any Other Document including, without
limitation, any Obligor's obligations under Sections
4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be
charged to Borrowers' account as a Revolving Advance
and added to the Obligations.
2.12. Manner of Borrowing and Payment.
(a) Each borrowing of Revolving
Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.
(b) Each payment (including each
prepayment) by Borrowers on account of the principal of
and interest on the Revolving Advances, shall be
applied to the Revolving Advances pro rata according to
the applicable Commitment Percentages of Lenders.
(c) (i) Notwithstanding anything to
the contrary contained in Sections 2.12(a) and (b)
hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving
Advances shall be advanced by ACM Agent and each
payment by any Borrower on account of Revolving
Advances shall be applied first to those Revolving
Advances made by ACM Agent. On or before 1:00 P.M.,
New York time, on each Settlement Date commencing with
the first Settlement Date following the Closing Date,
ACM Agent and Lenders shall make certain payments as
follows: (I) if the aggregate amount of new Revolving
Advances made by ACM Agent during the preceding Week
(if any) exceeds the aggregate amount of repayments
applied to outstanding Revolving Advances during such
preceding Week, then each Lender shall provide ACM
Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w)
such Revolving Advances and (x) such repayments and
(II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds
the aggregate amount of new Revolving Advances made
during such Week, then ACM Agent shall provide each
Lender with funds in an amount equal to its applicable
Commitment Percentage of the difference between (y)
such repayments and (z) such Revolving Advances.
(ii) Each Lender shall be entitled
to earn interest at the Revolving Interest Rate on
outstanding Advances which it has funded.
(iii) Promptly following each
Settlement Date, ACM Agent shall submit to each Lender
a certificate with respect to payments received and
Advances made during the Week immediately preceding
such Settlement Date. Such certificate of ACM Agent
shall be conclusive in the absence of manifest error.
(d) If any Lender or any Transferee (a
"benefitted Lender") shall at any time receive any
payment of all or part of its Advances, or interest
thereon, or receive any Collateral in respect thereof
(whether voluntarily or involuntarily or by set-off) in
a greater proportion than any such payment to and
Collateral received by any other Lender, if any, in
respect of such other Lender's Advances, or interest
thereon, and such greater proportionate payment or
receipt of Collateral is not expressly permitted
hereunder, such benefitted Lender shall purchase for
cash from the other Lenders such portion of each such
other Lender's Advances, or shall provide such other
Lender with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or
benefits of such Collateral or proceeds ratably with
each of Lenders; provided, however, that if all or any
portion of such excess payment or benefits is
thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but
without interest. Each Lender so purchasing a portion
of another Lender's Advances may exercise all rights of
payment (including, without limitation, rights of set-
off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(e) Unless ACM Agent shall have been
notified by telephone, confirmed in writing, by any
Lender that such Lender will not make the amount which
would constitute its applicable Commitment Percentage
of the Advances available to ACM Agent, ACM Agent may
(but shall not be obligated to) assume that such Lender
shall make such amount available to ACM Agent and, in
reliance upon such assumption, make available to
Borrowers a corresponding amount. ACM Agent will
promptly notify Borrowing Agent of its receipt of any
such notice from a Lender. If such amount is made
available to ACM Agent on a date after a Settlement
Date, such Lender shall pay to ACM Agent on demand an
amount equal to the product of (i) the daily average
Federal Funds Rate (computed on the basis of a year of
360 days) during such period as quoted by ACM Agent,
times (ii) such amount, times (iii) the number of days
from and including such Settlement Date to the date on
which such amount becomes immediately available to ACM
Agent. A certificate of ACM Agent submitted to any
Lender with respect to any amounts owing under this
paragraph (e) shall be conclusive, in the absence of
manifest error. If such amount is not in fact made
available to ACM Agent by such Lender within three (3)
Business Days after such Settlement Date, ACM Agent
shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable
to such Revolving Advances hereunder, on demand from
Borrowers; provided, however, that ACM Agent's right to
such recovery shall not prejudice or otherwise
adversely affect Borrowers' rights (if any) against
such Lender.
2.13. Mandatory Prepayments.
When any Borrower sells or otherwise
disposes of any Collateral (other than Inventory in the
ordinary course of business), Borrowers shall repay the
Advances in an amount equal to the net proceeds of such
sale (i.e., gross proceeds less the reasonable costs of
such sales or other dispositions), such repayments to
be made promptly but in no event more than one (1)
Business Day following receipt of such net proceeds,
and until the date of payment, such proceeds shall be
held in trust for ACM Agent. The foregoing shall not
be deemed to be implied consent to any such sale
otherwise prohibited by the terms and conditions
hereof. Such repayments shall be applied to the
Advances in such order as ACM Agent may determine,
subject to Borrowers' ability to reborrow Revolving
Advances in accordance with the terms hereof.
III. INTEREST AND FEES.
3.1. Interest. Interest on Revolving Advances
shall be payable in arrears on the last day of each
month with respect to Domestic Rate Loans and, with
respect to Eurodollar Rate Loans, at the end of each
Interest Period. Interest charges shall be computed on
the actual principal of Advances outstanding during the
month (the "Monthly Advances") at a rate per annum
equal to the applicable Revolving Interest Rate.
Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the
Revolving Interest Rate with respect to Domestic Rate
Loans shall be similarly changed without notice or
demand of any kind by an amount equal to the amount of
such change in the Alternate Base Rate during the time
such change or changes remain in effect. Upon and
after the occurrence and declaration of an Event of
Default, and during the continuation thereof, the
Obligations shall bear interest at the applicable
Revolving Interest Rate plus two (2%) percent per annum
(the "Default Rate").
3.2. Letter of Credit Fees.
Borrowers shall pay ACM Agent (i) for the
ratable benefit of Lenders for issuing or causing the
issuance of a Letter of Credit, a fee computed at a
rate per annum of two and three quarters percent
(2.75%) on the outstanding amount thereof from time to
time, ("Letter of Credit Fees"), and (ii) Bank's other
customary charges payable in connection with Letters of
Credit, as in effect from time to time (which charges
shall be furnished to Borrowing Agent by ACM Agent upon
request). Such fees and charges shall be payable (i)
in the case of any Letter of Credit, on its opening
(ii) in the case of a standby Letter of Credit, (A)
monthly thereafter in advance and (B) upon each
increase in the outstanding amount thereof, and (iii)
in the case of any Letter of Credit that is not a
standby Letter of Credit, at the time of each increase
in face amount thereof. Any such charge in effect at
the time of a particular transaction shall be the
charge for that transaction, notwithstanding any
subsequent change in Bank's prevailing charges for that
type of transaction. All Letter of Credit Fees payable
hereunder shall be deemed earned in full on the date
when the same are due and payable hereunder and shall
not be subject to rebate or proration upon the
termination of this Agreement for any reason.
Upon the occurrence and during the
continuance of an Event of Default, or upon termination
of this Agreement and on demand thereafter, Borrowers
will cause cash to be deposited and maintained in an
account with ACM Agent, as cash collateral, in an
amount equal to outstanding Letters of Credit and each
Borrower hereby irrevocably authorizes ACM Agent, in
its discretion, on such Borrower's behalf and in such
Borrower's name, to open such an account and to make
and maintain deposits therein, or in an account opened
by such Borrower, in the amounts required to be made by
such Borrower, out of the proceeds of Receivables or
other Collateral or out of any other funds of such
Borrower coming into Lender's possession at any time.
ACM Agent will invest such cash collateral in such
short-term money-market items as to which ACM Agent and
Borrowing Agent mutually agree and the net return on
such investments shall be credited to such account and
constitute additional cash collateral. No Borrower may
withdraw amounts credited to any such account except
upon payment and performance in full of all Obligations
and termination of this Agreement.
3.3. (a) Closing Fee. Upon the execution of
this Agreement, Borrowers shall pay to ACM Agent for
the ratable benefit of Lenders a closing fee of
$285,000.
(b) Facility Fee. If, for any month
during the Term, the average daily unpaid balance of
the Revolving Advances for each day of such month does
not equal the Maximum Revolving Advance Amount, then
Borrowers shall pay to ACM Agent for the ratable
benefit of Lenders a fee at a rate equal to one-half of
one percent (.5%) per annum on the amount by which the
Maximum Revolving Advance Amount exceeds such average
daily unpaid balance. Such fee shall be payable to ACM
Agent in arrears on the last day of each month.
(c) Agency Fee. Upon the execution of
this Agreement and on each anniversary of the Closing
Date thereafter during the Term, Borrowers shall pay to
ACM Agent an Agency Fee of $100,000 per annum. The
Agency Fee shall be deemed earned in full by ACM Agent
on the date when same is due and payable hereunder and
shall not be subject to rebate or proration upon
termination of this Agreement for any reason.
3.4. (a) Collateral Evaluation Fee.
Borrowers shall pay ACM Agent a collateral evaluation
fee equal to $2,000 per month commencing on the first
day of the month following the Closing Date and on the
first day of each month thereafter during the Term.
The collateral evaluation fee shall be deemed earned in
full on the date when same is due and payable hereunder
and shall not be subject to rebate or proration upon
termination of this Agreement for any reason.
(b) Collateral Monitoring Fee.
Borrowers shall pay to ACM Agent on the first day of
each month following any month in which ACM Agent
performs any collateral monitoring - namely any field
examination, collateral analysis or other business
analysis, the need for which is to be determined by ACM
Agent and which monitoring is undertaken by ACM Agent
or for ACM Agent's benefit - a collateral monitoring
fee in an amount equal to $600 per day for each person
(other than ACM Agent's management personnel) employed
to perform such monitoring and in an amount equal to
$600 per day for each manager of ACM Agent performing
such monitoring, plus all reasonable costs and
disbursements incurred by ACM Agent in the performance
of such examination or analysis.
3.5. Computation of Interest and Fees.
Interest and fees hereunder shall be computed on the
basis of a year of 360 days and for the actual number
of days elapsed. If any payment to be made hereunder
becomes due and payable on a day other than a Business
Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be
payable at the Revolving Interest Rate during such
extension.
3.6. Maximum Charges. In no event whatsoever
shall interest and other charges charged hereunder
exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event
that a court determines that ACM Agent or any Lender
has received interest and other charges hereunder in
excess of the highest rate applicable hereto, such
excess interest shall be first applied to any unpaid
principal balance owed by Borrowers, and if the then
remaining excess interest is greater than the
previously unpaid principal balance, Lenders shall
promptly refund such excess amount to Borrowers and the
provisions hereof shall be deemed amended to provide
for such permissible rate.
3.7. Increased Costs. In the event that any
new applicable law, treaty or governmental regulation,
or any change in any existing law, treaty or
governmental regulation or in the interpretation or
application thereof, or compliance with any request or
directive (whether or not having the force of law) from
any central bank or other financial, monetary or
authority, by any Lender (for purposes of this Section
3.7, the term "Lender" shall include ACM Agent, any Co-
Agent or any Lender and any corporation or bank
controlling ACM Agent, any Co-Agent or any Lender) and
the office or branch where ACM Agent, any Co-Agent or
any Lender (as so defined) makes or maintains any
Eurodollar Rate Loans shall:
(a) subject ACM Agent, any Co-Agent or
any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Eurodollar Rate Loan
or change the basis of taxation of payments to ACM
Agent, any Co-Agent or any Lender of principal, fees,
interest or any other amount payable hereunder or under
any Other Documents (except for changes in the rate of
tax on the overall net income of ACM Agent, any Co-
Agent or any Lender by the jurisdiction in which it
maintains its principal office);
(b) impose, modify or hold applicable
any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or
for the account of, advances or loans by, or other
credit extended by, any office of ACM Agent, any Co-
Agent or any Lender, including (without limitation)
pursuant to Regulation D of the Board of Governors of
the Federal Reserve System; or
(c) impose on ACM Agent, any Co-Agent
or any Lender or the London interbank Eurodollar market
any other condition with respect to this Agreement, any
Other Documents or any other Eurodollar Rate Loan;
and the result of any of the foregoing is to increase
the cost to ACM Agent, any Co-Agent or Lender of
making, renewing or maintaining its Advances hereunder
by an amount that ACM Agent, any Co-Agent or such
Lender deems to be material or to reduce the amount of
any payment (whether of principal, interest or
otherwise) in respect of any of the Advances by an
amount that ACM Agent, any Co-Agent or such Lender
deems to be material, then, in any case Borrowers shall
promptly pay ACM Agent, any Co-Agent or such Lender
within ten (10) days of presentation of the
certification hereinafter referred to such additional
amount as will compensate ACM Agent, any Co-Agent or
such Lender for such additional cost or such reduction,
as the case may be, provided that the foregoing shall
not apply to increased costs which are reflected in the
Eurodollar Rate. ACM Agent, any Co-Agent or such
Lender shall certify the amount of such additional cost
or reduced amount to Borrowers, and such certification
shall be conclusive absent manifest error.
Notwithstanding the provisions of this Section 3.7, if
Borrowers elect to terminate this Agreement and repay
the Obligations hereunder solely as a result of the
financial impact of this Section 3.7 within ninety (90)
days of the imposition of such requirement and, if such
prepayment is made either through the proceeds of a
public offering, or through a refinancing with a
financial institution that does not require Borrowers
to make such payments, then Borrowers shall not be
required to pay Lenders the early termination fee set
forth in Section 13.1 hereof.
3.8. Basis For Determining Interest Rate
Inadequate or Unfair. In the event that ACM Agent, any
Co-Agent or any Lender shall have determined that:
(a) reasonable means do not exist for
ascertaining the Eurodollar Rate applicable pursuant to
Section 2.2 hereof for any Interest Period;
(b) Dollar deposits in the relevant
amount and for the relevant maturity are not available
in the London interbank Eurodollar market, with respect
to an outstanding Eurodollar Rate Loan, a proposed
Eurodollar Rate Loan, or a proposed conversion of a
Domestic Rate Loan into a Eurodollar Rate Loan;
ACM Agent shall give Borrowing Agent prompt written,
telephonic or telegraphic notice of such determination.
If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate
Loan, unless Borrowing Agent shall notify ACM Agent no
later than 10:00 a.m. (New York time) two (2) Business
Days prior to the date of such proposed borrowing that
its request for such borrowing shall be cancelled or
made as an unaffected type of Eurodollar Rate Loan,
(ii) any Domestic Rate Loan or Eurodollar Rate Loan
which was to have been converted to an affected type of
Eurodollar Rate Loan shall be continued as or converted
into a Domestic Rate Loan, or, if Borrowing Agent shall
notify ACM Agent, no later than 10:00 a.m. (New York
time) two (2) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type
of Eurodollar Rate Loan and (iii) any outstanding
affected Eurodollar Rate Loans shall be converted into
a Domestic Rate Loan, or, if the Borrowing Agent shall
notify ACM Agent, no later than 10:00 a.m. (New York
time) two (2) Business Days prior to the last Business
Day of the then current Interest Period applicable to
such affected Eurodollar Rate Loan, shall be converted
into an unaffected type of Eurodollar Rate Loan on the
last Business Day of the then current Interest Period
for such affected Eurodollar Rate Loans. Until such
notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate
Loan or maintain outstanding affected Eurodollar Rate
Loans and no Borrower shall have the right to convert a
Domestic Rate Loan or an unaffected type of Eurodollar
Rate Loan into an affected type of Eurodollar Rate
Loan.
3.9. Capital Adequacy.
(a) In the event that ACM Agent, any
Co-Agent or any Lender shall have determined that any
new applicable law, rule, regulation or guideline
regarding capital adequacy, or any change in any
existing law, rule, regulation or guideline or any
change in the interpretation or administration thereof
by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance with any request
or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central
bank or comparable agency, by ACM Agent, any Co-Agent
or any Lender (for purposes of this Section 3.9, the
term "Lender" shall include ACM Agent, any Co-Agent or
any Lender and any corporation or bank controlling ACM
Agent, any Co-Agent or any Lender) and the office or
branch where ACM Agent, any Co-Agent or any Lender (as
so defined) makes or maintains any Eurodollar Rate
Loans, has or would have the effect of reducing the
rate of return on ACM Agent, any Co-Agent or any
Lender's capital as a consequence of its obligations
hereunder to a level below that which ACM Agent, any
Co-Agent or such Lender could have achieved but for
such adoption, change or compliance (taking into
consideration ACM Agent's, any Co-Agent and each
Lender's policies with respect to capital adequacy) by
an amount deemed by ACM Agent, any Co-Agent or any
Lender to be material, then, from time to time,
Borrowers shall pay to ACM Agent, any Co-Agent or such
Lender within ten (10) days of presentation of the
certificate referred to in Section 3.9(b) hereof such
additional amount or amounts as will compensate ACM
Agent, any Co-Agent or such Lender for such reduction.
In determining such amount or amounts, ACM Agent, any
Co-Agent or such Lender may use any reasonable
averaging or attribution methods. The protection of
this Section 3.9 shall be available to ACM Agent, any
Co-Agent and each Lender regardless of any possible
contention of invalidity or inapplicability with
respect to the applicable law, regulation or condition.
(b) A certificate of ACM Agent, any Co-
Agent or such Lender setting forth such amount or
amounts as shall be necessary to compensate ACM Agent,
any Co-Agent or such Lender with respect to Section
3.9(a) hereof when delivered to Borrowers shall be
conclusive absent manifest error.
IV. COLLATERAL: GENERAL TERMS
4.1. Security Interest in the Collateral. To
secure the prompt payment and performance to ACM Agent,
the Co-Agents and each Lender of the Obligations, each
Obligor hereby assigns, pledges and grants to ACM Agent
for the ratable benefit of each Lender, ACM Agent and
the Co-Agents, a continuing security interest in and to
all of its Collateral, whether now owned or existing or
hereafter acquired or arising and wheresoever located.
Each Obligor shall mark its books and records as may be
necessary or appropriate to evidence, protect and
perfect ACM Agent's security interest and shall cause
its financial statements to reflect such security
interest.
4.2. Perfection of Security Interest. Each
Obligor shall take all action that may be necessary or
desirable, or that ACM Agent may reasonably request, so
as at all times to maintain the validity, perfection,
enforceability and priority of ACM Agent's security
interest in the Collateral or to enable ACM Agent to
protect, exercise or enforce its rights hereunder and
in the Collateral, including, but not limited to (i)
immediately discharging all Liens other than Permitted
Encumbrances or Liens otherwise permitted under Section
7.2, (ii) obtaining landlords' or mortgagees' lien
waivers within twenty (20) Business Days of ACM Agent's
request for same, (iii) delivering to ACM Agent,
endorsed or accompanied by such instruments of
assignment as ACM Agent may specify, and stamping or
marking, in such manner as ACM Agent may specify, any
and all chattel paper, instruments, letters of credit
and advices thereof and documents evidencing or forming
a part of the Collateral within ten (10) Business Days
of such Obligor's receipt of same, (iv) entering into
warehousing, lockbox and other custodial arrangements
satisfactory to ACM Agent within twenty (20) Business
Days of ACM Agent's request for same, and (v) executing
and delivering financing statements, instruments of
pledge, notices and assignments, in each case in form
and substance satisfactory to ACM Agent, relating to
the creation, validity, perfection, maintenance or
continuation of ACM Agent's security interest under the
Uniform Commercial Code or other applicable law. All
charges, expenses and fees ACM Agent may incur in doing
any of the foregoing, and any local taxes relating
thereto, shall be charged to Borrowers' account as a
Revolving Advance and added to the Obligations, or, at
ACM Agent's option, shall be paid to ACM Agent for the
ratable benefit of Lenders immediately upon demand.
4.3. Disposition of Collateral. Each Obligor
will (i) safeguard and protect all Collateral for ACM
Agent's general account and within ten (10) Business
Days of any request, take all action that ACM Agent may
reasonably request to safeguard and protect the
Collateral and (ii) make no disposition of any
Collateral whether by sale, lease or otherwise except
for the sale or other disposition of Collateral in the
ordinary course of business.
4.4. Preservation of Collateral. Following
the occurrence of an Event of Default, and during the
continuance thereof, in addition to the rights and
remedies set forth in Section 11.1 hereof, ACM Agent:
(a) may at any time take such steps as ACM Agent deems
necessary to protect ACM Agent's interest in and to
preserve the Collateral, including the hiring of such
security guards or the placing of other security
protection measures as ACM Agent may deem appropriate;
(b) may employ and maintain at any Obligor's premises a
custodian who shall have full authority to do all acts
necessary to protect ACM Agent's interests in the
Collateral; (c) may lease warehouse facilities to which
ACM Agent may move all or part of the Collateral; (d)
subject to the terms of applicable Intercreditor
Agreements, if any, may use any Obligor's owned or
leased lifts, hoists, trucks and other facilities or
equipment for handling or removing the Collateral; and
(e) subject to the terms of applicable Intercreditor
Agreements, if any, shall have, and is hereby granted,
a right of ingress and egress to the places where the
Collateral is located, and may proceed over and through
any Obligor's owned or leased property. Each Obligor
shall cooperate fully with all of ACM Agent's efforts
to preserve the Collateral and will take such actions
to preserve the Collateral as ACM Agent may direct.
All of ACM Agent's reasonable expenses of preserving
the Collateral, including any expenses relating to the
bonding of a custodian, shall be charged to Borrowers'
account as a Revolving Advance and added to the
Obligations.
4.5. Ownership of Collateral. With respect to
the Collateral, at the time the Collateral becomes
subject to ACM Agent's security interest: (a) each
Obligor shall be the sole owner of and fully authorized
and able to sell, transfer, pledge and/or grant a first
security interest in each and every item of its
respective Collateral to ACM Agent; and, except for
Permitted Encumbrances, the Collateral shall be free
and clear of all Liens and encumbrances whatsoever; (b)
each document and agreement executed by each Obligor or
delivered to ACM Agent or any Lender in connection with
this Agreement shall be true and correct in all
material respects; (c) all signatures and endorsements
of each Obligor that appear on such documents and
agreements shall be genuine and each Obligor shall have
full capacity to execute same; and (d) each Obligor's
Inventory shall be located as set forth on Schedule 4.5
and shall not be removed from such location(s) without
the prior written consent of ACM Agent except in the
ordinary course of business.
4.6. Defense of ACM Agent's and Lender's
Interests. Until (a) payment and performance in full
of all of the Obligations and (b) termination of this
Agreement, ACM Agent's interests in the Collateral
shall continue in full force and effect; provided,
however, so long as no Event of Default has occurred
and is continuing, Obligors shall be permitted to
destroy books and records, in the ordinary course of
business and in accordance with the record retention
policy of the Holdings Group described on Schedule 4.6
hereof. During such period no Obligor shall, without
ACM Agent's prior written consent, pledge, sell (except
Inventory in the ordinary course of business), assign,
transfer, create or suffer to exist a Lien upon or
encumber or allow or suffer to be encumbered in any
way, except for Permitted Encumbrances, any part of the
Collateral. Each Obligor shall defend ACM Agent's
interests in the Collateral against any and all Persons
whatsoever. At any time following the occurrence and
during the continuance of an Event of Default and upon
demand by ACM Agent for payment of all Obligations, ACM
Agent shall have the right to take possession of the
indicia of the Collateral and the Collateral in
whatever physical form contained, including without
limitation: labels, stationery, documents, instruments
and advertising materials. If ACM Agent exercises this
right to take possession of the Collateral, Obligors
shall, upon demand, assemble it in the best manner
possible and make it available to ACM Agent at a place
reasonably convenient to ACM Agent. In addition, with
respect to all Collateral, ACM Agent and Lenders shall
be entitled to all of the rights and remedies set forth
herein and further provided by the Uniform Commercial
Code or other applicable law. Each Obligor shall, and
ACM Agent may, at its option, instruct all suppliers,
carriers, forwarders, warehouses or others receiving or
holding cash, checks, Inventory, documents or
instruments in which ACM Agent holds a security
interest to deliver same to ACM Agent and/or subject to
ACM Agent's order and if they shall come into any
Obligor's possession, they, and each of them, shall be
held by such Obligor in trust as ACM Agent's trustee,
and such Obligor will immediately deliver them to ACM
Agent in their original form together with any
necessary endorsement.
4.7. Books and Records. Each Obligor shall
(a) keep proper books of record and account in which
full, true and correct entries will be made of all
dealings or transactions of or in relation to its
business and affairs; (b) set up on its books accruals
with respect to all taxes, assessments, charges, levies
and claims; and (c) on a reasonably current basis set
up on its books, from its earnings, allowances against
doubtful Receivables, advances and investments and all
other proper accruals (including without limitation by
reason of enumeration, accruals for premiums, if any,
due on required payments and accruals for depreciation,
obsolescence, or amortization of properties), which
should be set aside from such earnings in connection
with its business. All determinations pursuant to this
subsection shall be made in accordance with, or as
required by, GAAP consistently applied in the opinion
of the Accountants as shall then be regularly engaged
by Obligors.
4.8. Financial Disclosure. Each Obligor
hereby irrevocably authorizes and directs all
accountants and auditors employed by such Obligor at
any time during the Term to exhibit and deliver to ACM
Agent and each Lender copies of any of such Obligor's
financial statements, trial balances or other
accounting records of any sort in the accountant's or
auditor's possession, and to disclose to ACM Agent and
each Lender any information such accountants may have
concerning such Obligor's financial status and business
operations; however, ACM Agent and each Lender will
attempt to obtain such information or materials
directly from such Obligor prior to obtaining such
information or materials from such accountants. Each
Obligor hereby authorizes all federal, state and
municipal authorities to furnish to ACM Agent and each
Lender copies of reports or examinations relating to
such Obligor, whether made by such Obligor or
otherwise; however, ACM Agent and each Lender will
attempt to obtain such information or materials
directly from such Obligor prior to obtaining such
information or materials from such authorities.
4.9. Compliance with Laws. Each Obligor shall
comply with all acts, rules, regulations and orders of
any legislative, administrative or judicial body or
official applicable to its respective Collateral or any
part thereof or to the operation of such Obligor's
business the non-compliance with which would have a
material adverse effect on its respective Collateral,
or the operations, business or condition (financial or
otherwise) of such Obligor. Each Obligor may, however,
contest or dispute any acts, rules, regulations, orders
and directions of those bodies or officials in any
reasonable manner, provided that any related Lien is
inchoate or stayed and sufficient reserves are
established to the reasonable satisfaction of ACM Agent
to protect ACM Agent's Lien on or security interest in
the Collateral. The Collateral at all times shall be
maintained in accordance with the requirements of all
insurance carriers which provide insurance with respect
to the Collateral so that such insurance shall remain
in full force and effect.
4.10. Inspection of Premises. At all
reasonable times and, so long as no Default or Event of
Default has occurred and is continuing, with reasonable
notice, ACM Agent or any Lender shall have full access
to and the right to audit, check, inspect and make
abstracts and copies from each Obligor's books,
records, audits, correspondence and all other papers
relating to the Collateral and the operation of each
Obligor's business. ACM Agent, any Lender and their
agents may enter upon any Obligor's premises at any
time during business hours and at any other reasonable
time, and from time to time, for the purpose of
inspecting the Collateral and any and all records
pertaining thereto and the operation of such Obligor's
business.
4.11. Insurance. Each Obligor shall bear the
full risk of any loss of any nature whatsoever with
respect to the Collateral. At each Obligor's own cost
and expense in amounts and with carriers acceptable to
ACM Agent, each Obligor shall (a) keep all its
insurable properties and properties in which such
Obligor has an interest insured against the hazards of
fire, flood, sprinkler leakage, those hazards covered
by extended coverage insurance and such other hazards,
and for such amounts, as is customary in the case of
companies engaged in businesses similar to such
Obligor's including, without limitation, business
interruption insurance; (b) maintain a bond in such
amounts as is customary in the case of companies
engaged in businesses similar to such Obligor's
insuring against larceny, embezzlement or other
criminal misappropriation of insured's officers and
employees who may either singly or jointly with others
at any time have access to the assets or funds of such
Obligor either directly or through authority to draw
upon such funds or to direct generally the disposition
of such assets; (c) maintain public and product
liability insurance against claims for personal injury,
death or property damage suffered by others; (d)
maintain all such worker's compensation or similar
insurance as may be required under the laws of any
state or jurisdiction in which such Obligor is engaged
in business; (e) furnish ACM Agent with (i) copies of
all policies and evidence of the maintenance of such
policies by the renewal thereof at least thirty (30)
days before any expiration date, and (ii) appropriate
loss payable endorsements in form and substance
satisfactory to ACM Agent, naming ACM Agent as a co-
insured and loss payee as its interests may appear with
respect to all insurance coverage referred to in
clauses (a) and (b) above as such coverage relates to
the Collateral, and providing (A) that all proceeds
thereunder with respect to the Collateral shall be
payable to ACM Agent, (B) no such insurance shall be
affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that
such policy and loss payable clauses may not be
cancelled, amended or terminated unless at least thirty
(30) days' prior written notice is given to ACM Agent.
In the event of any loss thereunder, the carriers named
therein hereby are directed by ACM Agent and the
applicable Obligor to make payment for such loss with
respect to the Collateral to ACM Agent and not to such
Obligor and ACM Agent jointly. If any insurance losses
are paid by check, draft or other instrument payable to
any Obligor and ACM Agent jointly, ACM Agent may
endorse such Obligor's name thereon and do such other
things as ACM Agent may deem advisable to reduce the
same to cash with respect to the Collateral. ACM Agent
is hereby authorized to adjust and compromise claims
under insurance coverage referred to in clauses (a) and
(b) above with respect to the Collateral. All loss
recoveries received by ACM Agent upon any such
insurance with respect to the Collateral may be applied
to the Obligations, in such order as ACM Agent in its
sole discretion shall determine; provided, however,
that the obligations of Lenders to make Advances shall
not be terminated due solely to such application of
loss recoveries. Any surplus shall be paid by ACM
Agent to Obligors or applied as may be otherwise
required by law. Any deficiency thereon shall be paid
by Obligors to ACM Agent, on demand.
4.12. Failure to Pay Insurance. If any Obligor
fails to obtain insurance as hereinabove provided, or
to keep the same in force, ACM Agent, if ACM Agent so
elects, may obtain such insurance and pay the premium
therefor for Obligors' account, and charge Borrowers'
account therefor and such expenses so paid shall be
part of the Obligations. ACM Agent shall endeavor to
give notice of the payment of such premium to Borrowing
Agent either simultaneously therewith or shortly
thereafter, provided, however, ACM Agent shall have no
liability to Obligors for failure to give such notice.
4.13. Payment of Taxes. Each Obligor will pay,
when due, all taxes, assessments and other Charges
lawfully levied or assessed upon such Obligor or any of
the Collateral including, without limitation, real and
personal property taxes, assessments and charges and
all franchise, income, employment, social security
benefits, withholding, and sales taxes except Charges
being contested in good faith and by appropriate
proceedings and with respect to which proper reserves
have been taken by Obligors and provided that no Lien
shall be incurred that will affect the priority of the
Liens in favor of ACM Agent or the value of the assets
in which ACM Agent has a Lien, unless a stay of
enforcement of any such Lien shall be in effect. If
any Charge by any governmental authority is or may be
imposed on or as a result of any transaction between
any Obligor, ACM Agent, any Co-Agent or Lenders which
ACM Agent, any Co-Agent or any Lender may be required
to withhold or pay or if any Charges remain unpaid
after the date fixed for their payment, or if any claim
shall be made which, in ACM Agent's or Lender's
opinion, may possibly create a valid Lien on the
Collateral, ACM Agent may without notice to Obligors
pay the Charges and each Obligor hereby indemnifies and
holds ACM Agent, each Co-Agent and each Lender harmless
in respect thereof. The amount of any payment by ACM
Agent under this Section 4.13 shall be charged to the
Borrowers' account as a Revolving Advance and added to
the Obligations and, until Obligors shall furnish ACM
Agent with an indemnity therefor (or supply ACM Agent
with evidence satisfactory to ACM Agent that due
provision for the payment thereof has been made), ACM
Agent may hold without interest any balance standing to
Obligors' credit and ACM Agent shall retain its
security interest in any and all Collateral held by ACM
Agent.
4.14. Payment of Leasehold Obligations. Each
Obligor shall at all times pay, when and as due (taking
into account any applicable grace period), its rental
obligations under all leases of Real Property under
which it is a tenant, and shall otherwise comply, in
all material respects, with all other terms of such
leases and keep them in full force and effect unless
termination thereof could not reasonably be determined
to have a material adverse effect on any Obligor or
such Obligor's business or if less than $100,000 of
Inventory is at the leased location to be terminated,
and at ACM Agent's request will provide evidence of
having done so.
4.15. Receivables.
(a) Nature of Receivables. Each of the
Receivables shall be a bona fide and valid account
representing a bona fide indebtedness incurred by the
Customer therein named, for a fixed sum as set forth in
the invoice relating thereto (provided immaterial or
unintentional invoice errors shall not be deemed to be
a breach hereof) with respect to an absolute sale or
lease and delivery of goods upon stated terms of a
Obligor, or work, labor or services theretofore
rendered by a Obligor as of the date each Receivable is
created. Same shall be due and owing in accordance
with the applicable Obligor's standard terms of sale
without dispute, setoff or counterclaim except as may
be stated on the accounts receivable schedules
delivered by the Obligors to ACM Agent.
(b) Solvency of Customers. Each
Customer, to the best of each Obligor's knowledge, as
of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the
Customer is obligated in full when due or with respect
to such Customers of any Obligor who are not solvent
such Obligor has set up on its books and in its
financial records bad debt reserves adequate to cover
such Receivables.
(c) Locations of Obligor. Each
Obligor's chief executive office is located at the
addresses set forth on Schedule 4.15(c) hereto. Until
written notice is given to ACM Agent by Borrowing Agent
of any other office at which Obligor keeps its records
pertaining to Receivables, all such records shall be
kept at such executive office.
(d) Collection of Receivables. Until
any Obligor's authority to do so is terminated by ACM
Agent (which notice ACM Agent may give at any time
following the occurrence of an Event of Default or when
ACM Agent in its reasonable discretion deems it to be
in Lenders' best interest to do so), each Obligor will,
at such Obligor's sole cost and expense, but on ACM
Agent's behalf and for ACM Agent's account, collect as
ACM Agent's property and in trust for ACM Agent all
amounts received on Receivables, and shall not
commingle such collections with any Obligor's funds or
use the same except to pay Obligations. Each Obligor
shall, upon request, deliver to ACM Agent or the
Blocked Accounts or the Depository Accounts in original
form and on the date of receipt thereof, all checks,
drafts, notes, money orders, acceptances, cash and
other evidences of Indebtedness that represent proceeds
of Collateral (excluding proceeds of tax refunds which
are required to be delivered to ACM Agent upon request
after an Event of Default).
(e) Notification of Assignment of
Receivables. At any time following the occurrence of
an Event of Default or a Default, ACM Agent shall have
the right to send notice of the assignment of, and ACM
Agent's security interest in, the Receivables to any
and all Customers or any third party holding or
otherwise concerned with any of the Collateral and
thereafter, ACM Agent shall have the sole right to
collect the Receivables, take possession of the
Collateral, or both. ACM Agent's actual collection
expenses, including, but not limited to, stationery and
postage, telephone and telegraph, secretarial and
clerical expenses and the salaries of any collection
personnel used for collection, may be charged to
Borrowers' account and added to the Obligations.
(f) Power of ACM Agent to Act on
Obligors' Behalf. ACM Agent shall have the right to
receive, endorse, assign and/or deliver in the name of
ACM Agent or any Obligor any and all checks, drafts and
other instruments for the payment of money relating to
the Receivables, and such Obligor hereby waives notice
of presentment, protest and non-payment of any
instrument so endorsed to the extent permitted by law.
Each Obligor hereby constitutes ACM Agent or ACM
Agent's designee as such Obligor's attorney with power
(A) at any time (i) to endorse such Obligor's name upon
any notes, acceptances, checks, drafts, money orders or
other evidences of payment relating to the Collateral;
(ii) to sign such Obligor's name on any invoice or bill
of lading relating to any of the Receivables, drafts
against Customers, assignments and verifications of
Receivables; (iii) to send verifications of Receivables
to any Customer; (iv) to sign such Obligor's name on
all financing statements or any other documents or
instruments deemed necessary or appropriate by ACM
Agent to preserve, protect, or perfect ACM Agent's
interest in the Collateral and to file same and (v) to
do all other acts and things necessary to carry out
this Agreement other than as provided for in subclause
(B) below; and (B) following the occurrence and during
the continuance of an Event of Default: (i) to demand
payment of the Receivables; (ii) to enforce payment of
the Receivables by legal proceedings or otherwise;
(iii) to exercise all of such Obligor's rights and
remedies with respect to the collection of the
Receivables and any other Collateral; (iv) to settle,
adjust, compromise, extend or renew the Receivables;
(v) to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (vi) to
prepare, file and sign such Obligor's name on a proof
of claim in bankruptcy or similar document against any
Customer; and (vii) to prepare, file and sign such
Obligor's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection
with the Receivables. All acts of said attorney or
designee are hereby ratified and approved, and said
attorney or designee shall not be liable for any acts
of omission or commission nor for any error of judgment
or mistake of fact or of law, unless done maliciously
or with gross (not mere) negligence; this power being
coupled with an interest is irrevocable while any of
the Obligations remain unpaid. ACM Agent shall have
the right at any time following the occurrence and
during the continuance of an Event of Default, to
change the address for delivery of mail addressed to
any Obligor to such address as ACM Agent may designate
and to receive, open and dispose of all mail addressed
to any Obligor.
(g) No Liability. Neither ACM Agent,
any Co-Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any
kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in
payment thereof, or for any damage resulting therefrom
unless such damage arises from the willful misconduct
or gross (not mere) negligence of ACM Agent, any Co-
Agent or any Lender. Following the occurrence of an
Event of Default, ACM Agent may, without notice or
consent from any Obligor, sue upon or otherwise
collect, extend the time of payment of, compromise or
settle for cash, credit or upon any terms any of the
Receivables or any other securities, instruments or
insurance applicable thereto and/or release any obligor
thereof. ACM Agent is authorized and empowered to
accept following the occurrence of an Event of Default
or Default the return of the goods represented by any
of the Receivables, without notice to or consent by any
Obligor, all without discharging or in any way
affecting any Obligor's liability hereunder.
(h) Establishment of a Lockbox Account,
Dominion Account. All proceeds of Collateral
(excluding proceeds of tax refunds which are required
to be delivered to ACM Agent only upon request after an
Event of Default) shall, at the direction of ACM Agent,
be deposited by Obligors into a lockbox account,
dominion account or such other "blocked account"
("Blocked Accounts") as ACM Agent may require pursuant
to an arrangement with such bank as may be selected by
Obligors and be acceptable to ACM Agent. Obligors
shall issue to any such bank, an irrevocable letter of
instruction directing said bank to transfer such funds
so deposited to ACM Agent, either to any account
maintained by ACM Agent at said bank or by wire
transfer to appropriate account(s) of ACM Agent. All
funds deposited in any Blocked Account with respect to
the Collateral shall immediately become the property of
ACM Agent and Obligors shall obtain the agreement by
such bank to waive any offset rights against the funds
so deposited. Neither ACM Agent, any Co-Agent nor any
Lender assumes any responsibility for such "blocked
account" arrangement, including without limitation, any
claim of accord and satisfaction or release with
respect to deposits accepted by any bank thereunder.
Alternatively, ACM Agent may establish depository
accounts ("Depository Accounts") in the name of ACM
Agent at a bank or banks for the deposit of such funds
and Obligors shall deposit all proceeds of Collateral
(excluding proceeds of tax refunds which are required
to be delivered to ACM Agent only upon request after an
Event of Default) or cause same to be deposited, in
kind, in such Depository Accounts of ACM Agent in lieu
of depositing same to the Blocked Accounts.
(i) Adjustments. No Obligor will,
without ACM Agent's consent, compromise or adjust any
Receivables (or extend the time for payment thereof) or
accept any returns of merchandise or grant any
additional discounts, allowances or credits thereon
except for those compromises, adjustments, returns,
discounts, credits and allowances as have been
heretofore customary in the business of such Obligor.
4.16. Inventory. All Inventory has been, and
will be, produced by Obligor in accordance in all
material respects with the Federal Fair Labor Standards
Act of 1938, as amended, and all rules, regulations and
orders thereunder.
4.17. Intentionally Omitted.
4.18. Exculpation of Liability. Except as
specifically provided in this Agreement, nothing herein
contained shall be construed to constitute ACM Agent,
any Co-Agent or any Lender as any Obligor's agent for
any purpose whatsoever, nor shall ACM Agent, any Co-
Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of
any part of the Collateral wherever the same may be
located and regardless of the cause thereof. Neither
ACM Agent, any Co-Agent nor any Lender, whether by
anything herein or in any assignment or otherwise,
assumes any Obligor's obligations under any contract or
agreement assigned to ACM Agent any Co-Agent or such
Lender, and neither ACM Agent, any Co-Agent nor any
Lender shall be responsible in any way for the
performance by any Obligor of any of the terms and
conditions thereof.
4.19. Financing Statements. Except as respects
the financing statements filed by ACM Agent and the
financing statements described on Schedule 1.2, no
financing statement covering any of the Collateral or
any proceeds thereof is on file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
Each Obligor represents and warrants as follows:
5.1. Authority. Each Obligor has full power,
authority and legal right to enter into this Agreement
and the Other Documents and to perform all its
respective Obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement
and of the Other Documents (a) are within such
Obligor's corporate powers, have been duly authorized,
are not in contravention of law or the terms of such
Obligor's by-laws, certificate of incorporation or
other applicable documents relating to such Obligor's
formation or to the conduct of such Obligor's business
or of any material agreement or undertaking to which
such Obligor is a party or by which such Obligor is
bound, and (b) will not conflict with nor result in any
breach in any of the provisions of or constitute a
default under or result in the creation of any Lien
except Permitted Encumbrances upon any asset of such
Obligor under the provisions of any agreement, charter
document, instrument, by-law, or other instrument to
which such Obligor or its property is a party or by
which it may be bound.
5.2. Formation and Qualification. (a) Each
Obligor is duly incorporated and in good standing under
the laws of the applicable state listed on Schedule
5.2(a) and is qualified to do business and is in good
standing in the states listed on Schedule 5.2(a) which
constitute all states in which qualification and good
standing are necessary for such Obligor to conduct its
business and own its property and where the failure to
so qualify would have a material adverse effect on such
Obligor or its business. Each Obligor has delivered to
ACM Agent true and complete copies of its certificate
of incorporation and by-laws and will promptly notify
ACM Agent of any amendment or changes thereto.
(b) The only Subsidiaries of each
Obligor are listed on Schedule 5.2 (b).
5.3. Survival of Representations and
Warranties. All representations and warranties of each
Obligor contained in this Agreement and the Other
Documents shall be true at the time of such Obligor's
execution of this Agreement and the Other Documents,
and shall survive the execution, delivery and
acceptance thereof by the parties thereto and the
closing of the transactions described therein or
related thereto.
5.4. Tax Returns. Each Obligor's federal tax
identification number is set forth on Schedule 5.4.
Each Obligor has filed all federal, state and local tax
returns and other reports each is required by law to
file and has paid all taxes, assessments, fees and
other governmental charges that are due and payable
except those being contested in good faith and by
appropriate proceedings and with respect to which
proper reserves have been taken by Obligors and
provided that no Lien shall be incurred that will
affect the priority of the Liens in favor of ACM Agent
or the value of the assets in which ACM Agent has a
Lien unless a stay of enforcement of any such Lien
shall be in effect. Federal and state tax returns of
each Obligor have been examined and reported upon by
the appropriate taxing authority or closed by
applicable statute and satisfied for all fiscal years
prior to and including the fiscal year ending September
1986. The provision for taxes on the books of each
Obligor are adequate for all years not closed by
applicable statutes, and for its current fiscal year,
and no Obligor has knowledge of any deficiency or
additional assessment in connection therewith not
provided for on its books.
5.5. Financial Statements.
(a) The pro forma balance sheet of
Holdings on a Consolidated Basis (the "Pro Forma
Balance Sheet") furnished to ACM Agent on the Closing
Date reflects the consummation of the transactions
contemplated under this Agreement (the "Transactions")
and is accurate, complete and correct and fairly
reflects the financial condition of Holdings on a
Consolidated Basis as of the Closing Date after giving
effect to the Transactions. The Pro Forma Balance
Sheet has been certified as accurate, complete and
correct in all material respects by the Chief Financial
Officer of Holdings.
(b) The twelve-month cash flow
projections of Holdings on a Consolidated Basis and
their projected balance sheets as of the Closing Date,
copies of which are annexed hereto as Exhibit 5.5(b)
(the "Projections") were prepared by the Chief
Financial Officer of Holdings are based on underlying
assumptions which provide a reasonable basis for the
projections contained therein and reflect Obligors'
judgment based on present circumstances of the most
likely set of conditions and course of action for the
projected period. The cash flow Projections together
with the Pro Forma Balance Sheet, are referred to as
the "Pro Forma Financial Statements".
(c) The financial statements of
Holdings on a Consolidated Basis and of each Obligor on
a consolidating basis as of April 1, 1995, such
financial statements of Holdings on a Consolidated
Basis accompanied by reports thereon containing
opinions without qualification by independent certified
public accountants, copies of which have been delivered
to ACM Agent, have been prepared in accordance with
GAAP, consistently applied (except for changes in
application in which such accountants concur), and
present fairly the financial position of the Obligors
and their Subsidiaries at such date and the results of
their operations for such period. Since April 1, 1995
there has been no change in the condition, financial or
otherwise, of Holdings on a Consolidated Basis, as
shown on the consolidated balance sheet as of such
date, except changes in the ordinary course of
business, none of which individually or in the
aggregate has been materially adverse.
5.6. Corporate Name. No Obligor has been
known by any other corporate name in the past five
years and does not sell Inventory under any other name
except as set forth on Schedule 5.6, nor has any
Obligor been the surviving corporation of a merger or
consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5)
years.
5.7. O.S.H.A. and Environmental Compliance.
Except as disclosed on Schedule 5.7:
(a) Each Obligor has duly complied
with, and its facilities, business, assets, property,
leaseholds and Equipment are in compliance in all
material respects with, the provisions of the Federal
Occupational Safety and Health Act, the Environmental
Protection Act, RCRA and all other Environmental Laws;
there are no outstanding citations, notices or orders
of non-compliance issued to any Obligor or relating to
its business, assets, property, leaseholds or Equipment
under any such laws, rules or regulations, except as
could not reasonably be expected to have a material
adverse effect on any Obligor or such Obligor's
business.
(b) Each Obligor has been issued all
required federal, state and local licenses,
certificates or permits relating to all applicable
Environmental Laws, except for those licenses,
certificates or permits the failure of which to obtain
could not reasonably be determined to have a material
adverse effect on any Obligor or such Obligor's
business.
(c) (i) There are no visible signs of
releases, spills, discharges, leaks or disposal
(collectively referred to as "Releases") of Hazardous
Substances at, upon, under or within any Real Property
or any premises leased by any Obligor; (ii) neither the
Real Property nor any premises leased by any Obligor
has ever been used as a treatment, storage or disposal
facility of Hazardous Waste in violation of any
applicable Environmental Laws; and (iii) no Hazardous
Substances are present on the Real Property or any
premises leased by any Obligor, except for such amounts
or concentration that could not result in liability
under any applicable Environmental Laws, and excepting
such quantities as are handled in accordance with all
applicable manufacturer's instructions and governmental
regulations and in proper storage containers and as are
necessary for the operation of the commercial business
of any Obligor or of its tenants.
5.8. Solvency; No Litigation, Violation,
Indebtedness or Default.
(a) Obligors are solvent, able to pay
their debts as they mature, have capital sufficient to
carry on their business and all businesses in which
they are about to engage, and (i) as of the Closing
Date, the fair present saleable value of their assets,
calculated on a going concern basis, is in excess of
the amount of their liabilities and (ii) Obligors are
able to pay their obligations as they become due and
Holdings on a Consolidated Basis does not have
unreasonably small capital in order to carry on their
business.
(b) Except as disclosed in Schedule
5.8(b), no Obligor has any pending or threatened
litigation, arbitration, actions or proceedings which
involve the possibility of materially and adversely
affecting its business, assets, operations, condition
or prospects, financial or otherwise, or the
Collateral, or the ability of such Obligor to perform
this Agreement.
(c) No Obligor is in violation of any
applicable statute, regulation or ordinance in any
respect materially and adversely affecting the
Collateral or its business, assets, operations or
condition (financial or otherwise), or prospects, nor
is any Obligor in violation of any order of any court,
governmental authority or arbitration board or
tribunal.
(d) No Obligor or any member of the
Controlled Group maintains or contributes to any Plan
other than those listed on Schedule 5.8(d) hereto.
Except as set forth in Schedule 5.8(d), (i) no Plan has
incurred any "accumulated funding deficiency," as
defined in Section 302(a)(2) of ERISA and Section
412(a) of the Code, whether or not waived, and each
Obligor and each member of the Controlled Group has met
all applicable minimum funding requirements under
Section 302 of ERISA in respect of each Plan, (ii) each
Plan which is intended to be a qualified plan under
Section 401(a) of the Code as currently in effect has
been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the
trust related thereto is exempt from federal income tax
under Section 501(a) of the Code, (iii) no Obligor or
any member of the Controlled Group has incurred any
liability to the PBGC other than for the payment of
premiums, and there are no premium payments which have
become due which are unpaid, (iv) no Plan has been
terminated by the plan administrator thereof or by the
PBGC, and there is no occurrence which would cause the
PBGC to institute proceedings under Title IV of ERISA
to terminate any Plan, (v) at this time, the current
value of the assets of each Plan exceeds the present
value of the accrued benefits and other liabilities of
such Plan and no Obligor or any member of the
Controlled Group knows of any facts or circumstances
which would materially change the value of such assets
and accrued benefits and other liabilities, (vi) no
Obligor or any member of the Controlled Group has
breached any of the responsibilities, obligations or
duties imposed on it by ERISA with respect to any Plan,
(vii) no Obligor or any member of a Controlled Group
has incurred any liability for any excise tax arising
under Section 4972 or 4980B of the Code, and no fact
exists which could give rise to any such liability,
(viii) no Obligor or any member of the Controlled Group
nor any fiduciary of, nor any trustee to, any Plan, has
engaged in a "prohibited transaction" described in
Section 406 of the ERISA or Section 4975 of the Code
nor taken any action which would constitute or result
in a Termination Event with respect to any such Plan
which is subject to ERISA, (ix) each Obligor and each
member of the Controlled Group has made all contribu-
tions due and payable with respect to each Plan, (x)
there exists no event described in Section 4043(b) of
ERISA, for which the thirty (30) day notice period
contained in 29 CFR section2615.3 has not been waived, (xi)
no Obligor or any member of the Controlled Group has
any fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons
other than employees or former employees of any Obligor
and any member of the Controlled Group, and (xii) no
Obligor or any member of the Controlled Group has
withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980.
5.9. Patents, Trademarks, Copyrights and
Licenses. All patents, patent applications,
trademarks, trademark applications, service marks,
service mark applications, copyrights, copyright
applications, design rights, tradenames, assumed names,
trade secrets and licenses owned or utilized by any
Obligor which are necessary for the operation of such
Obligor's business are set forth on Schedule 5.9, are
valid and have been duly registered or filed with all
appropriate governmental authorities and constitute all
of the intellectual property rights which are necessary
for the operation of its business; there is no
objection to or pending challenge to the validity of
any such material patent, trademark, copyright, design
right, tradename, trade secret or license and no
Obligor is aware of any grounds for any challenge,
except as set forth in Schedule 5.9 hereto. Each
patent, patent application, patent license, trademark,
trademark application, trademark license, service mark,
service mark application, service mark license,
copyright, copyright application and copyright license
owned or held by any Obligor and all trade secrets used
by any Obligor consist of original material or property
developed by such Obligor or was lawfully acquired by
such Obligor from the proper and lawful owner thereof.
Each of such items has been maintained so as to
preserve the value thereof from the date of creation or
acquisition thereof to the extent that such items are
necessary for the operation of such Obligor's business.
With respect to all software (other than commercial
software typically sold by retail establishments) used
by any Obligor, such Obligor is in possession of all
source and object codes related to each piece of
software or is the beneficiary of a source code escrow
agreement, each such source code escrow agreement being
listed on Schedule 5.9 hereto.
5.10. Licenses and Permits. Except as set
forth in Schedule 5.10, each Obligor (a) is in
compliance with and (b) has procured and is now in
possession of, all material licenses or permits
required by any applicable federal, state, or local law
or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes
to conduct business and where the failure to procure
such licenses or permits would have a material adverse
effect on the business, properties, condition
(financial or otherwise) or operations, present or
prospective of such Obligor.
5.11. Default of Indebtedness. No Obligor is
in default in the payment of the principal of or
interest on any material Indebtedness or under any
instrument or agreement under or subject to which any
material Indebtedness has been issued and no event has
occurred under the provisions of any such instrument or
agreement which with or without the lapse of time or
the giving of notice, or both, constitutes or would
constitute an event of default thereunder.
5.12. No Default. No Obligor is in default in
the payment or performance of any of its material
contractual obligations and no Default has occurred.
5.13. No Burdensome Restrictions. No Obligor
is party to any contract or agreement the performance
of which would materially adversely affect the
business, assets, operations, condition (financial or
otherwise) or prospects of such Obligor. No Obligor
has agreed or consented to cause or permit in the
future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or
hereafter acquired, to be subject to a Lien which is
not a Permitted Encumbrance.
5.14. No Labor Disputes. No Obligor is
involved in any labor dispute; there are no strikes or
walkouts or union organization of any Obligor's
employees threatened or in existence and no labor
contract is scheduled to expire during the Term other
than as set forth on Schedule 5.14 hereto.
5.15. Margin Regulations. No Obligor is
engaged, nor will it engage, principally or as one of
its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying"
any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U or
Regulation G of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter
in effect. No part of the proceeds of any Advance will
be used for "purchasing" or "carrying" "margin stock"
as defined in Regulation U of such Board of Governors.
5.16. Investment Company Act. No Obligor is an
"investment company" registered or required to be
registered under the Investment Company Act of 1940, as
amended, nor is it controlled by such a company.
5.17. Disclosure. No representation or
warranty made by any Obligor in this Agreement or in
any financial statement, report, certificate or any
other document furnished in connection herewith
contains any untrue statement of material fact or omits
to state any material fact necessary to make the
statements herein or therein not misleading. There is
no fact known to any Obligor or which reasonably should
be known to any Obligor which Obligors have not
disclosed to ACM Agent in writing with respect to the
Transactions which materially and adversely affects the
condition (financial or otherwise), results of
operations, business, or assets of any Obligor.
5.18. Swaps. No Obligor is a party to, nor
will it be a party to, any swap agreement whereby such
Obligor has agreed or will agree to swap interest rates
or currencies unless same provides that damages upon
termination following an event of default thereunder
are payable on an unlimited "two-way basis" without
regard to fault on the part of either party.
5.19. Conflicting Agreements. No provision of
any mortgage, indenture, contract, agreement, judgment,
decree or order binding on any Obligor or affecting the
Collateral conflicts with, or requires any Consent
which has not already been obtained to, or would in any
way prevent the execution, delivery or performance of,
the terms of this Agreement or the Other Documents.
5.20. Application of Certain Laws and
Regulations. No Obligor nor any Affiliate of any
Obligor is subject to any statute, rule or regulation
which regulates the incurrence of any Indebtedness,
including without limitation, statutes or regulations
relative to common or interstate carriers or to the
sale of electricity, gas, steam, water, telephone,
telegraph or other public utility services.
5.21. Business and Property of Obligors. Upon
and after the Closing Date, Obligors (other than
Holdings, Air and Management) do not propose to engage
in any business other than the manufacture and sale of
adhesives, steel and steel products and related
activities and activities necessary to conduct the
foregoing. On the Closing Date, each Obligor will own
all the property and possess all of the rights and
Consents necessary for the conduct of the business of
such Obligor.
VI. AFFIRMATIVE COVENANTS.
Each Obligor shall and shall cause each member
of the Holdings Group to, until payment in full of the
Obligations and termination of this Agreement:
6.1. Payment of Fees. Pay to ACM Agent on
demand all usual and customary fees and expenses which
ACM Agent incurs in connection with (a) the forwarding
of Advance proceeds and (b) the establishment and
maintenance of any Blocked Accounts or Depository
Accounts as provided for in Section 4.15(h). ACM Agent
may, without making demand, charge the account of
Borrowers for all such fees and expenses.
6.2. Conduct of Business and Maintenance of
Existence and Assets. Except as otherwise provided in
this Agreement, (a) conduct continuously and operate
actively its business according to good business
practices and maintain all of its properties useful or
necessary in its business in good working order and
condition (reasonable wear and tear excepted and except
as may be disposed of in accordance with the terms of
this Agreement), including, without limitation, all
licenses, patents, copyrights, design rights,
tradenames, trade secrets and trademarks and take all
actions necessary to enforce and protect the validity
of any intellectual property right or other right
included in the Collateral provided, however, that such
Obligor shall not in any event be required to maintain
any such licenses, patents, copyrights, design rights,
tradenames, trade secrets, trademarks or other
intellectual property rights which, in such Obligor's
judgment, are not necessary or material to the conduct
of such Obligor's business; (b) keep in full force and
effect its existence and comply in all material
respects with the laws and regulations governing the
conduct of its business where the failure to do so
would have a material adverse effect on such Obligor or
its business; and (c) make all such reports and pay all
such franchise and other taxes and license fees and do
all such other acts and things as may be lawfully
required to maintain its rights, licenses, leases,
powers and franchises under the laws of the United
States or any political subdivision thereof.
6.3. Violations. Promptly, but in any event
within ten (10) Business Days of occurrence, notify ACM
Agent in writing of any violation of any law, statute,
regulation or ordinance of any Governmental Body, or of
any agency thereof, applicable to any Obligor which may
materially and adversely affect the Collateral or any
Obligor's business, assets, operations, condition
(financial or otherwise) or prospects.
6.4. Government Receivables. Take all steps
necessary to protect ACM Agent's interest in the
Collateral under the Federal Assignment of Claims Act
or other applicable state or local statutes or
ordinances if individually or in the aggregate such
Collateral exceeds $50,000 in amount, and deliver to
ACM Agent appropriately endorsed, any instrument or
chattel paper connected with any such Receivables
arising out of contracts between any Obligor and the
United States, any state or any department, agency or
instrumentality of any of them.
6.5. Net Worth. Cause to be maintained at the
end of each fiscal quarter of Holdings, a Net Worth in
an amount not less than $65,000,000.
6.6. Current Ratio. Cause to be maintained at
all times a ratio of Current Assets to Current
Liabilities of not less than 1.5 to 1.0.
6.7. Interest Coverage. Cause to be
maintained as at the end of each fiscal quarter of
Holdings an Interest Coverage Ratio for the last four
fiscal quarters then ended equal to or greater than (a)
1.1 to 1.0 on the last day of the fiscal quarters ended
in fiscal year 1995; (b) 1.5 to 1.0 on the last day of
the fiscal quarters ended in fiscal year 1996; and (c)
1.75 to 1.0 on the last day of each fiscal quarter
thereafter.
6.8. Working Capital. Cause to be maintained
as at the end of each fiscal quarter of Holdings
Working Capital in an amount not less than $40,000,000.
6.9. Funded Debt to Net Worth. Cause to be
maintained as at the end of each fiscal quarter of
Holdings a ratio of Funded Debt to Net Worth of not
greater than 3.0 to 1.0.
6.10. Execution of Supplemental Instruments.
Execute and deliver to ACM Agent from time to time,
within ten (10) Business Days of demand by ACM Agent,
such supplemental agreements, statements, assignments
and transfers, or instructions or documents relating to
the Collateral, and such other instruments as ACM Agent
may request, in order that the full intent of this
Agreement may be carried into effect.
6.11. Payment of Indebtedness. Pay, discharge
or otherwise satisfy at or before maturity (subject,
where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment
practices) all its material obligations and liabilities
of whatever nature, except when the amount or validity
thereof is currently being contested in good faith by
appropriate proceedings and each Obligor shall have
provided for such reserves as ACM Agent may reasonably
deem proper and necessary, subject at all times to any
applicable subordination arrangement in favor of
Lenders.
6.12. Standards of Financial Statements. Cause
all financial statements referred to in Sections 9.6,
9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13 and 9.14 as to
which GAAP is applicable to be complete and correct in
all material respects (subject, in the case of interim
financial statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail
and, where applicable, in accordance with GAAP applied
consistently throughout the periods reflected therein
(except as concurred in by such reporting accountants
or officer, as the case may be, and disclosed therein).
6.13. Maintenance of Equipment. The Equipment
shall be maintained in good operating condition and
repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be
made so that the value and operating efficiency of the
Equipment shall be maintained and preserved. No
Obligor shall use or operate the Equipment in violation
of any law, statute, ordinance, code, rule or
regulation which violation could have a material
adverse effect on any Obligor's business, properties,
condition or prospects (financial or otherwise). Each
Obligor shall have the right to sell or otherwise
dispose of Equipment to the extent set forth in Section
7.1(b) hereof.
6.14. Environmental Matters. (a) Conduct its
operations at the Real Property and at any premises
leased by any Obligor in compliance in all material
respects with all applicable Environmental Laws, and
shall not place or permit to be placed any Hazardous
Substances on any Real Property or any premises leased
by any Obligor except as not prohibited by applicable
law or appropriate governmental authorities and which
could not reasonably be expected to have a material
adverse effect on any Obligor or such Obligor's
business or with respect to which Obligors have
promptly responded and are diligently taking all
necessary actions in order to safeguard the health of
any Person and to avoid subjecting the Collateral or
any Real Property to any Lien.
(b) Establish and maintain a system to
assure and monitor continued compliance with all
applicable Environmental Laws which system shall
include periodic reviews of such compliance.
(c) (i) employ in connection with the
use of the Real Property appropriate technology
necessary to maintain compliance with any applicable
Environmental Laws and (ii) dispose of any and all
Hazardous Waste generated at the Real Property only at
facilities and with carriers that maintain valid
permits under RCRA and any other applicable
Environmental Laws. Obligors shall use their best
efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment,
transport, storage or disposal facilities or operators
employed by Obligors in connection with the transport
or disposal of any Hazardous Waste generated at the
Real Property.
(d) In the event any Obligor obtains,
gives or receives notice of any Release or threat of
Release of a reportable quantity of any Hazardous
Substances at the Real Property (any such event being
hereinafter referred to as a "Hazardous Discharge") or
receives any notice of violation, request for
information or notification that it is potentially
responsible for investigation or cleanup of
environmental conditions at the Real Property, demand
letter or complaint, order, citation, or other written
notice with regard to any Hazardous Discharge or
violation of Environmental Laws affecting the Real
Property or any Obligor's interest therein (any of the
foregoing is referred to herein as an "Environmental
Complaint") from any Person, including any state agency
responsible in whole or in part for environmental
matters in the state in which the Real Property is
located or the United States Environmental Protection
Agency (any such person or entity hereinafter the
"Authority"), within five (5) Business Days, give
written notice of same to ACM Agent detailing facts and
circumstances of which any Obligor is aware giving rise
to the Hazardous Discharge or Environmental Complaint,
except for such Hazardous Discharge or Environmental
Complaint which could not reasonably be expected to
have a material adverse effect on any Obligor or such
Obligor's business. Such information is to be provided
to allow ACM Agent to protect its security interest in
the Collateral and is not intended to create nor shall
it create any obligation upon ACM Agent or any Lender
with respect thereto. Obligors shall promptly forward
to ACM Agent copies of all documents and reports
concerning a Hazardous Discharge at the Real Property
that any Obligor is required to file under any
Environmental Laws which could reasonably be expected
to have a material adverse effect on any Obligor or
such Obligor's business. Such information is to be
provided solely to allow ACM Agent to protect ACM
Agent's security interest in the Collateral.
(e) Promptly forward to ACM Agent
copies of any request for information, notification of
potential liability, demand letter relating to
potential responsibility with respect to the
investigation or cleanup of Hazardous Substances at any
site other than the Real Property listed on Schedule
1.2A hereto, operated or used by any Obligor to dispose
of Hazardous Substances, except for such correspondence
concerning subject matter which could not reasonably be
expected to have a material adverse effect on any
Obligor or such Obligor's business, and Obligors shall
continue to forward copies of correspondence between
any Obligor and the Authority regarding such claims to
Lender until the claim is settled.
(f) Respond promptly to any Hazardous
Discharge or Environmental Complaint and take all
necessary action in order to safeguard the health of
any Person and to avoid subjecting the Collateral or
Real Property to any Lien.
(g) In the event that ACM Agent
reasonably concludes that a Hazardous Discharge that
could have a material adverse effect on any Obligor or
such Obligor's business has occurred, promptly upon the
written request of ACM Agent, Obligors shall provide
ACM Agent, at Obligors' expense, with a copy of each
environmental site assessment or environmental audit
report prepared by an environmental engineering firm
for or on behalf of any Obligor, if any, which such
Obligor has obtained, to enable ACM Agent to assess
with a reasonable degree of certainty the existence of
a Hazardous Discharge and the potential costs in
connection with abatement, cleanup and removal of any
Hazardous Substances found on, under, at or within the
Real Property; provided, however, this provision shall
not obligate Obligors to obtain any such additional
assessments or reports.
(h) Defend and indemnify ACM Agent,
each Co-Agent and Lenders and hold ACM Agent, each Co-
Agent, any Lenders and their respective employees,
agents, directors and officers harmless from and
against all loss, liability, damage and expense,
claims, costs, fines and penalties, including
attorney's fees, suffered or incurred by ACM Agent or
Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any
Lien thereunder, with respect to any Hazardous
Discharge or the presence of any Hazardous Substances
affecting the Collateral, whether or not the same
originates or emerges from the Real Property or any
contiguous real estate, except to the extent such loss,
liability, damage and expense is attributable to any
Hazardous Discharge resulting from actions on the part
of ACM Agent or any Lender. Obligors' obligations
under this Section 6.14 shall arise upon the discovery
of the presence of any Hazardous Substances at the Real
Property, whether or not any federal, state, or local
environmental agency has taken or threatened any action
in connection with the presence of any Hazardous
Substances. Obligors' obligation and the
indemnifications hereunder shall survive the
termination of this Agreement.
VII. NEGATIVE COVENANTS.
No Obligor shall, nor shall any Obligor permit
any member of the Holdings Group to, until satisfaction
in full of the Obligations and termination of this
Agreement:
7.1. Merger, Consolidation, Acquisition and
Sale of Assets.
(a) (i) Enter into any merger,
consolidation or other reorganization with or into any
other Person or permit any other Person to merge,
consolidate or reorganize with or into it, except (x)
any Borrower or other member of Holdings Group (which
was a member of Holdings Group as of the Closing Date)
may merge with any other Borrower or other member of
Holdings Group (which was a member of Holdings Group as
of the Closing Date) upon prior written notice to ACM
Agent of such merger or liquidation; and (y) Imperial
may merge into or consolidate with another Person which
is not a member of the Holdings Group provided that all
Obligations owing to Lenders from Imperial shall be
satisfied in connection with such merger or
consolidation, and the Maximum Revolving Advance Amount
shall be permanently reduced by the Individual Maximum
Revolving Advance Amount with respect to Imperial.
(ii) Acquire all or a substantial
portion of the assets or stock of any Person unless,
after giving effect thereto, (x) Holdings on a
Consolidated Basis has Working Capital in an amount not
less than the sum of (a) $40,000,000 plus (b) scheduled
principal payments on Indebtedness due within 36 months
of the date of such acquisition (excluding obligations
arising pursuant to this Agreement), and (y) any Person
whose stock is acquired in whole or in part shall
become a Guarantor.
(b) Sell, lease, transfer or otherwise
dispose of any of its properties or assets, except
(i) in the ordinary course of its business; (ii) assets
(other than Collateral) that are obsolete, real estate
held for resale or idle assets that any applicable
Borrower's (or other member of the Holdings Group's)
chief executive officer or chief financial officer
determines in his business judgment is not necessary to
the operation of its respective business; (iii) the
sale of all or substantially all of the stock or all or
substantially all of the assets of Imperial, provided
that all Obligations owing to Lenders from Imperial
shall be satisfied from the proceeds of such sale, and
the Maximum Revolving Advance Amount shall be
permanently reduced by the Individual Maximum Revolving
Advance Amount with respect to Imperial; (iv) any
transfers of properties or assets permitted by the
terms of Sections 7.10 or 7.12 hereof; and (v) any
lease of certain real property and improvements thereon
relating to the Old Newport Sheet Mill to L.B. Foster,
a Pennsylvania corporation.
7.2. Creation of Liens. Create or suffer to
exist any Lien upon or against any of its property or
assets now owned or hereafter acquired, except (i)
Permitted Encumbrances (ii) Liens solely on Equipment
or Real Property (in addition to those contemplated by
clauses (i), (iii), (iv) and (v) hereof) to secure
Indebtedness not to exceed $5,000,000 in the aggregate
at any time; (iii) Liens on Equipment, Real Property or
general intangibles (other than General Intangibles as
defined in Section 1.2 hereof) incurred in connection
with a public offering or private placement of debt or
securities otherwise permitted hereunder or to secure
the Intercompany Notes; (iv) Liens on Equipment, Real
Property or general intangibles (other than General
Intangibles as defined in Section 1.2 hereof) incurred
in connection with a refinancing of Indebtedness
referred to in Section 7.2(iii) hereof or Indebtedness
listed on Schedule 7.2 which is presently secured by
Liens on such Equipment, Real Property or general
intangibles (other than General Intangibles as defined
in Section 1.2 hereof), and which borrowings are
otherwise permitted hereunder; (v) with respect to any
member of the Holdings Group created or acquired
pursuant to the terms of Sections 7.1 or 7.12 hereof
any Liens on any of the assets of such Subsidiary
(except for Liens on any Collateral) in favor of the
holders of the debt or securities referenced under
Section 7.2(iii) or (iv) hereof; or (vi) the pledge of
the Intercompany Notes by Holdings to the trustee or
collateral agent for the holders of Indebtedness issued
in connection with the Public Offering or the
refinancing thereof; provided, however, all such Liens
pursuant to subparagraph (ii) which secure Indebtedness
in excess of $200,000 and all such Liens pursuant to
subparagraphs (iii) - (v) shall be subject to the terms
of intercreditor agreements in form and substance
satisfactory to ACM Agent.
7.3. Guarantees. Become liable upon the
obligations of any Person by assumption, endorsement or
guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on Schedule 7.3; (b) the
endorsement of checks in the ordinary course of
business; (c) guaranties issued by Holdings with
respect to (i) trade creditors or (ii) Indebtedness of
any of its Subsidiaries which is permitted under
Section 7.8(ii), (iv) and (v) hereof; (d) guarantees
issued by any member of Holdings Group with respect to
Indebtedness of Holdings issued in connection with the
Public Offering or the transactions contemplated under
Section 7.2(iv) hereof, and (e) with respect to any
member of the Holdings Group created or acquired
pursuant to the terms of Sections 7.1 or 7.12 hereof,
guarantees of Indebtedness of Holdings issued in
connection with the Public Offering or in connection
with the transactions contemplated under Section
7.2(iv) hereof.
7.4. Investments. Purchase or acquire
obligations or stock of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof; (b)
commercial paper with maturities of not more than 180
days and a published rating of not less than A-1 or P-1
(or the equivalent rating); (c) certificates of time
deposit and bankers' acceptances having maturities of
not more than 180 days and repurchase agreements backed
by United States government securities of a commercial
bank if (i) such bank has a combined capital and
surplus of at least $500,000,000, or (ii) its debt
obligations, or those of a holding company of which it
is a Subsidiary, are rated not less than A (or the
equivalent rating) by a nationally recognized
investment rating agency; (d) U.S. money market funds
that invest solely in obligations issued or guaranteed
by the United States of America or an agency thereof;
(e) money market preferred stocks which, at the date of
acquisition and at all times thereafter are accorded
ratings of at least AA- by Standard and Poor's
Corporation, Inc. or Aa3 by Moody's Investors Service,
Inc.; (f) noncash consideration in the form of
promissory notes, debentures or other securities
received by any Borrower or members of the Holdings
Group in connection with the sale of properties or
assets permitted under Section 7.1(b) hereof, provided
that such noncash consideration shall not exceed 15% of
the aggregate sale price of such properties or assets;
and (g) transactions permitted under Section 7.1
hereof.
7.5. Loans. Make advances, loans or
extensions of credit to any Person, except (i) the
extension of commercial trade credit in connection with
the sale of Inventory in the ordinary course of its
business; (ii) loans from any Borrower or Guarantor to
any other Borrower or any other Guarantor, provided,
that, with respect to such loans made by a Borrower, at
the time each such loan is made such Borrower believes
that after giving effect to such loan and for the
foreseeable future thereafter such Borrower will have
sufficient Undrawn Availability to run its business and
ACM Agent receives a certificate executed by the
President or Chief Financial Officer of such Borrower
making the loan within thirty (30) days following the
end of the month in which each such loan is made
stating that after giving effect to such loan and for
the foreseeable future thereafter such Borrower will
have sufficient Undrawn Availability to run its
business (the "Officer's Certificate"); (iii) noncash
consideration in the form of promissory notes,
debentures or other securities received by any Borrower
or any other member of the Holdings Group in connection
with the sale of properties or assets permitted under
Section 7.1(b) hereof, provided that such noncash
consideration shall not exceed 15% of the aggregate
sale price of such properties or assets; (iv) loans
from any Borrower or any Guarantor to Holdings to
enable Holdings to make payments on and which moneys
are used to pay principal, interest and premium
relating to Indebtedness otherwise permitted under
Section 7.8 hereof; and (v) the Intercompany Notes.
7.6. Capital Expenditures. Contract for,
purchase or make any expenditure or commitments for
fixed or capital assets (including capitalized leases)
in any fiscal year in an amount in excess of (a)
$25,000,000 in fiscal year 1995, and (b) $20,000,000 in
fiscal year 1996 and in each fiscal year thereafter.
7.7. Dividends. Declare, pay or make any
dividend or distribution on any shares of the common
stock or preferred stock of any Obligor (other than
dividends or distributions payable in its stock, or
split-ups or reclassifications of its stock) or apply
any of its funds, property or assets to the purchase,
redemption or other retirement of any common or
preferred stock, or of any options to purchase or
acquire any such shares of common or preferred stock of
any Obligor except (i) dividends, distributions,
redemptions or other payments with respect to common
stock or preferred stock from any member of the
Holdings Group (except Holdings) to such member's
Parent with the ultimate purpose of enabling Holdings
to make payments on and which dividends, distributions,
redemptions or other payments are used to pay
principal, interest and premium relating to
Indebtedness otherwise permitted hereunder; (ii)
dividends, distributions, redemptions or other payments
with respect to common stock or preferred stock by
Holdings, provided the aggregate amount of (1) the
dividends, distributions, redemptions or other payments
paid by Holdings from and after the Closing Date and
(2) the amount of Indebtedness redeemed, repurchased or
received by Holdings through open market purchases
pursuant to Section 7.17 hereof, do not exceed the sum
of (a) 50% of net income (if positive) of Holdings on a
Consolidated Basis less 100% of net income (if
negative) of Holdings on a Consolidated Basis accrued
during the period from the first day of the fiscal
quarter beginning after the Closing Date and ending on
the last day of the fiscal quarter immediately
preceding the date of any such proposed dividend,
distribution, redemption or other payment; and (b) the
aggregate cash proceeds (after expenses) received by
Holdings from the issue or sale of capital stock of any
member of the Holdings Group after the Closing Date
(other than to a Subsidiary or by virtue of any
employee stock ownership plan or similar trust),
including cash proceeds from the exercise of warrants;
and (iii) subject to utilization for purposes not
otherwise prohibited by this Agreement, dividends,
distributions, redemptions or other payments with
respect to common stock or preferred stock from any
member of the Holdings Group (except Holdings) to such
member's Parent provided, that, at the time each
dividend, distribution, redemption or other payment
pursuant to subclauses (ii) and (iii) hereof is made
and after giving effect to the payment thereof, (x) no
Default or Event of Default has occurred and is
continuing and (y) such payor will be able to pay its
obligations as they become due and will have sufficient
capital in order to carry on its business as intended
to be conducted.
Notwithstanding the foregoing, this Section 7.7
shall not prohibit (i) the payment of any dividend
within 60 days after the date of its declaration (if
the declaration of such dividend was permitted by the
terms of this Agreement at the time of such
declaration); or (ii) the repurchase, retirement or
other acquisition of any shares of Holdings' capital
stock, or any option, warrant or other right to
purchase shares of capital stock, or the repayment of
any Indebtedness of Holdings, in any such transaction
solely in exchange for shares of, or out of the
proceeds of a substantially contemporaneous issuance
of, capital stock.
7.8. Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness (exclusive of trade
debt) except in respect of (i) Indebtedness to Lenders;
(ii) Indebtedness incurred for capital expenditures
permitted under Section 7.6 hereof; (iii) Indebtedness
set forth on Schedule 7.8 hereof; (iv) Indebtedness for
borrowed money not otherwise permitted by clauses (i),
(ii) and (iii) and not to exceed $5,000,000 at any
time, and (v) refinancings of Indebtedness listed on
Schedule 7.8 or referred to in clauses (ii), (iv),
(vi), (vii) and (viii) of this Section 7.8 which comply
with the provisions of Section 7.17(i); (vi)
Indebtedness incurred in connection with the Public
Offering; (vii) the Intercompany Notes; and (viii) the
guarantees described in Section 7.3(d) and (e).
7.9. Nature of Business. Substantially change
the nature of the business in which it is presently
engaged as described under Section 5.21 hereof, nor
except as specifically permitted hereby purchase or
invest, directly or indirectly, in any assets or
property other than in the ordinary course of business
for assets or property which are useful in, necessary
for and are to be used in its business as presently
conducted.
7.10. Transactions with Affiliates. Except as
set forth in Section 7.5 hereof, directly or
indirectly, purchase, acquire or lease any property
from, or sell, transfer or lease any property to, or
otherwise deal with, any Affiliate, Subsidiary or
Parent except transactions in the ordinary course of
business, on an arm's-length basis on terms no less
favorable than terms which would have been obtainable
from a Person other than an Affiliate, Subsidiary or
Parent; provided, however, any member of the Holdings
Group shall be permitted to transfer (a) Inventory so
long as: (i) ACM Agent retains its first priority
security interest in such Inventory, (ii) ACM Agent is
given prompt notice of a transfer to a member of the
Holdings Group who is not a Borrower (except as regards
any transfer of Inventory to Erlanger for purposes of
processing such Inventory), and (iii) such documents as
ACM Agent requires to maintain its first priority
security interest are executed and delivered to ACM
Agent; and (b) Equipment from any member of the
Holdings Group to another member of the Holdings Group;
provided, further, any member of the Holdings Group may
pay to any other member of the Holdings Group
reasonable management fees in accordance with its
customary practice (as such practice is described on
Schedule 7.10 hereof).
7.11. Leases. Enter as lessee into any lease
arrangement for real or personal property (unless
capitalized and permitted under Section 7.6 hereof) if
after giving effect thereto, aggregate annual rental
payments for all leased property (unless capitalized
and permitted under Section 7.6 hereof) would exceed
$1,500,000 in any one fiscal year.
7.12. Subsidiaries.
(a) Form any Subsidiary; provided,
however, Holdings shall be permitted to form a
Subsidiary so long as such Subsidiary becomes a
Guarantor under this Agreement.
(b) Enter into any partnership, joint
venture or similar arrangement.
7.13. Fiscal Year and Accounting Changes.
Change its fiscal year end from the last Saturday in
September or make any significant change (i) in
accounting treatment and reporting practices except as
required by GAAP or (ii) in tax reporting treatment
except as required by law.
7.14. Pledge of Credit. Now or hereafter
pledge ACM Agent's or any Lender's credit on any
purchases or for any purpose whatsoever or, with
respect to any Borrower, use any portion of any Advance
in or for any business other than such Borrower's
business as conducted on the date of this Agreement.
7.15. Amendment of Articles of Incorporation,
By-Laws. Amend, modify or waive any material term or
provision of its Articles of Incorporation or By-Laws
unless required by law or where such amendment,
modification or waiver would not have a material
adverse effect on such Person or on the Lenders.
7.16. Compliance with ERISA. (i) (x) Maintain,
or permit any member of the Controlled Group to
maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become
obligated to contribute, to any Plan, other than those
Plans disclosed on Schedule 5.8(d); (ii) engage, or
permit any member of the Controlled Group to engage, in
any non-exempt "prohibited transaction", as that term
is defined in section 406 of ERISA and Section 4975 of
the Code; (iii) incur, or permit any member of the
Controlled Group to incur, any "accumulated funding
deficiency", as that term is defined in Section 302 of
ERISA or Section 412 of the Code; (iv) terminate, or
permit any member of the Controlled Group to terminate,
any Plan where such event could result in any liability
of any Obligor or any member of the Controlled Group or
the imposition of a lien on the property of any Obligor
or any member of the Controlled Group pursuant to
Section 4068 of ERISA; (v) assume, or permit any member
of the Controlled Group to assume, any obligation to
contribute to any Multiemployer Plan not disclosed on
Schedule 5.8(d); (vi) incur, or permit any member of
the Controlled Group to incur, any withdrawal liability
to any Multiemployer Plan; (vii) fail promptly to
notify Lender of the occurrence of any Termination
Event; (viii) fail to comply, or permit a member of the
Controlled Group to fail to comply, with the
requirements of ERISA or the Code or other applicable
laws in respect of any Plan; (ix) fail to meet, or
permit any member of the Controlled Group to fail to
meet, all minimum funding requirements under ERISA or
the Code or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding
requirement with respect of any Plan.
7.17. Prepayment of Indebtedness. At any time,
directly or indirectly, prepay any Indebtedness (other
than trade payables or Indebtedness owed to Lenders) or
repurchase, redeem, retire or otherwise acquire any
Indebtedness of any Obligor except, (i) Indebtedness
owed to a bank or other lending institution that is
refinanced with Indebtedness from another bank or
lending institution containing economic terms and
conditions no less favorable to the relevant Obligor or
Obligors than those set forth in the Indebtedness being
refinanced; (ii) prepayments, repurchases, redemptions,
retirements or other acquisitions of Indebtedness of
any Obligor made from the proceeds of an equity
offering of the shares of common stock of any member of
the Holdings Group; (iii) so long as no Default or
Event of Default exists prior to or after giving effect
to such prepayment, Borrowers may prepay up to
$30,000,000 of Indebtedness, other than subordinated
indebtedness of Holdings, with the proceeds of a cash
capital contribution made by Holdings to any Borrower;
provided, that during the thirty (30) month period
subsequent to such prepayment, the "Debt Service" (as
defined below) of Holdings on a Consolidated Basis for
such thirty (30) month period is reduced by the amount
of such prepayment; (iv) prepayments made to the
holders of the Lien on any Equipment, Real Property or
general intangibles (other than General Intangibles as
defined in Section 1.2 hereof) through the sale of such
Equipment or Real Property or general intangibles
(other than General Intangibles as defined in Section
1.2 hereof) pursuant to a sale permitted under this
Agreement; (v) Indebtedness owed to a bank or other
lending institution that is directly repaid with the
proceeds of the issuance of a public offering or
private placement of debt or securities otherwise
permitted hereunder; or (vi) Indebtedness of Holdings
repurchased, redeemed or retired by Holdings through
open market purchases; provided, that, amounts expended
for such open market purchases and dividends paid
pursuant to Section 7.7(ii) hereof shall not, in the
aggregate, exceed the sum of (a) 50% of net income (if
positive) of Holdings on a Consolidated Basis less 100%
of net income (if negative) of Holdings on a
Consolidated Basis accrued during the period from the
first day of the fiscal quarter beginning after the
Closing Date and ending on the last day of the fiscal
quarter immediately preceding the date of any such
proposed open market purchase; and (b) the aggregate
cash proceeds (after expenses) received by Holdings
from the issue or sale of capital stock of any member
of the Holdings Group after the Closing Date (other
than to a Subsidiary or by virtue of any employee stock
ownership plan or similar trust), including cash
proceeds from the exercise of warrants; or
(viii) Indebtedness incurred in connection with the
Public Offering that is refinanced with Indebtedness on
economic terms and conditions no less favorable to the
members of Holdings Group than those set forth in the
Indebtedness being refinanced. "Debt Service" shall
mean all amounts due to banks and lending institutions
for money borrowed including but not limited to
principal, interest, fees and premiums.
7.18. Negative Pledge. Pledge the stock or
grant a Lien upon any of the assets of any Obligor
other than a Lien in favor of ACM Agent or Lenders,
except Permitted Encumbrances or as otherwise permitted
under Section 7.2 hereof.
VIII. CONDITIONS PRECEDENT.
8.1. Conditions to Initial Advances. The
agreement of Lenders to make the initial Advances
requested to be made on the Closing Date is subject to
the satisfaction, or waiver by Lenders, immediately
prior to or concurrently with the making of such
Advances, of the following conditions precedent:
(a) Notes. ACM Agent shall have
received the Notes duly executed and delivered by an
authorized officer of each Borrower;
(b) Filings, Registrations and
Recordings. Each document (including, without
limitation, any Uniform Commercial Code financing
statement) required by this Agreement, any Other
Document or under law or reasonably requested by the
ACM Agent to be filed, registered or recorded in order
to create, in favor of ACM Agent, a perfected security
interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each
jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and
ACM Agent shall have received an acknowledgment copy,
or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory
evidence of the payment of any necessary fee, tax or
expense relating thereto;
(c) Corporate Proceedings of Obligors.
ACM Agent shall have received a copy of the
resolutions, in form and substance reasonably
satisfactory to ACM Agent, of the Board of Directors of
each Obligor authorizing (as applicable) (i) the
execution, delivery and performance of this Agreement,
the Notes, and any related agreements, (collectively
the "Documents") and (ii) the granting of the Liens
upon the Collateral, in each case certified by the
Secretary or an Assistant Secretary of such Obligor as
of the Closing Date; and, such certificate shall state
that the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the date
of such certificate;
(d) Incumbency Certificates of the
Obligor. ACM Agent shall have received a certificate
of the Secretary or an Assistant Secretary of each
Obligor, dated the Closing Date, as to the incumbency
and signature of the officers of each Obligor executing
this Agreement, any certificate or other documents to
be delivered by it pursuant hereto, together with
evidence of the incumbency of such Secretary or
Assistant Secretary;
(e) Certificates. ACM Agent shall have
received a copy of the Articles or Certificate of
Incorporation of each Obligor, and all amendments
thereto, certified by the Secretary of State or other
appropriate official of its jurisdiction of
incorporation together with copies of the By-Laws of
each Obligor and all agreements of each Obligor's
shareholders certified as accurate and complete by the
Secretary of each Obligor;
(f) Good Standing Certificates. ACM
Agent shall have received good standing certificates
for each Obligor dated not more than 30 days prior to
the Closing Date, issued by the Secretary of State or
other appropriate official of each Obligor's
jurisdiction of incorporation and each jurisdiction
where the conduct of each Obligor's business activities
or the ownership of its properties necessitates
qualification;
(g) Legal Opinion. ACM Agent shall
have received the executed legal opinion of Bryan Cave
and such other counsel engaged by any of the Obligors,
each in form and substance satisfactory to ACM Agent or
Lenders which shall cover such matters incident to the
transactions contemplated by this Agreement, and the
Other Documents as ACM Agent or any Lender may
reasonably require and each Obligor hereby authorizes
and directs such counsel to deliver such opinions to
ACM Agent and Lenders;
(h) No Litigation. (i) No litigation,
investigation or proceeding before or by any arbitrator
or governmental authority shall be continuing or
threatened against any Obligor or against the officers
or directors of any Obligor (A) in connection with the
Documents or any of the transactions contemplated
thereby and which, in the reasonable opinion of ACM
Agent, is deemed material or (B) which if adversely
determined, would, in the reasonable opinion of ACM
Agent, have a material adverse effect on the business,
assets, operations or condition (financial or
otherwise) of any Obligor; and (ii) no injunction,
writ, restraining order or other order of any nature
materially adverse to any Obligor or the conduct of its
business or inconsistent with the due consummation of
the Transactions shall have been issued by any
governmental authority;
(i) Financial Condition Opinions. ACM
Agent shall have received an executed Officer's
Certificate in the form attached hereto as Exhibit
8.1(i);
(j) Collateral Examination. ACM Agent,
the Co-Agents and each Lender shall have completed
review of the business operations of each Obligor and
Collateral examinations and received appraisals, the
results of which shall be satisfactory in form and
substance to ACM Agent the Co-Agents and each Lender,
of the Receivables, Inventory and General Intangibles,
and of each Obligor and all books and records in
connection therewith;
(k) Fees. ACM Agent shall have
received all fees payable to ACM Agent and Lenders on
or prior to the Closing Date pursuant to Article III
hereof;
(l) Pro Forma Financial Statements.
ACM Agent shall have received a copy of the Pro Forma
Financial Statements which shall be satisfactory in all
respects to ACM Agent;
(m) Intercreditor Agreements. ACM
Agent shall have entered into Intercreditor Agreements
with Borrowers and each lender to any Borrower which
has a lien upon any Equipment, Real Property or general
intangibles (other than General Intangibles as defined
in Section 1.2 hereof), including, but not limited to,
City of Dayton, Commonwealth of Pennsylvania acting by
and through the Department of Commerce, Holdings and
the trustee or collateral agent for the holders of
Indebtedness issued in connection with the Public
Offering (with respect to the Liens securing the
Intercompany Notes and the Liens securing the Guaranty
obligations of Obligors (other than Holdings) with
respect to the Public Offering), each of which shall be
satisfactory in form and substance to ACM Agent and
Lenders in their sole discretion;
(n) Other Documents. ACM Agent shall
have received all Other Documents, each in form and
substance satisfactory to ACM Agent;
(o) Insurance. ACM Agent shall have
received in form and substance satisfactory to ACM
Agent, certified copies of Obligors' casualty insurance
policies, together with loss payable endorsements on
ACM Agent's standard form of loss payee endorsement
naming ACM Agent as loss payee as such coverage relates
to the Collateral, and certified copies of Obligors'
liability insurance policies, together with
endorsements naming ACM Agent as a co-insured;
(p) Environmental Reports. ACM Agent
shall have received all environmental studies and
reports prepared by independent environmental
engineering firms of all Real Property owned or leased
by Obligors; and an environmental report, in form and
substance satisfactory to ACM Agent and each Lender
relating to the environmental liabilities disclosed on
the financial statements of Holdings on a Consolidated
Basis dated October 31, 1993;
(q) Payment Instructions. ACM Agent
shall have received written instructions from Borrowing
Agent directing the application of proceeds of the
initial Advances made pursuant to this Agreement;
(r) Blocked Accounts. ACM Agent shall
have received duly executed agreements establishing the
Blocked Accounts or Depository Accounts with financial
institutions acceptable to ACM Agent for the collection
or servicing of the Receivables and proceeds of the
Collateral;
(s) Consents. ACM Agent shall have
received any and all Consents necessary to permit the
effectuation of the transactions contemplated by the
Other Documents; and, ACM Agent shall have received
such Consents and waivers of such third parties as
might assert claims with respect to the Collateral, as
ACM Agent and its counsel shall deem necessary;
(t) No Adverse Material Change. (i)
Since April 1, 1995, there shall not have occurred (x)
any material adverse change in the condition, financial
or otherwise, operations, properties or prospects of
any Obligor (y) any material damage or destruction to
any of the Collateral nor any material depreciation in
the value thereof and (z) any event, condition or state
of facts which would reasonably be expected to
materially and adversely affect the business, financial
condition or results of operations of any Obligor and
(ii) no representations made or information provided
including, but not limited to, the information
contained in the financial forecasts set forth in
subsection (v) of this Section 8.1 shall have been
proven to be inaccurate or misleading in any material
respect;
(u) Leasehold Agreements. ACM Agent
shall have received landlord, mortgagee or warehouseman
agreements satisfactory to ACM Agent with respect to
all premises leased by Obligors at which Inventory is
located;
(v) Net Worth. ACM Agent shall have
received (i) the Pro Forma Balance Sheet reflecting a
Net Worth after giving effect to the Transactions of at
least $75,000,000, provided that, if the closing of the
Transactions takes place contemporaneously with the
closing of the Public Offering, then the Pro Forma
Balance Sheet shall reflect a Net Worth after giving
effect to the Transactions (and the transactions in
connection with the Public Offering) of at least
$75,000,000 less the after tax charges resulting from
any prepayment penalties, write-offs or deferred
financing costs or other expenses which arise as a
result of consummation of the Public Offering, (ii) the
financial statements of Holdings on a Consolidated
Basis for the fiscal year ended September 24, 1994 and
forecasts of availability for each Borrower hereunder
for the twelve months subsequent to the Closing Date;
and (iii) the Projections reflecting each Borrower's
ability to meet all obligations as they mature, all in
form and in substance satisfactory to the ACM Agent;
(w) Contract Review. ACM Agent shall
have reviewed all material contracts of Borrowers
including, without limitation, leases, union contracts,
labor contracts, vendor supply contracts, license
agreements and distributorship agreements and such
contracts and agreements shall be satisfactory in all
respects to ACM Agent;
(x) Closing Certificate. ACM Agent
shall have received a closing certificate signed by the
Chief Financial Officer of each Borrower dated as of
the date hereof, stating that (i) all representations
and warranties set forth in this Agreement and the
Other Documents are true and correct on and as of such
date, (ii) Borrowers are on such date in compliance
with all the terms and provisions set forth in this
Agreement and the other Documents and (iii) on such
date no Default or Event of Default has occurred or is
continuing;
(y) Initial Advances. ACM Agent shall
have received evidence from Borrowers that the
aggregate amount of Eligible Receivables and Eligible
Inventory is sufficient in value and amount to support
Advances in the amount requested by Borrowers on the
Closing Date;
(z) Undrawn Availability. After giving
effect to the initial Advances hereunder, Borrowers
shall have Undrawn Availability of at least $5,000,000;
(aa) Public Offering. NS Group, Inc.
shall have completed the Public Offering;
(ab) Merger. The merger of N SUB I and
another member of the Holdings Group shall have
occurred and ACM Agent and its counsel shall have
received proof of such merger and of the liquidation of
N.K. Steel Processing Company; and
(ac) Other. All corporate and other
proceedings, and all documents, instruments and other
legal matters in connection with the Transactions shall
be satisfactory in form and substance to ACM Agent, the
Co-Agents and their counsel.
8.2. Conditions to Each Advance. The
agreement of Lenders to make any Advance requested to
be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the
following conditions precedent as of the date such
Advance is made:
(a) Representations and Warranties.
Each of the representations and warranties made by any
Obligor in or pursuant to this Agreement and any Other
Document, and each of the representations and
warranties contained in any certificate, document or
financial or other statement furnished at any time
under or in connection with this Agreement or any Other
Documents shall be true and correct in all material
respects on and as of such date as if made on and as of
such date, except representations and warranties which,
by their nature, speak of a particular date which shall
be true and correct in all material respects as of such
date. All schedules to this Agreement and
representations and warranties made by any Obligor in
or pursuant to this Agreement shall be deemed
prospectively amended by all written disclosures
received by ACM Agent from such Obligor with respect to
such schedule or specific representation or warranty
(which disclosure reflects a change in circumstances
which is not prohibited by the provisions of this
Agreement) as of the date of such receipt by ACM Agent;
(b) No Default. No Event of Default or
Default shall have occurred and be continuing on such
date, or would exist after giving effect to the
Advances requested to be made, on such date; provided,
however, that with the approval of Required Lenders in
their sole discretion, Agent on behalf of Lenders may
continue to make Advances notwithstanding the existence
of an Event of Default or Default and that any Advances
so made shall not be deemed a waiver of any such Event
of Default or Default; and
(c) Maximum Advances. In the case of
any Advances requested to be made, after giving effect
thereto, the aggregate Advances shall not exceed the
maximum amount of Advances permitted under Section 2.1
hereof.
Each request for an Advance by Borrowing Agent
hereunder shall constitute a representation and
warranty by each Obligor as of the date of such Advance
that the conditions contained in this subsection shall
have been satisfied.
IX. INFORMATION AS TO OBLIGORS.
Each Obligor shall, until satisfaction in full
of the Obligations and the termination of this
Agreement:
9.1. Disclosure of Material Matters. Within
ten (10) Business Days of learning thereof, report to
ACM Agent all matters materially affecting the value,
enforceability or collectability of any portion of the
Collateral including, without limitation, any Obligor's
reclamation or repossession of, or the return to any
Obligor of, a material amount of goods, or material
claims or material disputes asserted by any Customer or
other obligor.
9.2. Schedules. Deliver to ACM Agent on or
before the fifteenth (15th) day of each month as and
for the prior month (a) accounts receivable ageings,
(b) accounts payable schedules and (c) Inventory
reports. In addition, each Borrower will deliver to
ACM Agent at such intervals as ACM Agent may require:
(i) confirmatory assignment schedules, (ii) copies of
Customer's invoices, (iii) evidence of shipment or
delivery, and (iv) such further schedules, documents
and/or information regarding the Collateral as ACM
Agent may require including, without limitation, trial
balances and test verifications. ACM Agent shall have
the right to confirm and verify all Receivables by any
manner and through any medium it considers advisable
and do whatever it may deem reasonably necessary to
protect its interests hereunder. The items to be
provided under this Section are to be in form
satisfactory to ACM Agent (with ACM Agent to notify
Obligors if the items are not in satisfactory form, and
Obligors shall have ten (10) Business Days thereafter
to supply such items in satisfactory form) and executed
by each Obligor and delivered to ACM Agent from time to
time solely for ACM Agent's convenience in maintaining
records of the Collateral, and any Obligor's failure to
deliver any of such items to ACM Agent shall not
affect, terminate, modify or otherwise limit ACM
Agent's Lien with respect to the Collateral.
9.3. Litigation. Promptly, but in any event
within ten (10) Business Days of occurrence, notify ACM
Agent in writing of any litigation, suit or
administrative proceeding affecting any Obligor,
whether or not the claim is covered by insurance, which
may materially and adversely affect the Collateral or
any Obligor's business, assets, operations, condition
or prospects (financial or otherwise).
9.4. Material Occurrences. Promptly, but in
any event within five (5) Business Days of occurrence,
notify ACM Agent in writing of (a) any Event of Default
or Default; (b) any event, development or circumstance
whereby any financial statements or other reports
furnished to ACM Agent fail in any material respect to
present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results
of any Obligor as of the date of such statements; (c)
any accumulated retirement plan funding deficiency
which, if such deficiency continued for two plan years
and was not corrected as provided in Section 4971 of
the Code, could subject any Obligor to a tax imposed by
Section 4971 of the Code; (d) each and every default by
any Obligor which might result in the acceleration of
the maturity of any Indebtedness in an amount in excess
of $100,000.00, including the names and addresses of
the holders of such Indebtedness, and the amount of
such Indebtedness; and (e) any other development in the
business or affairs of any Obligor which might
reasonably be expected to be materially adverse; in
each case describing the nature thereof and the action
Obligors propose to take with respect thereto.
9.5. Government Receivables. Notify ACM Agent
within ten (10) Business Days of occurrence, if any of
its Receivables (which individually or in the aggregate
exceed $50,000 in amount) arise out of contracts
between such Obligor and the United States, any state,
or any department, agency or instrumentality of any of
them.
9.6. Annual Financial Statements. Furnish ACM
Agent within ninety (90) days after the end of each
fiscal year of Obligors, financial statements of
Holdings on a Consolidated Basis and of each Obligor on
a consolidating basis and including, but not limited
to, statements of income and stockholders' equity and
cash flow from the beginning of the current fiscal year
to the end of such fiscal year and the balance sheet as
at the end of such fiscal year, all prepared in
accordance with GAAP applied on a basis consistent with
prior practices, and in reasonable detail and with
respect to the financial statements of Holdings on a
Consolidated Basis, reported upon without qualification
by Arthur Andersen LLP or by another independent
certified public accounting firm selected by Borrowers
and satisfactory to ACM Agent (the "Accountants"). The
audit report of such accounting firm shall be
accompanied by a statement of such accounting firm
certifying that (i) they have caused this Agreement to
be reviewed, (ii) in making the examination upon which
such report was based, either no information came to
their attention which to their knowledge constituted an
Event of Default or a Default under this Agreement or
any Other Document or, if such information came to
their attention, specifying any such Default or Event
of Default, its nature, when it occurred and whether it
is continuing, and such report shall contain or have
appended thereto calculations which set forth the
Obligors' compliance with the requirements or
restrictions imposed by Sections 6.5, 6.6, 6.7, 6.8,
6.9, 7.6 and 7.11 hereof. In addition, the reports
shall be accompanied by a certificate of the President
and/or Chief Financial Officer of Holdings which shall
state that, based on an examination sufficient to
permit him to make an informed statement, no Default or
Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its
nature, when it occurred, whether it is continuing and
the steps being taken by Obligors with respect to such
default and, such certificate shall have appended
thereto calculations which set forth Obligors'
compliance with the requirements or restrictions
imposed by Sections 6.5, 6.6, 6.7, 6.8, 6.9, 7.6 and
7.11 hereof.
9.7. Quarterly Financial Statements. Furnish
ACM Agent within forty-five (45) days after the end of
each fiscal quarter, an unaudited balance sheet of
Holdings on a Consolidated Basis and of each Obligor on
a consolidating basis and unaudited statements of
income and stockholders' equity and cash flow of
Obligors reflecting results of operations from the
beginning of the fiscal year to the end of such quarter
and for such quarter, prepared on a basis consistent
with prior practices and complete and correct in all
material respects, subject to normal year end
adjustments. The reports shall be accompanied by a
certificate signed by the President and/or Chief
Financial Officer of Holdings, which shall state that,
based on an examination sufficient to permit him to
make an informed statement, no Default or Event of
Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being
taken by Obligors with respect to such default and such
certificate shall have appended thereto calculations
which set forth Obligors' compliance with the
requirements or restrictions imposed by Sections 6.5,
6.6, 6.7, 6.8, 6.9, 7.6 and 7.11 hereof.
9.8. Monthly Financial Statements. Furnish
ACM Agent within thirty (30) days after the end of each
month, an unaudited balance sheet of Holdings on a
Consolidated Basis and of each Obligor on a
consolidating basis and unaudited statements of income
and stockholders' equity and cash flow of Holdings on a
Consolidated Basis and each Obligor on a consolidating
basis reflecting results of operations from the
beginning of the fiscal year to the end of such month
and for such month, prepared on a basis consistent with
prior practices and complete and correct in all
material respects, subject to normal year end
adjustments. The reports shall be accompanied by a
certificate signed by the President and/or Chief
Financial Officer of Holdings, which shall state that,
based on an examination sufficient to permit him to
make an informed statement, no Default or Event of
Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it
occurred, whether it is continuing and the steps being
taken by Obligors with respect to such event and, such
certificate shall have appended thereto calculations
which set forth Obligors' compliance with the
requirements or restrictions imposed by Sections 6.5,
6.6, 6.7, 6.8, 6.9, 7.6 and 7.11 hereof.
9.9. Other Reports. Furnish ACM Agent as soon
as available, but in any event within ten (10) days
after the issuance thereof, with copies of such
financial statements, reports and returns as Holdings
shall send to all of its stockholders.
9.10. Additional Information. Furnish ACM
Agent with such additional information as ACM Agent
shall reasonably request in order to enable ACM Agent
to determine whether the terms, covenants, provisions
and conditions of this Agreement have been complied
with by Obligors including, without limitation and
without the necessity of any request by ACM Agent, (a)
copies of all environmental audits and reviews, (b) at
least thirty (30) days prior thereto, notice of any
Obligor's opening of any new office or place of
business or any Obligor's closing of any existing
office or place of business, and (c) promptly upon, and
in any event within five (5) Business Days of, any
Obligor's learning thereof, notice of any labor dispute
to which any Obligor may become a party, any strikes or
walkouts relating to any of its plants or other
facilities, and the expiration of any labor contract to
which any Obligor is a party or by which any Obligor is
bound.
9.11. Projected Operating Budget. Furnish ACM
Agent, no less than thirty (30) days prior to the
beginning of each fiscal year of Obligors commencing
with fiscal year 1996, a month by month projected
operating budget and cash flow of Holdings on a
Consolidated Basis and each Obligor on a consolidating
basis for such fiscal year (including an income
statement for each month and a balance sheet as at the
end of the last month in each fiscal quarter), such
projections to be accompanied by a certificate signed
by the President or Chief Financial Officer of Holdings
to the effect that such projections have been prepared
on the basis of sound financial planning practice
consistent with past budgets and financial statements
and that such officer has no reason to question the
reasonableness of any material assumptions on which
such projections were prepared.
9.12. Variances From Operating Budget. Furnish
ACM Agent, concurrently with the delivery of the
financial statements referred to in Section 9.6 and
each quarterly report, a written report summarizing all
material variances from budgets submitted by Obligors
pursuant to Section 9.11 and a discussion and analysis
by management with respect to such variances.
9.13. Notice of Suits, Adverse Events. Furnish
ACM Agent with (i) prompt notice of any lapse or other
termination of any Consent issued to any Obligor by any
Governmental Body or any other Person that is material
to the operation of any Obligor's business, or any
refusal by any Governmental Body or any other Person to
renew or extend any such Consent within five (5)
Business Days of the occurrence thereof; (ii) copies of
any periodic or special reports filed by any Obligor
with any Governmental Body or Person, if such reports
indicate any material change in the business,
operations, affairs or condition of any Obligor, or if
copies thereof are requested by Lender, and (iii)
copies of any material notices and other communications
from any Governmental Body or Person which specifically
relate to any Obligor.
9.14. ERISA Notices and Requests. Furnish ACM
Agent with written notice in the event that (i) any
Obligor or any member of the Controlled Group knows or
has reason to know that a Termination Event has
occurred, together with a written statement describing
such Termination Event and the action, if any, which
such Obligor or member of the Controlled Group has
taken, is taking, or proposes to take with respect
thereto and, when known, any action taken or threatened
by the Internal Revenue Service, Department of Labor or
PBGC with respect thereto, (ii) any Obligor or any
member of the Controlled Group knows or has reason to
know that a prohibited transaction (as defined in
Sections 406 of ERISA and 4975 of the Code) has
occurred together with a written statement describing
such transaction and the action which such Obligor or
any member of the Controlled Group has taken, is taking
or proposes to take with respect thereto, (iii) a
funding waiver request has been filed with respect to
any Plan together with all communications received by
any Obligor or any member of the Controlled Group with
respect to such request, (iv) any increase in the
benefits of any existing Plan or the establishment of
any new Plan or the commencement of contributions to
any Plan to which any Obligor or any member of the
Controlled Group was not previously contributing shall
occur, (v) any Obligor or any member of the Controlled
Group shall receive from the PBGC a notice of intention
to terminate a Plan or to have a trustee appointed to
administer a Plan, together with copies of each such
notice, (vi) any Obligor or any member of the
Controlled Group shall receive any favorable or
unfavorable determination letter from the Internal
Revenue Service regarding the qualification of a Plan
under Section 401(a) of the Code, together with copies
of each such letter; (vii) any Obligor or any member of
the Controlled Group shall receive a notice regarding
the imposition of withdrawal liability, together with
copies of each such notice; (viii) any Obligor or any
member of the Controlled Group shall fail to make a
required installment or any other required payment
under Section 412 of the Code on or before the due date
for such installment or payment; or (ix) any Obligor or
any member of the Controlled Group knows that (a) a
Multiemployer Plan has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the
PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multiemployer
Plan, such notice to be provided within five (5)
Business Days of the occurrence of any of the foregoing
occurrences.
9.15. Additional Documents. Execute and
deliver to ACM Agent, upon request, such documents and
agreements as ACM Agent may, from time to time,
reasonably request to carry out the purposes, terms or
conditions of this Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the
following events shall constitute an "Event of
Default":
10.1. failure by any Obligor to pay any
principal or interest on the Obligations when due,
whether at maturity or by reason of acceleration
pursuant to the terms of this Agreement or by notice of
intention to prepay, or by required prepayment or
failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due;
10.2. any representation or warranty made or
deemed made by any Obligor in this Agreement or any
related agreement or in any certificate, document or
financial or other statement furnished at any time in
connection herewith or therewith shall prove to have
been misleading in any material respect on the date
when made or deemed to have been made;
10.3. failure by any Obligor to (i) furnish
financial information (x) when due which is unremedied
for ten (10) Business Days after notice by ACM Agent or
any Lender or (y) when requested which is unremedied
for a period of thirty (30) days, or (ii) permit the
inspection of its books or records;
10.4. issuance of a notice of Lien, levy,
assessment, injunction or attachment against a material
portion of any Obligor's property which is not stayed
or lifted within thirty (30) days;
10.5. failure or neglect of any Obligor to
perform, keep or observe any term, provision,
condition, covenant herein contained, or contained in
any Other Documents, other than a failure or neglect of
any Obligor to perform, keep or observe any term,
provision, condition or covenant, contained in Sections
4.1 (as to the last sentence thereof), 4.6, 4.7, 4.9,
4.11, 6.1, 6.2 (as to maintenance of property), 6.4,
6.12 (as to financial statements being prepared in
reasonable detail) 6.13, 9.4 or 9.6 hereof which is
cured within the earlier of (x) with respect to
circumstances where any Obligor is obligated to take
action and fails to do so (as opposed to circumstances
where such Obligor takes action but fails to do so in a
manner which is satisfactory to ACM Agent), thirty (30)
days from the occurrence of such failure or neglect or
(y) with respect to circumstances (i) where any Obligor
takes action but fails to do so in a manner which is
satisfactory to ACM Agent or (ii) where any Obligor
becomes aware of its failure or neglect to take action
at all, twenty (20) days from the date on which such
Obligor becomes aware of such failure or neglect;
10.6. any judgment is rendered or judgment
liens filed against any Obligor for an amount in excess
of $500,000 (singly or in the aggregate) which within
forty (40) days of such rendering or filing is not
either satisfied, stayed or discharged of record;
10.7. any Obligor shall (i) apply for, consent
to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or
a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence
a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (iv) be
adjudicated a bankrupt or insolvent, (v) file a
petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to,
or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under
such bankruptcy laws, or (vii) take any action for the
purpose of effecting any of the foregoing;
10.8. any Obligor shall admit in writing its
inability, or be generally unable, to pay its debts as
they become due or cease operations of its present
business;
10.9. any Subsidiary of any Obligor shall (i)
apply for, consent to or suffer the appointment of, or
the taking of possession by, a receiver, administrative
receiver, administrator, custodian, trustee, liquidator
or similar fiduciary of itself or of all or a
substantial part of its property, (ii) admit in writing
its inability, or be generally unable, to pay its debts
as they become due or cease operations of its present
business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case
under any state or federal bankruptcy laws (as now or
hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take
advantage of any other law providing for the relief of
debtors, (vii) acquiesce to, or fail to have dismissed,
within thirty (30) days, any petition filed against it
in any involuntary case under such bankruptcy laws, or
(viii) take any action for the purpose of effecting any
of the foregoing;
10.10. any change in any Borrower's condition or
affairs (financial or otherwise) which in Lenders'
reasonable opinion materially impairs the Collateral or
the ability of Borrowers (taken as a whole) to perform
their Obligations under this Agreement;
10.11. any Lien created hereunder or provided
for hereby or under any related agreement for any
reason ceases to be or is not a valid and perfected
Lien having a first priority interest except as
otherwise provided for in any Intercreditor Agreement;
10.12. a default of the obligations of any
Borrower or any member of the Holdings Group under any
other agreement to which it is a party shall occur
which materially and adversely affects the condition,
affairs or prospects (financial or otherwise) of the
Holdings Group which default is not cured or waived
within any applicable grace period;
10.13. termination or breach of any agreement
executed and delivered to ACM Agent in connection with
the Obligations of any Borrower;
10.14. any Change of Ownership shall occur; or
10.15. any material provision of this Agreement
shall, for any reason, cease to be valid and binding on
any Obligor (except as permitted with respect to
Imperial pursuant to Section 7.1 hereof), or any
Obligor shall so claim in writing to ACM Agent;
10.16. if (i) any Governmental Body shall (A)
revoke, terminate, suspend or adversely modify any
material license, permit, patent, trademark or
tradename of any Obligor, or (B) commence proceedings
to suspend, revoke, terminate or adversely modify any
such license, permit, trademark, tradename or patent
and such proceedings shall not be dismissed or
discharged within sixty (60) days, or (C) schedule or
conduct a hearing on the renewal of any material
license, permit, trademark, tradename or patent
necessary for the continuation of any Obligor's
business and the staff of such Governmental Body issues
a report recommending the termination, revocation,
suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; (ii)
any agreement which is necessary or material to the
operation of any Obligor's business shall be revoked or
terminated and not replaced by a substitute acceptable
to ACM Agent within thirty (30) days after the date of
such revocation or termination, and the occurrence of
any event described in (i) and (ii) would have a
material adverse effect on the business or financial
condition of the Holdings Group;
10.17. any portion of the Collateral shall be
seized or taken by a Governmental Body, or any Obligor
or the title and rights of any Obligor which is the
owner of any material portion of the Collateral shall
have become the subject matter of litigation which
might, in the opinion of ACM Agent, upon final
determination, result in impairment or loss of the
security provided by this Agreement or the Other
Documents;
10.18. the operations of any manufacturing
facility of any Obligor are interrupted at any time for
more than thirty (30) consecutive days other than for
normal maintenance and for routine closures, unless
such Obligor shall (i) be entitled to receive for such
period of interruption, proceeds of business
interruption insurance sufficient to assure that its
per diem cash needs during such period is at least
equal to its average per diem cash needs for the
consecutive three month period immediately preceding
the initial date of interruption and (ii) receive such
proceeds in the amount described in clause (i)
preceding not later than sixty (60) days following the
initial date of any such interruption; or
10.19. an event or condition specified in
Sections 7.16 or 9.14 hereof shall occur or exist with
respect to any Plan and, as a result of such event or
condition, together with all other such events or
conditions, any Obligor or any member of the Controlled
Group shall incur, or in the opinion of ACM Agent be
reasonably likely to incur, a liability to a Plan or
the PBGC (or both) which, in the reasonable judgment of
ACM Agent would have a material adverse effect upon the
Collateral or the ability of Obligors to perform their
Obligations under this Agreement.
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1. Rights and Remedies. Upon the occurrence
of (i) an Event of Default pursuant to Section 10.7 all
Obligations shall be immediately due and payable and
this Agreement and the obligation of Lenders to make
Advances shall be deemed terminated; (ii) any of the
other Events of Default and at any time thereafter
(such Event of Default not having previously been cured
or waived), at the option of Required Lenders all
Obligations shall be immediately due and payable and
Required Lenders shall have the right to terminate this
Agreement and to terminate the obligation of Lenders to
make Advances and (iii) a filing of a petition against
any Borrower in any involuntary case under any state or
federal bankruptcy laws, the obligation of Lenders to
make Advances hereunder shall be terminated other than
as may be required by an appropriate order of the
bankruptcy court having jurisdiction over any Borrower.
Upon the occurrence and during the continuance of any
Event of Default, ACM Agent shall have the right to
exercise any and all other rights and remedies provided
for herein, under the Uniform Commercial Code and at
law or equity generally, including, without limitation,
the right to foreclose the security interests granted
herein and to realize upon any Collateral by any
available judicial procedure and/or to take possession
of and sell any or all of the Collateral with or
without judicial process. Upon the occurrence and
during the continuance of an Event of Default, ACM
Agent may enter any Obligor's premises or other
premises without legal process and without incurring
liability to any Obligor therefor, and ACM Agent may
thereupon, or at any time thereafter, in its discretion
without notice or demand, take the Collateral and
remove the same to such place as ACM Agent may deem
advisable and ACM Agent may require Obligors to make
the Collateral available to Lenders at a convenient
place. With or without having the Collateral at the
time or place of sale, ACM Agent may sell the
Collateral, or any part thereof, at public or private
sale, at any time or place, in one or more sales, at
such price or prices, and upon such terms, either for
cash, credit or future delivery, as ACM Agent may
elect. Except as to that part of the Collateral which
is perishable or threatens to decline speedily in value
or is of a type customarily sold on a recognized
market, ACM Agent shall give Obligors reasonable
notification of such sale or sales, it being agreed
that in all events written notice mailed to Borrowing
Agent at least five (5) days prior to such sale or
sales is reasonable notification. At any public sale
ACM Agent or any Lender may bid for and become the
purchaser, and ACM Agent, any Lender or any other
purchaser at any such sale thereafter shall hold the
Collateral sold absolutely free from any claim or right
of whatsoever kind, including any equity of redemption
and such right and equity are hereby expressly waived
and released by each Obligor. In connection with the
exercise of the foregoing remedies and subject to the
terms of the applicable Intercreditor Agreements, if
any, ACM Agent is granted permission to use, without
charge, all of Obligors' (a) trademarks, trade styles,
trade names, patents, patent applications, licenses,
franchises and other proprietary rights which are used
in connection with Inventory for the purpose of
disposing of such Inventory and (b) Equipment for the
purpose of completing the manufacture of unfinished
goods. The proceeds realized from the sale of any
Collateral shall be applied as follows: first, to the
reasonable costs, expenses and attorneys' fees and
expenses incurred by ACM Agent and Lenders for
collection and for acquisition, completion, protection,
removal, storage, sale and delivery of the Collateral;
second, to interest due upon any of the Obligations;
and, third, to the principal of the Obligations. If
any deficiency shall arise, Obligors shall remain
liable to ACM Agent and Lenders therefor.
11.2. ACM Agent's Discretion. ACM Agent shall
have the right in its sole discretion to determine
which rights, Liens, security interests or remedies ACM
Agent may at any time pursue, relinquish, subordinate,
or modify or to take any other action with respect
thereto and such determination will not in any way
modify or affect any of ACM Agent's or Lenders' rights
hereunder.
11.3. Setoff. In addition to any other rights
which ACM Agent or any Lender may have under applicable
law, upon the occurrence and during the continuance of
an Event of Default hereunder, ACM Agent and such
Lender shall have a right to apply any Obligor's
property held by ACM Agent, any Co-Agent any Lender or
by the Bank to reduce the Obligations.
11.4. Rights and Remedies not Exclusive. The
enumeration of the foregoing rights and remedies is not
intended to be exhaustive and the exercise of any right
or remedy shall not preclude the exercise of any other
right or remedies, all of which shall be cumulative and
not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. Waiver of Notice. Each Obligor hereby
waives notice of non-payment of any of the Receivables,
demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of
acceptance hereof, notice of loans or advances made,
credit extended, Collateral received or delivered, or
any other action taken in reliance hereon, and all
other demands and notices of any description, except
such as are expressly provided for herein.
12.2. Delay. No delay or omission on ACM
Agent's or any Lender's part in exercising any right,
remedy or option shall operate as a waiver of such or
any other right, remedy or option or of any default.
12.3. Jury Waiver. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(A) ARISING UNDER THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term. This Agreement, which shall inure
to the benefit of and shall be binding upon the
respective successors and permitted assigns of each
Obligor, ACM Agent and each Lender, shall become
effective on the date hereof and shall continue in full
force and effect until the last day of the Term unless
sooner terminated as herein provided. The Term shall
be automatically extended for successive periods of one
(1) year each unless terminated by either party at the
end of such initial Term or any successive Term by
giving the other party ninety (90) days prior written
notice. Borrowers may terminate this Agreement at any
time upon thirty (30) days' prior written notice
("Termination Date") upon payment in full of the
Obligations; and payment to ACM Agent for the ratable
benefit of the Lenders of an early termination fee of
(x) $200,000 if the Termination Date occurs on or after
the Closing Date to and including the date immediately
preceding the first anniversary of the Closing Date or
(y) $100,000 if the Termination Date occurs on or after
the first anniversary of the Closing Date to and
including the date immediately preceding the second
anniversary of the Closing Date.
13.2. Termination. The termination of this
Agreement shall not affect any Obligor's, ACM Agent's
or any Lender's rights, or any of the Obligations
having their inception prior to the effective date of
such termination, and the provisions hereof shall
continue to be fully operative until all transactions
entered into, rights or interests created or
Obligations have been fully disposed of, concluded or
liquidated. The Liens and rights granted to ACM Agent
and Lenders hereunder and the financing statements
filed hereunder shall continue in full force and
effect, notwithstanding the termination of this
Agreement or the fact that any Borrower's respective
account may from time to time be temporarily in a zero
or credit position, until all of the Obligations of
each Obligor have been paid or performed in full after
the termination of this Agreement or each Obligor has
furnished ACM Agent and Lenders with an indemnification
satisfactory to ACM Agent and Lenders with respect
thereto. Accordingly, each Obligor waives any rights
which it may have under Section 9-404(1) of the Uniform
Commercial Code to demand the filing of termination
statements with respect to the Collateral, and ACM
Agent shall not be required to send such termination
statements to any Obligor, or to file them with any
filing office, unless and until this Agreement shall
have been terminated in accordance with its terms and
all Obligations paid in full in immediately available
funds. All representations, warranties, covenants,
waivers and agreements contained herein shall survive
termination hereof until all Obligations are repaid and
performed in full, except to the extent such provisions
by their terms survive termination.
XIV. REGARDING THE ACM AGENT AND THE CO-AGENTS.
14.1. Appointment. Each Lender hereby
designates BNYCC to act as ACM Agent and BNYCC and PNC
to act as Co-Agents for such Lender under this
Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes ACM Agent and the Co-Agents to
take such action on its behalf under the provisions of
this Agreement and the Other Documents and to exercise
such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required
of ACM Agent and the Co-Agents by the terms hereof and
thereof and such other powers as are reasonably
incidental thereto and ACM Agent shall hold all
Collateral, payments of principal and interest, fees
(except the fees set forth in Sections 3.3(c) and 3.4),
charges and collections (without giving effect to any
collection days) received pursuant to this Agreement,
for the ratable benefit of Lenders. ACM Agent and the
Co-Agents may perform any of their respective duties
hereunder by or through its agents or employees. As to
any matters not expressly provided for by this
Agreement (including, without limitation, collection of
the Notes) neither ACM Agent nor the Co-Agents shall be
required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting
(and shall be fully protected in so acting or
refraining from acting) upon the instructions of the
Required Lenders, and such instructions shall be
binding; provided, however, that neither ACM Agent nor
the Co-Agents shall be required to take any action
which exposes ACM Agent or a Co-Agent, as the case may
be, to liability or which is contrary to this Agreement
or the Other Documents or applicable law unless ACM
Agent or a Co-Agent, as the case may be, is furnished
with an indemnification reasonably satisfactory to ACM
Agent or a Co-Agent, as the case may be, with respect
thereto.
14.2. Nature of Duties. ACM Agent and the Co-
Agents shall have no duties or responsibilities except
those expressly set forth in this Agreement and the
Other Documents. Neither ACM Agent nor the Co-Agents
nor any of their officers, directors, employees or
agents shall be (i) liable for any action taken or
omitted by them as such hereunder or in connection
herewith, unless caused by their willful misconduct or
gross (not mere) negligence, or (ii) responsible in any
manner for any recitals, statements, representations or
warranties made by any Obligor or any officer thereof
contained in this Agreement, or in any of the Other
Documents or in any certificate, report, statement or
other document referred to or provided for in, or
received by ACM Agent or any Co-Agent under or in
connection with, this Agreement or any of the Other
Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this
Agreement, or any of the Other Documents or for any
failure of any Obligor to perform its obligations
hereunder. Neither ACM Agent nor any Co-Agent shall be
under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this
Agreement or any of the Other Documents, or to inspect
the properties, books or records of any Obligor. The
duties of ACM Agent as respects the Advances to
Borrowers shall be mechanical and administrative in
nature; ACM Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any
Lender; and nothing in this Agreement, expressed or
implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.
14.3. Lack of Reliance on ACM Agent, Co-Agents
and Resignation. Independently and without reliance
upon ACM Agent, any Co-Agent or any other Lender, each
Lender has made and shall continue to make (i) its own
independent investigation of the financial condition
and affairs of Obligors in connection with the making
and the continuance of the Advances hereunder and the
taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the
creditworthiness of Obligors. Neither ACM Agent nor
any Co-Agent shall have any duty or responsibility,
either initially or on a continuing basis, to provide
any Lender with any credit or other information with
respect thereto, whether coming into its possession
before making of the Advances or at any time or times
thereafter except as shall be provided by Obligors
pursuant to the terms hereof. Neither ACM Agent nor
any Co-Agent shall be responsible to any Lender for any
recitals, statements, information, representations or
warranties herein or in any agreement, document,
certificate or a statement delivered in connection with
or for the execution, effectiveness, genuineness,
validity, enforceability, collectability or sufficiency
of this Agreement or any Other Document, or of the
financial condition of Obligors, or be required to make
any inquiry concerning either the performance or
observance of any of the terms, provisions or
conditions of this Agreement, the Other Documents or
the financial condition of Obligors, or the existence
of any Event of Default or any Default.
ACM Agent or any Co-Agent may resign on sixty
(60) days' written notice to each of Lenders and the
Borrowing Agent and upon such resignation, the Required
Lenders will promptly designate a successor ACM Agent
or Co-Agent, as the case may be, reasonably
satisfactory to Borrowers.
Any such successor ACM Agent or Co-Agent shall
succeed to the rights, powers and duties of ACM Agent
or Co-Agent, as the case may be, and the term "ACM
Agent" or "Co-Agent", as the case may be, shall mean
such successor agent effective upon its appointment,
and the former ACM Agent's or Co-Agent's rights, powers
and duties as ACM Agent or Co-Agent shall be
terminated, without any other or further act or deed on
the part of such former ACM Agent or Co-Agent. After
any ACM Agent's or Co-Agent's resignation as ACM Agent
or Co-Agent, as the case may be, the provisions of this
Article XIV shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was
ACM Agent or Co-Agent under this Agreement.
14.4. Certain Rights of ACM Agent and Co-
Agents. If ACM Agent or any Co-Agent shall request
instructions from Lenders with respect to any act or
action (including failure to act) in connection with
this Agreement or any Other Document, ACM Agent or Co-
Agent, as the case may be, shall be entitled to refrain
from such act or taking such action unless and until
ACM Agent or Co-Agent, as the case may be, shall have
received instructions from the Required Lenders; and
neither ACM Agent nor any Co-Agent shall incur
liability to any Person by reason of so refraining.
Without limiting the foregoing, Lenders shall not have
any right of action whatsoever against ACM Agent or any
Co-Agent as a result of its acting or refraining from
acting hereunder in accordance with the instructions of
the Required Lenders.
14.5. Reliance. ACM Agent and Co-Agents shall
be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier
message, cablegram, order or other document or
telephone message believed by it to be genuine and
correct and to have been signed, sent or made by the
proper person or entity, and, with respect to all legal
matters pertaining to this Agreement and the Other
Documents and their respective duties hereunder, upon
advice of counsel selected by it. ACM Agent and Co-
Agents may employ agents and attorneys-in-fact and
shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by ACM
Agent or Co-Agents, as the case may be, with reasonable
care.
14.6. Notice of Default. Neither ACM Agent nor
any Co-Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of
Default hereunder or under the Other Documents, unless
ACM Agent or such Co-Agent has received notice from a
Lender or an Obligor referring to this Agreement or the
Other Documents, describing such Default or Event of
Default and stating that such notice is a "notice of
default". In the event that ACM Agent or any Co-Agent
receives such a notice, ACM Agent or such Co-Agent
shall give notice thereof to ACM Agent and Lenders.
ACM Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided, that,
unless and until ACM Agent shall have received such
directions, ACM Agent may (but shall not be obligated
to) take such action, or refrain from taking such
action, with respect to such Default or Event of
Default as it shall deem advisable in the best
interests of Lenders.
14.7. Indemnification. To the extent ACM Agent
and the Co-Agents are not reimbursed and indemnified by
Borrowers, each Lender will reimburse and indemnify ACM
Agent or such Co-Agent in proportion to their
respective portion of the Advances (or, if no Advances
are outstanding, according to its Commitment
Percentage), from and against any and all liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever which may be imposed on,
incurred by or asserted against ACM Agent or any Co-
Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any
Other Document; provided that, Lenders shall not be
liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements
resulting from ACM Agent's or such Co-Agent's willful
misconduct or gross (not mere) negligence.
14.8. ACM Agent and Co-Agents in their
Individual Capacity. With respect to the obligation of
ACM Agent and Co-Agents to lend under this Agreement,
the Advances made by it shall have the same rights and
powers hereunder as any other Lender and as if it were
not performing the duties as ACM Agent or Co-Agent
specified herein; and the term "Lender" or any similar
term shall, unless the context clearly otherwise
indicates, include ACM Agent and Co-Agents in their
respective individual capacities as a Lender. ACM
Agent and Co-Agents each may engage in business with
Obligors as if they were not performing the duties
specified herein, and may accept fees and other
consideration from Obligors for services in connection
with this Agreement or otherwise without having to
account for the same to Lenders.
14.9. Delivery of Documents. To the extent ACM
Agent and Co-Agents receive documents and information
from Obligors pursuant to the terms of this Agreement,
ACM Agent or such Co-Agent will promptly furnish such
documents and information to ACM Agent and the Lenders.
14.10. Borrowers' Undertaking to ACM Agent and
Co-Agents. Without prejudice to their respective
obligations to the Lenders under the other provisions
of this Agreement, the Borrowers hereby undertake with
ACM Agent and Co-Agents to pay to ACM Agent and Co-
Agents from time to time on demand all amounts from
time to time due and payable by them for the account of
ACM Agent or Co-Agents or the Lenders or any of them
pursuant to this Agreement to the extent not already
paid. Any payment made pursuant to any such demand
shall pro tanto satisfy the Borrowers' obligations to
make payments for the account of the Lenders or to one
or more of them pursuant to this Agreement.
XV. BORROWING AGENCY.
15.1. Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably
designates Borrowing Agent to be its attorney and agent
and in such capacity to borrow, sign and endorse notes,
and execute and deliver all instruments, documents,
writings and further assurances now or hereafter
required hereunder, on behalf of such Borrower or
Borrowers and hereby authorizes ACM Agent to pay over
or credit all loan proceeds hereunder in accordance
with the request of Borrowing Agent.
(b) The handling of this credit
facility in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their
request. Neither ACM Agent nor any Lender shall incur
liability to Borrowers as a result thereof. To induce
ACM Agent and Lenders to do so and in consideration
thereof, each Obligor hereby indemnifies ACM Agent and
each Lender and holds ACM Agent and each Lender
harmless from and against any and all liabilities,
expenses, losses, damages and claims of damage or
injury asserted against ACM Agent or any Lender by any
Person arising from or incurred by reason of the
handling of the financing arrangements of Borrowers as
provided herein, reliance by ACM Agent or any Lender on
any request or instruction from Borrowing Agent or any
other action taken by ACM Agent or any Lender with
respect to this Section 15.1 except due to willful
misconduct or gross (not mere) negligence of the
indemnified party.
(c) All Obligations shall be joint and
several, and each Obligor shall make payment upon the
maturity of the Obligations by acceleration or
otherwise, and such obligation and liability on the
part of each Obligor shall in no way be affected by any
extensions, renewals and forbearance granted to ACM
Agent or any Lender to any Obligor, failure of ACM
Agent or any Lender to give any Obligor notice of
borrowing or any other notice, any failure of ACM Agent
or any Lender to pursue to preserve its rights against
any Obligor, the release by ACM Agent or any Lender of
any Collateral now or thereafter acquired from any
Obligor, and such agreement by each Obligor to pay upon
any notice issued pursuant thereto is unconditional and
unaffected by prior recourse by ACM Agent or any Lender
to the other Obligors or any Collateral for such
Obligor's Obligations or the lack thereof.
15.2. Waiver of Subrogation. Each Borrower
expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution of
any other claim which such Borrower may now or
hereafter have against the other Borrowers or other
Person directly or contingently liable for the
Obligations hereunder, or against or with respect to
the other Borrowers' property (including, without
limitation, any property which is Collateral for the
Obligations), arising from the existence or performance
of this Agreement.
XVI. GUARANTY
16.1. Guaranty. Each Guarantor unconditionally
guaranties to Lenders, Co-Agents and ACM Agent, their
successors, endorsees and assigns the prompt payment
when due (whether by acceleration or otherwise) of the
Obligations, and irrespective of the genuineness,
validity, regularity or enforceability of such
Obligations, or of any instrument evidencing any of the
Obligations or of any Collateral therefor or of the
existence or extent of such Collateral.
16.2. No Impairment. Lenders may at any time
and from time to time, either before or after the
maturity thereof, without notice to or further consent
of the Guarantors, extend the time of payment of,
exchange or surrender any Collateral for, renew or
extend any of the Obligations or increase or decrease
the interest rate thereon, and may also make any
agreement with any Obligor or with any other party to
or person liable on any of the Obligations, or
interested therein, for the extension, renewal,
payment, compromise, discharge or release thereof, in
whole or in part, or for any modification of the terms
thereof or of any agreement between any Lender, Co-
Agents, ACM Agent and any Obligor or any such other
party or person, or make any election of rights any
Lender may deem desirable under the United States
Bankruptcy Code, as amended, or any other federal or
state bankruptcy, reorganization, moratorium or
insolvency law relating to or affecting the enforcement
of creditors' rights generally (any of the foregoing,
an "Insolvency Law") without in any way impairing or
affecting the obligations of Guarantors hereunder. The
obligations of Guarantors hereunder shall be effective
regardless of the subsequent incorporation, merger or
consolidation of any Obligor, or any change in the
composition, nature, personnel or location of any
Obligor and shall extend to any successor entity to any
Obligor, including a debtor in possession or the like
under any Insolvency Law.
16.3. Guaranty Absolute. Each Guarantor
guarantees that the Obligations will be paid strictly
in accordance with the terms of this Agreement and/or
any other document, instrument or agreement creating or
evidencing the Obligations, regardless of any law,
regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights
of any Borrower with respect thereto. Each Guarantor
hereby knowingly accepts the full range of risk
encompassed within a contract of "continuing guaranty"
which risk includes the possibility that any Borrower
will contract additional indebtedness for which such
Guarantor may be liable hereunder after such Borrower's
financial condition or ability to pay its lawful debts
when they fall due has deteriorated, whether or not
such Borrower has properly authorized incurring such
additional indebtedness. Each Guarantor acknowledges
that (i) no oral representations, including any
representations to extend credit or provide other
financial accommodations to any Borrower, have been
made by ACM Agent, either Co-Agent or any Lender to
induce such Guarantor to enter into this Agreement and
(ii) any extension of credit to the Borrowers shall be
governed solely by the provisions of this Agreement.
The liability of the Guarantors under this Agreement
shall be absolute and unconditional, in accordance with
its terms, and shall remain in full force and effect
without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever,
including, without limitation: (a) any waiver,
indulgence, renewal, extension, amendment or
modification of or addition, consent or supplement to
or deletion from or any other action or inaction under
or in respect of this Agreement or any Other Document
or any other instruments or agreements relating to the
Obligations or any assignment or transfer of any
thereof; (b) any lack of validity or enforceability of
this Agreement or any Other Document or other
documents, instruments or agreements relating to the
Obligations or any assignment or transfer of any
thereof; (c) any furnishing of any additional security
to ACM Agent, Co-Agents or any Lender or their
respective assignees or any acceptance thereof or any
release of any security by ACM Agent, any Co-Agent or
any Lender or its assignees; (d) any limitation on any
Obligor's liability or obligation under this Agreement
or any Other Document or any other documents,
instruments or agreements relating to the Obligations
or any assignment or transfer of any thereof or any
invalidity or unenforceability, in whole or in part, of
any such document, instrument or agreement or any term
thereof; (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to any
Obligor, or any action taken with respect to this
Agreement by any trustee or receiver, or by any court,
in any such proceeding, whether or not such Guarantor
shall have notice or knowledge of any of the foregoing;
(f) any exchange, release or nonperfection of any
collateral, or any release, or amendment or waiver of
or consent to departure from any guaranty or security,
for all or any of the Obligations; or (g) any other
circumstance which might otherwise constitute a defense
available to, or a discharge of, any Guarantor. Any
amounts due from any Guarantor to ACM Agent, any Co-
Agent or any Lender shall bear interest at the Default
Rate. Obligations include interest accruing after the
commencement of a proceeding under the United States
Bankruptcy Code, whether or not such interest is
allowed or allowable in such proceeding.
16.4. Waivers. (a) This is a guaranty of
payment and not of collection. Neither ACM Agent, any
Co-Agent nor any Lender shall be under any obligation
to institute suit, exercise rights or remedies or take
any other action against any Obligor or resort to any
collateral security held by any of them to secure any
of the Obligations as a condition precedent to the
Guarantors being obligated to perform as agreed herein
and each Guarantor hereby waives any and all rights
which it may have by statute or otherwise which would
require ACM Agent, any Co-Agent or any Lender to do any
of the foregoing. Each Guarantor further consents and
agrees that ACM Agent shall be under no obligation to
marshal any assets in favor of such Guarantor, or
against or in payment of any or all of the Obligations.
Each Guarantor hereby waives any rights to interpose
any defense, counterclaim or offset of any nature and
description which it may have or which may exist
between and among ACM Agent, any Co-Agent or any
Lender, and/or any Obligor with respect to such
Guarantor's obligations under this Agreement, or which
any Obligor may assert on the underlying debt,
including but not limited to failure of consideration,
breach of warranty, fraud, payment (other than cash
payment in full of the Obligations), statute of frauds,
bankruptcy, infancy, statute of limitations, accord and
satisfaction, and usury.
(b) Each Guarantor further waives (i) notice
of the acceptance of this Agreement, of the making of
any such loans or extensions of credit, and of all
notices and demands of any kind to which the Guarantors
may be entitled, including, without limitation, notice
of adverse change in any Obligor's financial condition
or of any other fact which might materially increase
the risk of such Guarantor, and (ii) presentment to or
demand of payment from anyone whomsoever liable upon
any of the Obligations, protest, notices of
presentment, non-payment or protest and except as
otherwise provided in this Agreement notice of any sale
of collateral security or any default of any sort.
(c) Each Guarantor expressly waives any and
all rights of subrogation, reimbursement, indemnity,
exoneration, contribution or any other claim which such
Guarantor may now or hereafter have against any
Obligor, or against or with respect to any Obligor's
property (including, without limitation, property
securing such Guarantor's obligations to Lenders),
arising from the existence or performance of this
Agreement. In furtherance, and not in limitation, of
the preceding waiver, each Guarantor agrees that any
payment to ACM Agent, any Co-Agent or any Lender by any
Guarantor pursuant to this Agreement shall be deemed a
contribution to the capital of such Obligor and any
such payment shall not constitute such Guarantor a
creditor of any such party.
16.5. Security. All sums at any time to the
credit of any Guarantor and any property of such
Guarantor in any Lender's, Co-Agent's or ACM Agent's
possession or in the possession of any bank, financial
institution or other entity that directly or
indirectly, through one or more intermediaries,
controls or is controlled by, or is under common
control with, any Lender, Co-Agent or ACM Agent shall
be deemed held by such Lender or such affiliate, as the
case may be, as security for any and all of such
Guarantor's obligations to such Lender, Co-Agent or ACM
Agent and to any affiliate of such Lender, Co-Agent or
ACM Agent no matter how or when arising and whether
under this or any other instrument, agreement or
otherwise.
16.6. Payments from Guarantor. ACM Agent in
its sole and absolute discretion, with or without
notice to any Guarantor, may apply on account of the
Obligations any payment from such Guarantor or any
other Guarantor, or amounts realized from any security
for the Obligations, or may deposit any and all such
amounts realized in a non-interest bearing cash
collateral deposit account to be maintained as security
for the Obligations.
16.7. No Termination. This is a continuing
irrevocable guaranty and shall remain in full force and
effect and be binding upon such Guarantor's successors
and assigns, until all of the Obligations have been
paid in full and this Agreement has been terminated.
If any of the present or future Obligations are
guarantied by persons, partnerships or corporations in
addition to Guarantors, the death, release or discharge
in whole or in part or the bankruptcy, merger,
consolidation, incorporation, liquidation or
dissolution of one or more of them shall not discharge
or affect the liabilities of any Guarantors under this
Agreement.
16.8. Recapture. Anything in this Agreement to
the contrary notwithstanding, if ACM Agent receives any
payment or payments on account of the liabilities
guarantied hereby, which payment or payments or any
part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver, or any
other party under any Insolvency Law, common law or
equitable doctrine, then to the extent of any sum not
finally retained by Lenders, such Guarantor's
obligations to Lenders shall be reinstated and this
Agreement shall remain in full force and effect (or be
reinstated) until payment shall have been made to ACM
Agent which payment shall be due on demand.
XVII. MISCELLANEOUS.
17.1. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws
of the State of New York applied to contracts to be
performed wholly within the State of New York. Any
judicial proceeding brought by or against any Obligor
with respect to any of the Obligations, this Agreement
or any related agreement may be brought in any court of
competent jurisdiction in the State of New York, United
States of America, and, by execution and delivery of
this Agreement, each Obligor accepts for itself and in
connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this
Agreement. Each Obligor hereby waives personal service
of any and all process upon it and consents that all
such service of process may be made by registered mail
(return receipt requested) directed to Borrowing Agent
at its address set forth in Section 17.6 and service so
made shall be deemed completed five (5) days after the
same shall have been so deposited in the mails of the
United States of America, or, at the ACM Agent's and/or
Lender's option, by service upon Borrowing Agent which
each Obligor irrevocably appoints as such Obligor's
agent for the purpose of accepting service. Nothing
herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of any
Co-Agent, ACM Agent or any Lender to bring proceedings
against any Obligor in the courts of any other
jurisdiction. Each Obligor waives any objection to
jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on
lack of jurisdiction or venue or based upon forum non
conveniens. Any judicial proceeding by any Obligor
against any Co-Agent, ACM Agent or any Lender
involving, directly or indirectly, any matter or claim
in any way arising out of, related to or connected with
this Agreement or any related agreement, shall be
brought only in a federal or state court located in the
City of New York, State of New York.
17.2. Entire Understanding.
(a) This Agreement and the documents
executed concurrently herewith contain the entire
understanding between each Obligor, ACM Agent, Co-
Agents and each Lender and supersede all prior
agreements and understandings, if any, relating to the
subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and
hereinafter made shall have no force and effect unless
in writing, signed by each Obligor's, ACM Agent's, each
Co-Agent's and each Lender's respective officers.
Neither this Agreement nor any portion or provisions
hereof may be changed, modified, amended, waived,
supplemented, discharged, cancelled or terminated
orally or by any course of dealing, or in any manner
other than by an agreement in writing, signed by the
party to be charged. Each Obligor acknowledges that it
has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is
not relying upon oral representations or statements
inconsistent with the terms and provisions of this
Agreement.
(a) The Required Lenders, ACM Agent
with the consent in writing of the Required Lenders,
and Obligors may, subject to the provisions of this
Section 17.2 (b), from time to time enter into written
supplemental agreements to this Agreement and the Other
Documents executed by Obligors or any of them, for the
purpose of adding or deleting any provisions or
otherwise changing, varying or waiving in any manner
the rights of Lenders, ACM Agent or Obligors thereunder
or the conditions, provisions or terms thereof or
waiving any Event of Default thereunder, but only to
the extent specified in such written agreements;
provided, however, that no such supplemental agreement
shall, without the consent of all Lenders:
(i) increase the Commitment
Percentage of any Lender;
(ii) increase the Maximum Revolving
Advance Amount;
(iii) extend the maturity of any
Note or the due date for any amount payable hereunder,
or decrease the rate of interest or reduce any fee
payable by Borrowers to Lenders pursuant to this
Agreement;
(iv) alter the definition of the
term Required Lenders or alter, amend or modify this
Section 17.2(b);
(v) except as provided in Section
7.1(b) hereof, release any Collateral during any
calendar year having an aggregate value in excess of
$1,000,000; or
(vi) change the rights and duties
of ACM Agent.
Any such supplemental agreement shall apply equally to
each Lender and shall be binding upon Obligors, Lenders
and ACM Agent and all future holders of the
Obligations. In the case of any waiver, Obligors, ACM
Agent and Lenders shall be restored to their former
positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no
waiver of a specific Event of Default shall extend to
any subsequent Event of Default (whether or not the
subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right
consequent thereon.
17.3. Successors and Assigns; Participations;
New Lenders.
(a) This Agreement shall be binding
upon and inure to the benefit of Obligors, ACM Agent,
Co-Agents, each Lender, all future holders of the
Obligations, and their respective successors and
assigns, except that no Obligor may assign or transfer
any of its rights or obligations under this Agreement
without the prior written consent of ACM Agent, each
Co-Agent and each Lender.
(b) Each Obligor acknowledges that in
the regular course of commercial banking business one
or more Lenders may at any time and from time to time
sell participating interests in the Advances to other
financial institutions (each such transferee or
purchaser of a participating interest, a "Transferee").
Each Transferee may exercise all rights of payment
(including without limitation rights of set-off) with
respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such
Transferee were the direct holder thereof provided that
Obligors shall not be required to pay to any Transferee
more than the amount which it would have been required
to pay to such Lender which granted an interest in its
Advances or other Obligations payable hereunder to such
Transferee had such Lender retained such interest in
the Advances hereunder or other Obligations payable
hereunder and in no event shall Obligors be required to
pay any such amount arising from the same circumstances
and with respect to the same Advances or other
Obligations payable hereunder to both such Lender and
such Transferee. Each Obligor hereby grants to any
Transferee a continuing security interest in any
deposits, moneys or other property actually or
constructively held by such Transferee as security for
the Transferee's interest in the Advances.
(c) Any Lender may sell, assign or
transfer all or any part of its rights under this
Agreement and the Other Documents to one or more
additional banks or financial institutions and one or
more additional banks or financial institutions may
commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than
$5,000,000, pursuant to a Commitment Transfer
Supplement, executed by a Purchasing Lender, the
transferor Lender, and ACM Agent and delivered to ACM
Agent for recording. Upon such execution, delivery,
acceptance and recording, from and after the transfer
effective date determined pursuant to such Commitment
Transfer Supplement, (i) Purchasing Lender thereunder
shall be a party hereto and, to the extent provided in
such Commitment Transfer Supplement, have the rights
and obligations of a Lender thereunder with a
Commitment Percentage as set forth therein, and (ii)
the transferor Lender thereunder shall, to the extent
provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for
that purpose. Such Commitment Transfer Supplement
shall be deemed to amend this Agreement to the extent,
and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting
adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such
transferor Lender under this Agreement and the Other
Documents. Obligors hereby consent to the addition of
such Purchasing Lender and the resulting adjustment of
the Commitment Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under
this Agreement and the Other Documents. Obligors shall
promptly execute and deliver such further documents and
do such further acts and things in order to effectuate
the foregoing.
(d) ACM Agent shall maintain at its
address a copy of each Commitment Transfer Supplement
delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Advances
owing to each Lender from time to time. The entries in
the Register shall be conclusive, in the absence of
manifest error, and Obligors, ACM Agent, Co-Agents and
Lenders may treat each Person whose name is recorded in
the Register as the owner of the Advance recorded
therein for the purposes of this Agreement. The
Register shall be available for inspection by Obligors
or any Lender at any reasonable time and from time to
time upon reasonable prior notice. ACM Agent shall
receive a fee in the amount of $2,500 payable by the
applicable Purchasing Lender upon the effective date of
each transfer or assignment to such Purchasing Lender.
(e) Obligors authorize each Lender to
disclose to any Transferee or Purchasing Lender and any
prospective Transferee or Purchasing Lender any and all
financial information in such Lender's possession
concerning Obligors which has been delivered to such
Lender by or on behalf of Obligors pursuant to this
Agreement or in connection with such Lender's credit
evaluation of Obligors.
(f) No Lender shall be permitted to
either sell participating interests or sell, assign or
transfer all or any part of its rights under this
Agreement and the Other Documents without obtaining the
written consent of Borrowing Agent, which consent shall
not be unreasonably withheld or delayed; provided,
however, no written consent of Borrowing Agent shall be
required (i) following the occurrence and during the
continuance of an Event of Default (ii) with respect to
a sale, transfer or assignment (x) to an Affiliate or
Subsidiary of any Lender or (y) as collateral to a
Federal Reserve Bank.
17.4. Application of Payments. ACM Agent shall
have the continuing and exclusive right to apply or
reverse and re-apply any payment and any and all
proceeds of Collateral to any portion of the Obliga-
tions. To the extent that any Obligor makes a payment
or ACM Agent or any Lender receives any payment or
proceeds of the Collateral for any Obligor's benefit,
which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be
repaid to a trustee, debtor in possession, receiver,
custodian or any other party under any bankruptcy law,
common law or equitable cause, then, to such extent,
the Obligations or part thereof intended to be
satisfied shall be revived and continue as if such
payment or proceeds had not been received by ACM Agent
or such Lender.
17.5. Indemnity. Each Obligor shall indemnify
ACM Agent, each Co-Agent and each Lender from and
against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature
whatsoever (including, without limitation, reasonable
fees and disbursements of counsel) which may be imposed
on, incurred by, or asserted against ACM Agent, any Co-
Agent or any Lender in any litigation, proceeding or
investigation instituted or conducted by any govern-
mental agency or instrumentality or any other Person
with respect to any aspect of, or any transaction
contemplated by, or referred to in, or any matter
related to, this Agreement or the Other Documents,
whether or not ACM Agent, any Co-Agent or any Lender is
a party thereto, except to the extent that any of the
foregoing arises out of the willful misconduct or gross
(not mere) negligence of the party being indemnified.
17.6. Notice. Any notice or request hereunder
may be given to any Obligor or to ACM Agent, any Co-
Agent or any Lender at their respective addresses set
forth below or at such other address as may hereafter
be specified in a notice designated as a notice of
change of address under this Section. Any notice or
request hereunder shall be given by (a) hand delivery,
(b) overnight courier, (c) registered or certified
mail, return receipt requested, (d) telex or telegram,
subsequently confirmed by registered or certified mail,
or (e) telecopy to the number set out below (or such
other number as may hereafter be specified in a notice
designated as a notice of change of address) with
telephone communication to a duly authorized officer of
the recipient confirming its receipt as subsequently
confirmed by registered or certified mail. Any notice
or other communication required or permitted pursuant
to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to
whom it is addressed, (b) on the earlier of actual
receipt thereof or three (3) days following posting
thereof by certified or registered mail, postage
prepaid, or (c) upon actual receipt thereof when sent
by a recognized overnight delivery service or (d) upon
actual receipt thereof when sent by telecopier to the
number set forth below with telephone communication
confirming receipt and subsequently confirmed by
registered, certified or overnight mail to the address
set forth below, in each case addressed to each party
at its address set forth below or at such other address
as has been furnished in writing by a party to the
other by like notice:
(A) If to ACM Agent at: The Bank of New York
Commercial Corporation
1290 Avenue of the Americas
New York, New York 10104
Attention: Daniel J. Murray
Telephone: (212) 408-4088
Telecopier: (212) 408-4317
with a copy to: Hahn & Hessen LLP
350 Fifth Avenue
New York, New York 10118
Attention: Steven J. Seif, Esq.
Telephone: (212) 736-1000
Telecopier: (212) 594-7167
(B) If to a Lender (other than ACM Agent) or to
Co-Agent, as specified on the signature pages hereof
(C) If to Borrowing NS Group, Inc.
Agent or Ninth & Lowell Streets
Obligors, at: Newport, Kentucky 41072
Attention: Mr. John R. Parker
Telephone: (606) 292-6805
Telecopier: (606) 292-0593
with a copy to: Bryan Cave LLP
One Metropolitan Square
211 North Broadway
Suite 3600
St. Louis, MO 63102
Attention: William F. Seabaugh, Esq.
Telephone: (314) 259-2000
Telecopier: (314) 259-2020
17.7. Severability. If any part of this
Agreement is contrary to, prohibited by, or deemed
invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to
the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and
shall be given effect so far as possible.
17.8. Expenses. All costs and expenses
including, without limitation, reasonable attorneys'
fees and disbursements incurred by ACM Agent (a) in all
efforts made to enforce payment of any Obligation or
effect collection of any Collateral, or (b) in
connection with the entering into, modification,
amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder and all
related agreements, documents and instruments, or (c)
in instituting, maintaining, preserving, enforcing and
foreclosing on ACM Agent's security interest in or Lien
on any of the Collateral, whether through judicial
proceedings or otherwise, or (d) in defending or
prosecuting any actions or proceedings arising out of
or relating to ACM Agent's or any Lender's transactions
with any Obligor, or (e) in connection with any advice
given to ACM Agent or any Lender with respect to its
rights and obligations under this Agreement and all
related agreements, may be charged to Borrowers'
account and shall be part of the Obligations; provided,
however, attorneys' fees incurred solely in connection
with the entering into of this Agreement, shall be
limited to the sum of (i) $200,000 and (ii) 50% of all
attorneys' fees in excess of $200,000.
17.9. Injunctive Relief. Each Obligor
recognizes that, in the event any Obligor fails to
perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may
prove to be inadequate relief to Lenders; therefore,
each Lender, if such Lender so requests, shall be
entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving
actual damages.
17.10. Consequential Damages. Neither ACM
Agent, any Co-Agent any Lender nor any agent or
attorney for any of them shall be liable to any Obligor
for consequential damages arising from any breach of
contract, tort or other wrong relating to the
establishment, administration or collection of the
Obligations.
17.11. Captions. The captions at various places
in this Agreement are intended for convenience only and
do not constitute and shall not be interpreted as part
of this Agreement.
17.12. Counterparts. This Agreement may be
executed in one or more counterparts, each of which
shall constitute an original, all of which taken
together shall constitute one and the same agreement.
17.13. Construction. The parties acknowledge
that each party and its counsel have reviewed this
Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
17.14. Survival. The obligations of Obligors
under Sections 2.2(f) and (g), 3.7, 3.9, 6.14(h) and
17.5 shall survive termination of this Agreement and
the Other Documents and payment in full of the
Obligations for one (1) year from the Termination Date.
The obligations of Guarantors shall be subject to
Section 16.8.
Each of the parties has signed this Agreement as
of the day and year first above written.
NEWPORT STEEL CORPORATION
By: /S/ J. R. PARKER
-----------------------------
Name: John R. Parker
Title: Treasurer
KOPPEL STEEL CORPORATION
By: /S/ J. R. PARKER
------------------------------
Name: John R. Parker
Title: Treasurer
IMPERIAL ADHESIVES, INC.
By: /S/ J. R. PARKER
------------------------------
Name: John R. Parker
Title: Treasurer
NS GROUP, INC.
By: /S/ J. R. PARKER
------------------------------
Name: John R. Parker
Title: Treasurer
ERLANGER TUBULAR CORPORATION
By: /S/ J. R. PARKER
------------------------------
Name: John R. Parker
Title: Treasurer
[Signatures Continued on Next Page]
NORTHERN KENTUCKY AIR, INC.
By: /S/ J. R. PARKER
------------------------------
Name: John R. Parker
Title: Treasurer
NORTHERN KENTUCKY MANAGEMENT, INC.
By: /S/ J. R. PARKER
------------------------------
Name: John R. Parker
Title: Treasurer
[Signatures Continued on Next Page]
THE BANK OF NEW YORK COMMERCIAL
CORPORATION, as Lender, as Co-Agent
and as ACM Agent
By: /S/ DANIEL J. MURRAY
--------------------------------
Name: Daniel J. Murray
Title: President
1290 Avenue of the Americas
New York, New York 10104
Commitment Percentage: 55.55556%
PNC BANK, OHIO, NATIONAL
ASSOCIATION, as Lender and as Co-Agent
By: /S/ DAVID MELIN
--------------------------------
Name: David Melin
Title: Assistant Vice President
210 East 5th Street
Cincinnati, Ohio 45201-1198
Commitment Percentage: 44.44444%
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 27th day of July, 1995, before me
personally came John R. Parker, to me known, who, being
by me duly sworn, did depose and say that he is the
Treasurer of Newport Steel Corporation, the corporation
described in and which executed the foregoing
instrument and that he is authorized to execute said
instrument on behalf of said corporation.
/S/ SUSAN M. PALIOTTA
---------------------------------
NOTARY PUBLIC
SUSAN M. PALIOTTA
NOTARY PUBLIC, State of New York
No. 01PA5038225
Qualified in Queens County
Commission Expires Jan. 17, 1997
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 27th day of July, 1995, before me
personally came John R. Parker, to me known, who,
being by me duly sworn, did depose and say that he is
the Treasurer of Koppel Steel Corporation the
corporation described in and which executed the
foregoing instrument and that he is authorized to
execute said instrument on behalf of said corporation.
/S/ SUSAN M. PALIOTTA
---------------------------------
NOTARY PUBLIC
SUSAN M. PALIOTTA
NOTARY PUBLIC, State of New York
No. 01PA5038225
Qualified in Queens County
Commission Expires Jan. 17, 1997
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 27th day of July, 1995, before me
personally came John R. Parker, to me known, who, being
by me duly sworn, did depose and say that he is the
Treasurer of Imperial Adhesives, Inc., the corporation
described in and which executed the foregoing
instrument and that he is authorized to execute said
instrument on behalf of said corporation.
/S/ SUSAN M. PALIOTTA
---------------------------------
NOTARY PUBLIC
SUSAN M. PALIOTTA
NOTARY PUBLIC, State of New York
No. 01PA5038225
Qualified in Queens County
Commission Expires Jan. 17, 1997
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 27th day of July, 1995 before me
personally came John R. Parker, to me known, who, being
by me duly sworn, did depose and say that he is the
Treasurer of NS Group, Inc., the corporation described
in and which executed the foregoing instrument and that
he is authorized to execute said instrument on behalf
of said corporation.
/S/ SUSAN M. PALIOTTA
---------------------------------
NOTARY PUBLIC
SUSAN M. PALIOTTA
NOTARY PUBLIC, State of New York
No. 01PA5038225
Qualified in Queens County
Commission Expires Jan. 17, 1997
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 27th day of July, 1995 before me
personally came John R. Parker, to me known, who, being
by me duly sworn, did depose and say that he is the
Treasurer of Erlanger Tubular Corporation the
corporation described in and which executed the
foregoing instrument and that he is authorized to
execute said instrument on behalf of said corporation.
/S/ SUSAN M. PALIOTTA
---------------------------------
NOTARY PUBLIC
SUSAN M. PALIOTTA
NOTARY PUBLIC, State of New York
No. 01PA5038225
Qualified in Queens County
Commission Expires Jan. 17, 1997
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 27th day of July, 1995 before me
personally came John R. Parker, to me known, who, being
by me duly sworn, did depose and say that he is the
Treasurer, of Northern Kentucky Air, Inc. the
corporation described in and which executed the
foregoing instrument and that he is authorized to
execute said instrument on behalf of said corporation.
/S/ SUSAN M. PALIOTTA
---------------------------------
NOTARY PUBLIC
SUSAN M. PALIOTTA
NOTARY PUBLIC, State of New York
No. 01PA5038225
Qualified in Queens County
Commission Expires Jan. 17, 1997
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 27th day of July, 1995 before me
personally came John R. Parker, to me known, who, being
by me duly sworn, did depose and say that he is the
Treasurer, of Northern Kentucky Management, Inc., the
corporation described in and which executed the
foregoing instrument and that he is authorized to
execute said instrument on behalf of said corporation.
/S/ SUSAN M. PALIOTTA
---------------------------------
NOTARY PUBLIC
SUSAN M. PALIOTTA
NOTARY PUBLIC, State of New York
No. 01PA5038225
Qualified in Queens County
Commission Expires Jan. 17, 1997
Table of Contents
Page
I. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Accounting Terms . . . . . . . . . . . . . . . . 1
1.2. General Terms. . . . . . . . . . . . . . . . . . 1
1.3. Uniform Commercial Code Terms. . . . . . . . . . 18
1.4. Certain Matters of Construction. . . . . . . . . 18
II. ADVANCES, PAYMENTS . . . . . . . . . . . . . . . . . . . 18
2.1. (a) Total Revolving Advances. . . . . . . . . . 18
(b) Individual Revolving
Advances. . . . . . . . . . . . . . . . . . 19
(c) Discretionary Rights. . . . . . . . . . . . 20
2.2. Procedure for Borrowing Revolving
Advances . . . . . . . . . . . . . . . . . . . . 20
2.3. Disbursement of Advance Proceeds . . . . . . . . 22
2.4. Maximum Advances . . . . . . . . . . . . . . . . 23
2.5. Repayment of Advances. . . . . . . . . . . . . . 23
2.6. Repayment of Excess Advances . . . . . . . . . . 24
2.7. Statement of Account . . . . . . . . . . . . . . 24
2.8. Letters of Credit. . . . . . . . . . . . . . . . 24
2.9. Issuance of Letters of Credit. . . . . . . . . . 25
2.10. Requirements For Issuance of
Letters of Credit. . . . . . . . . . . . . . . . 25
2.11. Additional Payments. . . . . . . . . . . . . . . 27
2.12. Manner of Borrowing and Payment. . . . . . . . . 27
2.13. Mandatory Prepayments. . . . . . . . . . . . . . 29
III. INTEREST AND FEES. . . . . . . . . . . . . . . . . . . . 29
3.1. Interest . . . . . . . . . . . . . . . . . . . . 29
3.2. Letter of Credit Fees. . . . . . . . . . . . . . 29
3.3. (a) Closing Fee . . . . . . . . . . . . . . . . 30
(b) Facility Fee. . . . . . . . . . . . . . . . 30
(c) Agency Fee. . . . . . . . . . . . . . . . . 30
3.4. (a) Collateral Evaluation Fee . . . . . . . . . 30
(b) Collateral Monitoring Fee . . . . . . . . . 31
3.5. Computation of Interest and Fees . . . . . . . . 31
3.6. Maximum Charges. . . . . . . . . . . . . . . . . 31
3.7. Increased Costs. . . . . . . . . . . . . . . . . 31
3.8. Basis For Determining Interest Rate
Inadequate or Unfair . . . . . . . . . . . . . . 32
3.9. Capital Adequacy . . . . . . . . . . . . . . . . 33
IV. COLLATERAL: GENERAL TERMS . . . . . . . . . . . . . . . 34
4.1. Security Interest in the
Collateral . . . . . . . . . . . . . . . . . . . 34
4.2. Perfection of Security Interest. . . . . . . . . 34
4.3. Disposition of Collateral. . . . . . . . . . . . 35
4.4. Preservation of Collateral . . . . . . . . . . . 35
4.5. Ownership of Collateral. . . . . . . . . . . . . 35
4.6. Defense of ACM Agent's and Lender's
Interests. . . . . . . . . . . . . . . . . . . . 36
4.7. Books and Records. . . . . . . . . . . . . . . . 36
4.8. Financial Disclosure . . . . . . . . . . . . . . 37
4.9. Compliance with Laws . . . . . . . . . . . . . . 37
4.10. Inspection of Premises . . . . . . . . . . . . . 37
4.11. Insurance. . . . . . . . . . . . . . . . . . . . 38
4.12. Failure to Pay Insurance . . . . . . . . . . . . 39
4.13. Payment of Taxes . . . . . . . . . . . . . . . . 39
4.14. Payment of Leasehold Obligations . . . . . . . . 39
4.15. Receivables. . . . . . . . . . . . . . . . . . . 40
(a) Nature of Receivables . . . . . . . . . . . 40
(b) Solvency of Customers . . . . . . . . . . . 40
(c) Locations of Obligor. . . . . . . . . . . . 40
(d) Collection of Receivables . . . . . . . . . 40
(e) Notification of Assignment of
Receivables . . . . . . . . . . . . . . . . 41
(f) Power of ACM Agent to Act on
Obligors' Behalf. . . . . . . . . . . . . . 41
(g) No Liability. . . . . . . . . . . . . . . . 42
(h) Establishment of a Lockbox
Account, Dominion Account . . . . . . . . . 42
(i) Adjustments.. . . . . . . . . . . . . . . . 42
4.16. Inventory. . . . . . . . . . . . . . . . . . . . 43
4.17. Intentionally Omitted. . . . . . . . . . . . . . 43
4.18. Exculpation of Liability . . . . . . . . . . . . 43
4.19. Financing Statements.. . . . . . . . . . . . . . 43
V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 43
5.1. Authority. . . . . . . . . . . . . . . . . . . . 43
5.2. Formation and Qualification. . . . . . . . . . . 44
5.3. Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . 44
5.4. Tax Returns. . . . . . . . . . . . . . . . . . . 44
5.5. Financial Statements . . . . . . . . . . . . . . 44
5.6. Corporate Name . . . . . . . . . . . . . . . . . 45
5.7. O.S.H.A. and Environmental
Compliance . . . . . . . . . . . . . . . . . . . 45
5.8. Solvency; No Litigation, Violation,
Indebtedness or Default. . . . . . . . . . . . . 46
5.9. Patents, Trademarks, Copyrights and
Licenses . . . . . . . . . . . . . . . . . . . . 47
5.10. Licenses and Permits . . . . . . . . . . . . . . 48
5.11. Default of Indebtedness. . . . . . . . . . . . . 48
5.12. No Default . . . . . . . . . . . . . . . . . . . 48
5.13. No Burdensome Restrictions . . . . . . . . . . . 48
5.14. No Labor Disputes. . . . . . . . . . . . . . . . 49
5.15. Margin Regulations . . . . . . . . . . . . . . . 49
5.16. Investment Company Act . . . . . . . . . . . . . 49
5.17. Disclosure . . . . . . . . . . . . . . . . . . . 49
5.18. Swaps. . . . . . . . . . . . . . . . . . . . . . 49
5.19. Conflicting Agreements . . . . . . . . . . . . . 49
5.20. Application of Certain Laws and
Regulations. . . . . . . . . . . . . . . . . . . 49
5.21. Business and Property of Obligor.. . . . . . . . 50
VI. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . 50
6.1. Payment of Fees. . . . . . . . . . . . . . . . . 50
6.2. Conduct of Business and Maintenance
of Existence and Assets. . . . . . . . . . . . . 50
6.3. Violations . . . . . . . . . . . . . . . . . . . 50
6.4. Government Receivables . . . . . . . . . . . . . 51
6.5. Net Worth. . . . . . . . . . . . . . . . . . . . 51
6.6. Current Ratio. . . . . . . . . . . . . . . . . . 51
6.7. Interest Coverage. . . . . . . . . . . . . . . . 51
6.8. Working Capital. . . . . . . . . . . . . . . . . 51
6.9. Funded Debt to Net Worth.. . . . . . . . . . . . 51
6.10. Execution of Supplemental
Instruments. . . . . . . . . . . . . . . . . . . 51
6.11. Payment of Indebtedness. . . . . . . . . . . . . 51
6.12. Standards of Financial Statements. . . . . . . . 52
6.13. Maintenance of Equipment . . . . . . . . . . . . 52
6.14. Environmental Matters. . . . . . . . . . . . . . 52
VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 54
7.1. Merger, Consolidation, Acquisition
and Sale of Assets . . . . . . . . . . . . . . . 54
7.2. Creation of Liens. . . . . . . . . . . . . . . . 55
7.3. Guarantees . . . . . . . . . . . . . . . . . . . 56
7.4. Investments. . . . . . . . . . . . . . . . . . . 56
7.5. Loans. . . . . . . . . . . . . . . . . . . . . . 56
7.6. Capital Expenditures . . . . . . . . . . . . . . 57
7.7. Dividends. . . . . . . . . . . . . . . . . . . . 57
7.8. Indebtedness . . . . . . . . . . . . . . . . . . 58
7.9. Nature of Business . . . . . . . . . . . . . . . 58
7.10. Transactions with Affiliates . . . . . . . . . . 58
7.11. Leases . . . . . . . . . . . . . . . . . . . . . 59
7.12. Subsidiaries . . . . . . . . . . . . . . . . . . 59
7.13. Fiscal Year and Accounting Changes . . . . . . . 59
7.14. Pledge of Credit . . . . . . . . . . . . . . . . 59
7.15. Amendment of Articles of
Incorporation, By-Laws . . . . . . . . . . . . . 59
7.16. Compliance with ERISA. . . . . . . . . . . . . . 60
7.17. Prepayment of Indebtedness.. . . . . . . . . . . 60
7.18. Negative Pledge. . . . . . . . . . . . . . . . . 61
VIII. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 61
8.1. Conditions to Initial Advances . . . . . . . . . 61
(a) Note. . . . . . . . . . . . . . . . . . . . 61
(b) Filings, Registrations and
Recordings. . . . . . . . . . . . . . . . . 61
(c) Corporate Proceedings of
Obligors. . . . . . . . . . . . . . . . . . 62
(d) Incumbency Certificates of the
Obligor . . . . . . . . . . . . . . . . . . 62
(e) Certificates. . . . . . . . . . . . . . . . 62
(f) Good Standing Certificates. . . . . . . . . 62
(g) Legal Opinion . . . . . . . . . . . . . . . 62
(h) No Litigation . . . . . . . . . . . . . . . 62
(i) Financial Condition Opinions. . . . . . . . 63
(j) Collateral Examination. . . . . . . . . . . 63
(k) Fees. . . . . . . . . . . . . . . . . . . . 63
(l) Pro Forma Financial
Statements. . . . . . . . . . . . . . . . . 63
(m) Intercreditor Agreements. . . . . . . . . . 63
(n) Other Documents . . . . . . . . . . . . . . 63
(o) Insurance . . . . . . . . . . . . . . . . . 63
(p) Environmental Reports . . . . . . . . . . . 64
(q) Payment Instructions. . . . . . . . . . . . 64
(r) Blocked Accounts. . . . . . . . . . . . . . 64
(s) Consents. . . . . . . . . . . . . . . . . . 64
(t) No Adverse Material Change. . . . . . . . . 64
(u) Leasehold Agreements. . . . . . . . . . . . 64
(v) Net Worth.. . . . . . . . . . . . . . . . . 64
(w) Contract Review.. . . . . . . . . . . . . . 65
(x) Closing Certificate . . . . . . . . . . . . 65
(y) Initial Advances. . . . . . . . . . . . . . 65
(z) Undrawn Availability. . . . . . . . . . . . 65
(aa) Public Offering . . . . . . . . . . . . . . 65
(ab) Merger. . . . . . . . . . . . . . . . . . . 65
(ac) Other . . . . . . . . . . . . . . . . . . . 65
8.2. Conditions to Each Advance . . . . . . . . . . . 66
(a) Representations and
Warranties. . . . . . . . . . . . . . . . . 66
(b) No Default. . . . . . . . . . . . . . . . . 66
(c) Maximum Advances. . . . . . . . . . . . . . 66
IX. INFORMATION AS TO OBLIGOR. . . . . . . . . . . . . . . . 66
9.1. Disclosure of Material Matters . . . . . . . . . 66
9.2. Schedules. . . . . . . . . . . . . . . . . . . . 67
9.3. Litigation . . . . . . . . . . . . . . . . . . . 67
9.4. Material Occurrences . . . . . . . . . . . . . . 67
9.5. Government Receivables . . . . . . . . . . . . . 68
9.6. Annual Financial Statements. . . . . . . . . . . 68
9.7. Quarterly Financial Statements . . . . . . . . . 68
9.8. Monthly Financial Statements . . . . . . . . . . 69
9.9. Other Reports. . . . . . . . . . . . . . . . . . 69
9.10. Additional Information . . . . . . . . . . . . . 69
9.11. Projected Operating Budget . . . . . . . . . . . 69
9.12. Variances From Operating Budget. . . . . . . . . 70
9.13. Notice of Suits, Adverse Events. . . . . . . . . 70
9.14. ERISA Notices and Requests . . . . . . . . . . . 70
9.15. Additional Documents . . . . . . . . . . . . . . 71
X. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . 71
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT . . . . . . . 74
11.1. Rights and Remedies. . . . . . . . . . . . . . . 74
11.2. ACM Agent's Discretion . . . . . . . . . . . . . 75
11.3. Setoff . . . . . . . . . . . . . . . . . . . . . 75
11.4. Rights and Remedies not Exclusive. . . . . . . . 76
XII. WAIVERS AND JUDICIAL PROCEEDINGS . . . . . . . . . . . . 76
12.1. Waiver of Notice . . . . . . . . . . . . . . . . 76
12.2. Delay. . . . . . . . . . . . . . . . . . . . . . 76
12.3. Jury Waiver. . . . . . . . . . . . . . . . . . . 76
XIII. EFFECTIVE DATE AND TERMINATION . . . . . . . . . . . . . 76
13.1. Term . . . . . . . . . . . . . . . . . . . . . . 76
13.2. Termination. . . . . . . . . . . . . . . . . . . 77
XIV. REGARDING THE ACM AGENT AND THE CO-AGENTS. . . . . . . . 77
14.1. Appointment. . . . . . . . . . . . . . . . . . . 77
14.2. Nature of Duties . . . . . . . . . . . . . . . . 78
14.3. Lack of Reliance on ACM Agent, Co-
Agents and Resignation . . . . . . . . . . . . . 78
14.4. Certain Rights of ACM Agent and Co-
Agents . . . . . . . . . . . . . . . . . . . . . 79
14.5. Reliance . . . . . . . . . . . . . . . . . . . . 80
14.6. Notice of Default. . . . . . . . . . . . . . . . 80
14.7. Indemnification. . . . . . . . . . . . . . . . . 80
14.8. ACM Agent and Co-Agents in their
Individual Capacity. . . . . . . . . . . . . . . 80
14.9. Delivery of Documents. . . . . . . . . . . . . . 81
14.10. Borrowers' Undertaking to ACM Agent
and Co-Agents. . . . . . . . . . . . . . . . . . 81
XV. BORROWING AGENCY . . . . . . . . . . . . . . . . . . . . 81
Borrowing Agency Provisions. . . . . . . . . . . 81
15.2. Waiver of Subrogation. . . . . . . . . . . . . . 82
XVI. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . 82
16.1. Guaranty . . . . . . . . . . . . . . . . . . . . 82
16.2. No Impairment. . . . . . . . . . . . . . . . . . 82
16.3. Guaranty Absolute. . . . . . . . . . . . . . . . 83
16.4. Waivers. . . . . . . . . . . . . . . . . . . . . 84
16.5. Security . . . . . . . . . . . . . . . . . . . . 85
16.6. Payments from Guarantor. . . . . . . . . . . . . 85
16.7. No Termination . . . . . . . . . . . . . . . . . 85
16.8. Recapture. . . . . . . . . . . . . . . . . . . . 85
XVII. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 85
17.1. Governing Law. . . . . . . . . . . . . . . . . . 85
17.2. Entire Understanding . . . . . . . . . . . . . . 86
17.3. Successors and Assigns;
Participations; New Lenders. . . . . . . . . . . 87
Application of Payments. . . . . . . . . . . . . 89
17.5. Indemnity. . . . . . . . . . . . . . . . . . . . 89
17.6. Notice . . . . . . . . . . . . . . . . . . . . . 90
17.7. Severability . . . . . . . . . . . . . . . . . . 91
17.8. Expenses . . . . . . . . . . . . . . . . . . . . 91
17.9. Injunctive Relief. . . . . . . . . . . . . . . . 91
17.10. Consequential Damages. . . . . . . . . . . . . . 92
17.11. Captions . . . . . . . . . . . . . . . . . . . . 92
17.12. Counterparts.. . . . . . . . . . . . . . . . . . 92
17.13. Construction.. . . . . . . . . . . . . . . . . . 92
17.14. Survival . . . . . . . . . . . . . . . . . . . . 92
EXHIBITS AND SCHEDULES
SCHEDULES
Schedule 1.2 - Permitted Liens
Schedule 1.2A - Real Property
Schedule 4.5 - Inventory Locations
Schedule 4.6 - Record Retention Policy of the
Holdings Group
Schedule 4.15(c) - Chief Executive Offices
Schedule 5.2(a) - States of Incorporation and
Qualification to do Business
Schedule 5.2 (b) - Subsidiaries
Schedule 5.4 - Tax Identification Numbers
Schedule 5.6 - Corporate Names
Schedule 5.7 - Environmental Compliance
Schedule 5.8(b) - Pending Litigation
Schedule 5.8(d) - Benefit Plans
Schedule 5.9 - Patents, Trademarks, Copyrights and
Licenses
Schedule 5.10 - Licenses and Permits
Schedule 5.14 - Labor Disputes and Contracts
Schedule 7.2 - Indebtedness Secured by Liens on
Equipment, Real Property or General
Intangibles
Schedule 7.3 - Guarantees
Schedule 7.8 - Indebtedness
Schedule 7.10 - Management Fees
EXHIBITS
Exhibit 2.1(a) - Revolving Credit Notes
Exhibit 2.8 - Letter of Credit and Security
Agreement
Exhibit 5.5(b) - Cash Flow Projections and Balance
Sheets
Exhibit 8.1(i) - Financial Condition Affidavit
Exhibit 17.3 - Commitment Transfer Supplement
The Exhibits and Schedules to this Agreement will be
furnished supplementally to the Commission upon
request.
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of July 28, 1995,
between NS Group, Inc., a Kentucky corporation (the
"Company"), and The Huntington National Bank, a national
banking association, as warrant agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue and deliver
its warrant certificates (the "Warrant Certificates")
evidencing warrants (the "Warrants") to acquire, under
certain circumstances, an aggregate of 1,533,692 shares,
subject to adjustment, of its Common Stock (as defined
below), in connection with an offering by the Company of
131,096 Units (herein so called) comprised of the Warrants
and $131,096,000 aggregate principal amount of its 13-1/2%
Senior Secured Notes Due 2003 (the "Senior Secured Notes");
WHEREAS, the Senior Secured Notes are to be issued
under an indenture to be dated as of July 28, 1995 (the
"Indenture") between the Company and The Huntington National
Bank, as trustee (the "Trustee");
WHEREAS, each Unit will consist of one Senior
Secured Note in the principal amount of $1,000 and one (1)
Warrant (each Warrant initially entitling the holder thereof
to purchase 11.699 shares of Common Stock), and, prior to
the separation of Senior Secured Notes from Warrants as
described herein, the Units shall be physically represented
by Senior Secured Notes containing thereon an endorsement
(the "Warrant Endorsement") representing beneficial
ownership of the related Warrants on deposit with the
Warrant Agent as custodian for the registered holders of
such Senior Secured Notes;
WHEREAS, the Warrants and the Senior Secured Notes
shall be separately transferable commencing on the
Separation Date (as defined below); and
WHEREAS, the Company desires the Warrant Agent to
act on behalf of the Company, and the Warrant Agent is
willing so to act, in connection with the issuance of
Warrant Certificates and other matters as provided herein;
NOW, THEREFORE, in consideration of the foregoing
and for the purpose of defining the terms and provisions of
the Warrants and the respective rights and obligations
thereunder of the Company, the Warrant Agent and the record
holders from time to time of the Warrants, the Company and
the Warrant Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions.
As used in this Agreement, the following terms
shall have the following respective meanings:
"Affiliate" of any person means any person
directly or indirectly controlling or controlled by or
under direct or indirect common control with such
person. For purposes of this definition, "control"
when used with respect to any person means the power to
direct the management and policies of such person,
directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Change of Shares" shall have the meaning ascribed
thereto in Section 4.1(a) hereof.
"Common Equity Securities" means Common Stock and
securities convertible into, or exercisable or
exchangeable for, Common Stock or rights or options to
acquire Common Stock or such other securities,
excluding the Warrants.
"Common Stock" or "Warrant Shares" means the
common stock, no par value per share, of the Company,
and any other capital stock of the Company into which
such common stock may be converted or reclassified or
that may be issued in respect of, in exchange for, or
in substitution of, such common stock by reason of any
stock splits, stock dividends, distributions, mergers,
consolidations or other like events.
"Common Stock Distribution" shall have the meaning
ascribed thereto in Section 4.1(b) hereof.
"Convertible Securities" shall have the meaning
ascribed thereto in Section 4.1(c) hereof.
"Depository" means a clearing agency registered
under the Exchange Act that is designated by the
Company to act as depository for the Warrants.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exercise Date" means the date 180 days after the
issuance of the Warrants.
"Expiration Date" means July 15, 2003, subject to
the provisions of Section 3.5.
"Global Certificate" or "Global Certificates"
means a Warrant Certificate or Certificates, as the
case may be, substantially in the form attached hereto
as Exhibit A, evidencing all or part of the entire
issue of Warrants, issued to the Depository or its
nominee, and registered in the name of such Depository
or nominee.
"Holders" means, from time to time, the holders of
the Warrants.
"NASD" means the National Association of
Securities Dealers, Inc., or any successor corporation
thereto.
"NASDAQ" means the National Association of
Securities Dealers, Inc. Automated Quotation System.
"Non-Surviving Combination" means any merger,
consolidation or other business combination by the
Company with one or more persons (other than a Wholly
Owned Recourse Subsidiary) in which the Company is not
the survivor, or a sale of all or substantially all of
the assets of the Company to one or more such other
persons, if, in connection with any of the foregoing,
consideration (other than consideration which includes
Common Equity Securities) is distributed to holders of
Common Stock in exchange for all or substantially all
of their equity interest in the Company.
"Options" shall have the meaning ascribed thereto
in Section 4.1(c) hereof.
The term "person" means any individual,
corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency
or political subdivision thereof or any other entity.
"Purchase Price" means the purchase price per
share of Common Stock to be paid upon the exercise of
each Warrant in accordance with the terms hereof, which
price shall initially be $4.00 per share, subject to
adjustment from time to time pursuant to Article IV
hereof.
"SEC" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933,
as amended.
"Separated" shall have the meaning ascribed
thereto in Section 5.2 hereof.
"Separation" shall have the meaning ascribed
thereto in Section 5.2 hereof.
"Separation Date" means ninety (90) days after the
date hereof or such earlier date as may be designated
to the Company by the Underwriters.
"Survivor" shall have the meaning ascribed thereto
in Section 3.5(b) hereof.
"Underlying Common Stock" means the shares of
Common Stock issuable upon the exercise of the
Warrants.
"Underwriters" means Chemical Securities, Inc. and
CS First Boston, the underwriters of the Units.
"Warrant Agent" means The Huntington National
Bank, a national banking association, or the successor
or successors of such Warrant Agent appointed in
accordance with the terms hereof.
"Warrant Agent Office" shall have the meaning
ascribed thereto in Section 5.1 hereof.
"Warrant Certificates" shall have the meaning
ascribed thereto in Section 2.1 hereof.
"Warrants" shall have the meaning ascribed thereto
in the preamble hereto.
The terms "Asset Sale Offer" and "Change of
Control Offer" and "Wholly-Owned Recourse Subsidiary"
shall have the respective meanings ascribed thereto in
the Indenture.
ARTICLE II
ORIGINAL ISSUE OF WARRANTS
Section 2.1 Form of Warrant Certificates.
The Warrant Certificates (a) shall be issued in
registered form only and substantially in the form attached
hereto as Exhibit A, (b) shall be dated the date of issuance
thereof (whether upon initial issuance, registration of
transfer, exchange or replacement), (c) shall show the date
of countersignature and (d) shall have such legends and
endorsements, each as provided by the Company, typed,
stamped, printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required
to comply with any law or with any rule or regulation
pursuant thereto or with any rule or regulation of any
securities exchange on which the Warrant may be listed, or
to conform to customary usage. The Warrant Certificates
shall be in a format and in a form reasonably satisfactory
to the Warrant Agent.
Pending the preparation of definitive Warrant
Certificates, temporary Warrant Certificates may be issued,
which may be printed, lithographed, typewritten,
mimeographed or otherwise produced, and which will be
substantially of the tenor of the definitive Warrant
Certificates in lieu of which they are issued.
If temporary Warrant Certificates are issued, the
Company will cause definitive Warrant Certificates to be
prepared without unreasonable delay. After the preparation
of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant
Certificates upon surrender of the temporary Warrant
Certificates to the Warrant Agent, without charge to the
Holder. Until so exchanged the temporary Warrant
Certificates shall in all respects be entitled to the same
benefits under this Agreement as definitive Warrant
Certificates.
Section 2.2 Execution and Delivery of Warrant
Certificates.
Warrant Certificates evidencing Warrants to
purchase initially an aggregate of up to 1,533,692 shares of
Common Stock shall be executed, on or after the date of this
Agreement, by the Company and delivered to the Warrant Agent
for countersignature, and the Warrant Agent shall thereupon
countersign and deliver such Warrant Certificates upon the
order and at the direction of the Company to the purchasers
thereof on the date of issuance. The Warrant Agent is
hereby authorized to countersign and deliver Warrant
Certificates as required by this Section 2.2 or by Section
3.4, Article V or Section 9.4. The Warrant Certificates
shall be executed on behalf of the Company by its Chairman
of the Board, its President or any of its Vice Presidents,
either manually or by facsimile signature printed thereon.
The Warrant Certificates shall be manually countersigned by
an authorized signatory of the Warrant Agent and shall not
be valid for any purpose unless so countersigned. In case
any officer of the Company whose signature shall have been
placed upon any of the Warrant Certificates shall cease to
be the Chairman of the Board, the President or a Vice
President of the Company before countersignature by the
Warrant Agent and issue and delivery thereof, such Warrant
Certificates may, nevertheless, be countersigned by the
Warrant Agent and issued and delivered with the same force
and effect as through such person had not ceased to be such
officer of the Company.
Section 2.3 Global Certificate Legend.
Any Global Certificate issued hereunder shall, in
addition to the provisions contained in Exhibit A, bear a
legend on its face in substantially the following form:
"This Warrant is a Global Certificate within the
meaning of the Warrant Agreement referred to herein and is
registered in the name of a Depository or a nominee of a
Depository. This Warrant Certificate is exchangeable for
Warrant Certificates registered in the name of a person
other than the Depository or its nominee only in the limited
circumstances described in the Warrant Agreement, and may
not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository."
ARTICLE III
EXERCISE PRICE; EXERCISE OF WARRANTS GENERALLY;
NON-SURVIVING COMBINATION
Section 3.1 Exercise Price.
Each Warrant Certificate shall, when countersigned
by the Warrant Agent, entitle the Holder thereof, subject to
the provisions thereof and of this Agreement, to receive
11.699 shares of Common Stock for each Warrant represented
thereby, subject to adjustment as herein provided upon
payment of the Purchase Price for each of such shares. The
Purchase Price shall be payable by certified or official
bank check or wire transfer, payable in United States
currency to the order of the Company.
Section 3.2 Exercise of Warrants.
Subject to the terms and conditions set forth
herein, the Warrants shall be exercisable at any time on or
after 180 days from the date of their issuance and prior to
5:00 p.m., Eastern Time, on the Expiration Date.
Section 3.3 Expiration of Warrants.
The Warrants shall terminate and become void as of
5:00 p.m., Eastern Time, on the Expiration Date; provided,
however, that the Warrants will terminate and become void
prior to the Expiration Date in the event of a Non-Surviving
Combination, pursuant to Section 3.5.
Section 3.4 Method of Exercise.
In order to exercise a Warrant, the Holder thereof
must surrender the Warrant Certificate evidencing such
Warrant to the Warrant Agent at the Warrant Agent Office,
with one of the forms on the reverse of or attached to the
Warrant Certificate duly executed, and tender the Purchase
Price therefor in accordance with this Article III.
If fewer than all of the Warrants represented by a
Warrant Certificate are surrendered, such Warrant
Certificate shall be surrendered and, subject to the
provisions of Article V, a new Warrant Certificate of the
same tenor and for the number of Warrants that were not
surrendered shall be executed by the Company. The Warrant
Agent shall countersign the new Warrant Certificate,
register it in such name or names as may be directed in
writing by the Holder and deliver the new Warrant
Certificate to the person or persons entitled to receive the
same.
Upon surrender of a Warrant Certificate and
payment of the Purchase Price in conformity with the
foregoing provisions, the Warrant Agent shall thereupon
promptly notify the Company, and the Warrant Agent will
deliver or cause to be delivered to or upon written order of
any Holder appropriate evidence of ownership of any shares
of Underlying Common Stock or other securities or property
(including any money) to which the Holder is entitled,
subject to the provisions of Section 9.2.
Section 3.5 Non-Surviving Combination.
(a) If the Company proposes, prior to the
Expiration Date, to enter into a transaction that would
constitute a Non-Surviving Combination if consummated, the
Company shall give written notice thereof to the Warrant
Agent and to the Holders of Warrants, promptly after an
agreement is reached with respect to the Non-Surviving
Combination but in no event less than 30 days prior to the
consummation thereof. Such notice shall describe the
transaction in reasonable detail and specify the
consideration to be received by the Holders. The Company
shall also furnish to each Holder of Warrants all notices
and materials furnished to its stockholders in connection
with such transactions.
(b) The Company agrees that it will not enter
into an agreement providing for a Non-Surviving Combination,
unless the party to such transaction that is the surviving
entity (the "Survivor") shall be obligated to distribute or
pay to each Holder of Warrants, upon payment of the Purchase
Price prior to the Expiration Date, the number of shares of
stock or other securities or other property (including any
cash) of the Survivor that would have been distributable or
payable on account of the Underlying Common Stock if such
Holder's Warrants had been exercised immediately prior to
such Non-Surviving Combination (or, if applicable, the
record date therefor). Following the consummation of a Non-
Surviving Combination, the Warrants shall represent only the
right to receive such shares of stock or other property from
the Survivor upon payment of the Purchase Price prior to the
Expiration Date.
ARTICLE IV
ADJUSTMENTS
Section 4.1 Adjustments of Exercise Price and Number of
Shares of Common Stock.
The number and kind of shares purchasable upon the
exercise of Warrants and the Purchase Price shall be subject
to adjustment from time to time as follows:
(a) Changes in Common Stock. In the event the
Company shall, at any time or from time to time after the
date hereof, (i) issue any shares of Common Stock as a stock
dividend to the holders of Common Stock, (ii) subdivide or
combine the outstanding shares of Common Stock into a
greater or lesser number of shares or (iii) issue any shares
of its capital stock in a reclassification or reorganization
of the Common Stock (any such issuance, subdivision,
combination, reclassification or reorganization being herein
called a "Change of Shares"), then (A) in the case of (i) or
(ii) above, the number of shares of Common Stock that may be
purchased upon the exercise of each Warrant shall be
adjusted to the number of shares of Common Stock that the
Holder of such Warrant would have owned or have been
entitled to receive after the happening of such event had
such Warrant been exercised immediately prior to the record
date (or, if there is no record date, the effective date)
for such event, and the Purchase Price shall be adjusted to
the price (calculated to the nearest 1,000th of one cent)
determined by multiplying the Purchase Price immediately
prior to such event by a fraction, the numerator of which
shall be the number of shares of Common Stock purchasable
with one Warrant immediately prior to such event and the
denominator of which shall be the number of shares of Common
Stock purchasable with one Warrant after the adjustment
referred to above and (B) in the case of (iii) above,
paragraph (l) below shall apply. An adjustment made
pursuant to clause (A) of this paragraph (a) shall become
effective retroactively immediately after the record date in
the case of such dividend and shall become effective
immediately after the effective date in other cases, but any
shares of Common Stock issuable solely as a result of such
adjustment shall not be issued prior to the effective date
of such event.
(b) Common Stock Distribution. In the event the
Company shall, at any time or from time to time after the
date hereof, issue, sell or otherwise distribute (including
by way of deemed distributions pursuant to paragraphs (c)
and (d) below) any shares of Common Stock (other than
pursuant to a Change of Shares or the exercise or
conversion, as the case may be, of any Option, Convertible
Security (each as defined in paragraph (c) below) or
Warrant) (any such event, including any deemed distributions
described in paragraphs (c) and (d), being herein called a
"Common Stock Distribution"), for a consideration per share
less than the current market price per share of Common Stock
(as defined in paragraph (f) below), on the date of such
Common Stock Distribution, then, effective upon such Common
Stock Distribution, the Purchase Price shall be reduced to
the price (calculated to the nearest 1,000th of one cent)
determined by multiplying the Purchase Price in effect
immediately prior to such Common Stock Distribution by a
fraction, the numerator of which shall be the sum of (i) the
number of shares of Common Stock outstanding (exclusive of
any treasury shares) immediately prior to such Common Stock
Distribution multiplied by the current market price per
share of Common Stock on the date of such Common Stock
Distribution, plus (ii) the consideration, if any, received
by the Company upon such Common Stock Distribution, and the
denominator of which shall be the product of (A) the total
number of shares of Common Stock outstanding (exclusive of
any treasury shares) immediately after such Common Stock
Distribution multiplied by (B) the current market price per
share of Common Stock on the date of such Common Stock
Distribution. Notwithstanding the foregoing provisions of
this Section 4.1(b), no adjustments under this Section 4.1
shall be made with respect to any shares of Common Stock
issued by the Company pursuant to a firm commitment
underwritten public offering at a public offering price
(without taking into account any compensation, discounts or
expenses paid or incurred by the Company for and in the
underwriting of, or otherwise in connection with, the
issuance thereof) in an amount greater than or equal to the
market price on the date immediately preceding the date on
which the distribution of such shares of Common Stock
commences less the lesser of (i) fifty cents per share or
(ii) five percent (5%) of the market price per share on the
date immediately preceding the date of such distribution.
If any Common Stock Distribution shall require an
adjustment to the Purchase Price pursuant to the foregoing
provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, then, effective at the time such
adjustment is made, the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number
of such shares so purchasable immediately prior to such
Common Stock Distribution by a fraction, the numerator of
which shall be the Purchase Price in effect immediately
prior to such adjustment and the denominator of which shall
be the Purchase Price in effect immediately after such
adjustment. In computing adjustments under this paragraph,
fractional interests in Common Stock shall be taken into
account to the nearest 1,000th of a share.
The provisions of this paragraph (b), including by
operation of paragraph (c) or (d) below, shall not operate
to increase the Purchase Price or reduce the number of
shares of Common Stock purchasable upon the exercise of any
Warrant, except by operation of paragraph (j) or (k) below.
(c) Issuance of Options. In the event the
Company shall, at any time or from time to time after the
date hereof, issue, sell, distribute or otherwise grant in
any manner (including by assumption) any rights to subscribe
for or to purchase, or any warrants or options for the
purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (any such
rights, warrants or options being herein called "Options"
and any such convertible or exchangeable stock or securities
being herein called "Convertible Securities"), whether or
not such Options or the rights to convert or exchange such
Convertible Securities are immediately exercisable, and the
price per share at which Common Stock is issuable upon the
exercise of such Options or upon the conversion or exchange
of such Convertible Securities (determined by dividing (i)
the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale,
distribution or granting of such Options, plus the minimum
aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such
Options, plus, in the case of Options to acquire Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or
exchange of all such Convertible Securities, by (ii) the
total maximum number of shares of Common Stock issuable upon
the exercise of all such Options) shall be less than the
current market price per share of Common Stock on the date
of the issuance, sale, distribution or granting of such
Options then, for purposes of paragraph (b) above, the total
maximum number of shares of Common Stock issuable upon the
exercise of all such Options or upon the conversion or
exchange of the total maximum amount of the Convertible
Securities issuable upon the exercise of all such Options
shall be deemed to have been issued as of the date of the
issuance, sale, distribution or granting of such Options and
thereafter shall be deemed to be outstanding and the Company
shall be deemed to have received as consideration such price
per share, determined as provided above, therefor. Except
as otherwise provided in paragraphs (j) and (k) below, no
additional adjustment of the Purchase Price shall be made
upon the actual exercise of such Options or upon conversion
or exchange of the Convertible Securities issuable upon the
exercise of such Options. If the minimum and maximum
numbers or amounts referred to in this paragraph (c) or in
paragraph (d) below cannot be calculated with certainty as
of the date of the required adjustment, such numbers and
amounts shall be determined in good faith by the Board of
Directors of the Company.
(d) Issuance of Convertible Securities. In the
event the Company shall, at any time or from time to time
after the date hereof, issue, sell or otherwise distribute
(including by assumption) any Convertible Securities (other
than upon the exercise of any Option), whether or not the
rights to convert or exchange such Convertible Securities
are immediately exercisable, and the price per share at
which Common Stock is issuable upon the conversion or
exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or
receivable by the Company as consideration for the issuance,
sale or distribution of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange
of all such Convertible Securities, by (ii) the total
maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities)
shall be less than the current market price per share of
Common Stock on the date of such issuance, sale or
distribution, then, for the purposes of paragraph (b) above,
the total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities
shall be deemed to have been issued as of the date of the
issuance, sale or distribution of such Convertible
Securities and thereafter shall be deemed to be outstanding
and the Company shall be deemed to have received as
consideration such price per share, determined as provided
above, therefor. Except as otherwise provided in paragraphs
(j) and (k) below, no additional adjustment of the Purchase
Price shall be made upon the actual conversion or exchange
of such Convertible Securities.
(e) Dividends and Distributions. In the event
the Company shall, at any time or from time to time after
the date hereof, distribute to the holders of Common Stock
any dividend or other distribution of cash, evidences of its
indebtedness, other securities or other properties or assets
(in each case other than (i) dividends payable in Common
Stock, Options or Convertible Securities and (ii) any cash
dividend that, when added to all other cash dividends paid
per share of Common Stock in the one year prior to the
declaration date of such dividend (excluding any such other
dividend included in a previous adjustment of the Purchase
Price pursuant to this paragraph (e)), does not exceed 10%
of the current market price per share of Common Stock on
such declaration date), or any options, warrants or other
rights to subscribe for or purchase any of the foregoing,
then (A) the Purchase Price shall be decreased to a price
determined by multiplying the Purchase Price then in effect
by a fraction, the numerator of which shall be the current
market price per share of Common Stock on the record date
for such distribution less the sum of (X) the cash portion,
if any, of such distribution per share of Common Stock
outstanding (exclusive of any treasury shares) to the extent
that such dividend, when added to all other cash dividends
paid per share of Common Stock in one year prior to the
declaration date of such dividend on the record date for
such distribution exceeds 10% of the current market price
per share of Common Stock on such declaration date plus (Y)
the then fair market value (as determined in good faith by
the Board of Directors of the Company) per share of Common
Stock outstanding (exclusive of any treasury shares) on the
record date for such distribution of that portion, if any,
of such distribution consisting of evidences of
indebtedness, other securities, properties, assets, options,
warrants or subscription or purchase rights, and the
denominator of which shall be such current market price per
share of Common Stock and (B) the number of shares of Common
Stock purchasable upon the exercise of each Warrant shall be
increased to a number determined by multiplying the number
of shares of Common Stock so purchasable immediately prior
to the record date for such distribution by a fraction, the
numerator of which shall be the Purchase Price in effect
immediately prior to the adjustment required by clause (A)
of this sentence and the denominator of which shall be the
Purchase Price in effect immediately after such adjustment.
The adjustments required by this paragraph (e) shall be made
whenever any such distribution is made and shall be
retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(f) Current Market Price. For the purpose of any
computation under paragraphs (b), (c), (d) and (e) of this
Section, the current market price per share of Common Stock
at any date shall be the average of the daily closing prices
for the shorter of (i) the 20 consecutive trading days
ending on the last full trading day on the exchange or
market specified in the second succeeding sentence prior to
the Time of Determination and (ii) the period commencing on
the date next succeeding the first public announcement of
the issuance, sale, distribution or granting in question
through such last full trading day prior to the Time of
Determination. The term "Time of Determination" as used
herein shall be the time and date of the earlier to occur of
(A) the date as of which the current market price is to be
computed and (B) the last full trading day on such exchange
or market before the commencement of "ex-dividend" trading
in the Common Stock relating to the event giving rise to the
adjustment required by paragraph (b), (c), (d) or (e). The
closing price for any day shall be the last reported sale
price regular way or, in case no such reported sale takes
place on such day, the average of the closing bid and asked
prices regular way for such day, in each case (1) on the
principal national securities exchange on which the shares
of Common Stock are listed or to which such shares are
admitted to trading or (2) if the Common Stock is not listed
or admitted to trading on a national securities exchange, in
the over-the-counter market as reported by NASDAQ or any
comparable system or (3) if the Common Stock is not listed
on NASDAQ or a comparable system, as furnished by two
members of the NASD selected from time to time in good faith
by the Board of Directors of the Company for that purpose.
In the absence of all of the foregoing, or if for any other
reason the current market price per share cannot be
determined pursuant to the foregoing provisions of this
paragraph (f), the current market price per share shall be
the fair market value thereof as determined in good faith by
the Board of Directors of the
Company.
(g) Certain Distributions. If the Company shall
pay a dividend or make any other distribution payable in
Options or Convertible Securities, then, for purposes of
paragraph (b) above (including dividends or distributions
by operation or paragraph (c) or (d) above, as the case may
be), such Options or Convertible Securities shall be deemed
to have been issued or sold without consideration except for
such amounts of consideration as shall have been deemed to
have been received by the Company pursuant to paragraphs (c)
or (d) above, as appropriate.
(h) Consideration Received. If any shares of
Common Stock shall be issued and sold in an underwritten
public offering, the consideration received by the Company
for such shares of Common Stock shall be deemed to include
the underwriting discounts and commissions realized by the
underwriters of such public offering. If any shares of
Common Stock, Options or Convertible Securities, shall be
issued, sold or distributed for a consideration other than
cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed
to be the then fair market value of such consideration (as
determined in good faith by the Board of Directors of the
Company). If any Options shall be issued in connection with
the issuance and sale of other securities of the Company,
together comprising one integral transaction in which no
specific consideration is allocated to such Options by the
parties thereto, such Options shall be deemed to have been
issued, sold or distributed for such amount of consideration
as shall be allocated to such Options in good faith by the
Board of Directors of the Company.
(i) Deferral of Certain Adjustments. No
adjustments to the Purchase Price (including the related
adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant) shall be
required hereunder unless such adjustment, together with
other adjustments carried forward as provided below, would
result in an increase or decrease of at least one percent of
the Purchase Price; provided, however, that any adjustment
which by reason of this paragraph (i) is not required to be
made shall be carried forward and taken into account in any
subsequent adjustment.
(j) Changes in Options and Convertible
Securities. If the exercise price provided for in any
Options referred to in paragraph (c) above, the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
paragraph (c) or (d) above, or the rate at which any
Convertible Securities referred to in paragraph (c) or (d)
above are convertible into or exchangeable for Common Stock
shall change at any time (other than under or by reason of
provisions designed to protect against dilution upon an
event which results in a related adjustment pursuant to this
Article IV), the Purchase Price then in effect and the
number of shares of Common Stock purchasable upon the
exercise of each Warrant shall forthwith be readjusted
(effective only with respect to any exercise of any Warrant
after such readjustment) to the Purchase Price and number of
shares of Common Stock so purchasable that would then be in
effect had the adjustment made upon the issuance, sale,
distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price,
additional consideration or conversion rate, as the case may
be, but only with respect to such Options and Convertible
Securities as then remain outstanding.
(k) Expiration Of Options and Convertible
Securities. If, at any time after any adjustment to the
number of shares of Common Stock purchasable upon the
exercise of each Warrant shall have been made pursuant to
paragraph (c), (d) or (j) above or this paragraph (k), any
Options or Convertible Securities shall have expired
unexercised or, solely with respect to Options that are
rights ("Rights"), are redeemed, the number of such shares
so purchasable shall, upon such expiration or such
redemption, be readjusted and shall thereafter be such as
they would have been had they been originally adjusted (or
had the original adjustment not been required, as the case
may be) as if (i) the only shares of Common Stock deemed to
have been issued in connection with such Options or
Convertible Securities were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such
Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale, distribution
or granting of all such Options or Convertible Securities,
whether or not exercised; provided, however, that (x) no
such readjustment shall have the effect of decreasing the
number of shares so purchasable by an amount (calculated by
adjusting such decrease to account for all other adjustments
made pursuant to this Article IV following the date of the
original adjustment referred to above) in excess of the
amount of the adjustment initially made in respect of the
issuance, sale, distribution or granting of such Options or
Convertible Securities and (y) in the case of the redemption
of any Rights, there shall be deemed (for the purposes of
paragraph (c) above) to have been issued as of the date of
such redemption for no consideration a number of shares of
Common Stock equal to the aggregate consideration paid to
effect such redemption divided by the current market price
of the Common Stock on the date of such redemption.
(l) Other Adjustments. In the event that at any
time the Holders shall become entitled to receive any
securities of the Company other than shares of Common Stock
as constituted on the date hereof the number of such other
securities so receivable upon exercise of the Warrants and
the Purchase Price applicable to such exercise shall be
adjusted at such time, and shall be subject to further
adjustment from time to time thereafter, in a manner and on
terms as nearly equivalent as practicable to the provisions
with respect to the shares of Common Stock contained in this
Article IV.
(m) Excluded Transactions. Notwithstanding any
provision in this Article IV to the contrary, no adjustment
shall be made pursuant to this Article IV in respect of (i)
any change in the par value of the Common Stock, (ii) the
granting of any Options or the issuance of any shares of
Common Stock, in either case, which would otherwise trigger
an adjustment under paragraph (b) above, that may be
registered on Form S-8 or any successor form under the
Securities Act, to any officers, directors or employees of,
or any consultants or advisors to, the Company, provided
that the granting of any Options or the issuance of shares
of Common Stock pursuant to this clause (ii) are in the
ordinary course of business and are usual and customary, or
(iii) the issuance of Common Stock (A) upon conversion or
exercise of any Convertible Securities or Options of the
Company outstanding on the date hereof or (B) pursuant to
any dividend reinvestment plan which provided that the price
of the Common Stock purchased for plan participants from the
Company will be no less than 95% of the average of the high
and low sales prices of the Common Stock on the investment
date or, if no trading in the Common Stock occurs on such
date, the next preceding date on which trading occurred (1)
on the principal national securities exchange on which the
shares of Common Stock are listed or to which such shares
are admitted to trading or (2) if the Common Stock is not
listed or admitted to trading on a national securities
exchange, in the over-the-counter market as reported by
NASDAQ or any comparable system or (3) if the Common Stock
is not listed on NASDAQ or a comparable system, as furnished
by two members of the NASD selected from time to time in
good faith by the Board of Directors of the Company for that
purpose. In the absence of all of the foregoing, or if for
any other reason the current market price per share cannot
be determined pursuant to the foregoing provisions of this
paragraph, the current market price per share shall be the
fair market value thereof as determined in good faith by the
Board of Directors of the Company. Clause (ii) of this
paragraph (m) shall not apply to any such grant or issuance
to the extent that after giving effect thereto, the
aggregate amount of Common Stock issued in all transactions
covered by clause (ii) of this paragraph (m) (assuming the
exercise of all then outstanding Options granted in such
transactions) would exceed 10% of the number of shares of
Common Stock then outstanding (after giving effect to the
exercise of the Options so granted, the Warrants and all
then outstanding Options or Convertible Securities).
Section 4.2 Notice of Adjustment.
Whenever the number of shares of Common Stock or
other stock or property issuable upon the exercise of each
Warrant is adjusted, as herein provided, the Company shall
promptly give a written certificate of the Company to the
Warrant Agent of such adjustment or adjustments and shall
cause the Warrant Agent promptly to mail by first class
mail, postage prepaid, to each Holder notice of such
adjustment or adjustments. In addition, the Company at its
sole expense shall within 120 calendar days following the
end of each fiscal year of the Company during which any
Warrants remain outstanding and an adjustment has occurred,
and promptly upon the request of any Holder of a Warrant in
connection with the exercise of any of such Holder's
Warrants, cause to be delivered to the Warrant Agent a
certificate of a firm of independent public accountants
selected by the Board of Directors of the Company (who may
be the regular accountants employed by the Company) setting
forth the number of shares of Common Stock or other stock or
property issuable upon the exercise of each Warrant after
such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the
computation by which such adjustment was made. The Warrant
Agent shall be entitled to rely on such Certificates and
shall be under no duty or responsibility with respect to any
such certificate except to exhibit the same from time to
time to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at
any time be under any duty or responsibility to any Holder
to determine whether any facts exist that may require any
adjustment of the number of shares of Common Stock or other
stock or property issuable on exercise of the Warrants, or
with respect to the nature or extent of any such adjustment
when made, or with respect to the method employed in making
such adjustment or the validity or value (or the kind or
amount) of any shares of Common Stock or other stock or
property which may be issuable on exercise of the Warrants.
The Warrant Agent shall not be responsible for any failure
of the Company to make any cash payment or to issue,
transfer or deliver any shares of Common Stock or stock
certificates or other common stock or property upon the
exercise of any Warrant.
Section 4.3 Statement of Warrants.
Irrespective of any adjustment in the number or
kind of shares issuable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to
express the same number and kind of shares as are stated in
the Warrants initially issuable pursuant to this Agreement.
Section 4.4 Fractional Interest.
The Company shall not be required to issue
fractional shares of Common Stock on the exercise of
Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same Holder, the
number of full shares of Common Stock which shall be
issuable upon such exercise shall be computed on the basis
of the aggregate number of shares of Common Stock acquirable
on exercise of the Warrants so presented. If any fraction
of a share of Common Stock would, except for the provisions
of this Section, be issuable on the exercise of any Warrant
(or specified portion thereof), the Company shall pay any
amount in cash calculated by it to be equal to the then
current market price per share multiplied by such fraction
computed to the nearest whole cent. The Holders by their
acceptance of the Warrant Certificates, expressly waive any
and all rights to receive any fraction of a share of Common
Stock or a stock certificate representing a fraction of a
share of Common Stock.
ARTICLE V
WARRANT TRANSFER BOOKS, TRANSFERS AND EXCHANGES
Section 5.1 Warrant Transfer Books, etc.
Prior to the Separation Date, the Warrants shall
not be transferable separately but shall be transferable
only as a Unit with the Senior Secured Notes as provided in
Section 5.2. The Warrant Certificates shall be issued in
registered form only. The Company shall cause to be kept at
the principal corporate trust office of the Warrant Agent
(the "Warrant Agent Office") a register in which, subject to
such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Warrant Certificates
and of transfers or exchanges of Warrant Certificates by the
Warrant Agent as herein provided.
At the option of the Holder thereof, and subject
to the provisions of this Agreement, Warrant Certificates
may be exchanged at the Warrant Agent Office, upon payment
of the charges hereinafter provided. Whenever any Warrant
Certificates are so surrendered for exchange, the Company
shall execute, and the Warrant Agent shall countersign and
deliver, the Warrant Certificates that the Holder making the
exchange is entitled to receive. Notwithstanding the
foregoing, any Global Certificate shall be exchangeable
pursuant to this Section for Warrant Certificates registered
in the names of persons other than the Depository or its
nominee only if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository or if at
any time such Depository ceases to be a clearing agency
registered under the Exchange Act or (ii) the Company
executes and delivers to the Warrant Agent a written order
that such Global Certificate shall be so exchangeable. Any
Global Certificate that is exchangeable pursuant to the
preceding sentence shall be exchangeable for Warrant
Certificates registered in such names as the Depository
shall direct.
Notwithstanding any other provision in this
Agreement, a Global Certificate may not be transferred
except as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository.
None of the Company, the Warrant Agent or any
agent of the Company or the Warrant Agent will have any
responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial
ownership interests of a Global Certificate or for
maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
All Warrant Certificates issued upon any
registration of transfer or exchange of Warrant Certificates
shall be the valid obligations of the Company, evidencing
the same obligations, and entitled to the same benefits
under this Agreement, as the Warrant Certificates
surrendered for such registration of transfer or exchange.
Every Warrant Certificate surrendered for
registration of transfer or exchange shall (if so required
by the Company or the Warrant Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Warrant Agent, duly
executed by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be payable by Holders for
any registration of transfer or exchange of Warrant
Certificates. The Company may require payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of
transfer or exchange of Warrant Certificates.
Any Warrant Certificate when duly endorsed in
blank shall be deemed negotiable. The Holder of any Warrant
Certificate duly endorsed in blank may be treated by the
Company, the Warrant Agent and all other persons dealing
therewith as the absolute owner thereof for any purpose and
as the person entitled to exercise the rights represented
thereby, or to the transfer thereof on the register of the
Company maintained by the Warrant Agent, any notice to the
contrary notwithstanding; but until such transfer on such
register, the Company and the Warrant Agent may treat the
registered Holder thereof as the owner for all purposes.
Notwithstanding the foregoing, with respect to any Global
Certificate, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant
Agent, from giving effect to any written certification,
proxy or other authorization furnished by any Depository (or
its nominee), as a Holder, with respect to such Global
Certificate or impair, as between such Depository and owners
of beneficial interests in such Global Certificate, the
operation of customary practices governing the exercise of
the rights of such Depository (or its nominee) as Holder of
such Global Certificate.
Section 5.2 Transfers of Warrants Prior to Separation of
Warrants and Senior Secured Notes; Separation
of Warrants and Senior Secured Notes.
The Company, simultaneously with the issue of the
Senior Secured Notes pursuant to the terms of the Indenture,
shall deliver to the Warrant Agent with respect to each
$1,000 principal amount of Senior Secured Notes so issued a
Warrant Certificate or Certificates for the purchase of
11.699 shares of Common Stock. Each such Warrant
Certificate may be held either in the name of the Warrant
Agent or in the name of a nominee thereof. Notwithstanding
the provisions of Section 5.1 hereof, all such Warrant
Certificates will be held by the Warrant Agent, as custodian
for the holders of the Units, until such time on or after
the Separation Date as the registered holder of a Senior
Secured Note containing a Warrant Endorsement shall have
surrendered such Senior Secured Note to the Warrant Agent at
the Warrant Agent Office for the exchange of such Unit, in
whole or in part, for a Warrant Certificate or Certificates
evidencing the underlying Warrants and for a Senior Secured
Note or Senior Secured Notes of a like aggregate principal
amount of authorized denominations and not containing a
Warrant Endorsement (such surrender and exchange being
referred to herein as a "Separation" and the related
Warrants being referred to as "Separated"). Prior to
Separation, beneficial ownership of the Warrants will be
evidenced by the certificates for Senior Secured Notes
registered in the names of the holders of the Senior Secured
Notes, which certificates will bear thereon a Warrant
Endorsement substantially in the form set forth in Section
2.2 of the Indenture, and the right to receive or exercise
Warrants will be transferable only in connection with the
transfer of such Senior Secured Notes.
All Senior Secured Notes containing a Warrant
Endorsement presented for Separation shall be duly endorsed
by the registered holder or holders thereof or by the duly
appointed legal representative thereof or by a duly
authorized attorney, and in the case of transfer, such
signature shall be guaranteed by an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the
Exchange Act, and shall be accompanied by a written
instrument or instruments of exchange or transfer, in form
satisfactory to the Company, the Warrant Agent and the
Trustee. The Warrant Agent shall deliver such Senior
Secured Notes to the Trustee pursuant to the provisions of
the Indenture, with instructions to issue new Senior Secured
Notes not containing a Warrant Endorsement in authorized
denominations for an aggregate principal amount equal to the
aggregate principal amount of the Senior Secured Notes
surrendered in the name of such registered holder or holders
or, if such Senior Secured Notes are also being presented
for registration of transfer, in the name of the transferee
or transferees. The Warrant Agent, as custodian, shall
deliver (or cause to be delivered) the Senior Secured Notes
so received from the Trustee and a Warrant Certificate or
Certificates executed by the Company and countersigned by
the Warrant Agent in the name of such registered holder or
holders or such transferee or transferees for such aggregate
number of Warrants as shall equal one Warrant for each
$1,000 principal amount of Senior Secured Notes so exchanged
for Separation, bearing numbers or other distinguishing
symbols not contemporaneously outstanding, to the person or
persons entitled thereto.
Notwithstanding the foregoing provisions of this
Section 5.2, if upon Separation the Warrant Certificates are
to be represented by a Global Certificate and the Senior
Secured Notes are to be represented by a global Senior
Secured Note, then Separation of the Warrants and the Senior
Secured Notes may be effected in any other commercially
reasonable manner satisfactory to the Company, the Warrant
Agent, the Trustee and the Depository.
The provisions of Article VII hereof shall apply
to the Warrant Agent when acting in its capacity as
custodian hereunder with the same effect as they apply when
acting in its capacity as Warrant Agent hereunder.
ARTICLE VI
WARRANT HOLDERS
Section 6.1 No Voting Rights.
Prior to the exercise of the Warrants, no Holder
of a Warrant Certificate, as such, shall be entitled to any
rights of a stockholder of the Company, including, without
limitation, the right to receive dividends or subscription
rights, the right to vote, to consent, to exercise any
preemptive right, to receive any notice of meetings of
stockholders for the election of directors of the Company or
any other matter or to receive any notice of any proceedings
of the Company, except as may be specifically provided for
herein.
Section 6.2 Right of Action.
All rights of action in respect of this Agreement
are vested in the Holders of the Warrants, and any Holder of
any Warrant without the consent of the Warrant Agent or any
Holder of any other Warrant, may, on such Holder's own
behalf and for such Holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in
respect of, such Holder's rights hereunder, including the
right to exercise, exchange or surrender for purchase such
Holder's Warrants in the manner provided in this Agreement.
ARTICLE VII
WARRANT AGENT
Section 7.1 Nature of Duties and Responsibilities
Assumed.
The Company hereby appoints the Warrant Agent to
act as agent of the Company as set forth in this Agreement.
The Warrant Agent hereby accepts the appointment as agent of
the Company and agrees to perform that agency upon the terms
and conditions herein set forth, by all of which the Company
and the Holders of Warrants, by their acceptance thereof,
shall be bound. The Warrant Agent shall not by
countersigning Warrant Certificates or by any other act
hereunder be deemed to make any representation as to
validity or authorization of the Warrants or the Warrant
Certificates (except as to its countersignature thereon) or
of any securities or other property delivered upon exercise
of any Warrant, or as to the number or kind or amount of
stock or other securities or other property deliverable upon
exercise of any Warrant or the correctness of the
representations of the Company made in such certificates
that the Warrant Agent receives. The Warrant Agent shall
not have any duty to calculate or determine any adjustments
with respect to the kind or amount of shares or other
securities or any property receivable by Holders upon the
exercise of Warrants required from time to time, and the
Warrant Agent shall have no duty or responsibility in
determining the accuracy or correctness of any such
calculation, other than to apply any adjustment, notice of
which is given by the Company to the Warrant Agent to be
mailed to the Holders in accordance with Section 4.2. The
Warrant Agent shall not (a) be liable for any recital or
statement of fact contained herein or in the Warrant
Certificates or for any action taken, suffered or omitted by
it in good faith in the belief that any Warrant Certificate
or any other document or any signature is genuine or
properly authorized, (b) be responsible for any failure on
the part of the Company to comply with any of its covenants
and obligations contained in this Agreement or in the
Warrant Certificates or (c) be liable for any act or
omission in connection with this Agreement except for its
own negligence or willful misconduct. The Warrant Agent is
hereby authorized to accept instructions with respect to the
performance of its duties hereunder from the Chief Executive
Officer, the President, the Chief Financial Officer, the
Treasurer and the Secretary of the Company and to apply to
any such officer for instructions (which instructions will
be promptly given in writing when requested), and the
Warrant Agent shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with
the instructions of any such officer, except for its own
negligence or willful misconduct, but in its discretion the
Warrant Agent may in lieu thereof accept other evidence of
such or may require such further or additional evidence as
it may deem reasonable. Any application by the Warrant
Agent for written instructions from the Company may, at the
option of the Warrant Agent, set forth in writing any action
proposed to be taken or omitted by the Warrant Agent under
this Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective.
The Warrant Agent shall not be liable for any action taken
by, or omission of, the Warrant Agent in accordance with a
proposal included in such application on or after the date
specified in such application (which date shall not be less
than three business days after the date any officer of the
Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date)
unless prior to taking any such action (or the effective
date in the case of an omission), the Warrant Agent shall
have received written instructions in response to such
application specifying the action to be taken or omitted.
The Warrant Agent may execute and exercise any of
the rights and powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys,
agents or employees, provided reasonable care has been
exercised in the selection of any such attorney, agent or
employee. The Warrant Agent shall not be under any
obligation or duty to institute, appear in or defend any
action, suit or legal proceeding in respect hereof, unless
first indemnified to its satisfaction, but this provision
shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether
with or without such indemnity. The Warrant Agent shall
promptly notify the Company in writing of any claim made or
action, suit or proceeding instituted against or arising out
of or in connection with this Agreement. No provision of
this Agreement shall require the Warrant Agent to expend or
risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
The Company will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and
delivered all such further acts, instruments and assurances
as may reasonably be required by the Warrant Agent in order
to enable it to carry out or perform its duties under this
Agreement.
Except as provided in Section 5.2, the Warrant
Agent shall act solely as agent of the Company hereunder.
The Warrant Agent shall not be liable except for the failure
to perform such duties as are specifically set forth herein,
and no implied covenants or obligations shall be read into
this Agreement against the Warrant Agent, whose duties and
obligations shall be determined solely by the express
provisions hereof.
Section 7.2 Right to Consult Counsel.
The Warrant Agent may at any time consult with
legal counsel of its selection satisfactory to it (who may
be legal counsel for the Company), and the Warrant Agent
shall incur no liability or responsibility to the Company or
to any Holder for any action taken, suffered or omitted by
it in good faith in accordance with the opinion or advice of
counsel.
Section 7.3 Compensation and Reimbursement.
The Company agrees to pay to the Warrant Agent
from time to time compensation for all services rendered by
it hereunder as the Company and the Warrant Agent may agree
from time to time in writing, and to reimburse the Warrant
Agent for reasonable expenses and disbursements incurred in
connection with the execution and administration of this
Agreement (including the reasonable compensation and the
expenses of its counsel), and further agrees to indemnify
the Warrant Agent for, and to hold it harmless against, any
and all loss, liability, damage, claim or expense incurred
without negligence, bad faith or willful misconduct on its
part, arising out of or in connection with the acceptance
and administration of this Agreement, including the costs
and expenses of defending itself against any claim or
liability in connection with the exercise or performance of
any of its powers or duties hereunder. The provisions of
this Section 7.3 shall survive the termination of this
Agreement.
Section 7.4 Warrant Agent May Hold Company Securities.
Except as may be limited by applicable law, the
Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any
of the Warrants or other securities of the Company or its
Affiliates or become pecuniarily interested in transactions
in which the Company or its Affiliates may be interested, or
contract with or lend money to the Company or its Affiliates
or otherwise act as fully and freely as though it were not
the Warrant Agent under this Agreement. Nothing herein
shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other person.
Section 7.5 Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Warrant
Agent and no appointment of a successor warrant agent shall
become effective until the acceptance of appointment by the
successor warrant agent as provided herein. The Warrant
Agent may assign its duties and be discharged from all
further duties and liability hereunder (except liability
arising as a result of the Warrant Agent's own negligence,
bad faith or willful misconduct) after giving written notice
to the Company. The Company may remove the Warrant Agent
upon written notice, and the Warrant Agent shall thereupon
in like manner be discharged from all further duties and
liabilities hereunder, except as aforesaid. The Warrant
Agent shall, at the Company's expense, cause to be mailed
(by first class mail, postage prepaid) to each Holder of a
Warrant at his last address as shown on the register of the
Company maintained by the Warrant Agent a copy of said
notice of resignation or notice of removal, as the case may
be. Upon such resignation or removal, the Company shall
appoint in writing a new warrant agent. If the Company
shall fail to make such appointment within a period of 30
days after it has been notified in writing of such
resignation by the resigning Warrant Agent or after such
removal, then the Company shall become Warrant Agent until a
successor Warrant Agent has been appointed, and the Holder
of any Warrant may apply to any court of competent
jurisdiction for the appointment of a new warrant agent.
Any new warrant agent, whether appointed by the Company or
by such a court, shall be a corporation doing business under
the laws of the United States, any state thereof or the
District of Columbia, in good standing and having a combined
capital and surplus of not less than $50,000,000. The
combined capital and surplus of any such new warrant agent
shall be deemed to be the combined capital and surplus as
set forth in the most recent annual report of its condition
published by such warrant agent prior to its appointment,
provided that such reports are published at least annually
pursuant to law or to the requirements of a federal or state
supervising or examining authority. After acceptance in
writing of such appointment by the new warrant agent, it
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein
as the Warrant Agent, without any further assurance,
conveyance, act or deed; but if for any reason it shall be
necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done
at the expense of the Company and shall be legally and
validly executed and delivered by the resigning or removed
Warrant Agent. Not later than the effective date of any
such appointment, the Company shall give notice thereof to
the resigning or removed Warrant Agent. Failure to give any
notice provided for in this Section, however, or any defect
therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the
appointment of a new warrant agent, as the case may be.
(b) Any corporation into which the Warrant Agent
or any new warrant agent may be merged or any corporation
resulting from any consolidation to which the Warrant Agent
or any new warrant agent shall be a party or any person to
whom the Warrant Agent transfers substantially all of its
corporate trust business shall be a successor Warrant Agent
under this Agreement without any further act, provided that
such corporation (i) would be eligible for appointment as
successor to the Warrant Agent under the provisions of
Section 7.5(a) or (ii) is a wholly-owned subsidiary of the
Warrant Agent. Any such successor Warrant Agent shall
promptly cause notice of its succession as Warrant Agent to
be mailed (by first class mail, postage prepaid) to each
Holder at such Holder's last address as shown on the
register maintained by the Warrant Agent pursuant to Section
5.1.
ARTICLE VIII
COVENANTS OF THE COMPANY
Section 8.1 Reservation of Common Stock for Issuance on
Exercise of Warrants; Listing.
The Company will at all times reserve and keep
available, free from preemptive rights, out of its
authorized but unissued Common Stock, solely for the purpose
of issuance upon exercise of Warrants as herein provided,
such number of shares of Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The
Company covenants that all shares of Common Stock which
shall be so issuable shall, upon such issuance, be duly and
validly issued and fully paid and nonassessable, and that
upon issuance such shares shall be listed on each national
securities exchange or quotation system (including NASDAQ),
if any, on which any other shares of outstanding Common
Stock of the Company are then listed.
Section 8.2 Reports to Holders.
The Company shall deliver to the Warrant Agent
within 15 days after it files them with the SEC, and shall
make available to any Holder upon request, copies of its
annual report and of the information, documents and other
reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act, it shall continue to file with the SEC, and
provide to the Warrant Agent, within 15 days after it would
have been required to file the same with the SEC, and shall
make available to any Holder upon request, reports
containing substantially the same information as would have
been required to be filed with the SEC had the Company
continued to have been subject to such reporting
requirements.
Section 8.3 Agreements Respecting Warrants.
The Company agrees that it will not enter into any
agreement or instrument which would preclude the exercise of
the Warrants for shares of Underlying Common Stock.
Section 8.4 Qualification Under the Securities Laws.
On or before the Separation Date, the Company will
register or otherwise qualify the Underlying Common Stock
issuable upon exercise of the Warrants pursuant to the
provisions of the Securities Act and pursuant to applicable
state securities laws. So long as any unexpired Warrants
remain outstanding, the Company will file such amendments
and/or supplements to any registration statement under the
Securities Act or under any state securities laws covering
the issuance of such Underlying Common Stock and supplement
and keep current any prospectus forming a part of such
registration statement as may be necessary to permit the
Company to deliver to each person exercising a Warrant a
prospectus meeting the requirements of the Securities Act
and the regulations of the SEC thereunder, and as may be
necessary to comply with any applicable state securities
laws.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Money and Other Property Deposited with the
Warrant Agent.
Any money, securities and other property which at
any time shall be deposited by the Company or on its behalf
with the Warrant Agent pursuant to this Agreement shall be
and are hereby assigned, transferred and set over to the
Warrant Agent in trust for the purpose for which such
moneys, securities or other property shall have been
deposited; but such moneys, securities or other property
need not be segregated from other funds, securities or other
property of the Warrant Agent except to the extent required
by law. The Warrant Agent shall distribute any money
deposited with it for payment and distribution to any Holder
by mailing by first-class mail a check in such amount as is
appropriate, to such Holder at the address shown on the,
Warrant register maintained pursuant to Section 5.1, or as
it may be otherwise directed in writing by such Holder, upon
surrender of such Holder's Warrants. Any money or other
property deposited with the Warrant Agent for payment and
distribution to any Holder that remains unclaimed for two
years, less one day, after the date the money was deposited
with the Warrant Agent shall be paid to the Company upon its
request therefor.
Section 9.2 Payment of Taxes.
The Company will pay all taxes and other
governmental charges that may be imposed on the Company or
on the Holders of the Warrants or on the holders of any
securities deliverable upon exercise of Warrants with
respect thereto. The Company will not be required, however,
to pay any tax or other charge imposed in connection with
any transfer involved in the issue of any certificate for
shares of Common Stock or other securities underlying the
Warrants or payment of cash or other property to any person
other than the Holder of a Warrant Certificate surrendered
upon the exercise thereof, and in case of such transfer or
payment, the Warrant Agent and the Company shall not be
required to issue any stock certificate or security or pay
any cash or distribute any property until such tax or charge
has been paid or it has been established to the Warrant
Agent's and the Company's satisfaction that no such tax or
other charge is due.
Section 9.3 Surrender of Certificates.
Any Warrant Certificate surrendered for exercise
or purchased or otherwise acquired by the Company shall, if
surrendered to the Company, be delivered to the Warrant
Agent and all Warrant Certificates surrendered or so
delivered to the Warrant Agent shall promptly be canceled by
the Warrant Agent and shall not be reissued by the Company.
The Warrant Agent shall return such canceled Warrant
Certificates to the Company.
Section 9.4 Mutilated, Destroyed, Lost and Stolen Warrant
Certificates.
If (a) any mutilated Warrant Certificate is
surrendered to the Warrant Agent or (b) the Company and the
Warrant Agent receive evidence to their satisfaction of the
destruction, loss or theft of any Warrant Certificate, and
indemnity as may be reasonably required by them to save each
of them harmless then, in the absence of notice to the
Company or any officer in the corporate trust department of
the Warrant Agent that such Warrant Certificate has been
acquired by a bona fide purchaser, the Company shall execute
and upon its written request the Warrant Agent shall
countersign and deliver, in exchange for any such mutilated
Warrant Certificate or in lieu of any such destroyed, lost
or stolen Warrant Certificate, a new Warrant Certificate of
like tenor and for a like aggregate number of warrants.
Upon the issuance of any new Warrant Certificate
under this Section 9.4, the Company may require the payment
by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto
and other expenses (including the reasonable fees and
expenses of the Warrant Agent) in connection therewith.
Every new Warrant Certificate executed and
delivered pursuant to this Section 9.4 in lieu of any
destroyed, lost or stolen Warrant Certificate shall
constitute an original contractual obligation of the
Company.
The provisions of this Section 9.4 are exclusive
and shall preclude (to the extent lawful) all other rights
or remedies with respect to the replacement of mutilated,
destroyed, lost or stolen Warrant Certificates.
Section 9.5 Miscellaneous Rights.
The rights of Holders upon the occurrence of the
events set forth in this Agreement are cumulative. If more
than one such event shall occur and the periods following
the occurrence of such events and prior to the closing of
the transactions that are the subject of such events
overlap, each Holder may exercise such rights arising
therefrom as such Holder may elect without any condition
imposed upon such exercise not contained in this Agreement.
Neither the Company nor any of its Affiliates
involved in any proposed transaction that is the subject of
such an event shall have any obligation to the Holders to
consummate any such proposed transaction once an agreement
or agreement in principle or decision to proceed with
respect thereto is reached, whether on the terms first
proposed or as revised, or to include any Holder in, or
apprise any Holder of, any negotiations or discussions
concerning any such proposed transaction among the
prospective parties thereto.
Section 9.6 Notices.
Any notice or communication by the Company or the
Warrant Agent to the other is duly given if in writing and
delivered in person, mailed by first-class mail (registered
or certified, return receipt requested), or sent by
telecopier or overnight air courier guaranteeing next day
delivery, to the other's address;
If to the Company:
NS Group, Inc.
Ninth and Lowell Streets
Newport, Kentucky 41072
Attention: Treasurer
If to the Warrant Agent:
The Huntington National Bank
41 South High Street
Columbus, Ohio 43215
Attention: Corporate Trust Department
The Company or the Warrant Agent by notice to the
other may designate additional or different addresses for
subsequent notices or communications.
All notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if
personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when
receipt acknowledged, if telecopied; and the next business
day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be
mailed by first-class mail to the Holder's address shown on
the register of the Company maintained by the Warrant Agent.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect
to other Holders.
If a notice or communication is mailed in the
manner provided above within the time prescribed, it is duly
given, whether or not the addressee receives it.
If the Company mails a notice or communication to
Holders, it shall mail a copy to the Warrant Agent at the
same time.
Section 9.7 Benefit of This Agreement.
This Agreement shall be binding upon and inure to
the benefit of the Company and the Warrant Agent, and their
respective successors and assigns, and the Holders from time
to time of the Warrants. Nothing in this Agreement is
intended or shall be construed to confer upon any person,
other than the Company, the Warrant Agent and the Holders of
the Warrants, any right, remedy or claim under or by reason
of this Agreement or any part hereof.
Section 9.8 Counterparts.
This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 9.9 Amendments.
The Company may, without the consent of the
Holders of the Warrants, by supplemental agreement or
otherwise, make any changes or corrections in this Agreement
(a) to cure any ambiguity or to correct or supplement any
provision herein which may be defective or inconsistent with
any other provision herein, (b) to add to the covenants and
agreements of the Company for the benefit of the Holders, or
surrender any rights or power reserved to or conferred upon
the Company in this Agreement, or (c) that do not adversely
affect the interests of the Holders in any material respect.
The Warrant Agent shall join with the Company in the
execution and delivery of any such supplemental agreements
unless it affects the Warrant Agent's own rights, duties or
immunities hereunder, in which case such party may, but
shall not be required to, join in such execution and
delivery. Prior to executing any such supplemental
agreement, the Warrant Agent shall be entitled to receive
and shall be protected in relying upon a certificate of the
Company which states that the proposed supplemental
agreement is in compliance with the terms of this Section
9.9.
Section 9.10 Termination.
This Agreement (other than the Company's
obligations with respect to Warrants previously exercised
under Article III, and with respect to compensation,
reimbursement and indemnification under Section 7.3) shall
terminate and be of no further force and effect, provided
the Company has complied with Section 3.5 hereof in the case
of a Non-Surviving Combination, on the earlier of (a) the
Expiration Date and (b) the consummation of a Non-Surviving
Combination.
Section 9.11 GOVERNING LAW.
THIS AGREEMENT AND EACH WARRANT ISSUED HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
Section 9.12 Headings.
The headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no
way modify or restrict any of the terms or provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed, as of the day and
year first above written.
NS GROUP, INC.
By: /S/ J. R. PARKER
--------------------------
Name:
Title:
THE HUNTINGTON NATIONAL BANK,
as Warrant Agent
By: /S/ CANDADA J. MOORE
-------------------------
Name:
Title:
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
Certificate for One Warrant
No.______
WARRANTS TO ACQUIRE COMMON STOCK OF
NS GROUP, INC.
This certifies that ____________, or registered
assigns, is the registered holder of the number of Warrants
set forth above (the "Warrants"). Each Warrant entitles the
holder thereof (the "Holder"), subject to the provisions
contained herein and in the Warrant Agreement referred to
below, to acquire from NS Group, Inc., a Kentucky
corporation (the "Company"), 11.699 shares of Common Stock,
no par value per share, of the Company (the "Common Stock")
for consideration equal to the Purchase Price (as defined in
the Warrant Agreement) per share of Common Stock. The
Warrants evidenced by this Warrant Certificate shall not be
exercisable after and shall terminate and become void as of
5:00 p.m., Eastern Time, on July 15, 2003 (the "Expiration
Date") or as of the closing of any Non-Surviving
Combination, if earlier.
This Warrant Certificate is issued under and in
accordance with a Warrant Agreement dated as of July 28,
1995 (the "Warrant Agreement"), between the Company and The
Huntington National Bank, a national banking association, as
warrant agent (the "Warrant Agent", which term includes any
successor Warrant Agent under the Warrant Agreement), and is
subject to the terms and provisions contained in the Warrant
Agreement, to all of which terms and provisions the Holder
of this Warrant Certificate consents by acceptance hereof.
The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made
to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and
obligations of the Company, the Warrant Agent and the
Holders of the Warrants. Capitalized terms not defined
herein have the meanings ascribed thereto in the Warrant
Agreement. A copy of the Warrant Agreement may be obtained
for inspection by the Holder hereof upon written request to
the Company at Ninth and Lowell Streets, Newport, Kentucky
41072, Attention of Chief Financial Officer.
This Warrant is a Global Certificate within the
meaning of the Warrant Agreement referred to herein and is
registered in the name of a Depository or a nominee of a
Depository. This Warrant Certificate is exchangeable for
Warrant Certificates registered in the name of a person
other than the Depository or its nominee only in the limited
circumstances described in the Warrant Agreement, and may
not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository.
Subject to the terms and conditions set forth in
the Warrant Agreement, the Warrants shall be exercisable at
any time on or after the date 180 days after the issuance of
the Warrants and prior to 5:00 p.m., Eastern Time, on the
Expiration Date (which term is defined in the Warrant
Agreement as July 15, 2003, subject to the provisions of
Section 3.5 of the Warrant Agreement). Prior to the
Separation Date, (which term is defined in the Warrant
Agreement as 90 days after the issuance of the Warrants or
such earlier date as may be designated to the Company by the
Underwriters or as may result from an Asset Sale Offer or a
Change of Control Offer) the Warrants shall not be
transferable separately but shall be transferable only as a
Unit with the Senior Secured Notes (as such terms are
defined in the Warrant Agreement).
If the Company proposes, prior to the Expiration
Date, to enter into a merger, consolidation, or other
business combination with one or more persons (other than a
Wholly Owned Recourse Subsidiary of the Company) in which
the Company is not the survivor, or a sale of all or,
substantially all of the assets of the Company to one or
more such other Persons, if, in connection with any of the
foregoing, consideration (other than Common Equity
Securities) is distributed to the holders of Common Stock in
exchange for all or substantially all of their equity
interest in the Company (a "Non-Surviving Combination"), the
Company shall give written notice thereof to the Holders
promptly after an agreement is reached but in no event less
than 30 days prior to the closing thereof. In the event the
Company enters into a Non-Surviving Combination, upon
payment of the Purchase Price prior to the Expiration Date,
the Holder hereof will be entitled to receive the shares of
stock or other securities or other property (including any
money) of the surviving entity in such Non-Surviving
Combination as the Holder would have received had the Holder
exercised its Warrants immediately prior to such
Non-Surviving Combination (or, if applicable, the record
date therefor).
In order to exercise a Warrant, the registered
holder hereof must surrender this Warrant Certificate at the
office of the Warrant Agent, with the Exercise Subscription
Form on the reverse hereof duly executed by the Holder
hereof, with signature guaranteed as therein specified and
tender the Purchase Price therefore.
NS GROUP, INC.
By:______________________
Name.
Title:
[SEAL]
Attest:_________________________________
Secretary
DATED:
Countersigned:
THE HUNTINGTON NATIONAL BANK,
as Warrant Agent
By:___________________________________
Authorized Signer
Date of Countersignature:
FORM OF REVERSE WARRANT CERTIFICATE
NS GROUP, INC.
This Warrant Certificate and all rights hereunder
are transferable by the registered Holder hereof, in whole
or in part, on the register maintained by the Warrant Agent,
upon surrender of this Warrant Certificate for registration
of transfer at the office of the Warrant Agent maintained
for such purpose, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the
Company and the Warrant Agent, duly executed by the
registered Holder hereof or his attorney duly authorized in
writing, with signature guaranteed as specified in the
attached Form of Assignment. Upon any partial transfer, the
Company will issue and deliver to such Holder a new Warrant
Certificate or Certificates with respect to any portion not
so transferred. No service charge shall be made for any
registration of transfer or exchange of Warrant
Certificates, but the Company may require payment by the
Holder of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
All shares of Common Stock issuable by the Company
upon the exercise of the Warrants shall, upon such issue, be
duly and validly issued and fully paid and nonassessable,
and upon issuance such shares shall be listed on each
national securities exchange or quotation system (including
NASDAQ), if any, on which any other shares of outstanding
Common Stock are then listed.
Each taker and holder of this Warrant Certificate,
by taking or holding the same, consents and agrees that the
holder of this Warrant Certificate when duly endorsed in
blank may be treated by the Company, the Warrant Agent and
all other persons dealing with this Warrant Certificate as
the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby, or to
the transfer hereof on the register of the Company
maintained by the Warrant Agent, any notice to the contrary
notwithstanding, but until such transfer on such register,
the Company and the Warrant Agent may treat the registered
Holder hereof as the owner for all purposes.
The number of shares of Common Stock issuable upon
exercise of the Warrants is subject to adjustment in certain
events in the manner set forth in the Warrant Agreement.
The Warrants do not entitle any Holder to any of
the rights of a stockholder of the Company.
This Warrant Certificate and the Warrant Agreement
are subject to amendment as provided in the Warrant
Agreement.
This Warrant Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by an authorized signatory of the Warrant
Agent.
EXERCISE SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
The undersigned hereby irrevocably elects to
exercise the Warrants represented by this Warrant
Certificate, for the acquisition, for each Warrant, of
11.699 shares each of Common Stock, $0.01 par value per
share, of NS Group, Inc., or such number of shares
represented by this Warrant Certificate as a result of
adjustments to such number pursuant to the Warrant
Agreement, on the terms and conditions specified in this
Warrant Certificate and the Warrant Agreement herein
referred to, surrenders this Warrant Certificate and all
right, title and interest therein to NS Group, Inc. and
directs that the shares of Common Stock deliverable upon the
exercise of such Warrants be registered or placed in the
name and at the address specified below and delivered
thereto.
Date: __________ __, ____
______________________/(3)/
(Signature of Owner)
_________________________
(Street Address)
_________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
_________________________
_____________________
/(3)/ The signature must correspond with the name as written
upon the face of the within Warrant Certificate in
every particular, without alteration or enlargement or
any change whatsoever, and must be guaranteed.
FORM OF TRANSFER
FOR VALUE RECEIVED the undersigned registered Holder
of this Warrant Certificate hereby sells, assigns and
transfers unto the Assignee(s) named below (including the
undersigned with respect to any Warrants constituting a part
of the Warrants evidenced by this Warrant Certificate not
being assigned hereby) all of the right of the undersigned
under this Warrant Certificate, with respect to the number
of Warrants set forth below:
Social Security
or other
identifying
Name of number of Number of
Assignee(s) Address assignee(s) Warrants
and does hereby irrevocably constitute and appoint the
Warrant Agent as the undersigned's attorney to make such
transfer on the register maintained by the Warrant Agent for
that purpose, with full power of substitution in the
premises.
Date: ____________ __, ____
________________________/(1)/
(Signature of Owner)
________________________
(Street Address)
__________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
__________________________
/(1)/ The signature must correspond with the name as
written upon the face of the within Warrant
Certificate in every particular, without
alteration or enlargement or any change
whatsoever, and must be guaranteed.
NS GROUP, INC.
and
THE HUNTINGTON NATIONAL BANK, as
Warrant Agent
___________________________________________
WARRANT AGREEMENT
Dated as of July 28, 1995
___________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . .
. 2
Section 1.1 Certain Definitions . . . . . . . . . . . .
. 2
ARTICLE II
ORIGINAL ISSUE OF WARRANTS . . . . . . . .
. 4
Section 2.1 Form of Warrant Certificates. . . . . . . .
. 4
Section 2.2 Execution and Delivery of
Warrant
Certificates. . . . . . . . . . . . . . .
. 5
Section 2.3 Global Certificate Legend . . . . . . . . .
. 5
ARTICLE III
EXERCISE PRICE; EXERCISE OF WARRANTS GENERALLY;
NON-SURVIVING COMBINATION. . . . . . . . .
. 6
Section 3.1 Exercise Price. . . . . . . . . . . . . . .
. 6
Section 3.2 Exercise of Warrants. . . . . . . . . . . .
. 6
Section 3.3 Expiration of Warrants. . . . . . . . . . .
. 6
Section 3.4 Method of Exercise. . . . . . . . . . . . .
. 6
Section 3.5 Non-Surviving Combination . . . . . . . . .
. 7
ARTICLE IV
ADJUSTMENTS . . . . . . . . . . . .
. 7
Section 4.1 Adjustments of Exercise Price
and
Number of Shares of Common Stock. . . . .
. 7
Section 4.2 Notice of Adjustment. . . . . . . . . . . .
. 15
Section 4.3 Statement of Warrants.. . . . . . . . . . .
. 16
Section 4.4 Fractional Interest . . . . . . . . . . . .
. 16
ARTICLE V
WARRANT TRANSFER BOOKS, TRANSFERS AND EXCHANGES . . .
. 16
Section 5.1 Warrant Transfer Books, etc.. . . . . . . .
. 16
Section 5.2 Transfers of Warrants Prior to
Separation of Warrants and Senior
Secured Notes; Separation of Warrants
and Senior Secured Notes. . . . . . . . .
. 18
ARTICLE VI
WARRANT HOLDERS . . . . . . . . . . .
. 20
Section 6.1 No Voting Rights. . . . . . . . . . . . . .
. 20
Section 6.2 Right of Action . . . . . . . . . . . . . .
. 20
ARTICLE VII
WARRANT AGENT. . . . . . . . . . . .
. 20
Section 7.1 Nature of Duties and
Responsibilities
Assumed . . . . . . . . . . . . . . . . .
. 20
Section 7.2 Right to Consult Counsel. . . . . . . . . .
. 22
Section 7.3 Compensation and Reimbursement. . . . . . .
. 22
Section 7.4 Warrant Agent May Hold Company
Securities. . . . . . . . . . . . . . . .
. 23
Section 7.5 Resignation and Removal;
Appointment
of Successor. . . . . . . . . . . . . . .
. 23
ARTICLE VIII
COVENANTS OF THE COMPANY. . . . . . . . .
. 24
Section 8.1 Reservation of Common Stock for
Issuance on Exercise of Warrants;
Listing . . . . . . . . . . . . . . . . .
. 24
Section 8.2 Reports to Holders. . . . . . . . . . . . .
. 24
Section 8.3 Agreements Respecting Warrants. . . . . . .
. 25
Section 8.4 Qualification Under the
Securities
Laws. . . . . . . . . . . . . . . . . . .
. 25
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . .
. 25
Section 9.1 Money and Other Property
Deposited
with the Warrant Agent. . . . . . . . . .
. 25
Section 9.2 Payment of Taxes. . . . . . . . . . . . . .
. 26
Section 9.3 Surrender of Certificates . . . . . . . . .
. 26
Section 9.4 Mutilated, Destroyed, Lost and
Stolen
Warrant Certificates. . . . . . . . . . .
. 26
Section 9.5 Miscellaneous Rights. . . . . . . . . . . .
. 27
Section 9.6 Notices . . . . . . . . . . . . . . . . . .
. 27
Section 9.7 Benefit of This Agreement . . . . . . . . .
. 28
Section 9.8 Counterparts. . . . . . . . . . . . . . . .
. 28
Section 9.9 Amendments. . . . . . . . . . . . . . . . .
. 28
Section 9.10 Termination . . . . . . . . . . . . . . . .
. 29
Section 9.11 GOVERNING LAW . . . . . . . . . . . . . . .
. 29
Section 9.12 Headings. . . . . . . . . . . . . . . . . .
. 30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM NS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS AS OF AND FOR THE THREE AND NINE MONTH
PERIODS ENDED JULY 1, 1995, INCLUDED IN THE COMPANY'S QUARTERLY
REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<CIK> 0000745026
<NAME> NS GROUP, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> SEP-24-1994
<PERIOD-END> JUL-01-1995
<EXCHANGE-RATE> 1
<CASH> 1,303
<SECURITIES> 17,144
<RECEIVABLES> 50,500
<ALLOWANCES> 559
<INVENTORY> 43,229
<CURRENT-ASSETS> 131,506
<PP&E> 272,267
<DEPRECIATION> 115,990
<TOTAL-ASSETS> 306,171
<CURRENT-LIABILITIES> 97,698
<BONDS> 121,803
<COMMON> 49,308
0
0
<OTHER-SE> 27,707
<TOTAL-LIABILITY-AND-EQUITY> 306,171
<SALES> 285,348
<TOTAL-REVENUES> 285,348
<CGS> 253,121
<TOTAL-COSTS> 253,121
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,143
<INCOME-PRETAX> 1,333
<INCOME-TAX> 282
<INCOME-CONTINUING> 1,051
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,051
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
