**Exhibit 10.15**

 

 

FORM OF

 

SECOND PRIORITY MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITYAGREEMENT AND FINANCING STATEMENT

 

From

 

THE NEIMAN MARCUS GROUP, INC.

 

To

 

DEUTSCHE BANK TRUST COMPANY AMERICAS

 

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Dated: October         ,2005

Premises: [City], [State]                         County

 

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THIS SECOND PRIORITY MORTGAGE, ASSIGNMENT OF LEASESAND RENTS, SECURITY AGREEMENT AND FINANCING STATEMENT dated as ofOctober         , 2005 (this “*Mortgage*”), by THE NEIMAN MARCUS GROUP, INC.,a Delaware corporation, having an office at One Marcus Square,1618 Main Street, Dallas, Texas 75201 (the “*Mortgagor*”), to DEUTSCHE BANK TRUSTCOMPANY AMERICAS, a                          ,having an office at 60 Wall Street, New York, New York 10005(the “*Mortgagee*”) as CollateralAgent for the Secured Parties (as such terms are defined below).

 

WITNESSETH THAT:

 

Referenceis made to (i) the credit agreement dated as of even date hereof (asamended, supplemented or otherwise modified from time to time, the “*Credit Agreement*”), among NEWTONACQUISITION MERGER SUB., INC. (“*MergerSub*” and, prior to the Merger (as defined in the Credit Agreement,the “*Borrower*”), a Delawarecorporation to be merged with and into THE NEIMAN MARCUS GROUP, INC., aDelaware corporation (“*Neiman Marcus*”and, after the Merger, the “*Borrower*”),NEWTON ACQUISITION, INC., a Delaware corporation (“*Holdings*”), the subsidiaries of NeimanMarcus from time to time party thereto, the lenders from time to time partythereto (the “*Lenders*”*)*, including, inter alia, Deutsche BankTrust Company Americas as administrative agent (the “*Administrative Agent*”) for the Lenders and as collateralagent (the “*Collateral Agent*”)for the Secured Parties, swingline lender (the “*Swingline Lender*”) and issuing bank (the “*Issuing Bank*”) with respect to any lettersof credit (the “*Letters of Credit*”)issued pursuant to the terms of the Credit Agreement, (ii) the creditagreement dated as of even date hereof (as amended, supplemented or otherwisemodified from time to time, the “*Term LoanCredit Agreement*”) among Merger Sub, Neiman Marcus, Holdings, eachsubsidiary of Neiman Marcus from time to time party thereto, the lenders fromtime to time party thereto, and Credit Suisse, as administrative agent,(iii) the Indenture, dated as of even date hereof (as amended from time totime, the “*New Notes Indenture*”),between Neiman Marcus and Wells Fargo Bank, National Association, as trustee,(iv) the Indenture, dated as of May 27, 1998 (as amended,supplemented or otherwise modified from time to time, the “*Existing Notes Indenture*”), between NeimanMarcus and The Bank of New York, (v) the Pledge and SecurityAgreement dated as of even date hereof (as amended, supplemented or otherwisemodified from time to time, the “*SecurityAgreement*”) among Holdings, the Borrower, the Subsidiary Partiesidentified therein and Deutsche Bank Trust Company Americas, (vi) thatcertain mortgage dated as of even date hereof by Mortgagor, in favor of                        ,as mortgagee (the “*First Mortgage*”)granting to the First Mortgagee a first priority lien and security interest inthe Mortgaged Property (as described below) in connection with the Term LoanCredit Agreement, the New Notes Indenture and the Existing Notes Indenture and(vii) the Lien Subordination and Intercreditor Agreement, dated as of evendate hereof, among the Collateral Agent,[                      ],as collateral trustee, Merger Sub, Neiman Marcus, Holdings and the subsidiariesof Neiman Marcus from time to time party thereto as attached hereto asExhibit B.  Capitalized terms used but not defined herein have themeanings given to them in the Credit Agreement and the Security Agreement.

 

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Inthe Credit Agreement, (i) the Lenders have agreed to make revolving loans(the “*Revolving Loans*”) to theBorrower, (ii) the Swingline Lender has agreed to make swingline loans(the “*Swingline Loans*”, togetherwith Revolving Loans, the “Loans”) to the Borrower and (iii) the IssuingBank has issued or agreed to issue from time to time Letters of Credit for theaccount of the Borrower, in each case pursuant to, upon the terms, and subjectto the conditions specified in, the Credit Agreement.  Subject to theterms of the Credit Agreement, Borrower may borrow, prepay and reborrowRevolving Loans.

 

Mortgagorwill be the Borrower subsequent to the Merger and will derive substantialbenefit from the making of the Loans by the Lenders and the issuance of theLetters of Credit by the Issuing Bank.  In order to induce the Lenders tomake Loans and the Issuing Bank to issue Letters of Credit, the Mortgagor hasagreed to grant this Mortgage to secure, among other things, the due andpunctual payment and performance of all of the obligations of the Borrowerunder the Credit Agreement.

 

Theobligations of the Lenders to make Loans and of the Issuing Bank to issueLetters of Credit are conditioned upon, among other things, the execution anddelivery by the Mortgagor of this Mortgage in the form hereof to secure theSecured Obligations (as defined in the Credit Agreement).

 

Asused in this Mortgage, the term “*SecuredParties*” shall mean (a) the Lenders, (b) the CollateralAgent, (c) the Issuing Banks, (d) each counterparty to any SwapAgreement with a Loan Party the obligations under which constitute Secured SwapObligations, (e) the beneficiaries of each indemnification obligationsundertaken by any Loan Party under any Loan Document and (f) thesuccessors and permitted assigns of each of the foregoing.

 

Pursuantto the requirements of the Credit Agreement, the Mortgagor is granting thisMortgage to create a lien on and a security interest in the Mortgaged Property(as hereinafter defined) to secure the performance and payment by the Mortgagorof the Secured Obligations.  The Credit Agreement also requires the grantingby the Mortgagor or the other Loan Parties, as applicable, of mortgages, deedsof trust and/or deeds to secure debt (the “*OtherMortgages*”) that create liens on and security interests in certainreal and personal property other than the Mortgaged Property to secure theperformance of the Secured Obligations.

 

*Granting Clauses*

 

NOW,THEREFORE, IN CONSIDERATION OF the foregoing and in order to secure thedue and punctual payment and performance of the Secured Obligations for thebenefit of the Secured Parties, Mortgagor hereby grants, conveys, mortgages,assigns and pledges to the Mortgagee, a mortgage lien on and a securityinterest in, Mortgagor’s interest in all the following described property (the “*Mortgaged Property*”) whether now owned orheld or hereafter acquired:

 

(1) the land more particularly described on Exhibit A hereto(the “*Land*”), together with allrights appurtenant thereto, including the easements over certain otheradjoining land granted by any easement agreements, covenant or restrictive

 

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agreementsand all air rights, mineral rights, water rights, oil and gas rights anddevelopment rights, if any, relating thereto, and also together with all of theother easements, rights, privileges, interests, hereditaments and appurtenancesthereunto belonging or in any way appertaining and all of the estate, right,title, interest, claim or demand whatsoever of Mortgagor therein and in thestreets and ways adjacent thereto, either in law or in equity, in possession orexpectancy, now or hereafter acquired (the “*Premises*”);

 

(2) all buildings, improvements, structures, paving, parkingareas, walkways and landscaping now or hereafter erected or located upon theLand, and all fixtures of every kind and type affixed to the Premises orattached to or forming part of any structures, buildings or improvements andreplacements thereof now or hereafter erected or located upon the Land (the “*Improvements*”);

 

(3) all apparatus, movable appliances, building materials,equipment, fittings, furnishings, furniture, machinery and other articles oftangible personal property of every kind and nature, and replacements thereof,now or at any time hereafter placed upon or used in any way in connection withthe use, enjoyment, occupancy or operation of the Improvements or the Premises,including all of Mortgagor’s books and records relating thereto and includingall pumps, tanks, goods, machinery, tools, equipment, lifts (including firesprinklers and alarm systems, fire prevention or control systems, cleaningrigs, air conditioning, heating, boilers, refrigerating, electronic monitoring,water, loading, unloading, lighting, power, sanitation, waste removal,entertainment, communications, computers, recreational, window or structural,maintenance, truck or car repair and all other equipment of every kind),restaurant, bar and all other indoor or outdoor furniture (including tables,chairs, booths, serving stands, planters, desks, sofas, racks, shelves, lockersand cabinets), bar equipment, glasses, cutlery, uniforms, linens, memorabiliaand other decorative items, furnishings, appliances, supplies, inventory, rugs,carpets and other floor coverings, draperies, drapery rods and brackets,awnings, venetian blinds, partitions, chandeliers and other lighting fixtures,freezers, refrigerators, walk-in coolers, signs (indoor and outdoor), computersystems, cash registers and inventory control systems, and all other apparatus,equipment, furniture, furnishings, and articles used in connection with the useor operation of the Improvements or the Premises, it being understood that theenumeration of any specific articles of property shall in no way result in orbe held to exclude any items of property not specifically mentioned (theproperty referred to in this subparagraph (3), the “*Personal Property*”);

 

(4) all general intangibles owned by Mortgagor and relating todesign, development, operation, management and use of the Premises or theImprovements, all certificates of occupancy, zoning variances, building, use orother permits, approvals, authorizations and consents obtained from and allmaterials prepared for filing or filed with any governmental agency inconnection with the development, use, operation or management of the Premisesand Improvements, all construction, service, engineering, consulting, leasing,architectural and other similar contracts concerning the design, construction,management, operation, occupancy and/or use of the Premises and Improvements,all architectural drawings, plans, specifications, soil

 

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tests,feasibility studies, appraisals, environmental studies, engineering reports andsimilar materials relating to any portion of or all of the Premises and Improvements,and all payment and performance bonds or warranties or guarantees relating tothe Premises or the Improvements, all to the extent assignable (the “*Permits, Plans and Warranties*”);

 

(5) all now or hereafter existing leases or licenses (under whichMortgagor is landlord or licensor) and subleases (under which Mortgagor issublandlord), concession, management, mineral or other agreements of a similarkind that permit the use or occupancy of the Premises or the Improvements forany purpose in return for any payment, or the extraction or taking of any gas,oil, water or other minerals from the Premises in return for payment of anyfee, rent or royalty (collectively, “*Leases*”),and all agreements or contracts for the sale or other disposition of all or anypart of the Premises or the Improvements, now or hereafter entered into byMortgagor, together with all charges, fees, income, issues, profits, receipts,rents, revenues or royalties payable thereunder (“*Rents*”);

 

(6) all real estate tax refunds and all proceeds of theconversion, voluntary or involuntary, of any of the Mortgaged Property intocash or liquidated claims (“*Proceeds*”),including, subject to the rights of Mortgagor under the Credit Agreement orother Collateral Documents, Proceeds of insurance maintained by the Mortgagorand condemnation awards, any awards that may become due by reason of the takingby eminent domain or any transfer in lieu thereof of the whole or any part ofthe Premises or Improvements or any rights appurtenant thereto, and any awardsfor change of grade of streets, together with any and all moneys now orhereafter on deposit for the payment of real estate taxes, assessments orcommon area charges levied against the Mortgaged Property, unearned premiums onpolicies of fire and other insurance maintained by the Mortgagor covering anyinterest in the Mortgaged Property or required by the Credit Agreement; and

 

(7) to the extent assignable, all extensions, improvements,betterments, renewals, substitutes and replacements of and all additions andappurtenances to, the Land, the Premises, the Improvements, the PersonalProperty, the Permits, Plans and Warranties and the Leases, hereinafteracquired by or released to the Mortgagor or constructed, assembled or placed bythe Mortgagor on the Land, the Premises or the Improvements, and allconversions of the security constituted thereby, immediately upon suchacquisition, release, construction, assembling, placement or conversion, as thecase may be, and in each such case, without any further mortgage, deed oftrust, conveyance, assignment or other act by the Mortgagor, all of which shallbecome subject to the lien of this Mortgage as fully and completely, and withthe same effect, as though now owned by the Mortgagor and specifically describedherein.

 

TOHAVE AND TO HOLD the Mortgaged Property unto the Mortgagee, its successors andassigns, for the ratable benefit of the Secured Parties, forever, subject onlyto Liens (as defined in the Credit Agreement), expressly permitted under Section 6.02of the Credit Agreement and to satisfaction and release as provided inSection 3.04.

 

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ARTICLE I

 

*Representations,Warranties and Covenants of Mortgagor*

 

Mortgagoragrees, covenants, represents and/or warrants as follows:

 

SECTION 1.01.  *Title, Mortgage Lien.*  Mortgagorhas good and marketable fee simple title to the Mortgaged Property, subjectonly to Liens expressly permitted under Section 6.02 of the CreditAgreement.  Mortgagor will forever warrant and defend its title to theMortgaged Property, the rights of Mortgagee therein under this Mortgage and thevalidity and priority of the lien of this Mortgage thereon against the claimsof all persons and parties except those having rights under Liens expresslypermitted under Section 6.02 of the Credit Agreement (but to the extent ofthose rights).

 

SECTION 1.02.  *Credit Agreement. *This Mortgageis given pursuant to the Credit Agreement.  Mortgagor expressly covenantsand agrees to pay when due, and to timely perform, and to cause the other LoanParties to pay when due, and to timely perform, the Secured Obligations inaccordance with the terms of the Loan Documents.

 

SECTION 1.03.  *Maintenance of Mortgaged Property.* Mortgagor will maintain the Improvements and the Personal Property in themanner required by the Credit Agreement.

 

SECTION 1.04.  *Insurance.*  Mortgagor will keepor cause to be kept the Improvements and Personal Property insured against suchrisks, and in the manner, pursuant to the Credit Agreement or the SecurityAgreement and shall purchase such additional insurance as may be required fromtime to time pursuant to the Credit Agreement and the Security Agreement. Federal Emergency Management Agency Standard Flood Hazard Determination Formswill be purchased by Mortgagor for each Mortgaged Property on whichImprovements are located.  If any portion of Improvements constitutingpart of the Mortgaged Property is located in an area identified as a specialflood hazard area by Federal Emergency Management Agency or other applicableagency, Mortgagor will purchase flood insurance in an amount reasonablysatisfactory to Mortgagee, but in no event less than the maximum limit ofcoverage available under the National Flood Insurance Act of 1968, as amended.

 

SECTION 1.05.  *Casualty Condemnation/Eminent Domain.* Mortgagor shall give Mortgagee prompt written notice of any casualty or otherdamage to the Mortgaged Property or any proceeding for the taking of theMortgaged Property or any portion thereof or interest therein under power ofeminent domain or by condemnation or any similar proceeding in accordance with,and to the extent required by, the Credit Agreement.  Any net proceedsreceived by or on behalf of the Mortgagor in respect of any such casualty,damage or taking shall constitute trust funds held by the Mortgagor for thebenefit of the Secured Parties to be applied to repair, restore or replace theMortgaged Property or, if a prepayment event shall occur with respect to anysuch net proceeds, to be applied in accordance with the Credit Agreement.

 

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SECTION 1.06.  *Assignment of Leases and Rents.* (a)  Mortgagor hereby irrevocably and absolutely grants, transfers andassigns all of its right title and interest in all Leases, together with anyand all extensions and renewals thereof for purposes of securing anddischarging the performance by Mortgagor of the Secured Obligations. Mortgagor has not assigned or executed any assignment of, and will not assignor execute any assignment of, any Leases or the Rents payable thereunder toanyone other than Mortgagee.

 

(b)  All Leases entered into by Mortgagor atthe Mortgaged Property following the date hereof shall be subordinate to thelien of this Mortgage unless otherwise contemplated under the CreditAgreement.  Mortgagor will not enter into, any Lease if such Lease, asentered into, will not be subordinate to the lien of this Mortgage unlessotherwise contemplated under the Credit Agreement.

 

(c)  Subject to Section 1.07(d), Mortgagorhas assigned and transferred to Mortgagee all of Mortgagor’s right, title andinterest in and to the Rents now or hereafter arising from each Leaseheretofore or hereafter made or agreed to by Mortgagor, it being intended thatthis assignment establish, subject to Section 1.07(d), an absolutetransfer and assignment of all Rents and all Leases to Mortgagee and not merelyto grant a security interest therein.  Subject to Section 1.07(d),Mortgagee may in Mortgagor’s name and stead (with or without first takingpossession of any of the Mortgaged Property personally or by receiver asprovided herein) operate the Mortgaged Property and rent, lease or let all orany portion of any of the Mortgaged Property to any party or parties at suchrental and upon such terms as Mortgagee shall, in its sole discretion,determine, and may collect and have the benefit of all of said Rents arisingfrom or accruing at any time thereafter or that may thereafter become due underany Lease.

 

(d)  So long as an Event of Default shall nothave occurred and be continuing, Mortgagee will not exercise any of its rightsunder Section 1.07(c), and Mortgagor shall receive and collect the Rentsaccruing under any Lease; but after the occurrence and during the continuanceof any Event of Default, Mortgagee may, at its option, receive and collect allRents and enter upon the Premises and Improvements through its officers,agents, employees or attorneys for such purpose and for the operation andmaintenance thereof.  Mortgagor hereby irrevocably authorizes and directseach tenant, if any, and each successor, if any, to the interest of any tenantunder any Lease, respectively, to rely upon any notice of a claimed Event ofDefault sent by Mortgagee to any such tenant or any of such tenant’s successorsin interest, and thereafter to pay Rents to Mortgagee without any obligation orright to inquire as to whether an Event of Default actually exists and even ifsome notice to the contrary is received from the Mortgagor, who shall have noright or claim against any such tenant or successor in interest for any suchRents so paid to Mortgagee.  Each tenant or any of such tenant’ssuccessors in interest from whom Mortgagee or any officer, agent, attorney oremployee of Mortgagee shall have collected any Rents, shall be authorized topay Rents to Mortgagor only after such tenant or any of their successors ininterest shall have received written notice from Mortgagee that the Event ofDefault is no longer continuing, unless and until a further notice of an Eventof Default is given by Mortgagee to such tenant or any of its successors ininterest.

 

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(e)  Mortgagee will not become a mortgagee inpossession so long as it does not enter or take actual possession of theMortgaged Property.  In addition, Mortgagee shall not be responsible orliable for performing any of the obligations of the landlord under any Lease,for any waste by any tenant, or others, for any dangerous or defectiveconditions of any of the Mortgaged Property, for negligence in the management,upkeep, repair or control of any of the Mortgaged Property or any other act oromission by any other person unless and until it enters or takes actualpossession of the Mortgaged Property.

 

(f)  Mortgagor shall furnish to Mortgagee,within 30 days after a request by Mortgagee to do so, a written statementcontaining the names of all tenants, subtenants and concessionaires of thePremises or Improvements, and a copy of any Lease.

 

SECTION 1.07.  *Security Agreement.*  ThisMortgage is both a mortgage of real property and a grant of a security interestin personal property, and shall constitute and serve as a “Security Agreement”within the meaning of the uniform commercial code as adopted in the statewherein the Premises are located (“*UCC*”). Mortgagor has hereby granted unto Mortgagee a security interest in and to allthe Mortgaged Property described in this Mortgage that is not real property,and simultaneously with the recording of this Mortgage, Mortgagor has filed orwill file UCC financing statements, and will file continuation statements priorto the lapse thereof, at the appropriate offices in the jurisdiction offormation of the Mortgagor to perfect the security interest granted by thisMortgage in all the Mortgaged Property that is not real property. Mortgagor hereby appoints Mortgagee as its true and lawful attorney-in-fact andagent, for Mortgagor and in its name, place and stead, in any and allcapacities, to execute any document and to file the same in the appropriateoffices (to the extent it may lawfully do so), and to perform each and everyact and thing reasonably requisite and necessary to be done to perfect thesecurity interest contemplated by the preceding sentence.  Mortgagee shallhave all rights with respect to the part of the Mortgaged Property that is thesubject of a security interest afforded by the UCC in addition to, but not inlimitation of, the other rights afforded Mortgagee hereunder and under the SecurityAgreement.  In the case of any conflict between this Mortgage and theSecurity Agreement, the Security Agreement shall govern.

 

SECTION 1.08.  *Filing and Recording.*  Mortgagorwill cause this Mortgage, the UCC financing statements referred to in Section 1.09,any other security instrument creating a security interest in or evidencing thelien hereof upon the Mortgaged Property and each UCC continuation statement andinstrument of further assurance to be filed, registered or recorded and, if necessary,refiled, rerecorded and reregistered, in such manner and in such places as maybe required by any present or future law in order to publish notice of andfully to perfect the lien hereof upon, and the security interest of Mortgageein, the Mortgaged Property until this Mortgage is terminated and released infull in accordance with Section 3.04 hereof.  Mortgagor will pay allfiling, registration and recording fees, all Federal, state, county andmunicipal recording, documentary or intangible taxes and other taxes, duties,imposts, assessments and charges, and all reasonable expenses incidental to orarising out of or in connection with the execution, delivery and recording ofthis Mortgage, UCC continuation statements any mortgage supplemental hereto,any security instrument with respect to the Personal Property, Permits, Plansand Warranties and Proceeds or any instrument of further assurance.

 

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SECTION 1.09.  *Further Assurances.*  Upon demandby Mortgagee, Mortgagor will, at the cost of Mortgagor and without expense toMortgagee, do, execute, acknowledge and deliver all such further acts, deeds,conveyances, mortgages, assignments, notices of assignment, transfers andassurances as Mortgagee shall from time to time reasonably require for thebetter assuring, conveying, assigning, transferring and confirming untoMortgagee the property and rights hereby conveyed or assigned or intended nowor hereafter so to be, or which Mortgagor may be or may hereafter become boundto convey or assign to Mortgagee, or for carrying out the intention orfacilitating the performance of the terms of this Mortgage, or for filing,registering or recording this Mortgage, and on demand, Mortgagor will alsoexecute and deliver and hereby appoints Mortgagee, following the occurrence andduring the continuance of an Event of Default, as its true and lawfulattorney-in-fact and agent, for Mortgagor and in its name, place and stead, inany and all capacities, to execute and file to the extent it may lawfully doso, one or more financing statements, chattel mortgages or comparable securityinstruments reasonably requested by Mortgagee to evidence more effectively thelien hereof upon the Personal Property and to perform each and every act andthing requisite and necessary to be done to accomplish the same.

 

SECTION 1.10.  *Additions to Mortgaged Property.* All right, title and interest of Mortgagor in and to all extensions,improvements, betterments, renewals, substitutes and replacements of, and alladditions and appurtenances to, the Mortgaged Property hereafter acquired by orreleased to Mortgagor or constructed, assembled or placed by Mortgagor upon thePremises or the Improvements, and all conversions of the security constitutedthereby, immediately upon such acquisition, release, construction, assembling,placement or conversion, as the case may be, and in each such case without anyfurther mortgage, conveyance, assignment or other act by Mortgagor, shallbecome subject to the lien and security interest of this Mortgage as fully andcompletely and with the same effect as though now owned by Mortgagor andspecifically described in the grant of the Mortgaged Property above, but at anyand all times Mortgagor will execute and deliver to Mortgagee any and all suchfurther assurances, mortgages, conveyances or assignments thereof as Mortgageemay reasonably require for the purpose of expressly and specifically subjectingthe same to the lien and security interest of this Mortgage.

 

SECTION 1.11.  *No Claims Against Mortgagee.* Nothing contained in this Mortgage shall constitute any consent or request byMortgagee, express or implied, for the performance of any labor or services orthe furnishing of any materials or other property in respect of the MortgagedProperty or any part thereof, nor as giving Mortgagor any right, power orauthority to contract for or permit the performance of any labor or services orthe furnishing of any materials or other property in such fashion as wouldpermit the making of any claim against Mortgagee in respect thereof.

 

SECTION 1.12.  *Fixture Filing.*  (a) Certain portions of the Mortgaged Property are or will become “fixtures” (asthat term is defined in the UCC) on the Land, and this Mortgage, upon beingfiled for record in the real estate records of the county wherein such fixturesare situated, shall operate also as a financing statement filed as a fixturefiling in accordance with the applicable provisions of said UCC upon suchportions of the Mortgaged Property that are or become fixtures.

 

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(b)  The real property to which the fixturesrelate is described in Exhibit A attached hereto.  The record ownerof the real property described in Exhibit A attached hereto is Mortgagor. The name, type of organization and jurisdiction of organization of the debtorfor purposes of this financing statement are the name, type of organization andjurisdiction of organization of the Mortgagor set forth in the first paragraphof this Mortgage, and the name of the secured party for purposes of thisfinancing statement is the name of the Mortgagee set forth in the firstparagraph of this Mortgage.  The mailing address of the Mortgagor/debtoris the address of the Mortgagor set forth in the first paragraph of thisMortgage.  The mailing address of the Mortgagee/secured party from whichinformation concerning the security interest hereunder may be obtained is theaddress of the Mortgagee set forth in the first paragraph of this Mortgage. Mortgagor’s organizational identification number is 95-4119509.

 

SECTION 1.13.  *Second Mortgage*.  The terms andconditions set forth herein and the security interest granted hereby shall besubject, in all respects, to the terms of the Intercreditor Agreement.

 

SECTION 1.14.  *Conflicts*.  In the event of aconflict between any provision of this Second Priority Mortgage and anyprovision of the Intercreditor Agreement, the Intercreditor Agreement shallgovern.  In the event of a conflict between any provision of this SecondPriority Mortgage and any provision of the Credit Agreement, the CreditAgreement shall govern.

 

SECTION 1.15.  *Performance Under First Mortgage.*  TheMortgagor shall perform or observe all covenants and conditions to be performedor observed by the Mortgagor under the First Mortgage and shall not permit anEvent of Default under the First Mortgage to occur and continue.

 

SECTION 1.16.  *Copies of Communication*.  If atany time the Mortgagor provides the First Mortgagee with any written communication,information, documentation, notice or demand of any kind (including regularmonthly loan payments) relevant to the First Mortgage, including any appraisalor other similar material, then the Mortgagor shall at the same time and by thesame means provide the Mortgagee with a copy of the same.  If at any timethe Mortgagor receives any written communication, information, documentation,notice or demand of any kind from the First Mortgagee relevant to the FirstMortgage or the loan or other obligation secured thereby, then the Mortgagorshall immediately provide the Mortgagee with a copy of the same.

 

SECTION 1.17.  *Savings Clause.*  Anyprovision herein to the contrary notwithstanding, Mortgagor makes no assignmentor grant of rights with respect to any (i) personal property or(ii) any general intangibles or any other rights to any Leases, ManagementAgreements, contracts, insurance proceeds, instruments, licenses or otherdocuments (collectively, “*Contract Rights*”),as to which the grant of a security interest therein would constitute aviolation of applicable law or of any valid and enforceable obligation in favorof a third party relating to such personal property or under such ContractRights.

 

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ARTICLE II

 

*Defaultsand Remedies*

 

SECTION 2.01.  *Events of Default.*  Any Event ofDefault under the Credit Agreement (as such term is defined therein) shallconstitute an Event of Default under this Mortgage.

 

SECTION 2.02.  *Demand for Payment.*  If an Eventof Default shall occur and be continuing, then, upon written demand ofMortgagee, Mortgagor will pay to Mortgagee all amounts due hereunder and underthe Credit Agreement and the Security Agreement and such further amount asshall be sufficient to cover the costs and expenses of collection, includingattorneys’ fees, disbursements and expenses incurred by Mortgagee, andMortgagee shall be entitled and empowered to institute an action or proceedingsat law or in equity for the collection of the sums so due and unpaid, toprosecute any such action or proceedings to judgment or final decree, toenforce any such judgment or final decree against Mortgagor and to collect, inany manner provided by law, all moneys adjudged or decreed to be payable.

 

SECTION 2.03.  *Rights To Take Possession, Operate and ApplyRevenues.*  (a)  If an Event of Default shall occur andbe continuing, Mortgagor shall, upon demand of Mortgagee, forthwith surrenderto Mortgagee actual possession of the Mortgaged Property and, if and to theextent not prohibited by applicable law, Mortgagee itself, or by such officersor agents as it may appoint, may then enter and take possession of all theMortgaged Property without the appointment of a receiver or an applicationtherefor, exclude Mortgagor and its agents and employees wholly therefrom, andhave access to the books, papers and accounts of Mortgagor.

 

(b)  If Mortgagor shall for any reason fail tosurrender or deliver the Mortgaged Property or any part thereof after suchdemand by Mortgagee, Mortgagee may to the extent not prohibited by applicablelaw, obtain a judgment or decree conferring upon Mortgagee the right toimmediate possession or requiring Mortgagor to deliver immediate possession ofthe Mortgaged Property to Mortgagee, to the entry of which judgment or decreeMortgagor hereby specifically consents.  Mortgagor will pay to Mortgagee,upon demand, all reasonable expenses of obtaining such judgment or decree,including reasonable compensation to Mortgagee’s attorneys and agents with interestthereon at the rate per annum applicable to overdue amounts under the CreditAgreement as provided in Section 2.13(c) of the Credit Agreement (the“*Interest Rate*”); and all suchexpenses and compensation shall, until paid, be secured by this Mortgage.

 

(c)  Upon every such entry or taking ofpossession, Mortgagee may, to the extent not prohibited by applicable law,hold, store, use, operate, manage and control the Mortgaged Property, conductthe business thereof and, from time to time, (i) make all necessary andproper maintenance, repairs, renewals, replacements, additions, betterments andimprovements thereto and thereon, (ii) purchase or otherwise acquireadditional fixtures, personalty and other property, (iii) insure or keepthe Mortgaged Property insured, (iv) manage and operate the MortgagedProperty and exercise all the rights and powers of Mortgagor to the same extentas Mortgagor could in its own name or otherwise with respect

 

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tothe same, or (v) enter into any and all agreements with respect to theexercise by others of any of the powers herein granted Mortgagee, all as mayfrom time to time be directed or determined by Mortgagee to be in its bestinterest and Mortgagor hereby appoints Mortgagee as its true and lawfulattorney-in-fact and agent, following the occurrence and during the continuanceof an Event of Default for Mortgagor and in its name, place and stead, in anyand all capacities, to perform any of the foregoing acts. Mortgagee may collectand receive all the Rents, issues, profits and revenues from the MortgagedProperty, including those past due as well as those accruing thereafter, and,after deducting (i) all expenses of taking, holding, managing andoperating the Mortgaged Property (including compensation for the services ofall persons employed for such purposes), (ii) the costs of all suchmaintenance, repairs, renewals, replacements, additions, betterments,improvements, purchases and acquisitions, (iii) the costs of insurance,(iv) such taxes, assessments and other similar charges as Mortgagee may atits option pay, (v) other proper charges upon the Mortgaged Property orany part thereof and (vi) the compensation, expenses and disbursements ofthe attorneys and agents of Mortgagee, Mortgagee shall apply the remainder ofthe moneys and proceeds so received first to the payment of the Mortgagee forthe satisfaction of the Secured Obligations, and, if there is any surplus, toMortgagor, subject to the entitlement of others thereto under applicable law.

 

(d)  Whenever, before any sale of the MortgagedProperty under Section 2.06, all Secured Obligations that are then dueshall have been paid and all Events of Default fully cured, Mortgagee willsurrender possession of the Mortgaged Property back to Mortgagor, itssuccessors or assigns.  The same right of taking possession shall,however, arise again if any subsequent Event of Default shall occur and becontinuing.

 

SECTION 2.04.  *Right To Cure Mortgagor’s Failure to Perform.* Should Mortgagor fail in the payment, performance or observance of any term,covenant or condition required by this Mortgage or the Credit Agreement (withrespect to the Mortgaged Property), Mortgagee may pay, perform or observe thesame, and all payments made or costs or expenses incurred by Mortgagee inconnection therewith shall be secured hereby and shall be, without demand,immediately repaid by Mortgagor to Mortgagee with interest thereon at theInterest Rate.  Mortgagee shall be the judge using reasonable discretionof the necessity for any such actions and of the amounts to be paid. Mortgagee is hereby empowered to enter and to authorize others to enter uponthe Premises or the Improvements or any part thereof for the purpose ofperforming or observing any such defaulted term, covenant or condition withouthaving any obligation to so perform or observe and without thereby becomingliable to Mortgagor, to any person in possession holding under Mortgagor or toany other person.

 

SECTION 2.05.  *Right to a Receiver.*  If an Eventof Default shall occur and be continuing, Mortgagee, shall be entitled to makeapplication to a court of competent jurisdiction for, and (to the extentpermitted by law) obtain from such a court, as a matter of right to the appointmentof a receiver to take possession of and to operate the Mortgaged Property andto collect and apply the Rents.  The receiver shall have all of the rightsand powers permitted under the laws of the state wherein the Mortgaged Propertyis located.  Mortgagor shall pay to Mortgagee upon demand all reasonableexpenses, including receiver’s fees, reasonable attorney’s fees anddisbursements, costs and agent’s compensation incurred pursuant to theprovisions of this Section 2.05; and all such expenses shall be secured bythis

 

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Mortgageand shall be, without demand, immediately repaid by Mortgagor to Mortgagee withinterest thereon at the Interest Rate.

 

SECTION 2.06.  *Foreclosure and Sale.*  (a) If an Event of Default shall occur and be continuing, Mortgagee may elect tosell the Mortgaged Property or any part of the Mortgaged Property by exerciseof the power of foreclosure or of sale granted to Mortgagee by applicable lawor this Mortgage.  In such case, Mortgagee may commence a civil action toforeclose this Mortgage, or it may proceed and sell the Mortgaged Property tosatisfy any Obligation.  Mortgagee or an officer appointed by a judgmentof foreclosure to sell the Mortgaged Property, may sell all or such parts ofthe Mortgaged Property as may be chosen by Mortgagee at the time and place ofsale fixed by it in a notice of sale, either as a whole or in separate lots,parcels or items as Mortgagee shall deem expedient, and in such order as it maydetermine, at public auction to the highest bidder.  Mortgagee or anofficer appointed by a judgment of foreclosure to sell the Mortgaged Propertymay postpone any foreclosure or other sale of all or any portion of theMortgaged Property by public announcement at such time and place of sale, andfrom time to time thereafter may postpone such sale by public announcement orsubsequently noticed sale.  Without further notice, Mortgagee or anofficer appointed to sell the Mortgaged Property may make such sale at the timefixed by the last postponement, or may, in its discretion, give a new notice ofsale.  Any person, including Mortgagor or Mortgagee or any designee oraffiliate thereof, may purchase at such sale.

 

(b)  The Mortgaged Property may be sold subjectto unpaid taxes and Liens expressly permitted under Section 6.02 of theCredit Agreement, and, after deducting all costs, fees and expenses ofMortgagee (including costs of evidence of title in connection with the sale),Mortgagee or an officer that makes any sale shall apply the proceeds of sale inthe manner set forth in Section 2.08.

 

(c)  Any foreclosure or other sale of less thanthe whole of the Mortgaged Property or any defective or irregular sale madehereunder shall not exhaust the power of foreclosure or of sale provided forherein; and subsequent sales may be made hereunder until the SecuredObligations have been satisfied, or the entirety of the Mortgaged Property hasbeen sold.

 

(d)  If an Event of Default shall occur and becontinuing, Mortgagee may instead of, or in addition to, exercising the rightsdescribed in Section 2.06(a) above and either with or without entryor taking possession as herein permitted, proceed by a suit or suits in law orin equity or by any other appropriate proceeding or remedy (i) tospecifically enforce payment of some or all of the Secured Obligations, or theperformance of any term, covenant, condition or agreement of this Mortgage orany other Loan Document or any other right, or (ii) to pursue any otherremedy available to Mortgagee, all as Mortgagee shall determine most effectualfor such purposes.

 

SECTION 2.07.  *Other Remedies.*  (a)  Incase an Event of Default shall occur and be continuing, Mortgagee may alsoexercise, to the extent not prohibited by law, any or all of the remediesavailable to a secured party under the UCC.

 

(b)  In connection with a sale of the MortgagedProperty or any Personal Property and the application of the proceeds of saleas provided in Section 2.08, Mortgagee shall be

 

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entitledto enforce payment of and to receive up to the principal amount of the SecuredObligations, plus all other charges, payments and costs due under thisMortgage, and to recover a deficiency judgment for any portion of the aggregateprincipal amount of the Secured Obligations remaining unpaid, with interest.

 

SECTION 2.08.  *Application of Sale Proceeds and Rents.* After any foreclosure sale of all or any of the Mortgaged Property, Mortgageeshall receive and apply the proceeds of the sale together with any Rents thatmay have been collected and any other sums that then may be held by Mortgageeunder this Mortgage as pursuant to Section 2.18(b) of the CreditAgreement, subject to the terms of the Intercreditor Agreement.

 

SECTION 2.09.  *Mortgagor as Tenant Holding Over.* If Mortgagor remains in possession of any of the Mortgaged Property after anyforeclosure sale by Mortgagee, at Mortgagee’s election Mortgagor shall bedeemed a tenant holding over and shall forthwith surrender possession to thepurchaser or purchasers at such sale or be summarily dispossessed or evictedaccording to provisions of law applicable to tenants holding over.

 

SECTION 2.10.  *Waiver of Appraisement, Valuation, Stay, Extensionand Redemption Laws. *Mortgagor waives, to the extent notprohibited by law, (i) the benefit of all laws now existing or thathereafter may be enacted (x) providing for any appraisement or valuationof any portion of the Mortgaged Property and/or (y) in any way extendingthe time for the enforcement or the collection of amounts due under any of theSecured Obligations or creating or extending a period of redemption from anysale made in collecting said debt or any other amounts due Mortgagee,(ii) any right to at any time insist upon, plead, claim or take thebenefit or advantage of any law now or hereafter in force providing for anyhomestead exemption, stay, statute of limitations, extension or redemption, orsale of the Mortgaged Property as separate tracts, units or estates or as asingle parcel in the event of foreclosure or notice of deficiency, and(iii) all rights of redemption, valuation, appraisement, stay ofexecution, notice of election to mature or declare due the whole of or each ofthe Secured Obligations and marshaling in the event of foreclosure of thisMortgage.

 

SECTION 2.11.  *Discontinuance of Proceedings.* In case Mortgagee shall proceed to enforce any right, power or remedy underthis Mortgage by foreclosure, entry or otherwise, and such proceedings shall bediscontinued or abandoned for any reason, or shall be determined adversely toMortgagee, then and in every such case Mortgagor and Mortgagee shall berestored to their former positions and rights hereunder, and all rights, powersand remedies of Mortgagee shall continue as if no such proceeding had beentaken.

 

SECTION 2.12.  *Suits To Protect the Mortgaged Property.* Mortgagee shall have power (a) to institute and maintain suits andproceedings to prevent any impairment of the Mortgaged Property by any acts thatmay be unlawful or in violation of this Mortgage, (b) to preserve orprotect its interest in the Mortgaged Property and in the Rents arisingtherefrom and (c) to restrain the enforcement of or compliance with anylegislation or other governmental enactment, rule or order that may beunconstitutional or otherwise invalid if the enforcement of or compliance withsuch enactment, rule or order would impair the security or be prejudicialto the interest of Mortgagee hereunder.

 

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SECTION 2.13.  *Filing Proofs of Claim.*  In caseof any receivership, insolvency, bankruptcy, reorganization, arrangement,adjustment, composition or other proceedings affecting Mortgagor, Mortgageeshall, to the extent permitted by law, be entitled to file such proofs of claimand other documents as may be necessary or advisable in order to have theclaims of Mortgagee allowed in such proceedings for the Secured Obligationssecured by this Mortgage at the date of the institution of such proceedings andfor any interest accrued, late charges and additional interest or other amountsdue or that may become due and payable hereunder after such date.

 

SECTION 2.14.  *Possession by Mortgagee.* Notwithstanding the appointment of any receiver, liquidator or trustee ofMortgagor, any of its property or the Mortgaged Property, Mortgagee shall beentitled, to the extent not prohibited by law, to remain in possession andcontrol of all parts of the Mortgaged Property now or hereafter granted under thisMortgage to Mortgagee in accordance with the terms hereof and applicable law.

 

SECTION 2.15.  *Waiver.*  (a)  No delay orfailure by Mortgagee to exercise any right, power or remedy accruing upon anybreach or Event of Default shall exhaust or impair any such right, power orremedy or be construed to be a waiver of any such breach or Event of Default oracquiescence therein; and every right, power and remedy given by this Mortgageto Mortgagee may be exercised from time to time and as often as may be deemedexpedient by Mortgagee.  No consent or waiver by Mortgagee to or of anybreach or Event of Default by Mortgagor in the performance of the SecuredObligations shall be deemed or construed to be a consent or waiver to or of anyother breach or Event of Default in the performance of the same or of any otherSecured Obligations by Mortgagor hereunder.  No failure on the part ofMortgagee to complain of any act or failure to act or to declare an Event ofDefault, irrespective of how long such failure continues, shall constitute awaiver by Mortgagee of its rights hereunder or impair any rights, powers orremedies consequent on any future Event of Default by Mortgagor.

 

(b)  Even if Mortgagee (i) grants someforbearance or an extension of time for the payment of any sums secured hereby,(ii) takes other or additional security for the payment of any sumssecured hereby, (iii) waives or does not exercise some right grantedherein or under the Loan Documents, (iv) releases a part of the MortgagedProperty from this Mortgage, (v) agrees to change some of the terms,covenants, conditions or agreements of any of the Loan Documents,(vi) consents to the filing of a map, plat or replat affecting thePremises, (vii) consents to the granting of an easement or other right affectingthe Premises or (viii) makes or consents to an agreement subordinatingMortgagee’s lien on the Mortgaged Property hereunder; no such act or omissionshall preclude Mortgagee from exercising any other right, power or privilegeherein granted or intended to be granted in the event of any breach or Event ofDefault then made or of any subsequent default; nor, except as otherwiseexpressly provided in an instrument executed by Mortgagee, shall this Mortgagebe altered thereby.  In the event of the sale or transfer by operation oflaw or otherwise of all or part of the Mortgaged Property, Mortgagee is herebyauthorized and empowered to deal with any vendee or transferee with referenceto the Mortgaged Property secured hereby, or with reference to any of theterms, covenants, conditions or agreements hereof, as fully and to the sameextent as it might deal with the original parties hereto and without in any wayreleasing or discharging any liabilities, obligations or undertakings.

 

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SECTION 2.16.  *Waiver of Trial by Jury.*  To thefullest extent permitted by applicable law, Mortgagor and Mortgagee each herebyirrevocably and unconditionally waive trial by jury in any action, claim, suitor proceeding relating to this Mortgage and for any counterclaim broughttherein.  Mortgagor hereby waives all rights to interpose any counterclaimin any suit brought by Mortgagee hereunder and all rights to have any such suitconsolidated with any separate suit, action or proceeding.

 

SECTION 2.17.  *Remedies Cumulative.*  No right,power or remedy conferred upon or reserved to Mortgagee by this Mortgage isintended to be exclusive of any other right, power or remedy, and each andevery such right, power and remedy shall be cumulative and concurrent and inaddition to any other right, power and remedy given hereunder or now orhereafter existing at law or in equity or by statute.

 

ARTICLE III

 

*Miscellaneous*

 

SECTION 3.01.  *Partial Invalidity.*  In the eventany one or more of the provisions contained in this Mortgage shall for anyreason be held to be invalid, illegal or unenforceable in any respect, suchvalidity, illegality or unenforceability shall, at the option of Mortgagee, notaffect any other provision of this Mortgage, and this Mortgage shall beconstrued as if such invalid, illegal or unenforceable provision had never beencontained herein or therein.

 

SECTION 3.02.  *Notices.*  All notices andcommunications hereunder shall be in writing and given to Mortgagor inaccordance with the terms of the Credit Agreement at the address set forth onthe first page of this Mortgage and to the Mortgagee as provided in theCredit Agreement.

 

SECTION 3.03.  *Successors and Assigns.*  All ofthe grants, covenants, terms, provisions and conditions herein shall run withthe Premises and the Improvements and shall apply to, bind and inure to, thebenefit of the permitted successors and assigns of Mortgagor and the successorsand assigns of Mortgagee.

 

SECTION 3.04.  *Satisfaction and Cancelation.* (a)  This Mortgage shall continue in effect (notwithstanding the fact thatfrom time to time there may be no Secured Obligations outstanding) until(i) the Credit Agreement has terminated pursuant to its express terms and(ii) all of the Secured Obligations have been indefeasibly paid andperformed in full (or with respect to any outstanding Letters of Credit, havebeen cash collateralized as required by the Credit Agreement) and nocommitments of the Agent or the Lenders which would give rise to any SecuredObligations are outstanding.

 

(b)  Upon any sale or other transfer byMortgagor of the Mortgaged Property that is permitted underSection 4.1(d) of the Security Agreement to any Person that is notanother Grantor or, upon the effectiveness of any written consent to therelease of the security interest granted hereby in the Mortgaged Propertypursuant to Section 9.02 of the Credit Agreement, the security interest inthe Mortgaged Property shall be automatically released.

 

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(c)  In connection with any termination orrelease pursuant to paragraph (a) or (b), the Mortgage shall bemarked “satisfied” by the Mortgagee, and this Mortgage shall be canceled ofrecord at the request and at the expense of the Mortgagor.  Mortgageeshall execute any documents reasonably requested by Mortgagor to accomplish theforegoing or to accomplish any release contemplated by this Section 3.04and Mortgagor will pay all costs and expenses, including reasonable attorneys’fees, disbursements and other charges, incurred by Mortgagee in connection withthe preparation and execution of such documents.

 

SECTION 3.05.  *Definitions.*  As used in thisMortgage, the singular shall include the plural as the context requires and thefollowing words and phrases shall have the following meanings: (a) “*including*” shall mean “including but notlimited to”; (b) “*provisions*”shall mean “provisions, terms, covenants and/or conditions”; (c) “*lien*” shall mean “lien, charge,encumbrance, security interest, mortgage or deed of trust”; (d) “*obligation*” shall mean “obligation, duty,covenant and/or condition”; and (e) “any of the Mortgaged Property” shallmean “the Mortgaged Property or any part thereof or interest therein”. Any act that Mortgagee is permitted to perform hereunder may be performed atany time and from time to time by Mortgagee or any person or entity designatedby Mortgagee.  Any act that is prohibited to Mortgagor hereunder is alsoprohibited to all lessees of any of the Mortgaged Property.  Eachappointment of Mortgagee as attorney-in-fact for Mortgagor under the Mortgageis irrevocable, with power of substitution and coupled with an interest. Subject to the applicable provisions hereof, Mortgagee has the right to refuseto grant its consent, approval or acceptance or to indicate its satisfaction,in its sole discretion, whenever such consent, approval, acceptance orsatisfaction is required hereunder.

 

SECTION 3.06.  *Multisite Real Estate Transaction.* Mortgagor acknowledges that this Mortgage is one of a number of Other Mortgagesand Collateral Documents that secure the Secured Obligations.  Mortgagoragrees that the lien of this Mortgage shall be absolute and unconditional andshall not in any manner be affected or impaired by any acts or omissionswhatsoever of Mortgagee, and without limiting the generality of the foregoing,the lien hereof shall not be impaired by any acceptance by the Mortgagee of anysecurity for or guarantees of any of the Secured Obligations hereby secured, orby any failure, neglect or omission on the part of Mortgagee to realize upon orprotect any Secured Obligation or indebtedness hereby secured or any collateralsecurity therefor including the Other Mortgages and other CollateralDocuments.  The lien hereof shall not in any manner be impaired oraffected by any release (except as to the property released), sale, pledge,surrender, compromise, settlement, renewal, extension, indulgence, alteration,changing, modification or disposition of any of the Secured Obligations secured(unless all Secured Obligations are satisfied pursuant to the Credit Agreement)or of any of the collateral security therefor, including the Other Mortgagesand other Collateral Documents or of any guarantee thereof, and Mortgagee mayat its discretion foreclose, exercise any power of sale, or exercise any otherremedy available to it under any or all of the Other Mortgages and otherCollateral Documents without first exercising or enforcing any of its rightsand remedies hereunder.  Such exercise of Mortgagee’s rights and remediesunder any or all of the Other Mortgages and other Collateral Documents shallnot in any manner impair the indebtedness hereby secured or the lien of thisMortgage and any exercise of the rights or remedies of Mortgagee hereundershall not impair the lien of any of the Other Mortgages and other CollateralDocuments or any of Mortgagee’s rights and remedies thereunder.  Mortgagor

 

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specificallyconsents and agrees that Mortgagee may exercise its rights and remedieshereunder and under the Other Mortgages and other Collateral Documentsseparately or concurrently and in any order that it may deem appropriate andwaives any rights of subrogation.

 

SECTION 3.07.  *No Oral Modification.*  ThisMortgage may not be changed or terminated orally.

 

SECTION 3.08.  *Subject to Intercreditor Agreement.* Notwithstanding anything herein to the contrary, the second-priority lien andsecurity interest granted to the Collateral Agent pursuant to this SecondPriority Mortgage and the exercise of any right or remedy by the CollateralAgent hereunder are subject to the provisions of the IntercreditorAgreement.  In the event of any conflict between the terms of theIntercreditor Agreement and this Second Priority Mortgage, the terms of theIntercreditor Agreement shall govern.  So long as the First Mortgage, orother senior mortgages are, outstanding, Mortgagor shall not be in defaulthereunder for the failure to comply with any term or provision contained inthis Second Priority Mortgage if such compliance would result in a defaultunder the terms and provisions of the First Mortgage or other senior mortgages.

 

ARTICLE IV

 

*ParticularProvisions*

 

ThisMortgage is subject to the following provisions relating to the particular lawsof the state wherein the Premises are located:

 

SECTION 4.01.  *Applicable Law; Certain Particular Provisions.* This Mortgage shall be governed by and construed in accordance with theinternal law of the state where the Mortgaged Property is located, except thatMortgagor expressly acknowledges that by their terms, the Credit Agreement andother Loan Documents (aside from those Other Mortgages to be recorded outsideNew York) shall be governed by the internal law of the State ofNew York, without regard to principles of conflict of law.  Mortgagorand Mortgagee agree to submit to jurisdiction and the laying of venue for anysuit on this Mortgage in the state where the Mortgaged Property islocated.  The terms and provisions set forth in Appendix A attachedhereto are hereby incorporated by reference as though fully set forthherein.  In the event of any conflict between the terms and provisionscontained in the body of this Mortgage and the terms and provisions set forthin Appendix A, the terms and provisions set forth in Appendix A shallgovern and control.

 

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INWITNESS WHEREOF, this Mortgage has been duly executed and delivered toMortgagee by Mortgagor on the date of the acknowledgment attached hereto.

 
|   | THE  NEIMAN MARCUS GROUP, INC., a  Delaware corporation, |
|--------|---------------------------------------------------------------|
|   |                                                          |
|   |                                                          | by: |
|   |                                                          |
|   |                                                          |   |   |
|   |                                                          |   | Name: |
|   |                                                          |   | Title: |

 

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**[ADD LOCAL FORM OF ACKNOWLEDGMENT]**

 

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Exhibit A

to Mortgage

 

Description of the Land

 

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Exhibit B

to Mortgage

 

Intercreditor Agreement

 

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Appendix A

to Deed of Trust

 

Local Law Provisions

 

None

 

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