Exhibit 10.8


 


Confidential Treatment Requested.


 


Certain material (indicated by asterisks) has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment.


 


EXECUTION COPY


	
   

  



 


 


CREDIT AGREEMENT


 


Dated as of October 6, 2005


 


Among


 


THE FINANCIAL INSTITUTIONS PARTY HERETO


 


as the Lenders


 


and


 


CREDIT SUISSE


 


as Administrative Agent and Collateral Agent,


 


and


 


NEWTON ACQUISITION, INC.,


 


and


 


NEWTON ACQUISITION MERGER SUB, INC. (to be merged with and into The
Neiman Marcus Group, Inc.)


 


and


 


The subsidiaries of The Neiman Marcus Group, Inc. from time to
time party hereto


 


CREDIT SUISSE

DEUTSCHE BANK SECURITIES INC.

as Joint Lead Arrangers


 


BANC OF AMERICA SECURITIES LLC

GOLDMAN SACHS CREDIT PARTNERS L.P.

as Co-Arrangers


 


CREDIT SUISSE

DEUTSCHE BANK SECURITIES INC.

BANC OF AMERICA SECURITIES LLC

GOLDMAN SACHS CREDIT PARTNERS L.P.

as Joint Bookrunners


 


and


 


DEUTSCHE BANK SECURITIES INC.

BANC OF AMERICA SECURITIES LLC

GOLDMAN SACHS CREDIT PARTNERS L.P.

as Co-Syndication Agents


	
   

  



 
















 


TABLE OF CONTENTS


 


	
  ARTICLE I

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.
  Defined Terms

  	
   

  	
   

  
	
  SECTION 1.02.
  Classification of Loans and Borrowings

  	
   

  	
   

  
	
  SECTION 1.03.
  Terms Generally

  	
   

  	
   

  
	
  SECTION 1.04.
  Effectuation of Transactions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The Credits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.
  Commitments

  	
   

  	
   

  
	
  SECTION 2.02.
  Loans and Borrowings

  	
   

  	
   

  
	
  SECTION 2.03.
  Request for Borrowing on the Closing Date

  	
   

  	
   

  
	
  SECTION 2.04.
  Funding of the Borrowing on the Closing Date

  	
   

  	
   

  
	
  SECTION 2.05.
  Type; Interest Elections

  	
   

  	
   

  
	
  SECTION 2.06.
  Termination of Commitments

  	
   

  	
   

  
	
  SECTION 2.07.
  Repayment of Loans; Evidence of Debt

  	
   

  	
   

  
	
  SECTION 2.08.
  Optional Prepayment of Loans

  	
   

  	
   

  
	
  SECTION 2.09.
  Mandatory Prepayment of Loans

  	
   

  	
   

  
	
  SECTION 2.10.
  Fees

  	
   

  	
   

  
	
  SECTION 2.11.
  Interest

  	
   

  	
   

  
	
  SECTION 2.12.
  Alternate Rate of Interest

  	
   

  	
   

  
	
  SECTION 2.13.
  Increased Costs

  	
   

  	
   

  
	
  SECTION 2.14.
  Break Funding Payments

  	
   

  	
   

  
	
  SECTION 2.15.
  Taxes

  	
   

  	
   

  
	
  SECTION 2.16.
  Payments Generally; Allocation of Proceeds; Sharing of Set-offs

  	
   

  	
   

  
	
  SECTION 2.17.
  Mitigation Obligations; Replacement of Lenders

  	
   

  	
   

  
	
  SECTION 2.18.
  Illegality

  	
   

  	
   

  
	
  SECTION 2.19.
  Change of Control

  	
   

  	
   

  
	
  SECTION 2.20.
  Asset Sale Offer

  	
   

  	
   

  
	
  SECTION 2.21.
  Repricing Protection

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Representations and
  Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.
  Organization; Powers

  	
   

  	
   

  
	
  SECTION 3.02.
  Authorization; Enforceability

  	
   

  	
   

  
	
  SECTION 3.03.
  Governmental Approvals; No Conflicts

  	
   

  	
   

  
	
  SECTION 3.04.
  Financial Condition; No Material Adverse Change

  	
   

  	
   

  
	
  SECTION 3.05.
  Properties

  	
   

  	
   

  



 


i

















 


	
  SECTION 3.06.
  Litigation and Environmental Matters

  	
   

  	
   

  
	
  SECTION 3.07.
  Compliance with Laws and Agreements; Licenses and Permits

  	
   

  	
   

  
	
  SECTION 3.08.
  Investment and Holding Company Status

  	
   

  	
   

  
	
  SECTION 3.09.
  Taxes

  	
   

  	
   

  
	
  SECTION 3.10.
  ERISA

  	
   

  	
   

  
	
  SECTION 3.11.
  Disclosure

  	
   

  	
   

  
	
  SECTION 3.12.
  Material Agreements

  	
   

  	
   

  
	
  SECTION 3.13.
  Solvency

  	
   

  	
   

  
	
  SECTION 3.14.
  Insurance

  	
   

  	
   

  
	
  SECTION 3.15.
  Capitalization and Subsidiaries

  	
   

  	
   

  
	
  SECTION 3.16.
  Security Interest in Collateral

  	
   

  	
   

  
	
  SECTION 3.17.
  Labor Disputes

  	
   

  	
   

  
	
  SECTION 3.18.
  Federal Reserve Regulations

  	
   

  	
   

  
	
  SECTION 3.19.
  Transaction Documents

  	
   

  	
   

  
	
  SECTION 3.20.
  Senior Indebtedness

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Conditions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Affirmative Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.
  Financial Statements and Other Information

  	
   

  	
   

  
	
  SECTION 5.02.
  Notices of Material Events

  	
   

  	
   

  
	
  SECTION 5.03.
  Existence; Conduct of Business

  	
   

  	
   

  
	
  SECTION 5.04.
  Payment of Obligations

  	
   

  	
   

  
	
  SECTION 5.05.
  Maintenance of Properties

  	
   

  	
   

  
	
  SECTION 5.06.
  Books and Records; Inspection Rights

  	
   

  	
   

  
	
  SECTION 5.07.
  Maintenance of Ratings

  	
   

  	
   

  
	
  SECTION 5.08.
  Compliance with Laws

  	
   

  	
   

  
	
  SECTION 5.09.
  Use of Proceeds

  	
   

  	
   

  
	
  SECTION 5.10.
  Insurance

  	
   

  	
   

  
	
  SECTION 5.11.
  Additional Collateral; Further Assurances

  	
   

  	
   

  
	
  SECTION 5.12.
  Maintenance of Corporate Separateness

  	
   

  	
   

  
	
  SECTION 5.13.
  2008 Notes Redemption

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Negative Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.
  Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock
  and Preferred Stock

  	
   

  	
   

  
	
  SECTION 6.02.
  Limitation on Liens

  	
   

  	
   

  
	
  SECTION 6.03.
  Merger, Consolidation or Sale of All or Substantially All Assets

  	
   

  	
   

  
	
  SECTION 6.04.
  Limitation on Restricted Payments

  	
   

  	
   

  
	
  SECTION 6.05.
  Limitations on Transactions with Affiliates

  	
   

  	
   

  



 


iii

















 


	
  SECTION 6.06.
  Limitations on Asset Sales

  	
   

  	
   

  
	
  SECTION 6.07.
  Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries

  	
   

  	
   

  
	
  SECTION 6.08.
  Limitations on Guarantees of Indebtedness by Restricted Subsidiaries

  	
   

  	
   

  
	
  SECTION 6.09.
  Limitations on Sale and Lease-Back Transactions

  	
   

  	
   

  
	
  SECTION 6.10.
  Amendments to Subordination Provisions

  	
   

  	
   

  
	
  SECTION 6.11.
  Obligations of the Borrower and the Restricted Subsidiaries Relating to Kate
  Spade

  	
   

  	
   

  
	
  SECTION 6.12.
  Impairment of Security Interest

  	
   

  	
   

  
	
  SECTION 6.13.
  Business of Borrower and Restricted Subsidiaries

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Events of Default

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.
  Notices

  	
   

  	
   

  
	
  SECTION 9.02.
  Waivers; Amendments

  	
   

  	
   

  
	
  SECTION 9.03.
  Expenses; Indemnity; Damage Waiver

  	
   

  	
   

  
	
  SECTION 9.04.
  Successors and Assigns

  	
   

  	
   

  
	
  SECTION 9.05.
  Survival

  	
   

  	
   

  
	
  SECTION 9.06.
  Counterparts; Integration; Effectiveness

  	
   

  	
   

  
	
  SECTION 9.07.
  Severability

  	
   

  	
   

  
	
  SECTION 9.08.
  Right of Setoff

  	
   

  	
   

  
	
  SECTION 9.09.
  Governing Law; Jurisdiction; Consent to Service of Process

  	
   

  	
   

  
	
  SECTION 9.10.
  WAIVER OF JURY TRIAL

  	
   

  	
   

  
	
  SECTION 9.11.
  Headings

  	
   

  	
   

  
	
  SECTION 9.12.
  Confidentiality

  	
   

  	
   

  
	
  SECTION 9.13.
  Several Obligations; Nonreliance; Violation of Law

  	
   

  	
   

  
	
  SECTION 9.14.
  USA PATRIOT Act

  	
   

  	
   

  
	
  SECTION 9.15.
  Disclosure

  	
   

  	
   

  
	
  SECTION 9.16.
  Appointment for Perfection

  	
   

  	
   

  
	
  SECTION 9.17.
  Interest Rate Limitation

  	
   

  	
   

  
	
  SECTION 9.18.
  Effectiveness of the Merger

  	
   

  	
   

  
	
  SECTION 9.19.
  INTERCREDITOR AGREEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Loan Guaranty

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01.
  Guaranty

  	
   

  	
   

  
	
  SECTION 10.02.
  Guaranty of Payment

  	
   

  	
   

  



 


iv

















 


	
  SECTION 10.03.
  No Discharge or Diminishment of Loan Guaranty

  	
   

  	
   

  
	
  SECTION 10.04.
  Defenses Waived

  	
   

  	
   

  
	
  SECTION 10.05.
  Rights of Subrogation

  	
   

  	
   

  
	
  SECTION 10.06.
  Reinstatement; Stay of Acceleration

  	
   

  	
   

  
	
  SECTION 10.07.
  Information

  	
   

  	
   

  
	
  SECTION 10.08.
  Taxes

  	
   

  	
   

  
	
  SECTION 10.09.
  Maximum Liability

  	
   

  	
   

  
	
  SECTION 10.10.
  Contribution

  	
   

  	
   

  
	
  SECTION 10.11.
  Liability Cumulative

  	
   

  	
   

  
	
  SECTION 10.12.
  Release of Loan Guarantors

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  
	
   

  
	
  Commitment Schedule

  
	
  Schedule 1.01(a)

  	
  —

  	
  Immaterial
  Subsidiaries

  
	
  Schedule 1.01(b)

  	
  —

  	
  Mortgaged
  Properties

  
	
  Schedule 3.05(a)

  	
  —

  	
  Properties

  
	
  Schedule 3.05(g)

  	
  —

  	
  Intellectual
  Property

  
	
  Schedule 3.06

  	
  —

  	
  Disclosed
  Matters

  
	
  Schedule 3.14

  	
  —

  	
  Insurance

  
	
  Schedule 3.15

  	
  —

  	
  Capitalization
  and Subsidiaries

  
	
  Schedule 3.17

  	
  —

  	
  Labor
  Disputes

  
	
  Schedule 4.01(b)

  	
  —

  	
  Local
  Counsel

  
	
  Schedule 6.01

  	
  —

  	
  Existing
  Indebtedness

  
	
  Schedule 9.01

  	
  —

  	
  Borrower’s
  Website for Electronic Delivery

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  Form of
  Administrative Questionnaire

  
	
  Exhibit B

  	
  —

  	
  Form of
  Assignment and Assumption

  
	
  Exhibit C

  	
  —

  	
  Form of
  Compliance Certificate

  
	
  Exhibit D

  	
  —

  	
  Joinder
  Agreement

  
	
  Exhibit E

  	
  —

  	
  Form of
  Borrowing Request

  
	
  Exhibit F

  	
  —

  	
  Form of
  Promissory Note

  
							



 


v

















 


CREDIT AGREEMENT dated as of
October 6, 2005 (this “Agreement”), among NEWTON ACQUISITION MERGER
SUB, INC. (“Merger Sub” and, prior to the Merger (as defined below), the
“Borrower”), a Delaware corporation to be merged with and into THE
NEIMAN MARCUS GROUP, INC., a Delaware corporation (“Neiman Marcus” and,
after the Merger, the “Borrower”), NEWTON ACQUISITION, INC., a Delaware
corporation (“Holdings”), each subsidiary of Neiman Marcus from time to
time party hereto, the Lenders (as defined in Article I) and CREDIT
SUISSE, as administrative agent and collateral agent for the Lenders hereunder
(in such capacities, the “Agent”).


 


Pursuant to or in connection
with the Merger Agreement (such term and each other capitalized term used but
not defined in this introductory statement having the meaning given it in Article I),
(a) Merger Sub will merge (the “Merger”) with and into Neiman
Marcus, with (i) the outstanding capital stock of Neiman Marcus being
converted into (and certain outstanding options to purchase, and outstanding
stock unit awards representing the right to receive, shares of capital stock of
Neiman Marcus being canceled in exchange for) the right to receive an aggregate
amount of approximately $5,110,800,000 in cash (the “Merger Consideration”),
subject to dissenters’ rights,  (ii) Neiman
Marcus surviving as a Wholly-Owned Subsidiary of Holdings and (iii) Neiman
Marcus assuming by operation of law all of the Obligations of Merger Sub under
this Agreement and the other Loan Documents, (b) the Borrower will obtain
the Senior Secured Asset-Based Revolving Credit Facility in an aggregate
principal amount of up to $600,000,000, (c) the Borrower will issue, in a
public offering or in a Rule 144A or other private placement, (i) $700,000,000
aggregate principal amount of its Senior Notes and (ii) $500,000,000
aggregate principal amount of its Senior Subordinated Notes, (d) the
Equity Contribution will be made, (e) the Existing Bank Debt Refinancing
will be effected, (f) the 2008 Notes Call for Redemption will be effected,
(g) the 2028 Debentures and the 2008 Notes will be secured by the Pari
Passu Liens and (h) the Transaction Costs will be paid.


 


In connection with the
foregoing, the Borrower has requested the Lenders to extend credit in the form
of Loans on the Closing Date, in an aggregate principal amount not in
excess of $1,975,000,000. The proceeds of the Loans are to be used solely to
finance, in part, the Merger Consideration, the Existing Bank Debt Refinancing,
the redemption after the Closing Date of the 2008 Notes and the Transaction
Costs.


 


The Lenders are willing to
extend such credit to the Borrower on the terms and subject to the conditions
set forth herein.  Accordingly, the
parties hereto agree as follows:


 


ARTICLE I


 


Definitions


 


SECTION 1.01.  Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:


 


“ABL Security Documents”
means any and all security agreements, pledge agreements, mortgages and other
agreements and documents pursuant to which any Liens are granted to secure any
Indebtedness or other obligations in respect of the Senior Secured Asset-Based
Revolving Credit Facility.


 


“ABR”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.


 

















 


“Acquired Indebtedness”
means, with respect to any specified Person, (a) Indebtedness of any other
Person existing at the time such other Person is merged with or into or became
a Restricted Subsidiary of such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, such other Person merging
with or into, or becoming a Restricted Subsidiary of such specified Person, and
(b) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.


 


“Additional Assets”
means (a) any property, plant or equipment used or useful in a Similar
Business, including any such asset acquired through any capital expenditure, (b) the
Capital Stock of a Person that becomes a Restricted Subsidiary as a result of
the acquisition of such Capital Stock by the Borrower or another Restricted
Subsidiary or is merged with or into the Borrower or another Restricted
Subsidiary and that is primarily engaged in a Similar Business, (c) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary that is primarily engaged in a Similar Business, (d) all
or substantially all of the assets of a Similar Business or (e) other
assets that are not classified as current assets under GAAP and that are used
or useful in a Similar Business.


 


“Additional Interest”
means all liquidated damages then owing pursuant to the Registration Rights
Agreement.


 


“Adjusted LIBOR Rate”
means, for any Interest Period, the rate obtained by dividing (a) the
LIBOR Rate for such Interest Period by (b) a percentage equal to 1 minus
the stated maximum rate (stated as a decimal) of all reserves, if any, required
to be maintained against “Eurocurrency liabilities” as specified in Regulation
D (including any marginal, emergency, special or supplemental reserves).


 


“Administrative
Questionnaire” means an Administrative Questionnaire in the form of Exhibit A.


 


“Affiliate” of any
specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person.  For purposes of this Agreement, “control”
(including, with correlative meanings, the terms “controlling”, “controlled
by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.


 


“Affiliate Transaction”
has the meaning assigned to such term in Section 6.05.


 


“Agent” has the
meaning assigned to such term in the preamble to this Agreement.


 


“Alternate Base Rate”
means, for any day, a rate per annum equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1⁄2 of 1%. 
Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.


 


“Applicable Percentage”
means, with respect to any Lender, a percentage equal to a fraction the
numerator of which is the aggregate outstanding principal amount of the Loans
(or, if no Loans are then outstanding, the Commitment) of such Lender and the
denominator of which is the aggregate outstanding principal amount of the Loans
(or, if no Loans are then outstanding, the Commitments) of all Lenders.


 


2

















 


“Applicable Rate”
means, for any day, (a) with respect to any ABR Loan, 1.50%, or (b) with
respect to any LIBOR Rate Loan, 2.50%.


 


“Approved Fund” means
any Person (other than an natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course and that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an entity that administers, advises or manages a Lender.


 


“Asset Sale” means (a) the
sale, conveyance, transfer or other disposition, whether in a single
transaction or a series of related transactions, of property or assets
(including by way of a Sale and Lease-Back Transaction) of the Borrower or any Restricted
Subsidiary (each referred to in this definition as a “disposition”), and
(b) the issuance or sale of Equity Interests of any Restricted Subsidiary,
whether in a single transaction or a series of related transactions, in each
case, other than:


 


(i) a disposition of cash, Cash Equivalents or
Investment Grade Securities or obsolete or worn out equipment, vehicles or
other similar assets in the ordinary course of business or any disposition of inventory
or goods held for sale in the ordinary course of business;


 


(ii) the disposition of all or substantially
all of the assets of the Borrower in a manner permitted pursuant to Section 6.03
or any disposition that constitutes a Change of Control;


 


(iii) the making of any Permitted Investment or
the making of any Restricted Payment that is not prohibited by Section 6.04;


 


(iv) any disposition of assets or issuance or
sale of Equity Interests of any Restricted Subsidiary, in each case that do not
or would not upon issuance constitute Term Loan First Lien Collateral, in any
transaction or series of transactions with an aggregate fair market value of
less than $25,000,000;


 


(v) any disposition of Term Loan First Lien
Collateral in any transaction or series of transactions with an applicable fair
market value of less than $10,000,000;


 


(vi) any disposition of property or assets or
issuance of securities by a Restricted Subsidiary to the Borrower or by the
Borrower or a Restricted Subsidiary to a Restricted Subsidiary;


 


(vii) to the extent allowable under Section 1031
of the Code, any exchange of like property (excluding any boot thereon) for use
in a Similar Business;


 


(viii) the lease, assignment or sub-lease of
any real or personal property in the ordinary course of business;


 


(ix) any issuance or sale of Equity Interests
in, or Indebtedness or other securities of, an Unrestricted Subsidiary (other
than any sale of Equity Interests in, or Indebtedness or other securities of,
Kate Spade held by the Borrower or any Restricted Subsidiary);


 


(x) foreclosures on assets;


 


(xi) sales of accounts receivable, or
participations therein, in connection with any Receivables Facility; and


 


3

















 


(xii) the unwinding of any Hedging Obligations.


 


“Asset Sale Offer”
has the meaning assigned to such term in Section 2.20(d).


 


“Assignment and Assumption”
means an assignment and assumption entered into by a Lender and an assignee
(with the consent of any party whose consent is required by Section 9.04),
and accepted by the Agent, in the form of Exhibit B or any other
form approved by the Agent.


 


“Attributable Debt”
in respect of a Sale and Lease-Back Transaction means, as at the time of
determination, the present value (discounted at the interest rate then borne by
the Loans, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such Sale
and Lease-Back Transaction (including any period for which such lease has been
extended); provided, however, that if such Sale and Lease-Back
Transaction results in a Capitalized Lease Obligation, the amount of
Indebtedness represented thereby will be determined in accordance with the
definition of “Capitalized Lease Obligation”.


 


“Board” means the
Board of Governors of the Federal Reserve System of the United States of
America.


 


“Board
of Directors” means (a) with
respect to a corporation, the board of directors of the corporation, (b) with
respect to a partnership, the board of directors of the general partner of the
partnership and (c) with respect to any other Person, the board or committee
of such Person serving a similar function.


 


“Board Resolution”
means, with respect to the Borrower, a duly adopted resolution of the Board of
Directors of the Borrower or any committee thereof.


 


“Borrower” has the
meaning assigned to such term in the preamble to this Agreement; provided
that when used in the context of determining the fair market value of an asset
or liability under this Agreement, “Borrower” shall, unless otherwise expressly
stated, be deemed to mean the Board of Directors of the Borrower when the fair
market value of such asset or liability is equal to or in excess of
$100,000,000.


 


“Borrowing” means any
Loans of the same Type made, converted or continued on the same date and, in
the case of LIBOR Rate Loans, as to which a single Interest Period is in
effect.


 


“Borrowing Request”
means a request by the Borrower for a Borrowing in accordance with Section 2.03
and substantially in the form attached hereto as Exhibit E, or such
other form as shall be approved by the Agent.


 


“Business Day” means
any day that is not a Saturday, Sunday or other day on which commercial banks
in New York City are authorized or required by law to remain closed; provided
that, when used in connection with a LIBOR Rate Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.


 


“Capital Expenditures” means, for any period, the aggregate of (a) all
expenditures (whether paid in cash or accrued as liabilities) by the Borrower
and the Restricted Subsidiaries during such period that, in conformity with
GAAP, are or are required to be included as additions during such period to
property, plant or equipment reflected in the consolidated balance sheet of the
Borrower and the Restricted Subsidiaries and (b) the value of all assets
under Capitalized Lease Obligations incurred by the 


 


4

















 


Borrower and its Restricted
Subsidiaries during such period; provided that
the term “Capital Expenditures” shall not include:


 


(i) expenditures made in connection with the
replacement, substitution, restoration or repair of assets to the extent
financed with (x) insurance proceeds paid on account of the loss of or damage
to the assets being replaced, restored or repaired or (y) awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced,


 


(ii) the purchase price of equipment that is
purchased simultaneously with the trade-in of existing equipment to the extent
that the gross amount of such purchase price is reduced by the credit granted
by the seller of such equipment for the equipment being traded in at such time,


 


(iii) the purchase of plant, property or
equipment to the extent financed with the proceeds of Asset Sales that are not
applied to prepay Loans pursuant to Section 2.20,


 


(iv) expenditures that constitute Consolidated
Lease Expense,


 


(v) expenditures that are accounted for as
capital expenditures by the Borrower or any Restricted Subsidiary and that actually
are paid for by a Person other than the Borrower or any Restricted Subsidiary
and for which neither the Borrower nor any Restricted Subsidiary has provided
or is required to provide or incur, directly or indirectly, any consideration
or obligation to such Person or any other Person (whether before, during or
after such period),


 


(vi) the book value of any asset owned by the
Borrower or any Restricted Subsidiary prior to or during such period to the
extent that such book value is included as a capital expenditure during such
period as a result of such Person reusing or beginning to reuse such asset
during such period without a corresponding expenditure actually having been
made in such period, provided that (x) any expenditure necessary in order
to permit such asset to be reused shall be included as a Capital Expenditure
during the period in which such expenditure actually is made and (y) such
book value shall have been included in Capital Expenditures when such asset was
originally acquired, or


 


(vii) expenditures that constitute acquisitions
of Persons or business units permitted hereunder.


 


“Capital Stock” means
(a) in the case of a corporation, corporate stock, (b) in the case of
an association or business entity, any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, (c) in
the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited) and (d) any other
interest or participation that confers on a Person the right to receive a share
of the profits and losses of, or distributions of assets of, the issuing
Person.


 


“Capitalized
Lease Obligation”  means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability
on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.


 


5
















 


“Cash Equivalents”
means:


 


(a) Dollars;


 


(b) Canadian dollars,
Japanese yen, pounds sterling, euro or, in the case of any Foreign Subsidiary
that is a Restricted Subsidiary, such local currencies held by it from time to
time in the ordinary course of business;


 


(c) securities issued
or directly and fully and unconditionally guaranteed or insured by the
government of the United States of America or any agency or instrumentality
thereof the securities of which are unconditionally guaranteed as a full faith
and credit obligation of such government with maturities of 24 months or less
from the date of acquisition;


 


(d) certificates of
deposit, time deposits and eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus in excess of $250,000,000;


 


(e) repurchase
obligations for underlying securities of the types described in clauses (c) and
(d) above entered into with any financial institution meeting the
qualifications specified in clause (d) above;


 


(f) commercial paper
rated at least “P-1” by Moody’s or at least “A-1” by S&P and in each case
maturing within 12 months after the date of issuance thereof;


 


(g) investment funds
investing at least 95% of their assets in securities of the types described in
clauses (a) through (f) above;


 


(h) readily marketable
direct obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Moody’s or S&P with maturities of 24 months or less
from the date of acquisition; and


 


(i) Indebtedness or Preferred
Stock issued by Persons with a rating of “A” or higher from S&P or “A2” or
higher from Moody’s with maturities of 12 months or less from the date of
acquisition.


 


Notwithstanding the
foregoing, Cash Equivalents shall include amounts denominated in currencies
other than those set forth in clauses (a) and (b) above; provided
that such amounts are converted into one or more of the currencies set forth in
clauses (a) and (b) above as promptly as practicable and in any
event within ten (10) Business Days following the receipt of such amounts.


 


“Change of Control” means
the occurrence of (a) the sale, lease or transfer, in one or a series of
related transactions, of all or substantially all of the assets of the Borrower
and its subsidiaries, taken as a whole, to any Person other than a Permitted Holder
or (b) the Borrower becomes aware of (by way of a report or any other
filing pursuant to Section 13(d) of the Exchange Act, proxy, vote,
written notice or otherwise) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provision), including any group acting for the
purpose of acquiring, holding or disposing of securities (within the meaning of
Rule 13d-5(b)(1) under the Exchange Act, or any successor provision),
other than the Permitted Holders, in a single transaction or in a series of
related transactions, by way of merger, consolidation or other business
combination or


 


6

















 


purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the total voting power of the Voting
Stock of the Borrower or any of its direct or indirect parent companies.


 


“Change of Control Offer”
has the meaning assigned to such term in Section 2.19(b).


 


“Change in Law” means
(a) the adoption of any law, rule or regulation after the date of
this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.13(b), by any lending office of such Lender or by
such Lender’s holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement (other than any such request, guideline
or directive to comply with any law, rule or regulation that was in effect
on the date of this Agreement).


 


“Closing Date” means
the date on which the conditions specified in Article IV are satisfied (or
waived in accordance with Section 9.02).


 


“Code” means the
Internal Revenue Code of 1986, as amended from time to time.


 


“Co-Investors” means
the investment funds associated with each of Credit Suisse First Boston and
Leonard Green & Partners, L.P., which are making a portion of the
Equity Contribution, and their respective Affiliates.


 


“Collateral” means
any and all property owned, leased or operated by a Person subject to a security
interest or Lien under the Collateral Documents and any and all other property
of any Loan Party, now existing or hereafter acquired, that may at any time be
or become subject to a security interest or Lien in favor of Agent, on behalf
of itself and the Lenders, to secure the Secured Obligations; provided, however,
that Collateral shall not at any time include any Margin Stock.


 


“Collateral Documents”
means, collectively, the Security Agreement, the Mortgages and any other
documents granting a Lien upon the Collateral as security for payment of the
Secured Obligations.


 


“Commitment” means (a) with
respect to each Lender, the commitment of such Lender to make Loans as set
forth in the Commitment Schedule or in the most recent Assignment and
Assumption executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Loans, which aggregate commitment
shall be $1,975,000,000 on the Closing Date.


 


“Commitment Schedule”
means the Schedule attached hereto identified as such.


 


“Consolidated
Depreciation and Amortization Expense” means with respect to any Person for
any period, the total amount of depreciation and amortization expense,
including the amortization of deferred financing fees and other related noncash
charges of such Person and its Restricted Subsidiaries for such period on a
consolidated basis and otherwise determined in accordance with GAAP.


 


“Consolidated Interest
Expense” means, with respect to any Person for any period, the sum, without
duplication, of (a) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, to the extent such expense was deducted in
computing Consolidated Net Income (including (i) amortization of original
issue discount resulting from the issuance of Indebtedness 


 


7

















 


at less than par, (ii) all
commissions, discounts and other fees and charges owed with respect to letters
of credit or bankers’ acceptances, (iii) noncash interest payments (but
excluding any noncash interest expense attributable to the movement in the
mark-to-market valuation of Hedging Obligations or other derivative instruments
pursuant to GAAP), (iv) the interest component of Capitalized Lease
Obligations and (v) net payments, if any, pursuant to interest rate
Hedging Obligations with respect to Indebtedness, and excluding (A) any
expense resulting from the discounting of the 2028 Debentures as a result of
the application of purchase accounting in connection with the Transactions, (B) Additional
Interest, (C) amortization of deferred financing fees, debt issuance
costs, commissions, fees and expenses, (D) any expensing of bridge,
commitment and other financing fees, (E) commissions, discounts, yield and
other fees and charges (including any interest expense) related to any
Receivables Facility and (F) any redemption premiums paid in connection
with the redemption of the 2008 Notes), plus (b) consolidated
capitalized interest of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued, less
(c) interest income for such period. For purposes of this definition,
interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by such Person to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP.


 


“Consolidated Lease
Expense” means for any period, all rental expenses of the Borrower and its
Restricted Subsidiaries during such period under operating leases for real or
personal property (including in connection with Sale and Lease-Back Transactions
permitted hereunder), excluding real estate taxes, insurance costs and common
area maintenance charges and net of sublease income, other than (a) obligations
under vehicle leases entered into in the ordinary course of business, (b) all
such rental expenses associated with assets acquired pursuant to an acquisition
of a Person or business unit to the extent such rental expenses relate to
operating leases in effect at the time of (and immediately prior to) such
acquisition and related to periods prior to such acquisition and (c) all
Capitalized Lease Obligations, all as determined on a consolidated basis in
accordance with GAAP.


 


“Consolidated Leverage Ratio”, with respect to any Person as
of any date of determination, means the ratio of (a) Consolidated Total
Indebtedness of such Person as of the end of the most recent fiscal quarter for
which internal financial statements are available immediately preceding the
date on which such event for which such calculation is being made shall occur
to (b) the aggregate amount of EBITDA of such Person for the period of the
most recently ended four full consecutive fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
event for which such calculation is being made shall occur, in each case with
such pro forma adjustments to
Consolidated Total Indebtedness and EBITDA as are appropriate and consistent
with the pro forma adjustment
provisions set forth in the definition of “Fixed Charge Coverage Ratio”.


 


“Consolidated Net Income”
means, with respect to any Person for any period, the aggregate of the Net
Income of such Person and its Restricted Subsidiaries for such period, on a
consolidated basis, and otherwise determined in accordance with GAAP; provided
that, without duplication:


 


(a) any net after-tax
extraordinary, non-recurring or unusual gains or losses (less all fees and
expenses relating thereto) or expenses (including relating to severance,
relocation, one-time compensation charges and the Transactions) shall be
excluded,


 


(b) the Net Income for
such period shall not include the cumulative effect of a change in accounting
principles during such period, whether effected through a cumulative effect
adjustment or a retroactive application in each case in accordance with GAAP,


 


(c) any net after-tax
income (loss) from disposed or discontinued operations and any net after-tax
gains or losses on disposal of disposed or discontinued operations shall be
excluded,


 


8

















 


(d) any net after-tax
gains or losses (less all fees and expenses relating thereto) attributable to
asset dispositions or the sale or other disposition of any Capital Stock of any
Person other than in the ordinary course of business, as determined in good
faith by the Borrower, shall be excluded,


 


(e) the Net Income for
such period of any Person that is not a subsidiary, or is an Unrestricted
Subsidiary, or that is accounted for by the equity method of accounting, shall
be excluded; provided that Consolidated Net Income of the Borrower shall be
increased by the amount of dividends or distributions or other payments that
are actually paid in cash (or to the extent converted into cash) to the
referent Person or a Restricted Subsidiary thereof in respect of such period
(subject in the case of dividends, distributions or other payments made to a Restricted
Subsidiary to the limitations contained in clause (f) below),


 


(f) solely for the
purpose of determining the amount available for Restricted Payments under Section 6.04(a)(iii)(A),
the Net Income for such period of any Restricted Subsidiary (other than any
Subsidiary Guarantor) shall be excluded if the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of its Net
Income is not at the date of determination wholly permitted without any prior
governmental approval (which has not been obtained) or, directly or indirectly,
by the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule, or governmental regulation applicable
to that Restricted Subsidiary or its stockholders, unless such restriction with
respect to the payment of dividends or similar distributions has been legally
waived; provided that Consolidated Net Income of the Borrower will be increased
by the amount of dividends or other distributions or other payments actually
paid in cash (or to the extent converted into cash) to the Borrower or a Restricted
Subsidiary thereof in respect of such period, to the extent not already
included therein,


 


(g) any increase in
amortization or depreciation or other noncash charges resulting from the
application of purchase accounting in relation to the Transactions or any
acquisition that is consummated after the Closing Date, net of taxes, shall be
excluded,


 


(h) any net after-tax
income (loss) from the early extinguishment of Indebtedness or Hedging
Obligations or other derivative instruments shall be excluded,


 


(i) any impairment
charge or asset write-off, in each case pursuant to GAAP, and the amortization
of intangibles arising pursuant to GAAP shall be excluded, and


 


(j) any noncash compensation
expense recorded from grants of stock appreciation or similar rights, stock
options, restricted stock or other rights to officers, directors or employees
shall be excluded.


 


Notwithstanding the
foregoing, for the purpose of Section 6.04 only (other than clause
(a)(iii)(D) thereof), there shall be excluded from Consolidated Net Income
any income arising from any sale or other disposition of Restricted Investments
made by the Borrower and the Restricted Subsidiaries, any repurchases and
redemptions of Restricted Investments from the Borrower and the Restricted Subsidiaries,
any repayments of loans and advances that constitute Restricted Investments by the
Borrower or any Restricted Subsidiary, any sale of the stock of an Unrestricted
Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in
each case only to the extent such amounts increase the amount of Restricted
Payments permitted under Section 6.04(a)(iii)(D); provided, however,
that any income arising from any sale or other disposition of the Equity
Interests in Kate Spade or any Extraordinary Distribution shall be excluded
from Consolidated Net Income for the purpose of Section 6.04 only.


 


9

















 


“Consolidated Secured
Debt Ratio” as of any date of determination means the ratio of (a) Consolidated
Total Indebtedness of the Borrower and the Restricted Subsidiaries that is
secured by Liens as of the end of the most recent fiscal quarter for which
internal financial statements are available immediately preceding the date on
which such event for which such calculation is being made shall occur to (b) the
aggregate amount of EBITDA of the Borrower and the Restricted Subsidiaries for
the period of the most recently ended consecutive four full fiscal quarters for
which internal financial statements are available immediately preceding the
date on which such event for which such calculation is being made shall occur,
in each case with such pro forma adjustments to Consolidated Total Indebtedness
and EBITDA as are appropriate and consistent with the pro forma adjustment
provisions set forth in the definition of “Fixed Charge Coverage Ratio”.


 


“Consolidated Total
Indebtedness” means, as at any date of determination, an amount equal to
the sum of (a) the aggregate amount of all outstanding Indebtedness of the
Borrower and the Restricted Subsidiaries on
a consolidated basis consisting of Indebtedness for borrowed money, obligations
in respect of Capitalized Lease Obligations, Attributable Debt in respect of
Sale and Lease-Back Transactions and debt obligations evidenced by bonds,
notes, debentures or similar instruments or letters of credit or bankers’
acceptances (and excluding (x) any undrawn letters of credit issued in the
ordinary course of business and (y) all obligations relating to
Receivables Facilities) and (b) the aggregate amount of all
outstanding Disqualified Stock of the Borrower and all Disqualified Stock and
Preferred Stock of the Restricted Subsidiaries (excluding items eliminated in
consolidation), with the amount of such Disqualified Stock and Preferred Stock
equal to the greater of their respective voluntary or involuntary liquidation
preferences and Maximum Fixed Repurchase Prices, in each case determined on a
consolidated basis in accordance with GAAP. 
For purposes of this definition, the “Maximum Fixed Repurchase Price”
of any Disqualified Stock or Preferred Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock or Preferred Stock as if such Disqualified Stock or
Preferred Stock were purchased on any date on which Consolidated Total
Indebtedness shall be required to be determined pursuant to this Agreement, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Stock or Preferred Stock, such fair market value shall be
determined reasonably and in good faith by the Borrower.


 


“Consolidated Working
Capital” means, at any date, the excess of (a) the sum of all amounts
(other than cash and Cash Equivalents) that would, in conformity with GAAP, be
set forth opposite the caption “total current assets” (or any like caption) on
a consolidated balance sheet of the Borrower and its Restricted Subsidiaries at
such date over (b) the sum of all amounts that would, in conformity with
GAAP, be set forth opposite the caption “total current liabilities” (or any
like caption) on a consolidated balance sheet of the Borrower and its
Restricted Subsidiaries on such date, including deferred revenue but excluding,
without duplication, (i) the current portion of any Funded Debt, (ii) the
current portion of interest and (iii) the current portion of current and
deferred income taxes.


 


“Contingent Obligations”
means, with respect to any Person, any obligation of such Person guaranteeing
any leases, dividends or other obligations that do not constitute Indebtedness
(the “primary obligations”) of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including any obligation of such
Person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary obligation
against loss in respect thereof.


 


10

















 


“Credit Card Sale” means the sale
from the Borrower to HSBC Bank Nevada, N.A., of the private label credit card
accounts of Neiman Marcus and related receivables and other assets, pursuant to
the HSBC Agreements (it being understood that such sale was consummated on July 7,
2005).


 


“Default” means any
event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.


 


“Derivative Transaction”
means (a) an interest-rate transaction, including an interest-rate swap,
basis swap, forward rate agreement, interest rate option (including a cap,
collar, and floor), and any other instrument linked to interest rates that
gives rise to similar credit risks (including when-issued securities and
forward deposits accepted), (b) an exchange-rate transaction, including a
cross-currency interest-rate swap, a forward foreign-exchange contract, a
currency option, and any other instrument linked to exchange rates that gives
rise to similar credit risks, (c) an equity derivative transaction,
including an equity-linked swap, an equity-linked option, a forward
equity-linked contract, and any other instrument linked to equities that gives
rise to similar credit risk and (d) a commodity (including precious metal)
derivative transaction, including a commodity-linked swap, a commodity-linked
option, a forward commodity-linked contract, and any other instrument linked to
commodities that gives rise to similar credit risks; provided that no
phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or its subsidiaries shall be a Derivative
Transaction.


 


“Designated Asset Sale
Proceeds” means net cash proceeds in an aggregate amount not to exceed $100,000,000
received by the Borrower or any Restricted Subsidiary from the sale, transfer,
lease or other disposition of any asset or assets so designated as Designated
Asset Sale Proceeds pursuant to an Officers’ Certificate delivered to the Agent
on or prior to the date on which such asset or assets are sold.


 


“Designated
Noncash Consideration”  means the fair market value of noncash
consideration received by the Borrower or a Restricted Subsidiary in connection
with an Asset Sale that is so designated as Designated Noncash Consideration
pursuant to an Officers’ Certificate, setting forth the basis of such
valuation, executed by an executive vice president and the principal financial
officer of the Borrower, less the amount of cash or Cash Equivalents received
in connection with a subsequent sale of such Designated Noncash Consideration.


 


“Designated Preferred
Stock” means Preferred Stock of the Borrower or any parent company thereof
(in each case other than Disqualified Stock) that is issued for cash (other
than to a Restricted Subsidiary) and is so designated as Designated Preferred
Stock pursuant to an Officers’ Certificate executed by an executive vice president
and the principal financial officer of the Borrower or the applicable parent
company thereof, as the case may be, on the issuance date thereof, the cash
proceeds of which are excluded from the calculation set forth in Section 6.04(a)(iii).


 


“Disclosed Matters”
means the actions, suits and proceedings and the environmental matters
disclosed in Schedule 3.06.


 


“Disqualified Stock” means,
with respect to any Person, any Capital Stock of such Person which, by its
terms, or by the terms of any security into which it is convertible or for
which it is putable or exchangeable, or upon the happening of any event,
matures or is mandatorily redeemable (other than solely for Capital Stock that
is not Disqualified Stock), other than as a result of a change of control or
asset sale, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the option of the holder thereof, other than as a result of a
change of control or asset sale, in whole or in part, in each case prior to the
date that is ninety-one (91) days after the earlier of the Maturity Date
and the date the Loans are no longer outstanding; provided  that
if such Capital Stock is issued to any plan for the benefit of employees 


 


11

















 


of the Borrower or its subsidiaries
or by any such plan to such employees, such Capital Stock shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Borrower or its subsidiaries in order to satisfy applicable statutory or
regulatory obligations.


 


“Dollars” or “$”
refers to lawful money of the United States of America.


 


“Domestic Subsidiary”
means, with respect to any Person, any Restricted Subsidiary of such Person
other than (a) a Foreign Subsidiary or (b) any Domestic Subsidiary of
a Foreign Subsidiary, but, in each case, including any subsidiary that
guarantees or otherwise provides direct credit support for any indebtedness of the
Borrower.


 


“EBITDA” means, with
respect to any Person for any period, the Consolidated Net Income of such
Person for such period,


 


(a) increased by
(without duplication): (i) provision for taxes based on income or profits,
plus franchise or similar taxes, of such Person for such period deducted in
computing Consolidated Net Income, plus (ii) consolidated Fixed Charges
of such Person for such period to the extent the same was deducted in
calculating Consolidated Net Income, plus
(iii) Consolidated Depreciation and Amortization Expense of such Person
for such period to the extent such depreciation and amortization were deducted
in computing Consolidated Net Income, plus  (iv) any expenses or charges related
to any Equity Offering, Permitted Investment, acquisition, disposition,
recapitalization or the incurrence of Indebtedness permitted to be incurred hereunder
including a refinancing thereof (whether or not successful) and any amendment
or modification to the terms of any such transactions, including such fees,
expenses or charges related to the Transactions and the Credit Card Sale (including
any one-time costs associated with entering into any program agreements or
servicing agreements directly related to the Credit Card Sale, but not any
payments required or contemplated by such agreements , other than payments in
respect of transition services provided thereunder prior to the first
anniversary of the Credit Card Sale), in each case, deducted in computing
Consolidated Net Income, plus (v) the amount of any
restructuring charge or reserve deducted in such period in computing
Consolidated Net Income, including any one-time costs incurred in connection
with (A) acquisitions after the Closing Date or (B) the closing of
any stores or distribution centers after the Closing Date, plus (vi) any
write offs, write downs or other noncash charges reducing Consolidated Net
Income for such period, excluding any such charge that represents an accrual or
reserve for a cash expenditure for a future period, plus (vii) the
amount of any minority interest expense deducted in calculating Consolidated
Net Income, plus (viii) the amount of
management, monitoring, consulting and advisory fees and related expenses paid
(or any accruals related to such fees or related expenses)  during such period to the Sponsors to the
extent permitted under Section 6.05, plus (ix) the amount of
net cost savings projected by the Borrower in good faith to be realized as a
result of specified actions taken during such period (calculated on a pro forma
basis as though such cost savings had been realized on the
first day of such period), net of the amount of actual benefits realized during
such period from such actions; provided  that (A) such cost savings are
reasonably identifiable and factually supportable, (B) such actions are
taken within 36 months after the Closing Date and (C) the aggregate amount
of cost savings added pursuant to this clause (ix) shall not exceed $50,000,000
for any four consecutive quarter period (which adjustments may be incremental
to pro forma adjustments made
pursuant to the second paragraph of the definition of “Fixed Charge Coverage
Ratio”), plus (x) any costs or expenses
incurred by the Borrower or a Restricted Subsidiary pursuant to any management
equity plan or stock option plan or any other management or employee benefit
plan or agreement or any stock subscription or stockholders agreement, to the
extent that such costs or expenses are funded with cash proceeds contributed to
the capital of the Borrower or net cash proceeds of issuance of Equity
Interests of the Borrower 


 


12

















 


(other than Disqualified
Stock that is Preferred Stock) in each case, solely to the extent that such
cash proceeds are excluded from the calculation set forth in Section 6.04(a)(iii);


 


(b) decreased by
(without duplication) noncash gains increasing Consolidated Net Income of such
Person for such period, excluding any gains that represent the reversal of any
accrual of, or cash reserve for, anticipated cash charges in any prior period
(other than such cash charges that have been added back to Consolidated Net
Income in calculating EBITDA in accordance with this definition); and


 


(c) increased or
decreased, as applicable, by (without duplication) (i) any net gain or
loss resulting in such period from Hedging Obligations and the application of
Statement of Financial Accounting Standards #133, (ii) any net gain or
loss resulting in such period from currency translation gains or losses related
to currency remeasurements of Indebtedness and (iii) the amount of gain or
loss resulting in such period from a sale of receivables and related assets to
a Receivables Subsidiary in connection with a Receivables Facility.


 


“Eligible Assignee”
means (i) a Lender, (ii) a commercial bank, insurance company, or
company engaged in the business of making commercial loans or a commercial
finance company, which Person, together with its Affiliates, has a combined
capital and surplus in excess of $1,000,000,000, (iii) any Affiliate of a
Lender under common control with such Lender or (iv) an Approved Fund of a
Lender, provided that in any event, “Eligible Assignee” shall not
include (w) any natural person, (x) Holdings or the Borrower or any
Affiliate (which for this purpose shall not include the Agent or any of its
branches or Affiliates engaged in the business of making commercial loans) thereof,
(y) any Sponsor or any of their respective Affiliates or (z) any “creditor”,
as defined in Regulation T, or “foreign branch of a broker-dealer”, within
the meaning of Regulation X; provided, however, that upon
the occurrence of an Event of Default, no Person (other than a Lender) shall be
an “Eligible Assignee” if the assignment of any Commitment or Loan to such
Person would cause such Person to have Commitments or Loans in excess of
twenty-five percent (25%) of the then outstanding total aggregate Commitments
or Loans, as the case may be.


 


“EMU”
means the economic and monetary union contemplated by the Treaty of the
European Union.


 


“Environmental Laws”
means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material or to health and safety
matters.


 


“Environmental Liability”
means any liability, contingent or otherwise (including any liability for
damages, costs of environmental remediation, fines, penalties or indemnities),
of the Borrower or any Subsidiary directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of
any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment
or (e) any contract, agreement or other consensual arrangement pursuant to
which liability is assumed or imposed with respect to any of the foregoing.


 


“Equity Contribution”
means the contribution by the Sponsors, the Co-Investors and the Management
Stockholders and certain other Persons investing through Newton Co-Invest I LLC
or Newton Co-Invest II LLC, in an aggregate amount of not less than 25% of the
total consolidated capitalization of Holdings on the Closing Date, after giving
pro forma effect to the consummation of the 


 


13

















 


Transactions and the
redemption after the Closing Date of the 2008 Notes, in cash to Holdings (or
any direct or indirect parent thereof) as common equity and/or preferred equity
having terms reasonably satisfactory to the Joint Lead Arrangers, and the cash
contribution by Holdings (or any direct or indirect parent thereof) of the
amount so received to Merger Sub (or if by a direct or indirect parent of
Holdings, by such parent to Holdings and by Holdings to Merger Sub) in respect
of Holdings’ common equity and/or preferred equity in Merger Sub having terms
reasonably satisfactory to the Joint Lead Arrangers or in exchange for the
issuance to Holdings of Equity Interests of Merger Sub.


 


“Equity Interests” means
Capital Stock and all warrants, options or other rights to acquire Capital
Stock, but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock.


 


“Equity Offering” means
any public or private sale of common stock or Preferred Stock of the Borrower
or any of its direct or indirect parent companies (excluding Disqualified
Stock), other than (a) public offerings with respect to the Borrower’s or
any direct or indirect parent company’s common stock registered on Form S-4
or Form S-8, (b) any such public or private sale that constitutes an
Excluded Contribution and (c) an issuance to any subsidiary of the
Borrower.


 


“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time.


 


“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with
the Borrower, is treated as a single employer under Section 414(b) or
(c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.


 


“ERISA Event” means (a) any
“reportable event”, as defined in Section 4043 of ERISA or the regulations
issued thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of
an application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of
any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the
PBGC or a plan administrator of any notice of an intent to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (f) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is insolvent or in reorganization,
within the meaning of Title IV of ERISA.


 


“euro”
means the single currency of participating member states of the EMU.


 


“Event of Default”
has the meaning assigned to such term in Article VII.


 


“Excess Cash Flow” means, for any fiscal year of the Borrower
(or, in the case of the fiscal year of the Borrower ended July 30, 2006
(except for purposes of determining changes in Consolidated Working Capital),
the portion thereof commencing on the Closing Date and ending on July 30,
2006), an amount equal to the excess of:


 


(a) the sum, without
duplication, of:


 


14

















 


(i) Consolidated Net
Income for such period,


 


(ii) an amount equal to
the amount of all non-cash charges to the extent deducted in arriving at such
Consolidated Net Income,


 


(iii) decreases in Consolidated
Working Capital and long-term account receivables for such period (other than
any such decreases arising from acquisitions by the Borrower and its Restricted
Subsidiaries completed during such period), and


 


(iv) an amount equal to
the aggregate net non-cash loss on the sale, lease, transfer or other
disposition of assets by the Borrower and its Restricted Subsidiaries during
such period (other than sales in the ordinary course of business) to the extent
deducted in arriving at such Consolidated Net Income; over


 


(b) the sum, without
duplication, of:


 


(i) an amount equal to
the amount of all non-cash credits included in arriving at such Consolidated
Net Income and cash charges included in clauses (a) through (j) of the
definition of Consolidated Net Income,


 


(ii) without
duplication of amounts deducted pursuant to clause (xi) below in prior periods,
the amount of Capital Expenditures made in cash during such period, except to
the extent that such Capital Expenditures were financed with the proceeds of
Indebtedness of the Borrower or its Restricted Subsidiaries,


 


(iii) the aggregate
amount of all principal payments of Indebtedness of the Borrower and its
Restricted Subsidiaries (including (x) the principal component of payments in
respect of Capitalized Lease Obligations and (y) the amount of any prepayment
of Loans pursuant to Section 2.08 or 2.20 made with the proceeds of an
Asset Sale to the extent such Asset Sale resulted in an increase to
Consolidated Net Income and not in excess of the amount of such increase, but
excluding all other prepayments of the Loans) made during such period (other
than in respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder), except to the extent
financed with the proceeds of other Indebtedness of the Borrower or its
Restricted Subsidiaries,


 


(iv) an amount equal to
the aggregate net non-cash gain on the sale, lease, transfer or other
disposition of assets by the Borrower and its Restricted Subsidiaries during
such period (other than sales in the ordinary course of business) to the extent
included in arriving at such Consolidated Net Income,


 


(v) increases in Consolidated
Working Capital and long-term account receivables for such period (other than
any such increases arising from acquisitions of a Person or business unit by
the Borrower and its Restricted Subsidiaries during such period),


 


(vi) cash payments by
the Borrower and its Restricted Subsidiaries during such period in respect of
long-term liabilities of the Borrower and its Restricted Subsidiaries other
than Indebtedness,


 


(vii) without
duplication of amounts deducted pursuant to clause (xi) below in prior periods,
the amount of Investments and acquisitions made during such period to the
extent 


 


15

















 


permitted under Section 6.04,
to the extent that such Investments and acquisitions were financed with
internally generated cash flow of the Borrower and its Restricted Subsidiaries,


 


(viii) the amount of
Restricted Payments made during such period to the extent permitted under Section 6.04(b)(xvi),
to the extent that such Restricted Payments were financed with internally
generated cash flow of the Borrower and its Restricted Subsidiaries,


 


(ix) the aggregate
amount of expenditures actually made by the Borrower and the Restricted
Subsidiaries in cash during such period (including expenditures for the payment
of financing fees) to the extent that such expenditures are not expensed during
such period,


 


(x) the aggregate amount of
any premium, make-whole or penalty payments actually paid in cash by the
Borrower and the Restricted Subsidiaries during such period that are required
to be made in connection with any prepayment of Indebtedness,


 


(xi) without duplication of
amounts deducted from Excess Cash Flow in prior periods, the aggregate
consideration required to be paid in cash by the Borrower or any of its
Restricted Subsidiaries pursuant to binding contracts (the “Contract Consideration”) entered
into prior to or during such period relating to acquisitions or Capital
Expenditures to be consummated or made during the period of four consecutive
fiscal quarters of the Borrower following the end of such period, provided that to the extent the aggregate amount of
internally generated cash actually utilized to finance such acquisitions or
Capital Expenditures during such period of four consecutive fiscal quarters is
less than the Contract Consideration, the amount of such shortfall shall be added
to the calculation of Excess Cash Flow at the end of such period of four
consecutive fiscal quarters, and


 


(xii) the amount of cash
taxes paid in such period to the extent they exceed the amount of tax expense
deducted in determining Consolidated Net Income for such period.


 


“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.


 


“Excluded Contribution”
means net cash proceeds, marketable securities or Qualified Proceeds received
by the Borrower from (a) contributions to its common equity capital, and (b) the
sale (other than to a subsidiary of the Borrower or to any management equity
plan or stock option plan or any other management or employee benefit plan or
agreement of the Borrower) of Capital Stock (other than Disqualified Stock and
Designated Preferred Stock) of the Borrower, in each case designated as
Excluded Contributions pursuant to an Officers’ Certificate executed by an
executive vice president and the principal financial officer of the Borrower on
the date such capital contributions are made or the date such Equity Interests
are sold, as the case may be, which are excluded from the calculation set forth
in Section 6.04(a)(iii).


 


“Excluded Taxes”
means, with respect to the Agent, any Lender or any other recipient of any
payment to be made by or on account of any obligation of the Borrower or any
other Loan Party hereunder, (a) income or franchise taxes imposed on (or
measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed
by the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower or any other Loan Party is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 2.17(b)), any withholding tax that is imposed
on amounts payable to such Foreign Lender at the time such Foreign 


 


16

















 


Lender becomes a party to
this Agreement (or designates a new lending office) or is attributable to such
Foreign Lender’s failure to comply with Section 2.15(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower or any other Loan Party with respect to
such withholding tax pursuant to Section 2.15(a).


 


“Existing Bank Debt
Refinancing” means the payment in full of all amounts, if any, due or owing
under the Existing Credit Agreement, the termination of all commitments
thereunder and the release and discharge of all guarantees thereof (if any) and
all security therefor (if any).


 


“Existing Credit
Agreement” means the $350,000,000 Credit Agreement dated June 9, 2004
among Neiman Marcus, the lenders party thereto, Bank of America, N.A., as
syndication agent, Wachovia Bank, N.A., Wells Fargo Bank National Association
and BNP Paribas, as documentation agents, and JPMorgan Chase Bank, as
administrative agent.


 


“Extraordinary
Distribution” means any dividends, distributions or other payments made by
Kate Spade to the Borrower or a Restricted Subsidiary (a) to the extent
generated by (i) borrowings other than working capital borrowings, (ii) the
sale of debt or equity securities or (iii) sales or other dispositions or
assets, other than inventory, accounts receivable and other assets sold in the
ordinary course of business or as part of the normal retirement or replacement
of assets or (b) representing a liquidating distribution or payment in
connection with the liquidation or winding up of Kate Spade.


 


“Federal Funds Effective
Rate” means, 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 on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day that is a Business Day, the average of the quotations for such day
for such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.


 


“Fee Letter” means
that certain Amended and Restated Fee Letter dated as of May 26, 2005, by
and among the Borrower, the Agent, Deutsche Bank Trust Company Americas,
Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc.,
Bank of America, N.A., Banc of America Bridge LLC, Banc of America Securities
LLC and Goldman Sachs Credit Partners L.P.


 


“Financial Officer”
means the chief financial officer, treasurer or controller of the Borrower.


 


“Fixed Charge Coverage
Ratio” means, with respect to any Person for any period, the ratio of
EBITDA of such Person for such period to the Fixed Charges of such Person for
such period.  In the event that the
Borrower or any Restricted Subsidiary incurs, assumes, guarantees, redeems,
retires or extinguishes any Indebtedness (other than Indebtedness incurred
under any revolving credit facility that has been permanently repaid and has
not been replaced) or issues or redeems Disqualified Stock or Preferred Stock
subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to or simultaneously with the
event for which the calculation of the Fixed Charge Coverage Ratio is made (the
“Calculation Date”),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma
effect to such incurrence, assumption, guarantee, redemption, retirement or
extinguishing of Indebtedness, or such issuance or redemption of Disqualified
Stock or Preferred Stock, as if the same had occurred at the beginning of the
applicable four-quarter period (the “reference period”).


 


17
















 


For purposes of making the
computation referred to above, Investments, acquisitions, dispositions,
mergers, consolidations and disposed operations (as determined in accordance
with GAAP) that have been made by the Borrower or any Restricted Subsidiary during
the four-quarter reference period or subsequent to such reference period and on
or prior to or simultaneously with the Calculation Date shall be calculated on
a pro forma basis assuming that all such Investments, acquisitions,
dispositions, mergers, consolidations and disposed operations (and the change
in any associated fixed charges and the change in EBITDA resulting therefrom)
had occurred on the first day of the reference period.  If since the beginning of such period any
Person (that subsequently became a Restricted Subsidiary or was merged with or
into the Borrower or any Restricted Subsidiary since the beginning of such
period) shall have made any Investment, acquisition, disposition, merger,
consolidation or disposed operation that would have required adjustment
pursuant to this definition, then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect thereto for such period as if such
Investment, acquisition, disposition, merger, consolidation or disposed
operation had occurred at the beginning of the reference period.


 


For purposes of this
definition, whenever pro forma effect is to be given to a transaction, the pro
forma calculations shall be made in good faith by a responsible financial or
accounting officer of the Borrower.  If
any Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the entire
period (taking into account any Hedging Obligations applicable to such
Indebtedness).  Interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by a responsible financial or accounting officer of the Borrower to
be the rate of interest implicit in such Capitalized Lease Obligation in
accordance with GAAP.  For purposes of
making the computation referred to above, interest on any Indebtedness under a
revolving credit facility computed on a pro forma basis shall be computed based
upon the average daily balance of such Indebtedness during the applicable
period.  Interest on Indebtedness that
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rate, shall be
deemed to have been based upon the rate actually chosen, or, if none, then
based upon such optional rate chosen as the Borrower may designate.


 


“Fixed Charges” means,
with respect to any Person for any period, the sum of (a) Consolidated
Interest Expense of such Person for such period, (b) all cash dividend
payments (excluding items eliminated in consolidation) on any series of
Preferred Stock during such period, and (c) all cash dividend payments
(excluding items eliminated in consolidation) on any series of Disqualified
Stock made during such period.


 


“Foreign Lender”
means a person that is not a “United States person” within the meaning of Section 7701(a)(30)
of the Code.


 


“Foreign Subsidiary” means,
with respect to any Person, any Restricted Subsidiary of such Person that is
not organized or existing under the laws of the United States of America, any
state thereof, the District of Columbia, or any territory thereof.


 


“Foreign
Subsidiary Total Assets”  means the total amount of all assets of
Foreign Subsidiaries of the Borrower and the Restricted Subsidiaries,
determined on a consolidated basis in accordance with GAAP as shown on the most
recent balance sheet of the Borrower.


 


“Funded Debt” means
all Indebtedness of the Borrower and its Restricted Subsidiaries for borrowed
money that matures more than one year from the date of its creation or matures
within one year from such date that is renewable or extendable, at the option
of such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders


 


18

















 


to extend credit during a period of more than
one year from such date, including Indebtedness in respect of the Loans.


 


“GAAP” means
generally accepted accounting principles in the United States of America that
are in effect on the Closing Date.


 


“Governmental Authority”
means the government of the United States of America, any other nation or any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.


 


“guarantee” means a
guarantee (other than by endorsement of negotiable instruments for collection
in the ordinary course of business), direct or indirect, in any manner
(including letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness or other obligations, and, when used as
a verb, shall have a corresponding meaning.


 


“Guaranteed Obligations”
has the meaning assigned to such term in Section 10.01.


 


“Hazardous Materials”  means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.


 


“Hedge Agreement” means any agreement with respect to any
Derivative Transaction between the Borrower or any Subsidiary and any other
Person.


 


“Hedging
Obligations”  means, with respect to any Person, the
obligations of such Person under currency exchange, interest rate or commodity
swap agreements, currency exchange, interest rate or commodity cap agreements
and currency exchange, interest rate or commodity collar agreements and other
agreements or arrangements, in each case designed to protect such Person
against fluctuations in currency exchange, interest rates or commodity prices.


 


“Holdings” has the
meaning assigned to such term in the preamble to this Agreement.


 


“HSBC Agreements”
means the Purchase, Sale and Servicing Transfer Agreement dated as of June 8,
2005, among HSBC Bank Nevada, N.A., HSBC Finance Corporation (together with
their Affiliates, “HSBC”), Neiman Marcus and Bergdorf Goodman, Inc.,
and all material agreements and instruments entered into in connection
therewith, including the Credit Card Program Agreement and the related Services
Agreement, in each case, as amended from time to time.


 


“HSBC Arrangements”
means the private label credit card program between the Borrower and HSBC
pursuant to the terms of the HSBC Agreements.


 


“Immaterial Subsidiary”
means, at any date of determination, any Restricted Subsidiary designated as
such in writing by the Borrower that (i) contributed 2.5% or less of
EBITDA of the Borrower and the Restricted Subsidiaries for the period of four
fiscal quarters most recently ended more than forty-five (45) days prior to the
date of determination and (ii) had consolidated assets representing 2.5%
or less of Total Assets on the last day of the most recent fiscal quarter ended
more than forty-five (45) days prior to the date of determination.  The Immaterial Subsidiaries as of the Closing
Date are listed on Schedule 1.01(a).


 


“incur” has the
meaning set forth in Section 6.01.


 


19

















 


“incurrence” has the
meaning set forth in Section 6.01.


 


“Indebtedness” means,
with respect to any Person, (a) any indebtedness (including principal and
premium) of such Person, whether or not contingent (i) in respect of
borrowed money, (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit or bankers’ acceptances (or, without double
counting, reimbursement agreements in respect thereof), (iii) representing
the balance deferred and unpaid of the purchase price of any property
(including Capitalized Lease Obligations), except any such balance that
constitutes a trade payable or similar obligation to a trade creditor, in each
case accrued in the ordinary course of business, or (iv) representing any
Hedging Obligations, if and to the extent that any of the foregoing
Indebtedness (other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet (excluding the footnotes thereto) of
such Person prepared in accordance with GAAP; (b) to the extent not
otherwise included, any obligation by such Person to be liable for, or to pay,
as obligor, guarantor or otherwise, on the obligations of the type referred to
in clause (a) of another Person (whether or not such items would
appear upon the balance sheet of such obligor or guarantor), other than by
endorsement of negotiable instruments for collection in the ordinary course of
business; (c) to the extent not otherwise included, the obligations of the
type referred to in clause (a) of another Person secured by a Lien on
any asset owned by such Person, whether or not such obligations are assumed by
such Person and whether or not such obligations would appear upon the balance
sheet of such Person;  provided that the amount of such
Indebtedness will be the lesser of the fair market value of such asset at the
date of determination and the amount of Indebtedness so secured; and (d) Attributable
Debt in respect of Sale and Lease-Back Transactions; provided, however, that notwithstanding the foregoing, Indebtedness will be
deemed not to include (A) Contingent Obligations incurred in the ordinary
course of business and (B) Obligations under, or in respect of,
Receivables Facilities.


 


“Indemnified Taxes”
means Taxes other than Excluded Taxes.


 


“Independent Financial
Advisor” means an accounting, appraisal, investment banking firm or
consultant to Persons engaged in Similar Businesses of nationally recognized
standing that is, in the good faith judgment of the Borrower, qualified to
perform the task for which it has been engaged and that is independent of the
Borrower and its Affiliates.


 


“Information” has the
meaning set forth in Section 3.11(a).


 


“Information Memorandum”
means the Confidential Information Memorandum dated September 2005,
relating to the Borrower and the Transactions.


 


“Intercreditor Agreement”
means the Lien Subordination and Intercreditor Agreement dated the date hereof,
among Holdings, the Borrower, the subsidiaries of the Borrower party from time
to time thereto, the Agent and the Revolving Facility Agent (as defined therein).


 


“Interest Election
Request” means a request by the Borrower to convert or continue a Borrowing
in accordance with Section 2.05.


 


“Interest Payment Date”
means (a) with respect to any ABR Loan, the first Business Day of each January,
April, July and October and the Maturity Date and (b) with
respect to any LIBOR Rate Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a LIBOR Rate
Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months’ duration after the first day of such Interest Period (or if such day is
not a Business Day, the next succeeding Business Day).


 


20

















 


“Interest Period”
means (a) with respect to any LIBOR Rate Borrowing, the period commencing
on the date of such Borrowing and ending on the numerically corresponding day
in the calendar month that is one, two, three or six months (or, to the
extent available to each Lender, nine or twelve months) thereafter, as the
Borrower may elect; provided, that (i) if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day and (ii) any Interest Period that
commences on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month
of such Interest Period.  For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing.


 


“Investment Grade
Securities” means (a) securities issued or directly and fully
guaranteed or insured by the government of the United States of America or any
agency or instrumentality thereof (other than Cash Equivalents), (b) debt
securities or debt instruments with a rating of BBB- or higher by S&P or
Baa3 or higher by Moody’s or the equivalent of such rating by such rating
organization, or, if no rating of S&P or Moody’s then exists, the
equivalent of such rating by any other nationally recognized securities rating
agency, but excluding any debt securities or instruments constituting loans or
advances among the Borrower and its subsidiaries, (c) investments in any
fund that invests exclusively in investments of the type described in
clauses (a) and (b), which fund may also hold immaterial amounts of
cash pending investment or distribution and (d) corresponding instruments
in countries other than the United States of America customarily utilized for
high quality investments.


 


“Investments” means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the form
of loans (including guarantees), advances or capital contributions (including
by means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others, but excluding accounts
receivable, trade credit, advances to customers, commission, travel and similar
advances to officers and employees, in each case made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities issued by any other Person and investments
that are required by GAAP to be classified on the balance sheet (excluding the
footnotes) of such Person in the same manner as the other investments included
in this definition to the extent such transactions involve the transfer of cash
or other property.  For purposes of the
definition of “Unrestricted Subsidiary” and Section 6.04, (a) “Investments”
shall include the portion (proportionate to the Borrower’s equity interest in
such subsidiary) of the fair market value of the net assets of a subsidiary of the
Borrower at the time that such subsidiary is designated an Unrestricted
Subsidiary; provided  that upon a redesignation of such subsidiary
as a Restricted Subsidiary, the Borrower shall be deemed to continue to have a
permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive)
equal to (i) the Borrower’s “Investment” in such subsidiary at the time of
such redesignation, less (ii) the portion (proportionate
to the Borrower’s equity interest in such subsidiary) of the fair market value
of the net assets of such subsidiary at the time of such redesignation, and (b) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Borrower.


 


“Joinder Agreement”
has the meaning assigned to such term in Section 5.11.


 


“Joint Lead Arrangers”
means Credit Suisse and Deutsche Bank Securities Inc.


 


“Kate Spade” means
Kate Spade LLC, a Delaware limited liability company.


 


21

















 


“Lenders” means the
Persons listed on the Commitment Schedule and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption.


 


“LIBOR Rate” means,
with respect to any Interest Period, (a) the rate per annum determined by
the Agent at approximately 11:00 a.m. (London time) on the date that is
two Business Days prior to the commencement of such Interest Period by
reference to the British Bankers’ Association Interest Settlement Rates for
deposits in dollars (as set forth by any service selected by the Agent that has
been nominated by the British Bankers’ Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such
Interest Period; provided that, to the extent that an interest rate is
not ascertainable pursuant to the foregoing provisions of this definition, the “LIBOR
Rate” shall be the interest rate per annum determined by the Agent to be the
average of the rates per annum at which deposits in dollars are offered for
such relevant Interest Period to major banks in the London interbank market in
London, England by the Agent at approximately 11:00 a.m. (London time) on
the date that is two Business Days prior to the beginning of such Interest
Period.


 


“Lien” means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including any conditional
sale or other title retention agreement, any lease in the nature thereof, any
option or other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the UCC (or equivalent
statutes) of any jurisdiction; provided  that in no event shall an operating lease
be deemed to constitute a Lien.


 


“Loan Documents” means
this Agreement, any promissory notes issued pursuant to the Agreement, the
Collateral Documents and the Intercreditor Agreement. Any reference in this
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto.


 


“Loan Guarantor” means
each Loan Party (other than the Borrower).


 


“Loan Guaranty” means
Article X of this Agreement.


 


“Loan Parties” means
Holdings, the Borrower, each Domestic Subsidiary (other than (i) subject
to compliance with Section 5.11, any Domestic Subsidiary that is an
Immaterial Subsidiary and (ii) any Unrestricted Subsidiary), and any other
Person who becomes a party to this Agreement as a Loan Party pursuant to a
Joinder Agreement, and their respective successors and assigns.


 


“Loans” means the term
loans made by the Lenders pursuant to this Agreement.


 


“Management Services
Agreement” means the agreement among Holdings, the Borrower and the
Sponsors dated as of October 6, 2005, as amended from time to time,
pursuant to which the Sponsors agree to provide certain services to Holdings
and the Borrower in exchange for certain fees.


 


“Management Stockholders”
means the members of management of the Borrower (or its direct parent) who are
holders of Equity Interests of the Borrower (or any of its direct or indirect
parent companies) on the Closing Date.


 


“Margin Stock” shall
have the meaning assigned to such term in Regulation U.


 


“Material Adverse Effect”
means a material adverse effect on (a) the business, assets, operations or
financial condition of the Borrower and the Subsidiaries taken as a whole, (b) the
ability of 


 


22

















 


the Borrower and the other
Loan Parties (taken as a whole) to perform their obligations under the Loan
Documents or (c) the rights of, or remedies available to the Agent or the
Lenders under, the Loan Documents.


 


“Material Indebtedness”
means Indebtedness (other than the Loans), or obligations in respect of one or
more Hedge Agreements, of any one or more of the Borrower and its Subsidiaries
in an aggregate principal amount exceeding $50,000,000.  For purposes of determining Material
Indebtedness, the “obligations” of the Borrower or any Subsidiary in respect of
any Hedge Agreement at any time shall be the maximum aggregate amount (giving
effect to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Hedge Agreement were terminated at such time.


 


“Maturity Date” means
April 6, 2013.


 


“Maximum Liability”
has the meaning assigned to such term in Section 10.09.


 


“Merger” has the
meaning assigned to such term in the introductory statement to this Agreement.


 


“Merger Agreement”
means the Agreement and Plan of Merger dated as of May 1, 2005, among
Holdings, Merger Sub and Neiman Marcus, as amended from time to time.


 


“Merger Consideration”
has the meaning assigned to such term in the introductory statement to this
Agreement.


 


“Merger Sub” has the
meaning assigned to such term in the preamble to this Agreement.


 


“Moody’s” means Moody’s
Investors Service, Inc. and any successor to its rating agency business.


 


“Mortgaged Properties”
means, initially, the owned real properties and leasehold and subleasehold
interests of the Loan Parties specified on Schedule 1.01(b), and
shall include each other parcel of real property and improvements thereto with
respect to which a Mortgage is granted pursuant to Section 5.11.


 


“Mortgages” means any
mortgage, deed of trust or other agreement which conveys or evidences a Lien in
favor of the Agent, for the benefit of the Agent and the Lenders, on real
property of a Loan Party, including any amendment, modification or supplement
thereto.


 


“Multiemployer Plan”
means a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of
ERISA.


 


“Neiman Marcus” has
the meaning assigned to such term in the preamble to this Agreement.


 


“Net Income” means,
with respect to any Person, the net income (loss) of such Person, determined in
accordance with GAAP and before any reduction in respect of Preferred Stock
dividends.


 


“Net Proceeds” means
the aggregate cash proceeds received by the Borrower or any Restricted Subsidiary
in respect of any Asset Sale, including any cash received upon the sale or
other disposition of any Designated Noncash Consideration received in any Asset
Sale, net of the direct costs relating to such Asset Sale and the sale or
disposition of such Designated Noncash Consideration, including legal,
accounting and investment banking fees, and brokerage and sales commissions,
any 


 


23

















 


relocation expenses incurred
as a result thereof, taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of principal,
premium, if any, and interest on Indebtedness required (other than as required
by Section 2.20(a)(i) or Section 2.20(b)(i)(A)) to be paid as a
result of such transaction and any deduction of appropriate amounts to be
provided by the Borrower as a reserve in accordance with GAAP against any
liabilities associated with the asset disposed of in such transaction and
retained by the Borrower after such sale or other disposition thereof,
including pension and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification obligations
associated with such transaction.


 


“New Note Documents”
means, collectively, the Senior Note Documents and the Senior Subordinated Note
Documents.


 


“New Notes” means,
collectively, the Senior Notes and the Senior Subordinated Notes.


 


“Non-Consenting
Lender” has the
meaning assigned to such term in Section 9.02(e).


 


“Non-Paying
Guarantor” has the
meaning assigned to such term in Section 10.10.


 


“Obligated
Party” has the
meaning assigned to such term in Section 10.02.


 


“Obligations” means
all unpaid principal of and accrued and unpaid interest on the Loans, all
accrued and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the Loan Parties to the Lenders or to any Lender, the Agent or
any indemnified party arising under the Loan Documents.


 


“Officer”  means the Chairman of the Board, the Chief Executive Officer, the Chief
Financial Officer, the President, any Executive Vice President, Senior Vice
President or Vice President, the Treasurer or the Secretary of the Borrower.


 


“Officers’
Certificate”  means a certificate signed on behalf of the
Borrower by two Officers of the Borrower, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Borrower.


 


“Other Information”
has the meaning assigned to such term in Section 3.11(b).


 


“Other Pari Passu Lien
Obligations” means (i) any Indebtedness constituting debt securities
incurred pursuant to an indenture with an institutional trustee or loans
incurred in the bank credit market (including institutional investor
participation therein) and (ii) all obligations with respect to such
Indebtedness.


 


“Other Taxes” means
any and all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement.


 


“Pari Passu Liens”
means any Lien on the Collateral granted for the benefit of the holders of the
2028 Debentures and the holders of the 2008 Notes, in each case that is
required by the terms of the indenture applicable thereto as a result of the
grant of security interests pursuant to any Loan Document, the ABL Security
Documents or otherwise.


 


“Participant” has the
meaning assigned to such term in Section 9.04.


 


24

















 


“Paying
Guarantor” has the
meaning assigned to such term in Section 10.10.


 


“PBGC” means the
Pension Benefit Guaranty Corporation referred to and defined in ERISA and any
successor entity performing similar functions.


 


“Perfection Certificate”
shall mean a certificate in the form of Exhibit I to the Security
Agreement or any other form approved by the Agent.


 


“Permitted Asset Swap”
means the concurrent purchase and sale or exchange of Related Business Assets
or a combination of Related Business Assets and cash or Cash Equivalents
between the Borrower or any of its Restricted Subsidiaries and another Person
that is not the Borrower or any of its Restricted Subsidiaries; provided
that any cash or Cash Equivalents received must be applied in accordance with Section 2.20.


 


“Permitted Collateral
Liens” means:


 


(a) Liens securing any
Other Pari Passu Lien Obligations; provided, however, that, at
the time of incurrence and after giving pro forma effect thereto, the
Consolidated Secured Debt Ratio would be no greater than 3.75 to 1.00;


 


(b) Liens existing on
the Closing Date;


 


(c) Pari Passu Liens;


 


(d) Liens described in
clauses (c), (d), (f), (h), (i), (l), (m), (o), (q) (but only with respect
to clauses (h), (i) and (r) (but only with respect to Section 6.01(b)(vi) referred
to therein) referred to therein), (r) (but only with respect to Sections
6.01(b)(vi) and (b)(xxii)(A) referred to therein), (t), (u) and (aa)
(but only with respect to obligations secured by Liens described in
clauses (a) or (c) set forth above) of the definition of “Permitted
Liens”; and


 


(e) Liens on the Term
Loan First Lien Collateral in favor of the Agent relating to the Agent’s
administrative expenses with respect to the Term Loan First Lien Collateral.


 


“Permitted Debt” has
the meaning assigned to such term in Section 6.01.


 


“Permitted Holders” means
each of the Sponsors, the Co-Investors and Management Stockholders and any
group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act, or any successor provision) of which any of the foregoing are
members; provided that,
in the case of such group and without giving effect to the existence of such
group or any other group, the Sponsors, the Co-Investors and Management
Stockholders, collectively, have beneficial ownership of more than 50% of the
total voting power of the Voting Stock of the Borrower or any of its direct or
indirect parent companies.  Any Person or
group whose acquisition of beneficial ownership constitutes a Change of Control
in respect of which a Change of Control Offer is made in accordance with Section 2.19
will thereafter, together with its Affiliates, constitute an additional
Permitted Holder.


 


“Permitted Investments”
means:


 


(a) any Investment in the Borrower or any Restricted Subsidiary;


 


(b) any Investment in
cash and Cash Equivalents or Investment Grade Securities;


 


25

















 


(c) (i) any
Investment by the Borrower or any Restricted Subsidiary of the Borrower in a
Person that is engaged in a Similar Business if as a result of such Investment (A) such
Person becomes a Restricted Subsidiary of the Borrower or (B) such Person,
in one transaction or a series of related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Borrower or a Restricted Subsidiary of the
Borrower, and (ii) any Investment held by such Person;


 


(d) any Investment in
securities or other assets not constituting cash, Cash Equivalents or
Investment Grade Securities and received in connection with an Asset Sale made
pursuant to Section 6.06 or any other disposition of assets not
constituting an Asset Sale;


 


(e) any Investment
existing on the Closing Date or made pursuant to legally binding written
commitments in existence on the Closing Date;


 


(f) loans and advances
to, and guarantees of Indebtedness of, employees not in excess of $10,000,000
outstanding at any one time, in the aggregate;


 


(g) any Investment
acquired by the Borrower or any Restricted Subsidiary (i) in exchange for
any other Investment or accounts receivable held by the Borrower or any such Restricted
Subsidiary in connection with or as a result of a bankruptcy, workout,
reorganization or recapitalization of the Person in which such other Investment
is made or which is the obligor with respect to such accounts receivable or (ii) as
a result of a foreclosure by the Borrower or any Restricted Subsidiary with
respect to any secured Investment or other transfer of title with respect to
any secured Investment in default;


 


(h) Hedging Obligations
permitted under Section 6.01(b)(xii);


 


(i) loans and advances
to officers, directors and employees for business-related travel expenses,
moving expenses and other similar expenses, in each case incurred in the
ordinary course of business or consistent with past practice or to fund such
Person’s purchase of Equity Interests of the Borrower or any direct or indirect
parent company thereof under compensation plans approved by the Board of
Directors of the Borrower in good faith;


 


(j) Investments the payment for which
consists of Equity Interests of the Borrower, or any of its direct or indirect parent companies
(exclusive of Disqualified Stock); provided  that such Equity Interests will not increase the amount available for
Restricted Payments under Section 6.04(a)(iii);


 


(k) guarantees of
Indebtedness permitted under Section 6.01 and performance guarantees in
the ordinary course of business;


 


(l) any transaction to the
extent it constitutes an investment that is permitted and made in accordance
with the provisions of Section 6.05(b) (other than any transaction
set forth in clauses (ii), (vi) and (xi) of Section 6.05(b));


 


(m) Investments consisting
of purchases and acquisitions of inventory, supplies, material or equipment or
the licensing or contribution of intellectual property pursuant to joint
marketing arrangements with other Persons;


 


(n) Investments in a Similar
Business having an aggregate fair market value, taken together with all other
Investments made pursuant to this clause (n) that are at that time 


 


26

















 


outstanding (without giving
effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of
such sale do not consist of cash or marketable securities), not to exceed the
greater of (x) $100,000,000 and (y) 1.50% of Total Assets at the time of
such Investment (with the fair market value of each Investment being measured
at the time made and without giving effect to subsequent changes in value);


 


(o) Investments relating to
a Receivables Facility; provided
that in the case of Receivables Facilities established after the Closing Date,
such Investments are necessary or advisable (in the good faith determination of
the Borrower) to effect such Receivables Facility; and


 


(p) additional Investments
having an aggregate fair market value, taken together with all other
Investments made pursuant to this clause (p) that are at that time outstanding
(without giving effect to the sale of an Unrestricted Subsidiary to the extent
the proceeds of such sale do not consist of cash or marketable securities), not
to exceed $150,000,000 (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value)


 


“Permitted Liens”
means, with respect to any Person:


 


(a) Liens to secure
Indebtedness incurred under Sections 6.01(b)(i) or (b)(ii), the 2008
Notes and the 2028 Debentures (and, in each case, any related obligations);


 


(b) pledges or deposits
by such Person under workmen’s compensation laws, unemployment insurance laws or
similar legislation, or good faith deposits to secure bids, tenders, contracts
(other than for the payment of Indebtedness) or leases to which such Person is
a party, or deposits to secure public or statutory obligations of such Person
or deposits of cash or U.S. government bonds to secure surety or appeal bonds
to which such Person is a party, or deposits as security for contested taxes or
import duties or for the payment of rent, in each case incurred in the ordinary
course of business;


 


(c) Liens imposed by
law, such as carriers’, warehousemen’s and mechanics’ Liens and other similar
Liens, in each case, for sums not yet overdue for a period of more than thirty
(30) days or being contested in good faith by appropriate proceedings or
other Liens arising out of judgments or awards against such Person with respect
to which such Person shall then be proceeding with an appeal or other
proceedings for review, if adequate reserves with respect thereto are
maintained on the books of such Person in accordance with GAAP;


 


(d) Liens for taxes,
assessments or other governmental charges or claims not yet overdue for a
period of more than thirty (30) days or payable or subject to penalties
for nonpayment or which are being contested in good faith by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are
maintained on the books of such Person in accordance with GAAP;


 


(e) Liens in favor of
issuers of performance and surety bonds or bid bonds or with respect to other
regulatory requirements or letters of credit issued pursuant to the request of
and for the account of such Person in the ordinary course of its business;


 


(f) minor survey
exceptions, minor encumbrances, easements or reservations of, or rights of
others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real properties or Liens 


 


27

















 


incidental
to the conduct of the business of such Person or to the ownership of its
properties, in each case, which were not incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person;


 


(g) Liens existing on
the Closing Date;


 


(h) Liens on property or shares of stock
of a Person at the time such Person becomes a subsidiary; provided  that  such Liens are not created or incurred in connection with, or in
contemplation of, such other Person becoming such a subsidiary; provided,  further,  that such
Liens may not extend to any other property owned by the Borrower or any Restricted
Subsidiary;


 


(i) Liens on property
at the time the Borrower or a Restricted Subsidiary acquired the property,
including any acquisition by means of a merger or consolidation with or into the
Borrower or any Restricted Subsidiary; provided that such Liens are not created or incurred in
connection with, or in contemplation of, such acquisition; provided,  further,  that the Liens may not extend to any
other property owned by the Borrower or any Restricted Subsidiary;


 


(j) Liens securing
Indebtedness or other obligations of a Restricted Subsidiary owing to the
Borrower or another Restricted Subsidiary permitted to be incurred in
accordance with Section 6.01;


 


(k) Liens on specific items
of inventory or other goods and proceeds of any Person securing such Person’s
obligations in respect of bankers’ acceptances issued or created for the
account of such Person to facilitate the purchase, shipment or storage of such inventory
or other goods;


 


(l) leases and subleases
granted to others in the ordinary course of business which do not materially
interfere with the ordinary conduct of the business of the Borrower or any of
the Restricted Subsidiaries and do not secure any Indebtedness;


 


(m) Liens arising from
financing statement filings under the UCC or similar state laws regarding
operating leases entered into by the Borrower and its Restricted Subsidiaries
in the ordinary course of business;


 


(n) Liens in favor of the
Borrower or any Subsidiary Guarantor;


 


(o) Liens on inventory or
equipment of the Borrower or any Restricted Subsidiary granted in the ordinary
course of business to the Borrower’s client at which such inventory or
equipment is located;


 


(p) Liens on accounts
receivable and related assets incurred in connection with a Receivables
Facility;


 


(q) Liens to secure any refinancing,
refunding, extension, renewal or replacement (or successive refinancing,
refunding, extensions, renewals or replacements) as a whole, or in part, of any
Indebtedness secured by any Lien referred to in clauses (a), (g), (h), (i), (r)
and (aa) of this definition; provided  that (x) such new Lien shall be limited
to all or part of the same property that secured the original Lien (plus
improvements on such property), and (y) the Indebtedness secured by such
Lien at such time is not increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of the
Indebtedness described 


 


28

















 


under clauses (a), (g),
(h), (i), (r) and (aa) of this definition at the time the original Lien
became a Permitted Lien pursuant this Agreement, and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement;


 


(r) Liens securing
Indebtedness permitted to be incurred pursuant to Section 6.01(b)(vi), (b)(xix),
(b)(xx), (b)(xxii)(A) and (b)(xxiii); provided that (A) Liens securing Indebtedness permitted
to be incurred pursuant to Section 6.01(b)(vi) do not at any time
encumber any property other than the property financed by such Indebtedness and
the proceeds and the products thereof, (B) Liens securing Indebtedness
permitted to be incurred pursuant to Section 6.01(b)(xix) are solely on
acquired property or the assets of the acquired entity, as the case may be and (C) Liens
securing Indebtedness permitted to be incurred pursuant to Section 6.01(b)(xx)
extend only to the assets of Foreign Subsidiaries;


 


(s) deposits in the ordinary
course of business to secure liability to insurance carriers;


 


(t) Liens securing judgments
for the payment of money not constituting an Event of Default under paragraph (h) of
Article VII, so long as such Liens are adequately bonded and any
appropriate legal proceedings that may have been duly initiated for the review
of such judgment have not been finally terminated or the period within which
such proceedings may be initiated has not expired;


 


(u) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods in the ordinary
course of business;


 


(v) Liens (i) of a
collection bank arising under Section 4-210 of the UCC on items in the
course of collection, (ii) attaching to commodity trading accounts or
other commodity brokerage accounts incurred in the ordinary course of business
and (iii) in favor of banking institutions arising as a matter of law
encumbering deposits (including the right of set-off) and which are within the
general parameters customary in the banking industry;


 


(w) Liens that are
contractual rights of set-off (i) relating to the establishment of
depository relations with banks not given in connection with the issuance of
Indebtedness, (ii) relating to pooled deposit or sweep accounts of the
Borrower or any of its Restricted Subsidiaries to permit satisfaction of
overdraft or similar obligations incurred in the ordinary course of business of
the Borrower and its Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements entered into with customers of the Borrower or any
of its Restricted Subsidiaries in the ordinary course of business;


 


(x) Liens encumbering
reasonable customary initial deposits and margin deposits and similar Liens
attaching to commodity trading accounts or other brokerage accounts incurred in
the ordinary course of business and not for speculative purposes;


 


(y) Liens deemed to exist in
connection with Investments in repurchase agreements permitted under Section 6.01;
provided  that such Liens do
not extend to any assets other than those assets that are the subject of such
repurchase agreement;


 


(z) other Liens securing
obligations incurred in the ordinary course of business which obligations do
not exceed $50,000,000 at any one time outstanding;


 


29
















 


(aa) Liens securing Hedging
Obligations, so long as the related Indebtedness is, and is permitted to be pursuant
to Section 6.02, secured by a Lien on the same property securing such
Hedging Obligations; and


 


(bb) Liens incurred to secure obligations
in respect of any
Indebtedness permitted to be incurred pursuant to Section 6.01; provided that, at the time
of incurrence and after giving pro forma effect thereto, the Consolidated
Secured Debt Ratio would be no greater than 4.00 to 1.00.


 


“Person” means any
individual, corporation, limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.


 


“Plan” means any
employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302
of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or,
if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.


 


“Preferred Stock” means
any Equity Interest with preferential rights of payment of dividends or upon
liquidation, dissolution, or winding up.


 


“Prime Rate” means
the rate of interest per annum determined from time to time by Credit Suisse as
its prime rate in effect at its principal office in New York City and
notified to the Borrower.


 


“Projections” means
the projections of the Borrower and the Subsidiaries included in the
Information Memorandum and any other projections and any forward-looking
statements of such entities furnished to the Lenders or the Agent by or on
behalf of Holdings, the Borrower or any of the Subsidiaries prior to the
Closing Date.


 


“Qualified
Proceeds” means
assets that are used or useful in, or Capital Stock of any Person engaged in, a
Similar Business; provided  that the fair market value of any such
assets or Capital Stock shall be determined by the Borrower in good faith.


 


“Receivables Facility”
means one or more receivables financing facilities, as amended, supplemented,
modified, extended, renewed, restated, refunded, replaced or refinanced from
time to time, the Indebtedness of which is non-recourse (except for standard
representations, warranties, covenants and indemnities made in connection with
such facilities) to the Borrower and its Restricted Subsidiaries pursuant to
which the Borrower or any of its Restricted Subsidiaries sells its accounts
receivable to either (a) a Person that is not a Restricted Subsidiary or (b) a
Receivables Subsidiary that in turn sells its accounts receivable to a Person
that is not a Restricted Subsidiary.


 


“Receivables Fees” means
distributions or payments made directly or by means of discounts with respect
to any participation interest issued or sold in connection with, and other fees
paid to a Person that is not a Restricted Subsidiary in connection with, any
Receivables Facility.


 


“Receivables Subsidiary”
means any subsidiary formed solely for the purpose of engaging, and that
engages only, in one or more Receivables Facilities.


 


“Refinancing Indebtedness”
has the meaning assigned to such term in Section 6.01(b)(xv).


 


“Refunding Capital Stock”
has the meaning assigned to such term in Section 6.04(b)(ii).


 


30

















 


“Register” has the
meaning assigned to such term in Section 9.04.


 


“Registration Rights
Agreement” means the Registration Rights Agreement relating to the Senior
Notes and the Senior Subordinated Notes, dated as of the Closing Date, among
the Borrower, each Subsidiary Guarantor, Credit Suisse First Boston LLC,
Deutsche Bank Securities Inc., Banc of America Securities LLC and Goldman Sachs &
Co.


 


“Regulation T” means
Regulation T of the Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof, and any successor provision
thereto.


 


“Regulation U” means
Regulation U of the Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof, and any successor provision
thereto.


 


“Regulation X”
means Regulation X of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof, and any successor
provision thereto.


 


“Related Business Assets”
means assets (other than cash or Cash Equivalents) used or useful in a Similar
Business; provided  that any assets received by the Borrower
or a Restricted Subsidiary in exchange for assets transferred by the Borrower
or a Restricted Subsidiary shall not be deemed to be Related Business Assets if
they consist of securities of a Person, unless upon receipt of the securities
of such Person, such Person would become a Restricted Subsidiary.


 


“Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, trustees, employees, agents and advisors of
such Person and such Person’s Affiliates.


 


“Required Lenders”
means at any time (i) prior to the making of the Loans on the Closing
Date, Lenders holding more than 50% of the total Commitments and (ii) thereafter,
the Lenders holding more than 50% of the aggregate principal amount of Loans
outstanding at such time.


 


“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.


 


“Responsible Officer”
of any Person means the chief executive officer, the president, any vice
president, the chief operating officer or any Financial Officer of such Person
and any other officer or similar official thereof responsible for the
administration of the obligations of such Person in respect of this Agreement,
and, as to any document delivered on the Closing Date (but subject to the
express requirements set forth in Article IV), shall include any secretary
or assistant secretary of a Loan Party. 
Any document delivered hereunder that is signed by a Responsible Officer
of a Loan Party shall be conclusively presumed to have been authorized by all
necessary corporate, partnership and/or other action on the part of such Loan
Party and such Responsible Officer shall be conclusively presumed to have acted
on behalf of such Loan Party.


 


“Restricted Investment”
means an Investment other than a Permitted Investment.


 


“Restricted Payments”
has the meaning assigned to such term in Section 6.04(a).


 


“Restricted
Subsidiary”  means, at any time, any direct or indirect subsidiary
of the Borrower (including any Foreign Subsidiary) that is not then an
Unrestricted Subsidiary; provided  that 


 


31

















 


upon the occurrence of an
Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such subsidiary
shall be included in the definition of “Restricted Subsidiary”.


 


“Retired Capital Stock”
has the meaning assigned to such term in Section 6.04(b)(ii).


 


“Revolving Facility First
Lien Collateral” has the meaning set forth in the Intercreditor Agreement.


 


“Sale and Lease-Back
Transaction” means any arrangement with any Person providing for the
leasing by the Borrower or any Restricted Subsidiary of any real or tangible
personal property, which property has been or is to be sold or transferred by the
Borrower or such Restricted Subsidiary to such Person in contemplation of such
leasing.


 


“S&P” means Standard &
Poor’s Ratings Service, a division of the McGraw-Hill Companies, Inc., and
any successor to its rating agency business.


 


“SEC” means the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any or all of its functions.


 


“Secured Hedging
Obligations” means all Hedging Obligations owing to the Agent, a Joint Lead
Arranger or a co-arranger, a Lender or any Affiliate of any of the foregoing and
with respect to which, at or prior to the time that the Hedge Agreement
relating to such Hedging Obligation is entered into, the Borrower (or another
Loan Party) and the Lender or other Person referred to above in this definition
(or Affiliate) party thereto (except in the case of the Agent) shall have
delivered written notice to the Agent that such a transaction has been entered
into and that it constitutes a Secured Hedging Obligation entitled to the
benefits of the Collateral Documents and the Intercreditor Agreement.


 


“Secured
Indebtedness” means any Indebtedness secured by a Lien.


 


“Secured Obligations”
means all Obligations, together with all Secured Hedging Obligations.


 


“Secured Parties” has
the meaning assigned to such term in the Security Agreement.


 


“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations
of the SEC promulgated thereunder.


 


“Security Agreement”
means that certain Pledge and Security and Intercreditor Agreement, dated as of
the date hereof, between the Loan Parties and the Agent, for the benefit of the
Agent and the other Secured Parties.


 


“Senior Indebtedness” means with respect to any Person (a) all
Indebtedness of such Person, whether outstanding on the Closing Date or thereafter
incurred and (b) all other obligations of such Person (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not post-filing interest is
allowed in such proceeding) in respect of Indebtedness described in clause (a) above
unless, in the case of clauses (a) and (b), the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness or other obligations are subordinate in right
of payment to the Obligations or the Loan Guarantee of such Person, as the case
may be; provided that Senior Indebtedness shall not include (i) any
obligation of such Person to the Borrower or any subsidiary or to any joint
venture in which the Borrower or any Restricted Subsidiary has an
interest,  (ii) any liability for
Federal, state, local or other Taxes owed or owing by such Person, (iii) any
accounts payable or other liability to 


 


32

















 


trade creditors in the
ordinary course of business (including guarantees thereof as instruments evidencing
such liabilities), (iv) any Indebtedness or other obligation of such
Person that is subordinate or junior in any respect to any other Indebtedness
or other obligation of such Person or (v) that portion of any Indebtedness
that at the time of incurrence is incurred in violation of this Agreement.


 


“Senior Note Documents”
means the Senior Notes Indenture and all other instruments, agreements and
other documents evidencing the Senior Notes or providing for any guarantee or
other right in respect thereof.


 


“Senior Notes” means
the Borrower’s 9%/93⁄4% Senior Notes due 2015, in an initial aggregate principal
amount of $700,000,000.


 


“Senior Notes Indenture”
means the Indenture dated as of the date hereof, among the Borrower, as issuer,
certain of its subsidiaries, as guarantors, and Wells Fargo Bank, National
Association, as trustee, pursuant to which the Senior Notes are issued.


 


“Senior Secured
Asset-Based Revolving Credit Agreement” means the Credit Agreement dated as
of the date hereof, among Holdings, Merger Sub, the subsidiaries of the
Borrower from time to time party thereto, Deutsche Bank Trust Company Americas,
as administrative agent and collateral agent, and the lenders from time to time
party thereto.


 


“Senior Secured
Asset-Based Revolving Credit Facility” means the credit facility provided
under the Senior Secured Asset-Based Revolving Credit Agreement, including any
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications,
extensions, replacements, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial paper facilities
with banks or other institutional lenders or investors that extend, replace,
refund, refinance, renew or defease any part of the loans, notes, other credit
facilities or commitments thereunder, including any such replacement, refunding
or refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof (provided that such increase in
borrowings is permitted under Section 6.01).


 


“Senior Secured Term Loan
Facility” means the credit facility provided under this Agreement,
including any guarantees, collateral documents, instruments and agreements executed
in connection therewith, and any amendments, supplements, modifications,
extensions, replacements, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial paper facilities
with banks or other institutional lenders or investors that extend, replace,
refund, refinance, renew or defease any part of the loans, notes, other credit
facilities or commitments thereunder, including any such replacement, refunding
or refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof (provided that such increase in
borrowings is permitted under Section 6.01).


 


“Senior Subordinated Notes
Indenture” means the Indenture dated as of the date hereof, among the
Borrower, as issuer, certain of its subsidiaries, as guarantors, and Wells
Fargo Bank, National Association, as trustee, pursuant to which the Senior
Subordinated Notes are issued.


 


“Senior Subordinated
Notes” means the Borrower’s 103/2% Senior Subordinated Notes due 2015, in an initial aggregate principal
amount of $500,000,000.


 


“Senior Subordinated Note
Documents” means the Senior Subordinated Notes Indenture and all other
instruments, agreements and other documents evidencing the Senior Subordinated
Notes or providing for any guarantee or other right in respect thereof.


 


33

















 


“Significant
Subsidiary”  means any Restricted Subsidiary of the
Borrower that would be a “significant subsidiary” as defined in Article 1,
Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act,
as such regulation is in effect on the date hereof.


 


“Similar
Business” means  any business conducted by the Borrower and
its Restricted Subsidiaries on the Closing Date or any business that is
similar, reasonably related, incidental or ancillary thereto.


 


“Sponsors” means
Texas Pacific Group and Warburg Pincus LLC and their respective Affiliates.


 


“Subordinated
Indebtedness” means (a) with respect to the Borrower, any Indebtedness
of the Borrower that is by its terms subordinated in right of payment to the Obligations,
and (b) with respect to any Loan Guarantor, any Indebtedness of such Loan
Guarantor that is by its terms subordinated in right of payment to the Loan
Guaranty of such Loan Guarantor.


 


“subsidiary” means,
with respect to any Person, (a) any corporation, association, or other
business entity (other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time of determination owned or controlled, directly or indirectly, by
such Person or one or more of the other subsidiaries of that Person or a
combination thereof and (b) any partnership, joint venture, limited
liability company or similar entity of which (i) more than 50% of the
capital accounts, distribution rights, total equity and voting interests or
general or limited partnership interests, as applicable, are owned or
controlled, directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person or a combination thereof whether in the form of membership,
general, special or limited partnership or otherwise, and (ii) such Person
or any Restricted Subsidiary of such Person is a controlling general partner or
otherwise controls such entity.


 


“Subsidiary” means, unless
the context otherwise requires, a Restricted Subsidiary of the Borrower.  For purposes of Sections 3.06, 3.09, 3.10,
3.15, 5.04 and 5.08 only, references to Subsidiaries shall be deemed also to be
references to Unrestricted Subsidiaries.


 


“Subsidiary Guarantor”
means each Restricted Subsidiary of the Borrower that is a Loan Party and that executes
this Agreement as a Loan Guarantor on the Closing Date and each other
Restricted Subsidiary of the Borrower that thereafter guarantees the Secured
Obligations pursuant to the terms of this Agreement.


 


“Successor Borrower”
has the meaning assigned to such term in Section 6.03(a)(i).


 


“Successor Person”
has the meaning assigned to such term in Section 6.03(c)(i).


 


“Taxes” means any and
all present or future taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority.


 


“Term Loan First Lien
Collateral” has the meaning set forth in the Intercreditor Agreement.


 


“Title Insurance Company”
means the title insurance company providing the Title Insurance Policies.


 


34
















 


“Title Insurance Policies”
means the lender’s title insurance policies issued to Agent with respect to the
Mortgaged Properties.


 


“Total
Assets”  means the total amount of all assets of the
Borrower and the Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP as shown on the most recent balance sheet of the Borrower.


 


“Transaction Costs”
means fees and expenses payable or otherwise borne by Holdings, the Borrower
and its subsidiaries in connection with the Transactions and the transactions
contemplated thereby (including redemption or other premiums payable in
connection with the redemption after the Closing Date of the 2008 Notes in
accordance with Section 5.13).


 


“Transactions” means,
collectively, (a) the execution, delivery and performance by Holdings and
Merger Sub of the Merger Agreement and the consummation of the transactions
contemplated thereby, (b) the execution, delivery and performance by the
Loan Parties of the Loan Documents to which they are a party and the making of
the Borrowings hereunder, (c) the execution, delivery and performance by
Holdings, the Borrower and the subsidiaries of the Borrower party thereto of
the New Note Documents and the issuance of the New Notes, (d) the
execution, delivery and performance of the Senior Secured Asset-Based Revolving
Credit Agreement and all other instruments, agreements and other documents
evidencing or governing the Senior Secured Asset-Based Revolving Credit
Facility or providing for any guarantee or other right in respect thereof and
the making of borrowings thereunder, (e) the execution, delivery and
performance by all parties thereto of the Intercreditor Agreement, (f) the
Existing Bank Debt Refinancing, (g) the 2008 Notes Call for Redemption, (h) the
granting of Pari Passu Liens, (i) the making of the Equity Contribution
(j) the entering into of the HSBC Arrangements and (k) the payment of the
Transaction Costs.


 


“2008 Notes” means
the 6.65% Senior Unsecured Notes due 2008 of Neiman Marcus outstanding on the
Closing Date.


 


“2008
Notes Call for Redemption” means the call for redemption of, and the deposit into a segregated
account of the estimated amount of the redemption payment related to, all
outstanding 2008 Notes in accordance with the indenture governing the 2008 Notes
and applicable law, and the securing of the 2008 Notes by the Pari Passu Liens
on the Closing Date.


 


“2028 Debentures”
means the 7.125% Senior Debentures due 2028 of Neiman Marcus outstanding on the
Closing Date.


 


“Type”, when used in
reference to any Loan or Borrowing, refers to whether the rate of interest on
such Loan, or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted LIBOR Rate or the Alternate Base Rate.


 


“UCC” means the
Uniform Commercial Code as in effect from time to time in the state of New York
or any other state the laws of which are required to be applied in connection
with the issue of perfection of security interests.


 


“Unliquidated Obligations”
means, at any time, any Secured Obligations (or portion thereof) that are
contingent in nature or unliquidated at such time, including any Secured
Obligation that is: (i) an obligation to reimburse a bank for drawings not
yet made under a letter of credit issued by it; (ii) any other obligation
(including any guarantee) that is contingent in nature at such time; or (iii) an
obligation to provide collateral to secure any of the foregoing types of
obligations, but excluding 


 


35

















 


unripened or contingent
obligations related to indemnification under Section 9.03 for which no
written demand has been made.


 


“Unrestricted Subsidiary”
means (a) any subsidiary of the Borrower that at the time of determination
is an Unrestricted Subsidiary (as designated by the Borrower, as provided
below) and (b) any subsidiary of an Unrestricted Subsidiary.


 


The Borrower may designate
any subsidiary of the Borrower (including any existing subsidiary and any newly
acquired or newly formed subsidiary) to be an Unrestricted Subsidiary unless such
subsidiary or any of its subsidiaries owns any Equity Interests or Indebtedness
of, or owns or holds any Lien on, any property of, the Borrower or any subsidiary
of the Borrower (other than any subsidiary of the subsidiary to be so
designated); provided  that (i) any Unrestricted Subsidiary
must be an entity of which shares of the capital stock or other equity
interests (including partnership interests) entitled to cast at least a
majority of the votes that may be cast by all shares or equity interests having
ordinary voting power for the election of directors or other governing body are
owned, directly or indirectly, by the Borrower, (ii) such designation
complies with Section 6.04 and (iii) each of (A) the subsidiary
to be so designated and (B) its subsidiaries has not at the time of
designation, and does not thereafter, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Borrower or any Restricted Subsidiary.


 


The Borrower may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided  that, immediately after giving effect to
such designation no Default shall have occurred and be continuing and either
(x) the Borrower could incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test described in the first paragraph
of Section 6.01 or (y) the Fixed Charge Coverage Ratio for the
Borrower and its Restricted Subsidiaries would be greater than such ratio for
the Borrower and its Restricted Subsidiaries immediately prior to such
designation, in each case on a pro forma basis taking into account such
designation.


 


Any such designation by the
Borrower shall be notified by the Borrower to the Agent by promptly delivering
to the Agent a copy of any applicable Board Resolution giving effect to such
designation and an Officers’ Certificate certifying that such designation
complied with the foregoing provisions. 
Notwithstanding the foregoing, as of the Closing Date, all of the subsidiaries
of the Borrower will be Restricted Subsidiaries, other than Neiman Marcus
Funding Corporation, Kate Spade, Gurwitch Products LLC and their respective
subsidiaries, which shall be Unrestricted Subsidiaries.


 


“USA PATRIOT Act”
means The Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of
Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended
from time to time.


 


“Voting
Stock”  of any Person as of any date means the
Capital Stock of such Person that is at the time entitled to vote in the
election of the Board of Directors of such Person.


 


“Weighted Average Life to
Maturity” means, when applied to any Indebtedness, Disqualified Stock or
Preferred Stock, as the case may be, at any date, the quotient obtained by dividing  (1) the sum of the products of the
number of years from the date of determination to the date of each successive
scheduled principal payment of such Indebtedness or redemption or similar
payment with respect to such Disqualified Stock or Preferred Stock multiplied
by the amount of such payment, by (2) the sum of all such payments.


 


36

















 


“Wholly-Owned Subsidiary”
of any Person means a subsidiary of such Person, 100% of the outstanding
Capital Stock or other ownership interests of which (other than directors’
qualifying shares) shall at the time be owned by such Person or by one or more
Wholly-Owned Subsidiaries of such Person.


 


“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I
of Subtitle E of Title IV of ERISA.


 


SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Type (e.g., a “LIBOR Rate Loan” or a “LIBOR
Rate Borrowing”).


 


SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  Unless otherwise specifically indicated, the
term “consolidated” with respect to any Person refers to such Person
consolidated with its Restricted Subsidiaries, and excludes from such
consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary
were not an Affiliate of such Person.  The
word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.


 


SECTION 1.04.  Effectuation of Transactions.  Each of the representations and warranties of
the Loan Parties contained in this Agreement (and all corresponding
definitions) are made after giving effect to the Transactions, unless the
context otherwise requires. References to the Transactions in Sections 3.02
and 3.03 shall be deemed not to include the Transactions described in clause (j)
of the definition of the term “Transactions” set forth in Section 1.01.


 


ARTICLE II


 


The Credits


 


SECTION 2.01.  Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees, severally and not jointly, to make a Loan to the
Borrower on the Closing Date, in a principal amount not to exceed its
Commitment.  Amounts prepaid or repaid in respect of Loans
may not be reborrowed.


 


SECTION 2.02.  Loans and Borrowings.  (a)  Each Loan shall be made as part of
a Borrowing consisting of Loans of the same Type made by the Lenders ratably in
accordance with their respective Commitments. 
The failure of any Lender to make any Loan required to be made by it
shall not 


 


37

















 


relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.


 


(b)  Subject to Section 2.12,
each Borrowing shall be comprised entirely of ABR Loans or LIBOR Rate Loans as
the Borrower may request in accordance herewith.  Each Lender at its option may make any LIBOR
Rate Loan by causing any domestic or foreign branch or Affiliate of such Lender
to make such Loan; provided that (i) any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement, (ii)in exercising such option, such Lender shall use
reasonable efforts to minimize any increase in the Adjusted LIBOR Rate or
increased costs to the Borrower resulting therefrom (which obligation of such
Lender shall not require it to take, or refrain from taking, actions that it
determines would result in increased costs for which it will not be compensated
hereunder or that it otherwise determines would be disadvantageous to it and in
the event of such request for costs for which compensation is provided under
this Agreement, the provisions of Section 2.13 shall apply) and (iii) such
branch or Affiliate of such Lender would not be included in clause (z) of the first
proviso to the definition of the term “Eligible Assignee” set forth in Section 1.01.


 


(c)  At the
commencement of each Interest Period for any LIBOR Rate Borrowing, such
Borrowing shall comprise an aggregate principal amount that is an integral
multiple of $1,000,000 and not less than $5,000,000.  Each ABR Borrowing when made shall be in a
minimum principal amount of $1,000,000; provided that an ABR Borrowing may be maintained
in a lesser amount equal to the difference between the aggregate principal
amount of all other Borrowings and the total amount of Loans at such time
outstanding.  Borrowings of more than one
Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of ten different Interest Periods in effect for LIBOR
Rate Borrowings at any time outstanding.


 


(d)  Notwithstanding
any other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.


 


SECTION 2.03.  Request for Borrowing on the Closing Date.  (a)  To request the making of the Loans
hereunder on the Closing Date, the Borrower shall notify the Agent of such
request either in writing by delivery of a Borrowing Request (by hand or
facsimile) signed by the Borrower or by telephone not later than 11:00 a.m.,
New York City time, two (2) Business Days before the proposed Closing Date
(or such later time as shall be acceptable to the Agent).  A telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or facsimile to
the Agent of a written Borrowing Request signed by the Borrower.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.01:


 


(i) the aggregate amount
of the requested Borrowing;


 


(ii) the date of the
Borrowing, which shall be a Business Day;


 


(iii) whether the Borrowing
is to be an ABR Borrowing or a LIBOR Rate Borrowing;


 


(iv) in the case of a
LIBOR Rate Borrowing, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Interest
Period”; and


 


(v) the location and
number of the Borrower’s account to which funds are to be disbursed.


 


38

















 


(b)  If no election as
to the Type of Borrowing is specified, then the requested Borrowing shall be an
ABR Borrowing.  If no Interest Period is
specified with respect to any LIBOR Rate Borrowing, then the Borrower shall be
deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of the Borrowing
Request in accordance with this Section, the Agent shall advise each Lender of
the details thereof and of the amount of such Lender’s Loan to be made as part
of the requested Borrowing.


 


SECTION 2.04.  Funding of the Borrowing on the Closing
Date.  (a)  Each Lender shall
make the Loan to be made by it hereunder on the Closing Date by wire transfer
of immediately available funds by 12:00 (noon), New York City time, to the
account of the Agent most recently designated by it for such purpose by notice
to the Lenders, in an amount equal to such Lender’s Applicable Percentage of
the aggregate principal amount of the Loans made on the Closing Date.


 


(b)  Unless the Agent
shall have received notice from a Lender prior to the Closing Date that such
Lender will not make available to the Agent such Lender’s share of the
Borrowing on the Closing Date, the Agent may assume that such Lender has made such
share available on the Closing Date in accordance with paragraph (a) of
this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount.  In
such event, if a Lender has not in fact made its share of the Borrowing
available to the Agent, then the applicable Lender and the Borrower severally
agree to pay to the Agent forthwith on demand (without duplication) such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to the Borrower to but excluding the date of
payment to the Agent, at (i) in the case of such Lender, the greater of
the Federal Funds Effective Rate and a rate determined by the Agent in
accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans.  If such Lender pays such amount to the Agent,
then such amount shall constitute such Lender’s Loan included in the Borrowing
on the Closing Date.  Nothing herein
shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment or to prejudice any rights which the Agent or the Borrower or any
Loan Party may have against any Lender as a result of any default by such
Lender hereunder.


 


SECTION 2.05.  Type; Interest Elections.  (a)  The Loans initially shall be of the
Type specified in the Borrowing Request and, in the case of a LIBOR Rate
Borrowing, shall have an initial Interest Period (not to exceed two (2) months’
duration) as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert
all or any portion of any Borrowing (subject to the minimum amounts for Borrowings
of the applicable Type specified in Section 2.02(c)) to a different Type
or to continue such Borrowing and, in the case of a LIBOR Rate Borrowing, may
elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.


 


(b)  To make an
election pursuant to this Section, the Borrower shall notify the Agent of such
election by telephone (i) in the case of an election to convert to or
continue as a LIBOR Rate Borrowing, not later than 11:00 a.m.,
New York City time, three (3) Business Days before the date of the
proposed conversion or continuation or (ii) in the case of an election to
convert to or continue as an ABR Borrowing, not later than 10:00 a.m., New
York City time, on the date of the proposed conversion or continuation.  Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery
or facsimile to the Agent of a written Interest Election Request in a form
approved by the Agent and signed by the Borrower.


 


39

















 


(c)  Each telephonic
and written Interest Election Request shall specify the following information
in compliance with Section 2.02:


 


(i) the Borrowing to
which such Interest Election Request applies and, if different options are
being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information to
be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);


 


(ii) the effective date
of the election made pursuant to such Interest Election Request, which shall be
a Business Day;


 


(iii) whether the
resulting Borrowing is to be an ABR Borrowing or a LIBOR Rate Borrowing; and


 


(iv) if the resulting
Borrowing is a LIBOR Rate Borrowing, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.


 


If any such Interest
Election Request requests a LIBOR Rate Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest
Period of one month’s duration.


 


(d)  Promptly following
receipt of an Interest Election Request, the Agent shall advise each Lender of
the details thereof and of such Lender’s portion of each resulting Borrowing.


 


(e)  If the Borrower
fails to deliver a timely Interest Election Request with respect to a LIBOR
Rate Borrowing prior to the end of the Interest Period applicable thereto,
then, unless such Borrowing is repaid as provided herein, at the end of such
Interest Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the Agent, at
the request of the Required Lenders, so notifies the Borrower, then, so long as
an Event of Default is continuing (i) no outstanding Borrowing may be
converted to or continued as a LIBOR Rate Borrowing and (ii) unless
repaid, each LIBOR Rate Borrowing shall be converted to an ABR Borrowing at the
end of the then current Interest Period applicable thereto.


 


SECTION 2.06.  Termination of Commitments.  The Commitments shall automatically terminate
upon earlier to occur of (i) the making of the Loans on the Closing Date
and (ii) 5:00 p.m., New York City time, on the Termination Date (as
defined in the Merger Agreement).


 


SECTION 2.07.  Repayment of Loans; Evidence of Debt.  (a)  The Borrower hereby unconditionally
promises to pay to the Agent for the account of each Lender the then unpaid
principal amount of each Loan on the Maturity Date.


 


(b)  Each Lender shall
maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each
Loan made by such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.


 


(c)  The Agent shall
maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the Type thereof and the Interest Period (if any) applicable
thereto, (ii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each 


 


40

















 


Lender hereunder and (iii) the amount of any sum received by the Agent
hereunder for the account of the Lenders and each Lender’s share thereof.


 


(d)  The entries made
in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall
be prima facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of any Lender or the Agent to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.


 


(e)  Any Lender may
request that Loans made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to such Lender and
its registered assigns and in substantially the form of Exhibit F
hereto.  Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more
promissory notes in such form payable to the payee named therein and its
registered assigns.


 


SECTION 2.08.  Optional Prepayment of Loans.  (a)  Upon prior notice in accordance
with paragraph (b) of this Section, the Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part
without premium or penalty (but subject to Section 2.14); provided
that any optional prepayment of Loans pursuant to this paragraph (a) (other
than any such prepayment that is made with Designated Asset Sale Proceeds) made
prior to the first anniversary of the Closing Date shall be accompanied by a
prepayment fee in an amount (expressed as a percentage of the principal amount
of Loans to be prepaid) equal to 1.00% of the principal amount of the Loans to
be prepaid.


 


(b)  The Borrower shall
notify the Agent by telephone (confirmed by facsimile) of any prepayment
hereunder (i) in the case of prepayment of a LIBOR Rate Borrowing, not
later than 11:00 a.m., New York City time, three (3) Business Days
before the date of prepayment or (ii) in the case of prepayment of an ABR
Borrowing, not later than 10:00 a.m., New York City time, on the day of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof
to be prepaid. Promptly following receipt of any such notice relating to a
Borrowing, the Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of a Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Borrowing shall be applied ratably to the Loans included
in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest
as required by Section 2.11.


 


SECTION 2.09.  Mandatory Prepayment of Loans.  (a)  No later than the earlier of (i) ninety
(90) days after the end of each fiscal year of the Borrower, commencing with
the fiscal year ending on July 30, 2006, and (ii) the date on which
the financial statements with respect to such period are delivered pursuant to Section 5.01(a),
the Borrower shall prepay outstanding Loans in an aggregate principal amount
equal to 50% of Excess Cash Flow for the fiscal year then ended; provided
that the amount of such prepayment shall be reduced to 25% of such Excess Cash
Flow if the Consolidated Leverage Ratio at the end of such fiscal year shall be
equal to or less than 5.00 to 1.00, but greater than 4.50 to 1.00, and (ii) such
prepayment shall not be required if the Consolidated Leverage Ratio at the end
of such fiscal year shall be equal to or less than 4.50 to 1.00.


 


(b)  The Borrower shall
deliver to the Agent, at the time of each prepayment required under this Section 2.09,
(i) a certificate signed by a Financial Officer of the Borrower setting
forth in reasonable detail the calculation of the amount of such prepayment and
(ii) to the extent practicable, at least three (3) days prior written
notice of such prepayment. Each notice of prepayment shall specify the 


 


41

















 


prepayment date, the Type of each Loan being prepaid and the principal
amount of each Loan (or portion thereof) to be prepaid. Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing. Prepayments shall be accompanied by accrued interest as required by Section 2.11.
All prepayments of Borrowings under this Section 2.09 shall be subject to Section 2.14,
but shall otherwise be without premium or penalty.


 


SECTION 2.10.  Fees. 
The Borrower agrees to pay to the Agent, for its own account, the agency
fees set forth in the Fee Letter, as amended, restated, supplemented or otherwise
modified from time to time, or such agency fees as may otherwise be separately
agreed upon by the Borrower and the Agent payable in the amounts and at the
times specified therein or as so otherwise agreed upon.


 


SECTION 2.11.  Interest.  (a)  The Loans comprising each
ABR Borrowing shall bear interest at the Alternate Base Rate plus the
Applicable Rate.


 


(b)  The Loans
comprising each LIBOR Rate Borrowing shall bear interest at the Adjusted LIBOR
Rate for the Interest Period in effect for such Borrowing plus the Applicable
Rate.


 


(c)  Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section or
(ii) in the case of any other amount, 2% plus the rate applicable to ABR
Loans as provided in paragraph (a) of this Section.


 


(d)  Accrued interest
on each Loan shall be payable in arrears on each Interest Payment Date for such
Loan; provided that (i) interest accrued pursuant to paragraph (c) of
this Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan, accrued interest on the principal amount
repaid or prepaid shall be payable on the date of such repayment or prepayment
and (iii) in the event of any conversion of any LIBOR Rate Loan prior to
the end of the current Interest Period therefor, accrued interest on such Loan
shall be payable on the effective date of such conversion.


 


(e)  All interest
hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate at times when the
Alternate Base Rate is based on the Prime Rate shall be computed on the basis
of a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).  The applicable
Alternate Base Rate, Adjusted LIBOR Rate or LIBOR Rate shall be determined by
the Agent, and such determination shall be conclusive absent manifest error.


 


SECTION 2.12.  Alternate Rate of Interest.  If prior to the commencement of any Interest
Period for a LIBOR Rate Borrowing:


 


(a) the Agent
determines (which determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR
Rate or the LIBOR Rate, as applicable, for such Interest Period; or


 


(b) the Agent is
advised by the Required Lenders that the Adjusted LIBOR Rate or the LIBOR Rate,
as applicable, for such Interest Period will not adequately and fairly reflect
the cost to such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period;


 


42

















 


then the Agent shall promptly
give notice thereof to the Borrower and the Lenders by telephone or facsimile
as promptly as practicable thereafter and, until the Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, any Interest Election Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a LIBOR Rate Borrowing shall
be ineffective and such Borrowing shall be converted to an ABR Borrowing on the
last day of the Interest Period applicable thereof.


 


SECTION 2.13.  Increased Costs.  (a)  If any Change in Law shall:


 


(i) impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBOR
Rate); or


 


(ii) impose on any
Lender or the London interbank market any other condition affecting this
Agreement or LIBOR Rate Loans made by such Lender;


 


and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any LIBOR Rate Loan or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or otherwise), then,
following delivery of the certificate contemplated by paragraph (c) of
this Section, the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered (except for any Taxes, which shall be dealt with exclusively
pursuant to Section 2.15).


 


(b)  If any Lender
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender’s capital or on
the capital of such Lender’s holding company, if any, as a consequence of this
Agreement or the Loans made by such Lender to a level below that which such
Lender or such Lender’s holding company could have achieved but for such Change
in Law other than due to Taxes, which shall be dealt with exclusively pursuant
to Section 2.15 (taking into consideration such Lender’s policies and the
policies of such Lender’s holding company with respect to capital adequacy),
then from time to time following delivery of the certificate contemplated by
paragraph (c) of this Section the Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered.


 


(c)  A certificate of a
Lender setting forth the amount or amounts necessary to compensate such Lender
or its holding company as specified in paragraph (a) or (b) of
this Section and setting forth in reasonable detail the manner in which
such amount or amounts was determined shall be delivered to the Borrower and
shall be conclusive absent manifest error. 
The Borrower shall pay such Lender the amount shown as due on any such
certificate within ten (10) days after receipt thereof.


 


(d)  Failure or delay
on the part of any Lender to demand compensation pursuant to this Section shall
not constitute a waiver of such Lender’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender pursuant to this
Section for any increased costs or reductions incurred more than 180 days
prior to the date that such Lender notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s
intention to claim compensation therefor; provided  further that,
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.


 


SECTION 2.14.  Break Funding Payments.  In the event of (a) the payment of any
principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto 


 


43

















 


(including as a result of an Event of Default), (b) the conversion
of any LIBOR Rate Loan other than on the last day of the Interest Period
applicable thereto, (c) the failure to borrow, convert, continue or prepay
any LIBOR Rate Loan on the date specified in any notice delivered pursuant
hereto, or (d) the assignment of any LIBOR Rate Loan other than on the
last day of the Interest Period applicable thereto as a result of a request by
the Borrower pursuant to Section 2.17, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event.  In the case
of a LIBOR Rate Loan, such loss, cost or expense to any Lender shall be deemed
to be the amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such
Loan had such event not occurred, at the Adjusted LIBOR Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which
would accrue on such principal amount for such period at the interest rate
which such Lender would bid were it to bid, at the commencement of such period,
for dollar deposits of a comparable amount and period from other banks in the
eurodollar market.  A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section and the basis therefor and setting forth
in reasonable detail the manner in which such amount or amounts was determined
shall be delivered to the Borrower and shall be conclusive absent manifest
error.  The Borrower shall pay such
Lender the amount shown as due on any such certificate within ten (10) days
after receipt thereof.


 


SECTION 2.15.  Taxes. 
(a)  Any and all payments by or on account of any obligation of any
Loan Party hereunder shall be made free and clear of and without deduction for
any Indemnified Taxes or Other Taxes; provided that if a Loan Party
shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Agent or Lender (as applicable)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Loan Party shall make such deductions and (iii) such
Loan Party shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.  If at any time a Loan Party is required by
applicable law to make any deduction or withholding from any sum payable
hereunder, such Loan Party shall promptly notify the relevant Lender or Agent
upon becoming aware of the same. In addition, each Lender or Agent shall
promptly notify a Loan Party upon becoming aware of any circumstances as a
result of which a Loan Party is or would be required to make any deduction or
withholding from any sum payable hereunder.


 


(b)  In addition, the
Loan Parties shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.


 


(c)  Each Loan Party
shall indemnify the Agent and each Lender, within ten (10) days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Agent or such Lender, as applicable, on or with respect to
any payment by or on account of any obligation of such Loan Party hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender, or by the Agent on
its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.


 


(d)  As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by a Loan
Party to a Governmental Authority, such Loan Party shall deliver to the Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Agent.


 


44
















 


(e)  Any Foreign Lender
that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which the Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this Agreement
shall deliver to the Borrower (with a copy to the Agent), at the time or times
prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.  In particular, on or prior
to the date which is ten (10) Business Days after the Closing Date, each
Foreign Lender shall deliver to the Borrower (with a copy to the Agent) two
duly signed, properly completed copies of either IRS Form W- 8BEN or
any successor thereto (relating to such Foreign Lender and entitling it to an
exemption from, or reduction of, United States withholding tax on all payments
to be made to such Foreign Lender by the Borrower or any other Loan Party
pursuant to this Agreement or any other Loan Document) or IRS Form W-8ECI
or any successor thereto (relating to all payments to be made to such Foreign
Lender by the Borrower or any other Loan Party pursuant to this Agreement or any
other Loan Document) or such other evidence reasonably satisfactory to the
Borrower and the Agent that such Foreign Lender is entitled to an exemption
from, or reduction of, United States withholding tax, including any exemption
pursuant to Section 871(h) or 881(c) of the Code, and in the
case of a Foreign Lender claiming such an exemption under Section 881(c) of
the Code, a certificate that establishes in writing to the Borrower and the
Agent that such Foreign Lender is not (i) a “bank” as defined in Section 881(c)(3)(A) of
the Code, (ii) a 10-percent stockholder within the meaning of Section 871(h)(3)(B) of
the Code, or (iii) a controlled foreign corporation related to the
Borrower with the meaning of Section 864(d) of the Code.  Thereafter and from time to time, each such
Foreign Lender shall (A) promptly submit to the Borrower (with a copy to
the Agent) such additional duly completed and signed copies of one or more of
such forms or certificates (or such successor forms or certificates as shall be
adopted from time to time by the relevant United States taxing authorities) as
may then be available under then current United States Laws and regulations to
avoid, or such evidence as is reasonably satisfactory to the Borrower and the
Agent of any available exemption from, or reduction of, United States
withholding taxes in respect of all payments to be made to such Foreign Lender
by the Borrower or other Loan Party pursuant to this Agreement, or any other
Loan Document, in each case, (1) on or before the date that any such form,
certificate or other evidence expires or becomes obsolete, (2) after the
occurrence of any event requiring a change in the most recent form, certificate
or evidence previously delivered by it to the Borrower and (3) from time
to time thereafter if reasonably requested by the Borrower or the Agent, and (B) promptly
notify the Borrower and the Administrative Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.


 


(f)  Each Lender or Agent
that is a United States person, agrees to complete and deliver to the Borrower
a statement signed by an authorized signatory of the Lender to the effect that
it is a United States person together with a duly completed and executed copy
of Internal Revenue Service Form W-9 or successor form.


 


(g)  If the Agent or a
Lender determines, in good faith in its sole discretion, that it has received a
refund of any Indemnified Taxes or Other
Taxes as to which it has been indemnified by a Loan Party or with respect to
which such Loan Party has paid additional amounts pursuant to this Section 2.15,
it shall pay over such refund to such Loan Party (but only to the extent of
indemnity payments made, or additional amounts paid, by such Loan Party under
this Section 2.15 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Agent or such Lender (including
any Taxes imposed with respect to such refund) as is determined by the Agent or
such Lender in good faith in its sole discretion, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that such
Loan Party, upon the request of the Agent or such Lender, agrees to repay as
soon as reasonably practicable the amount paid over to such Loan Party (plus
any penalties, interest or other charges imposed by the relevant Governmental 


 


45

















 


Authority) to the Agent or such Lender in the
event the Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the
Agent or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to such Loan Party or any
other Person.


 


(h)  If the Borrower
determines in good faith that a reasonable basis exists for contesting any
Indemnified Taxes or Other Taxes for which additional amounts have been paid
under this Section 2.15, the relevant Lender or Agent shall cooperate with
the Borrower in challenging such Indemnified Taxes or Other Taxes, at the
Borrower’s expense, if so requested by the Borrower in writing.


 


SECTION 2.16.  Payments Generally; Allocation of
Proceeds; Sharing of Set-offs.  (a) 
Unless otherwise specified, the Borrower shall make each payment required to be
made by it hereunder (whether of principal, interest or fees, or of amounts
payable under Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00
(noon), New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. 
Any amounts received after such time on any date may, in the discretion
of the Agent, be deemed to have been received on the next succeeding Business
Day for purposes of calculating interest thereon.  All such payments shall be made to the Agent
to the applicable account designated to the Borrower by the Agent, except that
payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly
to the Persons entitled thereto.  The Agent
shall distribute any such payments received by it, except as otherwise
provided, for the account of any other Person to the appropriate recipient
promptly following receipt thereof.  If
any payment hereunder shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable
for the period of such extension.  All
payments hereunder shall be made in Dollars. 
Any payment required to be made by the Agent hereunder shall be deemed
to have been made by the time required if the Agent shall, at or before such
time, have taken the necessary steps to make such payment in accordance with
the regulations or operating procedures of the clearing or settlement system
used by the Agent to make such payment.


 


(b)  Subject in all
respects to the provisions of the Intercreditor Agreement, all proceeds of
Collateral received by the Agent after an Event of Default has occurred and is
continuing and all or any portion of the Loans shall have been accelerated
hereunder pursuant to Article VII, shall upon election by the Agent or at
the direction of the Required Lenders be applied, first, to, ratably,
pay any fees, indemnities, or expense reimbursements then due to the Agent from
the Borrower (other than in connection with Hedging Obligations), second,
ratably, to pay any fees or expense reimbursements then due to the Lenders from
the Borrower (other than in connection with Hedging Obligations), third,
to pay interest due and payable in respect of the Loans, ratably, fourth,
to prepay principal on the Loans and any amounts owing with respect to Hedging
Obligations, ratably, fifth, to the payment of any other Secured
Obligation due to the Agent or any Lender by the Borrower, sixth, as
provided for under the Intercreditor Agreement, and seventh, to the
Borrower or as the Borrower shall direct.


 


(c)  If any Lender
shall, by exercising any right of set-off or counterclaim or otherwise, obtain
payment in respect of any principal of or interest on any of its Loans
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans and accrued interest thereon than the proportion
received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Loans of other
Lenders at such time outstanding to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective
Loans; provided that (i) if any such participations are purchased and all
or any portion of the payment giving rise thereto is recovered,  such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this paragraph shall not be construed to apply
to any payment made by the Borrower pursuant to and in accordance with the
express 


 


46

















 


terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any subsidiary
or Affiliate thereof (as to which the provisions of this paragraph shall
apply).  The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.


 


(d)  Unless the Agent
shall have received notice from the Borrower prior to the date on which any
payment is due to the Agent for the account of the Lenders that the Borrower
will not make such payment, the Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due.  In such event, if the Borrower has not in
fact made such payment, then each of the Lenders severally agrees to repay to
the Agent forthwith on demand the amount so distributed to such Lender with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the Agent
in accordance with banking industry rules on interbank compensation.


 


(e)  If any Lender
shall fail to make any payment required to be made by it pursuant to Sections
2.03(a), 2.16(c) or 9.03(c), then the Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Agent for the account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are
fully paid.


 


SECTION 2.17.  Mitigation Obligations; Replacement of
Lenders.  (a)  If any Lender
requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental Authority
for the account of any Lender pursuant to Section 2.15, then such Lender
shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as
applicable, in the future and (ii) would not subject such Lender to any
material unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender in any material respect.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.


 


(b)  If any Lender
requests compensation under Section 2.13, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for
the account of any Lender pursuant to Section 2.15, then the Borrower may,
at its sole expense and effort, upon notice to such Lender and the Agent, replace
such Lender by requiring such Lender to assign and delegate (and such Lender
shall be obligated to assign and delegate), without recourse (in accordance
with and subject to the restrictions contained in Section 9.04), all its
interests, rights and obligations under this Agreement to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrower shall have
received the prior written consent of the Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the
case of any such assignment resulting from a claim for compensation under Section 2.13
or payments required to be made pursuant to Section 2.15, such assignment
will result in a reduction in such compensation or payments.  A Lender shall not be required to make any
such assignment and delegation 


 


47

















 


if, prior thereto, as a result of a waiver by such Lender or otherwise,
the circumstances entitling the Borrower to require such assignment and
delegation cease to apply.


 


SECTION 2.18.  Illegality.  If any Lender reasonably determines that any Change
in Law has made it unlawful, or that any Governmental Authority has asserted
after the Closing Date that it is unlawful, for such Lender or its applicable
lending office to make or maintain any LIBOR Rate Loans, then, on notice
thereof by such Lender to the Borrower through the Agent, any obligations of
such Lender to make or continue LIBOR Rate Loans or to convert ABR Borrowings
to LIBOR Rate Borrowings shall be suspended until such Lender notifies the Agent
and the Borrower that the circumstances giving rise to such determination no
longer exist.  Upon receipt of such
notice, the Borrower shall upon demand from such Lender (with a copy to the Agent),
either convert all LIBOR Rate Borrowings of such Lender to ABR Borrowings,
either on the last day of the Interest Period therefor, if such Lender may
lawfully continue to maintain such LIBOR Rate Borrowings to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Loans.  Upon any such prepayment or
conversion, the Borrower shall also pay accrued interest on the amount so
prepaid or converted.  Each Lender agrees
to designate a different lending office if such designation will avoid the need
for such notice and will not, in the determination of such Lender, otherwise be
disadvantageous to it.


 


SECTION 2.19.  Change of Control.  (a)  The Borrower shall (i) within thirty
(30) days following the occurrence of a Change of Control, make an offer to all
Lenders to prepay all Loans pursuant to a Change in Control Offer (as defined
in paragraph (b) of this Section 2.19) at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest to the date of prepayment, in accordance with the terms contemplated
in this Section 2.19; and (ii) prepay all the Loans of all Lenders properly
accepting such offer of prepayment in accordance with such Change of Control
Offer.


 


(b)  A “Change of
Control Offer” means a notice delivered to the Agent (which will promptly
furnish such notice to the Lenders) stating:


 


(i) that a Change of
Control has occurred and that such Lender has the right to require the Borrower
to prepay all or a portion of such Lender’s Loans at a purchase price in cash
equal to 101% of the principal amount thereof, plus accrued and unpaid interest
to the date of prepayment;


 


(ii) the Change of
Control prepayment date (which shall be no earlier than thirty (30) days nor
later than sixty (60) days from the date such notice is delivered);


 


(iii) that any Loans as
to which such offer is not properly accepted will remain outstanding and
continue to accrue interest;


 


(iv) unless the
Borrower defaults in the payment of the purchase price of any Loans as to which
the Change of Control Offer shall have been accepted, all Loans accepted for
payment pursuant to the Change of Control Offer will cease to accrue interest
on the Change of Control prepayment date;


 


(v) Lenders electing to
have any Loans purchased pursuant to a Change of Control Offer will be required
to notify the Agent prior to the close of business on the third Business Day
preceding the Change of Control prepayment date; and


 


(vi) that Lenders will
be entitled to withdraw their election to require the Borrower to prepay their
Loans; provided  that the Agent receives, not later than
the close of business on the last day of the offer period, a notice setting
forth the name of the Lender, the principal amount of Loans 


 


48

















 


tendered
for prepayment, and a statement that such Lender is withdrawing its election to
have such Loans prepaid.


 


(c)  On the prepayment
date, the Borrower shall prepay the Loans of all Lenders who accept the Change
of Control Offer at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
prepayment.  If at the time of any
prepayment pursuant to this Section 2.19 there shall be outstanding
Borrowings of different Types or LIBOR Rate Borrowings with different Interest
Periods, and if some but not all Lenders shall have accepted such Change of
Control Offer, then the aggregate amount of such prepayment shall be allocated
ratably to each outstanding Borrowing that comprises the Loans of the accepting
Lenders.  All prepayments of Loans under
this Section 2.19 shall be subject to Section 2.14.


 


(d)  Notwithstanding
the foregoing provisions of this Section, the Borrower shall be deemed to have
made a Change of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in Section 2.19(b) applicable
to a Change of Control Offer made by the Borrower and prepays all Loans as to
which offers for prepayment have been validly accepted and not withdrawn pursuant
to the terms of such Change of Control Offer.


 


(e)  A Change of
Control Offer may be made in advance of a Change of Control, conditional upon
such Change of Control, if a definitive agreement is in place for such Change
of Control at the time of making of the Change of Control Offer.


 


SECTION 2.20.  Asset Sale Offer.  (a)  Within 450 days after the Agent’s
receipt of the Net Proceeds of any Asset Sale of Term Loan First Lien
Collateral, the Borrower or the applicable Restricted Subsidiary may, at its
option, apply the Net Proceeds from such Asset Sale (i) (A) to make
an offer to the Lenders to prepay Loans or (B) to make an offer to
purchase, prepay or permanently reduce Other Pari Passu Lien Obligations
secured by a Permitted Collateral Lien; provided, however, that
in connection with any prepayment, repayment or purchase of Indebtedness
pursuant to this clause (i), the Borrower or such Restricted Subsidiary shall
permanently retire such Indebtedness and, in the case of obligations under
revolving credit facilities or other similar Indebtedness, shall
correspondingly permanently reduce commitments with respect thereto (other than
obligations owed to the Borrower or a Restricted Subsidiary); provided, further,
however, that if the Borrower or any Restricted Subsidiary shall so
reduce obligations under any such Other Pari Passu Lien Obligations, the
Borrower or such Restricted Subsidiary will, equally and ratably, reduce the
amount of Indebtedness outstanding under this Agreement by, at its option,
(I) prepaying Loans in accordance with Section 2.08 or
(II) making an offer (in accordance with the procedures set forth below
for an Asset Sale Offer) to all Lenders to prepay their Loans at 100% of the principal
amount thereof, plus
the amount of accrued and unpaid interest on the principal amount of Loans to
be prepaid; or (ii) to acquire Additional Assets; provided, however,
that such Additional Assets are concurrently with their acquisition added to the
Collateral securing the Secured Obligations in accordance with the provisions
of Section 5.11 and the Collateral Documents, and provided, further,
that to the extent such Additional Assets constitute the Capital Stock of any
Person, the assets of such Person that may be used or useful in a Similar
Business are, in accordance with the provisions of Section 5.11 and the Collateral
Documents, concurrently with the acquisition added to the Collateral securing
the Secured Obligations.  Notwithstanding
the foregoing, if during such 450-day period the Borrower or a Restricted
Subsidiary enters into a definitive binding agreement committing it to apply
such Net Proceeds of any Asset Sale of Term Loan First Lien Collateral to
acquire Additional Assets pursuant to clause (ii) of this paragraph
(a), such 450-day period will be extended with respect to the amount of Net
Proceeds so committed until such Net Proceeds are required to be applied in 


 


49

















 


accordance with such agreement (but such extension will in no event be
for a period longer than 180 days) (or, if earlier, the date of termination of
such agreement).


 


(b)  Within
450 days after any of the Borrower’s or any Restricted Subsidiary’s
receipt of the Net Proceeds of any Asset Sale (other than an Asset Sale of Term
Loan First Lien Collateral), the Borrower or such Restricted Subsidiary may, at
its option, apply the Net Proceeds from such Asset Sale (i) to permanently
reduce (A) obligations under any Senior Indebtedness of the Borrower or
any Subsidiary Guarantor and, in the case of obligations under revolving credit
facilities or other similar Indebtedness, to correspondingly permanently reduce
commitments with respect thereto (other than obligations owed to the Borrower
or a Restricted Subsidiary); provided
that if the Borrower or any Restricted Subsidiary shall so reduce obligations
under any Senior Indebtedness (other than Senior Indebtedness under the Senior
Secured Asset-Based Revolving Credit Facility secured by the Revolving Facility
First Lien Collateral), the Borrower or such Subsidiary Guarantor will, equally
and ratably, reduce the amount of Indebtedness outstanding under this Agreement
by, at its option, (I) prepaying Loans in accordance with Section 2.08
or (II) making an offer (in accordance with the procedures set forth below
for an Asset Sale Offer) to all Lenders to prepay their Loans at 100% of the
principal amount thereof, plus
the amount of accrued and unpaid interest on the principal amount of Loans to
be prepaid, or (B) Indebtedness of a Restricted Subsidiary that is not a Subsidiary
Guarantor, other than Indebtedness owed to the Borrower or another Restricted
Subsidiary; or (ii) to an investment in (A) any one or more
businesses; provided  that such investment in any business is
in the form of the acquisition of Capital Stock and results in the Borrower or
any Restricted Subsidiary owning an amount of the Capital Stock of such
business such that it constitutes a Restricted Subsidiary, (B) properties,
(C) capital expenditures or (D) acquisitions of other assets, that in
each of (A), (B), (C) and (D), are used or useful in a Similar Business or
replace the businesses, properties and assets that are the subject of such
Asset Sale.  Notwithstanding the foregoing,
if during such 450-day period the Borrower or a Restricted Subsidiary enters
into a definitive binding agreement committing it to apply such Net Proceeds in
accordance with the requirements of clause (ii) of this paragraph (b),
such 450-day period will be extended with respect to the amount of Net Proceeds
so committed until such Net Proceeds are required to be applied in accordance
with such agreement (but such extension will in no event be for a period longer
than 180 days) (or, if earlier, until termination of such agreement).


 


(c)  Any Net Proceeds
from an Asset Sale that are not invested or applied in accordance with
paragraph (a) or (b) of this Section 2.20 within 450 days
from the date of the receipt of such Net Proceeds will be deemed to constitute “Excess
Proceeds”.  When the aggregate amount
of Excess Proceeds exceeds $45,000,000, the Borrower shall (i) make an
offer within ten (10) Business Days after the date that Excess Proceeds
exceed $45,000,000 to all Lenders and, if required by the terms of any other
Senior Indebtedness, to the holders of such Senior Indebtedness (other than
with respect to Hedging Obligations) in accordance with the procedures set
forth below for prepayment or an Asset Sale Offer, to prepay the maximum
aggregate principal amount of Loans and prepay or purchase the maximum
principal amount of such Senior Indebtedness that is an integral multiple of
$1,000 that may be purchased out of the Excess Proceeds at a prepayment or purchase
price in cash equal to 100% of the principal amount thereof, plus accrued and
unpaid interest to the date of prepayment or repurchase, in accordance with the
terms contemplated in this Section 2.20; and (ii) prepay all the
Loans of Lenders properly accepting such offer of prepayment in accordance with
such Asset Sale Offer (subject to the proration provisions set forth in
paragraph (f) of this Section 2.20).  The Borrower may satisfy the foregoing
obligations with respect to any Net Proceeds from an Asset Sale by making an
Asset Sale Offer with respect to such Net Proceeds prior to the expiration of
the relevant 450 day period or with respect to Excess Proceeds of $45,000,000
or less.


 


50

















 


(d)  An “Asset Sale
Offer” means a notice delivered to the Agent (which will promptly furnish
such notice to the Lenders) stating:


 


(i) that an Asset Sale Offer
is being made pursuant to this Section 2.20 and that such Lender has the
right to require the Borrower to prepay all or a portion of such Lender’s Loans
(subject to the proration provisions set forth in paragraph (f) of
this Section 2.20) at a purchase price in cash equal to 100% of the
principal amount thereof, plus accrued and unpaid interest to the date of
prepayment; and


 


(ii) the prepayment
date (which shall be no earlier than thirty (30) days nor later than sixty (60)
days from the date such notice is mailed).


 


(e)  On the prepayment
date, the Borrower (subject to the proration provisions set forth in
paragraph (f) of this Section 2.20) shall prepay the Loans of
all Lenders who accept the Asset Sale Offer at a purchase price in cash equal
to 100% of the principal amount thereof, plus accrued and unpaid interest to
the date of prepayment.  If at the time
of any prepayment pursuant to this Section 2.20 there shall be outstanding
Borrowings of different Types or LIBOR Rate Borrowings with different Interest
Periods, and if some but not all Lenders shall have accepted such Asset Sale
Offer, then the aggregate amount of such prepayment shall be allocated ratably
to each outstanding Borrowing that comprises the Loans of the accepting
Lenders.  All prepayments of Loans under
this Section 2.20 shall be subject to Section 2.14.


 


(f)  To the extent that
the aggregate amount of Loans and other Senior Indebtedness tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Borrower may use
any remaining Excess Proceeds for general corporate purposes, subject to the
terms of this Agreement.  If the
aggregate principal amount of Loans and other Senior Indebtedness tendered
pursuant to an Asset Sale Offer exceeds the amount of Excess Proceeds, the
Borrower shall select or cause to be selected the Loans and such other Senior
Indebtedness to be prepaid or purchased on a pro rata basis based on the
principal amount (or accreted value) of the Loans and other Senior Indebtedness
tendered.  Upon completion of any such
Asset Sale Offer, the amount of Excess Proceeds related to such Asset Sale
Offer shall be reset at zero.


 


(g)  Pending the final
application of any Net Proceeds pursuant to this Section 2.20, the
Borrower or the applicable Restricted Subsidiary may apply such Net Proceeds
temporarily to reduce Indebtedness outstanding under a revolving credit
facility or otherwise invest such Net Proceeds in any manner not prohibited
hereunder.


 


SECTION 2.21.  Repricing Protection.  In the event that, prior to the first
anniversary of the Closing Date, any Lender receives a Repricing Prepayment (as
defined below), then, at the time thereof, the Borrower shall pay to such
Lender a prepayment premium equal to 1.00% of the amount of such Repricing
Prepayment.  As used herein, with respect
to any Lender, a “Repricing Prepayment” is the amount of principal of
the Loans of such Lender that is received by such Lender as a result of the
mandatory assignment of such Loans in the circumstances described in Section 9.02(e) following
the failure of such Lender to consent to an amendment of this Agreement that
would have the effect of reducing the Applicable Rate with respect to such
Loans.


 


51

















 


ARTICLE III


 


Representations and Warranties


 


Each Loan Party represents
and warrants to the Lenders that:


 


SECTION 3.01.  Organization; Powers.  Each of the Loan Parties and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.


 


SECTION 3.02.  Authorization; Enforceability.  The Transactions are within each applicable
Loan Party’s corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action of such Loan Party.  Each Loan Document to which each Loan Party
is a party have been duly executed and delivered by such Loan Party and is a
legal, valid and binding obligation of such Loan Party, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors’ rights generally and to general principles of
equity.


 


SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except such as have been obtained or made and are
in full force and effect, except for filings necessary to perfect Liens created
pursuant to the Loan Documents and the ABL Security Documents and except for
filings in connection with consummating the Merger and filings as may be
required under the Exchange Act and applicable stock exchange rules in
connection therewith, (b) will not violate any Requirement of Law
applicable to any Loan Party or any of its Subsidiaries, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon any Loan Party or any of its Subsidiaries or its
assets, or (except for the Merger Consideration and the 2008 Notes Call for
Redemption) give rise to a right thereunder to require any payment to be made
by any Loan Party or any of its Subsidiaries, and (d) will not result in
the creation or imposition of any Lien on any asset of any Loan Party or any of
its Subsidiaries, except Liens created pursuant to the Loan Documents and the ABL
Security Documents; except, in each case other than with respect to the
creation of Liens, to the extent that any such violation, default or right, or
any failure to obtain such consent or approval or to take any such action,
would not reasonably be expected to result in a Material Adverse Effect.


 


SECTION 3.04.  Financial Condition; No Material Adverse
Change.  (a)  The Borrower has
heretofore furnished to the Lenders its consolidated balance sheet and
statements of earnings, shareholders’ equity and cash flows (i) as of and
for the fiscal years ended July 31, 2004 and July 30, 2005, each
reported on by Deloitte & Touche LLP, independent public accountants,
and (ii) to the extent possible in the exercise of the Borrower’s
commercially reasonable efforts, as of and for each subsequent fiscal month
ended at least thirty (30) days before the Closing Date, certified by its chief
financial officer.  Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to the absence of footnotes and normal year-end adjustments in the case
of the statements referred to in clause (ii) above.


 


(b)  The Borrower has
heretofore delivered to the Lenders its unaudited pro forma consolidated
balance sheet and related pro forma statements of earnings, shareholder’s
equity and cash flows as of July 30, 2005, prepared giving effect to the
Transactions as if they had occurred, with respect to such balance sheet, on
such date and, with respect to such other financial statements, on the first
day of 


 


52

















 


the 12-month period ending on such date. Such pro forma financial
statements have been prepared in good faith by the Borrower, based on the
assumptions used to prepare the pro forma financial information contained in
the Information Memorandum (which assumptions are believed by the Borrower on the
date hereof and on the Closing Date to be reasonable), are based on the best
information available to the Borrower as of the date of delivery thereof,
accurately reflect all adjustments required to be made to give effect to the
Transactions and present fairly on a pro forma basis the estimated consolidated
financial position of the Borrower and its consolidated Subsidiaries as of such
date and for such period, assuming that the Transactions had actually occurred
at such date or at the beginning of such period, as the case may be.


 


(c)  No event, change
or condition has occurred that has had, or would reasonably be expected to
have, a Material Adverse Effect, since July 30, 2005.


 


SECTION 3.05.  Properties.  (a)  As of the date of this Agreement, Schedule 3.05(a) sets
forth the address of each parcel of real property (or each set of parcels that
collectively comprise one operating property) that is owned or leased by each
Loan Party, together with a list of the lessors with respect to all such leased
property.  Schedule 3.05(a) also
identifies the principal place of business and chief executive office of each
Loan Party.  The books and records of
each Loan Party, and all of their respective chattel paper and records of
Accounts, are maintained exclusively at such locations. There is no location at
which any Loan Party has any Collateral (except for vehicles and inventory in
transit in the ordinary course of business) other than those locations
identified on Schedule 3.05(a).


 


(b)  Each of the
Borrower and each of the Subsidiaries has good and insurable fee simple title
to, or valid leasehold interests in, or easements or other limited property
interests in, all its real properties (including all Mortgaged Properties) and
has good and marketable title to its personal property and assets, in each
case, except for defects in title that do not materially interfere with its
ability to conduct its business as currently conducted or to utilize such
properties and assets for their intended purposes and except where the failure
to have such title would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. 
All such properties and assets are free and clear of Liens, other than
Liens (i) permitted by Section 6.02 or (ii) arising by operation
of law (which Liens, in the case of this clause (ii) do not
materially interfere with the ability of Holdings, the Borrower or the relevant
Subsidiary to carry on its business as now conducted or to utilize the affected
properties or assets for their intended purposes).


 


(c)  Each of the
Borrower and each of the Subsidiaries has complied with all obligations under
all leases to which it is a party, except where the failure to comply would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and all such leases are in full force and effect, except leases
in respect of which the failure to be in full force and effect would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.  Each of the Borrower and each of
the Subsidiaries enjoys peaceful and undisturbed possession under all such
leases, other than leases in respect of which the failure to enjoy peaceful and
undisturbed possession would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.


 


(d)  As of the Closing
Date, none of Holdings, the Borrower or any Subsidiary has received any notice
of, nor has any knowledge of, any pending or contemplated condemnation
proceeding affecting any of the Mortgaged Properties or any sale or disposition
thereof in lieu of condemnation.


 


(e)  To the Borrower’s
knowledge, as of the Closing Date, none of the Borrower or any Subsidiary is
obligated under any right of first refusal, option or other contractual right
to sell, assign or otherwise dispose of any Mortgaged Property or any interest
therein.


 


53

















 


(f)  Copies of
certificates of occupancy relating to each Mortgaged Property that the mortgagor
has in its possession have been delivered to the Agent as mortgagee with
respect to each Mortgaged Property.


 


(g)  Each of the
Borrower and the Subsidiaries owns or possesses, or is licensed to use, all
patents, trademarks, service marks, trade names and copyrights and all licenses
and rights with respect to the foregoing, necessary for the present conduct of
its business, without any conflict with the rights of others, and free from any
burdensome restrictions on the present conduct of its business, except where
such failure to own, possess or hold pursuant to a license or such conflicts
and restrictions would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect or except as set forth on Schedule 3.05(g).


 


SECTION 3.06.  Litigation and Environmental Matters.  (a)  Other than the Disclosed Matters,
there are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of any Loan Party,
threatened against or affecting the Loan Parties or any of their Subsidiaries (i) as
to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, would reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect or (ii) that involve
any Loan Documents or the Transactions.


 


(b)  Except for the
Disclosed Matters or any other matters that, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect (i) no
Loan Party nor any of its Subsidiaries has received notice of any claim with
respect to any Environmental Liability or knows of any basis for any
Environmental Liability and (ii) no Loan Party nor any of its Subsidiaries
(1) has failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any
Environmental Law or (2) has become subject to any Environmental
Liability.


 


(c)  Since the date of
this Agreement, there has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.


 


SECTION 3.07.  Compliance with Laws and Agreements; Licenses
and Permits.  

(a)  Each Loan Party is in compliance with all Requirements of Law
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.


 


(b)  Each Loan Party
and its Subsidiaries has obtained and holds in full force and effect, all
franchises, licenses, leases, permits, certificates, authorizations,
qualifications, easements, rights of way and other rights and approvals which
are necessary or advisable for the operation of its businesses as presently
conducted and as proposed to be conducted, except where the failure to have so
obtained or hold or to be in force, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.  No Loan Party or any of its Subsidiaries is
in violation of the terms of any such franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, right or approval, except
where any such violation, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.


 


SECTION 3.08.  Investment and Holding Company Status.  No Loan Party is (a) an “investment
company” as defined in, or is required to be registered under, the Investment
Company Act of 1940 or (b) a “holding company” as defined in, or subject
to regulation under, the Public Utility Holding Company Act of 1935.


 


54
















 


SECTION 3.09.  Taxes. 
Each Loan Party and its Subsidiaries has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) Taxes
that are being contested in good faith by appropriate proceedings and for which
such Loan Party or such Subsidiary, as applicable, has set aside on its books
adequate reserves in accordance with GAAP or (b) to the extent that the
failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.


 


SECTION 3.10.  ERISA. 
No ERISA Event has occurred in the five year period prior to the date on
which this representation is made or deemed made and is continuing or is
reasonably expected to occur that, when taken together with all other such
ERISA Events for which liability is reasonably expected to occur, would
reasonably be expected to result in a Material Adverse Effect.  Except as would not reasonably be expected to
have a Material Adverse Effect, the present value of all accumulated benefit
obligations under all Plans (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed
the fair market value of the assets of such Plans, in the aggregate.


 


SECTION 3.11.  Disclosure.  (a)  All written information (other than
the Projections, the pro forma financial statements and estimates and
information of a general economic nature) concerning Holdings, the Borrower,
the Subsidiaries, the Transactions and any other transactions contemplated
hereby included in the Information Memorandum or otherwise prepared by or on
behalf of the foregoing or their representatives and made available to any
Lenders or the Agent in connection with the Transactions on or before the date
hereof (the “Information”), when taken as a whole, as of the date such
Information was furnished to the Lenders and as of the Closing Date, did not
contain any untrue statement of a material fact as of any such date or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements were made.


 


(b)  The Projections, pro
forma financial statements and estimates and information of a general economic
nature prepared by or on behalf of the Borrower or any of its representatives
and that have been made available to any Lenders or the Agent in connection
with the Transactions on or before the date hereof (the “Other Information”)
(i) have been prepared in good faith based upon assumptions believed by
the Borrower to be reasonable as of the date thereof (it being understood that
actual results may vary materially from the Other Information), and (ii) as
of the Closing Date, have not been modified in any material respect by the
Borrower.


 


SECTION 3.12.  Material Agreements.  No Loan Party is in default in any material
respect in the performance, observance or fulfillment of any of its obligations
contained in (i) any material agreement to which it is a party or (ii) any
agreement or instrument to which it is a party evidencing or governing
Indebtedness, except where any such default would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.


 


SECTION 3.13.  Solvency.  (a)  Immediately after the consummation
of the Transactions to occur on the Closing Date, (i) the fair value of
the assets of the Loan Parties on a consolidated basis, at a fair valuation,
will exceed the debts and liabilities, direct, subordinated, contingent or
otherwise, of the Loan Parties on a consolidated basis; (ii) the present
fair saleable value of the property of the Loan Parties on a consolidated basis
will be greater than the amount that will be required to pay the probable
liability of the Loan Parties on a consolidated basis, on their debts and other
liabilities, direct, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) the Loan Parties on a
consolidated basis will be able to pay their debts and liabilities, direct,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) the Loan Parties on a consolidated basis
will not have unreasonably small capital with which to conduct the 


 


55

















 


businesses in which they are engaged as such businesses are now
conducted and are proposed to be conducted following the Closing Date.


 


(b)  The Loan Parties
do not intend to incur debts beyond their ability to pay such debts as they
mature, taking into account the timing and amounts of cash to be received by
the Loan Parties and the timing and amounts of cash to be payable by the Loan
Parties on or in respect of their Indebtedness.


 


SECTION 3.14.  Insurance.  Schedule 3.14 sets forth a true,
complete and correct description of all insurance maintained by or on behalf of
the Loan Parties and the Subsidiaries as of the Closing Date.  As of the Closing Date, all such insurance is
in full force and effect and all premiums in respect of such insurance have
been duly paid.  The Borrower believes
that the insurance maintained by or on behalf of the Borrower and the
Subsidiaries is adequate and is in accordance with normal industry practice.


 


SECTION 3.15.  Capitalization and Subsidiaries.  Schedule 3.15 sets forth (a) a
correct and complete list of the name and relationship to the Borrower of each
and all of the Borrower’s Subsidiaries, (b) a true and complete listing of
each class of each of the Borrower’s authorized Equity Interests, of which all
of such issued shares are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Persons identified
on Schedule 3.15, and (c) the type of entity of the Borrower
and each of its Subsidiaries.  All of the
issued and outstanding Equity Interests of the Subsidiaries owned by any Loan
Party have been (to the extent such concepts are relevant with respect to such
ownership interests) duly authorized and issued and are fully paid and
non-assessable free and clear of all Liens (other than Liens created under the
Loan Documents and the ABL Security Documents).


 


SECTION 3.16.  Security Interest in Collateral.  The provisions of this Agreement and the
other Loan Documents create legal and valid Liens on all the Collateral in
favor of the Agent, for the benefit of the Agent and the Lenders; and upon the
proper filing of UCC financing statements required pursuant to paragraph (l) of
Article IV and any Mortgages with respect to Mortgaged Properties, such
Liens constitute perfected and continuing Liens on the Collateral, securing the
Secured Obligations, enforceable against the applicable Loan Party and all
third parties, and having priority over all other Liens on the Collateral
except in the case of (a) Permitted Liens, to the extent any such
Permitted Liens would have priority over the Liens in favor of the Agent pursuant
to any applicable law, (b) Liens perfected only by possession (including
possession of any certificate of title) to the extent the Agent has not
obtained or does not maintain possession of such Collateral and (c) subject
to and as provided for under the terms of the Intercreditor Agreement, the
Liens granted under the ABL Security Documents.


 


SECTION 3.17.  Labor Disputes.  As of the Closing Date, except as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect: (a) there are no strikes, lockouts or slowdowns
against any Loan Party pending or, to the knowledge of the Borrower,
threatened, (b) the hours worked by and payments made to employees of the
Loan Parties and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters and (c) all payments due from any Loan Party or
any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of
the Loan Party or such Subsidiary to the extent required by GAAP.  Except (i) as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect or
(ii) as set forth on Schedule 3.17, the consummation of the
Transactions will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining
agreement to which Holdings, the Borrower or any of the Subsidiaries (or any
predecessor) is a party or by which Holdings, the Borrower or any of the
Subsidiaries (or any predecessor) is bound.


 


56

















 


SECTION 3.18.  Federal Reserve Regulations.  (a)  On the Closing Date, none of the
Collateral is Margin Stock.


 


(b)  None of Holdings,
the Borrower and the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.


 


(c)  No part of the
proceeds of any Loan will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (i) to purchase or carry Margin
Stock (other than pursuant to, or in connection with, the Merger) or to extend
credit to others for the purpose of purchasing or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose, or (ii) for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of Regulation T, U or X.


 


SECTION 3.19.  Transaction Documents.  Holdings and the Borrower have delivered to
the Agent a complete and correct copy of the Merger Agreement (including all
schedules, exhibits, amendments, supplements and modifications thereto).
Neither Holdings, the Borrower nor any other Loan Party or, to the knowledge of
Holdings, the Borrower or each Loan Party, any other Person party thereto is in
default in the performance or compliance with any material provisions
thereof.  Except as would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect, all representations and warranties set forth in the Merger Agreement
were true and correct in all material respects at the time as of which such
representations and warranties were made (or deemed made).


 


SECTION 3.20.  Senior Indebtedness.  The Obligations constitute “Senior Indebtedness”
and “Designated Senior Indebtedness” under and as defined in the Senior
Subordinated Note Documents.


 


ARTICLE IV


 


Conditions


 


The obligations of the
Lenders to make Loans hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):


 


(a) Credit Agreement
and Loan Documents.  The Agent (or
its counsel) shall have received (i) from each party hereto either (A) a
counterpart of this Agreement signed on behalf of such party or (B) written
evidence satisfactory to the Agent (which may include facsimile transmission of
a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement and (ii) duly executed copies of the Loan
Documents and such other certificates, documents, instruments and agreements as
the Agent shall reasonably request in connection with the transactions contemplated
by this Agreement and the other Loan Documents, including any promissory notes
requested by a Lender pursuant to Section 2.07.


 


(b) Legal Opinions.  The Agent shall have received, on behalf of
itself and the Lenders on the Closing Date, a favorable written opinion of (i) Cleary
Gottlieb Steen & Hamilton LLP, special counsel for Holdings and the
Borrower, in form and substance reasonably satisfactory to the Agent and (ii) local
or other counsel reasonably satisfactory to the Agent as specified on Schedule 4.01(b),
in each case (A) dated the Closing Date, (B) addressed to the Agent
and the Lenders and (C) in form and substance reasonably satisfactory to
the Agent and covering such other matters relating to the Loan Documents and
the Transactions as the Agent shall reasonably request.


 


57

















 


(c) Financial
Statements and Projections.  The
Lenders shall have received (i) the financial statements and opinion
referred to in Section 3.04(a) and (b) and (ii)  projections
in customary form for the Borrower and its Subsidiaries on a pro forma basis
for completion of the Transactions for the fiscal years 2006 through 2010.


 


(d) Closing
Certificates; Certified Certificate of Incorporation; Good Standing
Certificates.  The Agent shall have
received (i) a certificate of each Loan Party, dated the Closing Date and
executed by its Secretary or Assistant Secretary (or, in the case of NM Nevada
Trust, its Clerk), which shall (A) certify the resolutions of its Board of
Directors, members or other body authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, (B) identify by
name and title and bear the signatures of the Financial Officers and any other
officers of such Loan Party authorized to sign the Loan Documents to which it
is a party, and (C) contain appropriate attachments, including the
certificate or articles of incorporation or organization of each Loan Party
certified by the relevant authority of the jurisdiction of organization of such
Loan Party and a true and correct copy of its by-laws or operating, management
or partnership agreement, and (ii) a good standing certificate for each
Loan Party from its jurisdiction of organization.


 


(e) No Default
Certificate.  The Agent shall have received
a certificate, signed by the chief financial officer of the Borrower, dated the
Closing Date (i) stating that no Default has occurred and is continuing (other
than any Default arising pursuant to clause (c) of Article VII with
respect to any of the representations enumerated clause (ii) below) and (ii) stating
that the representations and warranties contained in Article III (except
the representations contained in Sections 3.04, 3.05, 3.06, 3.07, 3.09,
3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.17 and 3.19) are true and correct in all
material respects as of such date.


 


(f) Fees. The
Lenders and the Agent shall have received all fees required to be paid, and all
expenses for which invoices have been presented (including the reasonable
documented fees and expenses of legal counsel), on or before the Closing Date.


 


(g) Lien and
Judgment Searches.  The Agent shall
have received the results of recent lien and judgment searches in each of the
jurisdictions contemplated by the Perfection Certificate, and such search shall
reveal no material judgments and no liens on any of the assets of the Loan
Parties except for Permitted Liens or Liens discharged on or prior to the
Closing Date pursuant to a pay-off letter or other documentation reasonably
satisfactory to the Agent.


 


(h) Pay-Off Letter.  The Agent shall have received a pay-off
letter reasonably satisfactory to it in respect of the repayment of the
Existing Credit Agreement from the proceeds of the Loans, confirming that all
Liens upon any of the property of the Loan Parties constituting Collateral
arising under the Existing Credit Agreement, if any, will be terminated
concurrently with such payment and all letters of credit issued or guaranteed
as part of such Indebtedness shall have been cash collateralized or supported
by a letter of credit issued under the Senior Secured Asset-Based Revolving
Credit Facility.


 


(i) Solvency.  The Agent shall have received a customary
certificate from the chief financial officer of the Borrower certifying that
Holdings and its Subsidiaries, on a consolidated basis after giving effect to
the Transactions to occur on the Closing Date, are solvent (within the meaning
of Section 3.13).


 


(j) Equity Contribution.  The Equity Contribution shall have been made
in full.


 


58

















 


(k) Pledged Stock; Stock
Powers; Pledged Notes.  The Agent
shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Security Agreement, together with an
undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof and (ii) each promissory note
(if any) pledged to the Agent pursuant to the Security Agreement endorsed
(without recourse) in blank (or accompanied by an executed transfer form in
blank) by the pledgor thereof.


 


(l) Perfection
Certificate; Filings, Registrations and Recordings.  The Agent shall have received a completed
Perfection Certificate dated the Closing Date and signed by a Responsible
Officer of the Borrower, together with all attachments contemplated
thereby.  Each document (including any
Uniform Commercial Code financing statement) required by the Collateral
Documents or under law or reasonably requested by the Agent to be filed,
registered or recorded in order to create in favor of the Agent, for the
benefit of the Lenders, a perfected Lien on the Collateral described therein,
prior and superior in right to any other Person (other than with respect to
Permitted Liens), shall be in proper form for filing, registration or
recordation. The Agent, on behalf of the Lenders, shall have a security
interest in the Collateral of the type and priority described in the Collateral
Documents (subject to Liens expressly permitted by Section 6.02 and,
subject to the terms of the Intercreditor Agreement, the Liens granted under
the ABL Security Documents).


 


(m) Mortgages, etc.  The Agent shall have received, with respect
to each Mortgaged Property, each of the following, in form and substance
reasonably satisfactory to the Agent:


 


(i) a Mortgage on such property;


 


(ii) evidence that a counterpart of the
Mortgage has been recorded or delivered to the appropriate title insurance
company subject to arrangements reasonably satisfactory to the Agent for recording
promptly following the closing hereunder, in each case, in the place necessary,
in the Agent’s reasonable judgment, to create a valid and enforceable first
priority Lien (subject to the Intercreditor Agreement) in favor of the Agent
for the benefit of itself and the Lenders;


 


(iii) ALTA or other mortgagee’s title policy;


 


(iv) an opinion of counsel in the state in
which such parcel of real property is located in form and substance and from
counsel reasonably satisfactory to the Agent; and


 


(v) such other information, documentation, and
certifications as may be reasonably required by the Agent.


 


provided, that, (i) the amount of debt secured
by each Mortgage in any State that imposes a mortgage tax shall be reasonably
limited to an amount less than the Commitments so as to avoid multiple mortgage
tax assessments and (ii) notwithstanding the foregoing, the conditions set
forth in this clause (m) shall be considered satisfied even if the
Borrower does not deliver such items by the Closing Date, so long as the
Borrower has used commercially reasonable efforts to obtain and deliver such
items to Agent by the Closing Date.


 


(n) Closing Date Material
Adverse Effect.  Since July 31,
2004 and except as contemplated by the Merger Agreement, there shall not have
been any event, condition, development or occurrence that, has had, or would
reasonably be expected to have, individually or in the aggregate, any change,
circumstance, effect, event or occurrence that would be 


 


59

















 


materially
adverse to the assets, liabilities, business, financial condition or results of
operations of Neiman Marcus and its subsidiaries taken as a whole, other than
any change or effect resulting from (i) changes in general economic
conditions, (ii) general changes or developments in the industries in
which Neiman Marcus and its subsidiaries operate, (iii) the announcement
of the Merger Agreement and the transactions contemplated thereby, including
any termination of, reduction in or similar negative impact on relationships,
contractual or otherwise, with any customers, suppliers, distributors, partners
or employees of Neiman Marcus and its subsidiaries to the extent due to the
announcement and performance of the Merger Agreement or the identity of the
parties to the Merger Agreement, or the performance of the Merger Agreement and
the transactions contemplated thereby, including compliance with the covenants
set forth therein, (iv) any actions required under the Merger Agreement to
obtain any approval or authorization under applicable antitrust or competition
laws for the consummation of the merger contemplated by the Merger Agreement or
(v) changes in any tax laws or regulations or applicable accounting
regulations or principles, unless, in the case of the foregoing clauses (i) and
(ii), such changes referred to therein have a disproportionate effect on Neiman
Marcus and its subsidiaries taken as a whole relative to other participants in
the industries in which Neiman Marcus and its subsidiaries operate.  For the purposes of this clause (n), “industries
in which Neiman Marcus and its subsidiaries operate” means the luxury retail
segments of the apparel, accessories, jewelry, beauty and decorative home
products industries.


 


(o) Other Indebtedness.  The 2008 Notes Call for Redemption and the
Existing Bank Debt Refinancing shall have been effected.  After giving effect to the Transactions and
the other transactions contemplated hereby, Holdings, the Borrower and the
Subsidiaries shall not have any outstanding Indebtedness or preferred stock
other than (a) the Obligations, (b) Indebtedness under the Senior
Secured Asset-Based Revolving Credit Facility, (c) the New Notes, (d) the
2028 Debentures, (e) preferred Equity Interests issued in connection with
the Equity Contribution, if any, (f) the 2008 Notes and (g) 
Indebtedness set forth on Schedule 6.01.


 


(p) Insurance.  The Agent shall have received evidence of
insurance coverage in form, scope, and substance reasonably satisfactory to the
Agent and otherwise in compliance with the terms of Section 5.10 and Section 4.11
of the Security Agreement.


 


(q) Merger.  The Merger shall be consummated substantially
simultaneously with the making of the Loans, in accordance with the Merger
Agreement (which shall not have been amended or modified prior to the Closing
Date in a manner adverse to the Lenders in any material respect without the
prior written consent of the Joint Lead Arrangers).


 


(r) Other Financing.  The Borrower shall have (i) received
gross cash proceeds of not less than $1,200,000,000 from the issuance of the
New Notes and (ii) obtained the Senior Secured Asset-Based Revolving
Credit Facility.  The terms and
conditions of the New Notes and the Senior Secured Asset-Based Revolving Credit
Facility shall be reasonably satisfactory to the Agent.


 


(s) Intercreditor
Agreement.  The Intercreditor
Agreement shall have been duly executed and delivered by each party thereto,
and shall be in full force and effect.


 


(t) PATRIOT Act.  The Agent shall have received all
documentation and other information reasonably requested by it that is required
by regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act.


 


60

















 


The Agent shall notify the
Borrower and the Lenders of the Closing Date, and such notice shall be
conclusive and binding.  Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or
waived pursuant to Section 9.02) at or prior to 5:00 p.m.,
New York City time, on the Termination Date (as defined in the Merger
Agreement) (and, in the event such conditions are not so satisfied or waived,
the Commitments shall terminate at such time).


 


ARTICLE V


 


Affirmative Covenants


 


Until the Commitments have
expired or been terminated and the principal of and interest on each Loan and
all fees payable hereunder shall have been paid in full, each Loan Party executing
this Agreement covenants and agrees, jointly and severally with all of the Loan
Parties, with the Lenders that:


 


SECTION 5.01.  Financial Statements and Other
Information.  The Borrower will
furnish to the Agent (which will promptly furnish such information to the
Lenders):


 


(a) within ninety
(90) days after the end of each fiscal year of the Borrower, its audited
consolidated balance sheet and related statements of earnings, shareholders’
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by Deloitte & Touche LLP or other independent public accountants of
recognized national standing and reasonably acceptable to the Agent (without a “going
concern” or like qualification or exception or exception as to the scope of
such audit) to the effect that such consolidated financial statements present
fairly, in all material respects, the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP;


 


(b) within forty-five
(45) days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower, its consolidated balance sheet and related
statements of earnings, shareholders’ equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly, in all material respects, the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes;


 


(c) concurrently with
any delivery of financial statements under clause (a) or (b) above, a
certificate of a Financial Officer of the Borrower in substantially the form of
Exhibit C (i) certifying that no Event of Default or Default has
occurred and, if an Event of Default or Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto and (ii) setting forth, in the case of the financial statements
delivered under clause (a), (x) the Borrower’s calculation of Excess Cash
Flow for such fiscal year and (y) a list of names of all Immaterial
Subsidiaries (if any), that each Subsidiary set forth on such list individually
qualifies as an Immaterial Subsidiary and that all Domestic Subsidiaries listed
as Immaterial Subsidiaries in the aggregate comprise less than 5% of Total Assets
of the Borrower and the Subsidiaries at the end of the period to which such
financial statements relate and 


 


61

















 


represented (on a contribution basis) less than 5% of EBITDA for the
period to which such financial statements relate;


 


(d) concurrently with
any delivery of financial statements under clause (a) above, a certificate
of the accounting firm that reported on such financial statements stating
whether they obtained knowledge during the course of their examination of such
financial statements of any Default or Event of Default (which certificate may
be limited to the extent required by accounting rules or guidelines);


 


(e) concurrently with
any delivery of consolidated financial statements under clause (a) or (b) above,
the related unaudited consolidating financial statements reflecting the
adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries
(if any) from such consolidated financial statements;


 


(f) within ninety (90)
days after the beginning of each fiscal year, a detailed consolidated budget of
the Borrower and its Subsidiaries for such fiscal year (including a projected
consolidated balance sheet and the related consolidated statements of projected
cash flows and projected income as of the end of and for such fiscal year),
including a summary of the underlying material assumptions with respect thereto
(collectively, the “Budget”), and, as soon as available, significant
revisions, if any, of such Budget, which Budget or revisions thereto shall in
each case be accompanied by the statement of a Financial Officer of the
Borrower to the effect that, to the best of his knowledge, the Budget is a
reasonable estimate for the period covered thereby;


 


(g) as soon as
practicable upon the reasonable request of the Agent, deliver an updated
Perfection Certificate (or, to the extent such request relates to specified
information contained in the Perfection Certificate, such information)
reflecting all changes since the date of the information most recently received
pursuant to this clause (g) or Section 5.11;


 


(h) promptly after the
same become publicly available, copies of all periodic and other reports, proxy
statements and other materials publicly filed by the Borrower or any Subsidiary
with the SEC, or with any national securities exchange, or, after an initial
public offering of shares of Capital Stock of the Borrower, distributed by the
Borrower to its shareholders generally, as the case may be;


 


(i) promptly, a copy of
any final “management letter” received from the Borrower’s independent public
accountants to the extent such independent public accountants have consented to
the delivery of such management letter to the Agent upon the request of the
Borrower;


 


(j) promptly following the
Agent’s request therefor, all documentation and other information that the
Agent reasonably requests on its behalf or on behalf of any Lender in order to
comply with its ongoing obligations under applicable “know your customer” and
anti-money laundering rules and regulations, including the USA PATRIOT Act;
and


 


(k) as promptly as
reasonably practicable from time to time following the Agent’s request
therefor, such other information regarding the operations, business affairs and
financial condition of Holdings, the Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, as the Agent may reasonably request (on
behalf of itself or any Lender).


 


Notwithstanding the
foregoing, the obligations in clauses (a) and (b) of this Section 5.01
may be satisfied with respect to financial information of the Borrower and its
Subsidiaries by furnishing 


 


62

















 


(A) the applicable
financial statements of Holdings (or any direct or indirect parent of Holdings)
or (B) the Borrower’s or Holdings’ (or any direct or indirect parent
thereof), as applicable, Form 10-K or 10-Q, as applicable, filed with the
SEC; provided that, with
respect to each of clauses (A) and (B), (i) to the extent such
information relates to Holdings (or a parent thereof), such information is
accompanied by consolidating information that explains in reasonable detail the
differences between the information relating to Holdings (or such parent), on
the one hand, and the information relating to the Borrower and its Subsidiaries
on a standalone basis, on the other hand and (ii) to the extent such
information is in lieu of information required to be provided under
clause (a) of this Section 5.01, such materials are accompanied
by a report and opinion of Deloitte & Touche LLP or other independent
public accountants of recognized national standing and reasonably acceptable to
the Agent, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception
as to the scope of such audit.


 


Documents required to be
delivered pursuant to clauses (a), (b) or (h) of this Section 5.01
may be delivered electronically and if so delivered, shall be deemed to have
been delivered on the date (i) on which the Borrower posts such documents,
or provides a link thereto on the Borrower’s website on the Internet at the
website address listed on Schedule 9.01; or (ii) on which such
documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or
another relevant website, if any, to which each Lender and the Agent have
access (whether a commercial, third-party website or whether sponsored by the
Agent); provided that:  (i) upon
written request by the Agent, the Borrower shall deliver paper copies of such
documents to the Agent for further distribution to each Lender until a written
request to cease delivering paper copies is given by the Agent and (ii) the
Borrower shall notify (which may be by facsimile or electronic mail) the Agent
of the posting of any such documents and provide to the Agent by electronic
mail electronic versions (i.e., soft copies) of such documents.  Notwithstanding anything contained herein, in
every instance the Borrower shall be required to provide paper copies of the
compliance certificates required by clause (c) of this Section 5.01
to the Agent.


 


The financial statements
required to be delivered pursuant to clause (b) of this Section 5.01
with respect to the first fiscal quarter after the Closing Date shall not be
required to contain all purchase accounting adjustments relating to the
Transactions to the extent it is not practicable to include any such
adjustments in such financial statements.


 


SECTION 5.02.  Notices of Material Events.  The Borrower will furnish to the Agent
written notice of the following promptly after any Responsible Officer of
Holdings or the Borrower obtains knowledge thereof:


 


(a) the occurrence of
any Event of Default or Default;


 


(b) the filing or
commencement of, or any written threat or notice of intention of any person to
file or commence, any action, suit or proceeding, whether at law or in equity
or by or before any Governmental Authority or in arbitration, against Holdings,
the Borrower or any of the Subsidiaries as to which an adverse determination is
reasonably probable and which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect;


 


(c) any loss, damage,
or destruction to the Collateral in the amount of $10,000,000 or more, whether
or not covered by insurance;


 


(d) any and all default
notices received under or with respect to any leased location or public
warehouse where any material Collateral is located;


 


63

















 


(e) the occurrence of any
ERISA Event that, together with all other ERISA Events that have occurred and
are continuing, would reasonably be expected to have a Material Adverse Effect;
and


 


(f) any other
development that results in, or would reasonably be expected to result in, a
Material Adverse Effect.


 


Each notice delivered under
this Section 5.02 shall be accompanied by a statement of a Responsible
Officer of the Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.


 


SECTION 5.03.  Existence; Conduct of Business.  Each Loan Party will, and will cause each
Subsidiary to, do or cause to be done all things reasonably necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits (except as
such would otherwise reasonably expire, be abandoned or permitted to lapse in
the ordinary course of business), necessary or desirable in the normal conduct
of its business, and maintain all requisite authority to conduct its business
in each jurisdiction in which its business is conducted, except (i) other
than with respect to Holdings’ or the Borrower’s existence, to the extent such
failure to do so would not reasonably be expected to have a Material Adverse
Effect or (ii) pursuant to a transaction permitted by Section 6.03.


 


SECTION 5.04.  Payment of Obligations.  Each Loan Party will, and will cause each
Subsidiary to, pay or discharge all material Tax liabilities, before the same
shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b) such
Loan Party or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make
payment pending such contest would not reasonably be expected to result in a
Material Adverse Effect.


 


SECTION 5.05.  Maintenance of Properties.  Each Loan Party will, and will cause each
Subsidiary to (a) at all times maintain and preserve all material property
necessary to the normal conduct of its business in good repair, working order
and condition, ordinary wear and tear excepted and casualty or condemnation
excepted and (b) make, or cause to be made, all needful and proper
repairs, renewals, additions, improvements and replacements thereto as
necessary in accordance with prudent industry practice in order that the
business carried on in connection therewith, if any, may be properly conducted
at all times, except, in each case, where the failure to do so, individually or
in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.


 


SECTION 5.06.  Books and Records; Inspection Rights.  Each Loan Party will, and will cause each
Subsidiary to, (i) keep proper books of record and account in accordance
with GAAP in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities and (ii) permit
any representatives designated by the Agent (including employees of the Agent
or any consultants, accountants, lawyers and appraisers retained by the Agent),
upon reasonable prior notice, to visit and inspect its properties, to examine
and make extracts from its books and records, including environmental
assessment reports and Phase I or Phase II studies, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at
such reasonable times during normal business hours and as often as reasonably
requested.


 


SECTION 5.07.  Maintenance of Ratings.  Holdings and the Borrower shall use their
commercially reasonable efforts to cause the credit facilities provided for
herein to be continuously rated by S&P and Moody’s.


 


64

















 


SECTION 5.08.  Compliance with Laws.  Each Loan Party will, and will cause each
Subsidiary to, comply in all material respects with all Requirements of Law
applicable to it or its property, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.


 


SECTION 5.09.  Use of Proceeds.  The proceeds of the Loans will be used only
for the purposes specified in the introductory statement to this
Agreement.  No part of the proceeds of
any Loan will be used, whether directly or indirectly, for any purpose that
would entail a violation of Regulations T, U or X.


 


SECTION 5.10.  Insurance.  Each Loan Party will, and will cause each
Subsidiary to, maintain, with financially sound and reputable insurance
companies (a) insurance in such amounts and against such risks, as are
customarily maintained by similarly situated companies engaged in the same or
similar businesses operating in the same or similar locations (after giving
effect to any self-insurance reasonable and customary for similarly situated
companies) and (b) all insurance required pursuant to the Collateral
Documents (and shall cause the Agent to be listed as a loss payee (together
with any other loss payee in accordance with the Intercreditor Agreement) on
property and casualty policies covering loss or damage to Collateral and as an
additional insured on liability policies). 
The Borrower will furnish to the Agent, upon request, information in
reasonable detail as to the insurance so maintained.


 


SECTION 5.11.  Additional Collateral; Further Assurances.  (a)  Subject to applicable law, the
Borrower and each Subsidiary that is a Loan Party shall cause (i) each of
its Domestic Subsidiaries (other than any Immaterial Subsidiary (except as
otherwise provided in paragraph (e) of this Section 5.11) or
Unrestricted Subsidiary) formed or acquired after the date of this Agreement in
accordance with the terms of this Agreement that is required to become a
Subsidiary Guarantor pursuant to Section 6.08 and (ii) any such Domestic
Subsidiary that was an Immaterial Subsidiary but, as of the end of the most
recently ended fiscal quarter of the Borrower has ceased to qualify as an
Immaterial Subsidiary, to become a Loan Party as promptly thereafter as
reasonably practicable by executing a Joinder Agreement in substantially the
form set forth as Exhibit D hereto (the “Joinder Agreement”).
Upon execution and delivery thereof, each such Person (i) shall
automatically become a Loan Guarantor hereunder and thereupon shall have all of
the rights, benefits, duties, and obligations in such capacity under the Loan
Documents and (ii) will simultaneously therewith or as soon as practicable
thereafter grant Liens to the Agent, for the benefit of the Agent and the
Lenders and each other Secured Party at such time party to or benefiting from
the Intercreditor Agreement or the Security Agreement (including, if
applicable, the holders of the 2028 Debentures or the 2008 Notes), in each case
to the extent required by the terms thereof, in any property (subject to the
limitations with respect to Equity Interests set forth in paragraph (b) of
this Section 5.11, the limitations with respect to real property set forth
in paragraph (f) of this Section 5.11 and any other limitations
set forth in the Security Agreement) of such Loan Party which constitutes
Collateral, on such terms as may be required pursuant to the terms of the Collateral
Documents and in such priority as may be required pursuant to the terms of the Intercreditor
Agreement.


 


(b)  The Borrower and
each Subsidiary that is a Loan Party will cause (i) 100% of the issued and
outstanding Equity Interests of each of its Domestic Subsidiaries, other than
any Domestic Subsidiary taxed as a partnership for federal income tax purposes
that holds Capital Stock of a Foreign Subsidiary whose Equity Interests are
pledged pursuant to clause (ii) below, and (ii) 65% of the issued and
outstanding Equity Interests entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity
Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2))
in each Foreign Subsidiary directly owned by the Borrower or any Subsidiary
that is a Loan Party to be subject at all times to a first priority perfected
Lien in favor of the Agent pursuant to the terms and conditions of the Loan
Documents or other security documents as the Agent shall reasonably request; provided,
however this paragraph (b) shall not require the Borrower or 


 


65

















 


any Subsidiary to grant a security interest in (i) any Equity
Interests of a Subsidiary to the extent a pledge of such Equity Interests in
favor of the Agent or to secure any debt securities of the Borrower or any
Subsidiary that would be entitled to such a security interest would require
separate financial statements of a Subsidiary to be filed with the SEC (or any
other government agency) under Rule 3-10 or Rule 3-16 of Regulation S-X
under the Securities Act (or any successor thereto) or any other law, rule or
regulation or (ii) the Equity Interests of any Unrestricted Subsidiary.


 


(c)  Without limiting
the foregoing, each Loan Party will, and will cause each Subsidiary that is a
Loan Party to, execute and deliver, or cause to be executed and delivered, to
the Agent such documents, agreements and instruments, and will take or cause to
be taken such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents and
such other actions or deliveries of the type required by Article IV, as
applicable (including the delivery of the items contemplated by paragraph (m)
thereof to the extent the Borrower has been unable to deliver such items by the
Closing Date after having used its commercially reasonable efforts to obtain
and deliver such items by the Closing Date)), which may be required by law or
which the Agent may, from time to time, reasonably request to carry out the
terms and conditions of this Agreement and the other Loan Documents and to
ensure perfection and priority of the Liens created or intended to be created
by the Collateral Documents, all at the expense of the Loan Parties.


 


(d)  Subject to the
limitations set forth or referred to in this Section 5.11, if any material
assets (including any real property or improvements thereto or any interest
therein) are acquired by the Borrower or any Subsidiary that is a Loan Party
after the Closing Date (other than assets constituting Collateral under the
Security Agreement that become subject to the Lien in favor of the Agent upon
acquisition thereof), the Borrower will notify the Agent and the Lenders
thereof, and, if requested by the Agent or the Required Lenders, the Borrower
will cause such assets to be subjected to a Lien securing the Secured
Obligations and will take, and cause the Loan Parties that are Subsidiaries to
take, such actions as shall be necessary or reasonably requested by the Agent
to grant and perfect such Liens, including actions described in paragraph (c) of
this Section, all at the expense of the Loan Parties.


 


(e)  If, at any time
and from time to time after the Closing Date, Subsidiaries that are not Loan
Parties because they are Immaterial Subsidiaries comprise in the aggregate more
than 5% of Total Assets as of the end of the most recently ended fiscal quarter
of the Borrower or more than 5% of EBITDA of the Borrower and the Restricted
Subsidiaries for the period of four consecutive fiscal quarters as of the end
of the most recently ended fiscal quarter of the Borrower, then the Borrower
shall, not later than 45 days after the date by which financial statements for
such quarter are required to be delivered pursuant to this Agreement, cause one
or more such Subsidiaries to become additional Loan Parties (notwithstanding
that such Subsidiaries are, individually, Immaterial Subsidiaries) such that the
foregoing condition ceases to be true.


 


(f)  Notwithstanding
anything to the contrary in this Section 5.11, real property required to
be mortgaged under this Section 5.11 shall be limited to real property
located in the U.S. that are full-line Neiman Marcus retail stores owned in fee
by a Loan Party or leased by a Loan Party pursuant to a financeable lease or
other real property owned in fee by a Loan Party having a fair market value at
the time of the acquisition thereof of $5,000,000 or more (provided that
the cost of perfecting such Lien is not unreasonable in relation to the
benefits to the Lenders of the security afforded thereby in the Agent’s
reasonable judgment after consultation with the Borrower; provided  further
that the Borrower shall use commercially reasonable efforts to ensure that all
leases entered into after the Closing Date by the Borrower and the other Loan
Parties will be financeable leases).


 


(g)  Notwithstanding
anything to the contrary contained herein, the Loan Parties shall not be
required to include as Collateral any Excluded Assets (as defined in the
Security Agreement).


 


66

















 


SECTION 5.12.  Maintenance of Corporate Separateness.  Each Loan Party will, and will cause each
Subsidiary to, satisfy customary corporate or limited liability company
formalities, including the maintenance of corporate and business records.


 


SECTION 5.13.  2008 Notes Redemption.  Within forty (40) days after the Closing
Date, the Borrower shall deposit with the trustee under the indenture governing
the 2008 Notes sufficient funds for the full satisfaction and discharge of the
entire outstanding principal amount of the 2008 Notes.


 


ARTICLE VI


 


Negative Covenants


 


Until the Commitments have
expired or terminated and the principal of and interest on each Loan and all
fees, expenses and other amounts payable under any Loan Document have been paid
in full, the Loan Parties covenant and agree, jointly and severally, with the
Lenders that:


 


SECTION 6.01.  Limitation on Incurrence of Indebtedness
and Issuance of Disqualified Stock and Preferred Stock.  (a)  The Borrower will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise (collectively, “incur” and collectively, an “incurrence”)
with respect to any Indebtedness (including Acquired Indebtedness), and the
Borrower will not issue any shares of Disqualified Stock and will not permit
any Restricted Subsidiary to issue any shares of Disqualified Stock or
Preferred Stock; provided  that
the Borrower may incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock, and any Restricted Subsidiary may incur Indebtedness
(including Acquired Indebtedness), issue shares of Disqualified Stock or issue
shares of Preferred Stock, if the Fixed Charge Coverage Ratio on a consolidated
basis for the Borrower’s and its Restricted Subsidiaries’ most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock or Preferred Stock is issued would have
been at least 2.00 to 1.00, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock
had been issued, as the case may be, and the application of the proceeds
therefrom had occurred at the beginning of such four-quarter period; provided
that the amount of Indebtedness (including Acquired Indebtedness), Disqualified
Stock and Preferred Stock that may be incurred or issued, as applicable,
pursuant to the foregoing by Restricted Subsidiaries that are not Subsidiary
Guarantors shall not exceed $100,000,000 at any one time outstanding;


 


(b)  The limitations
set forth in paragraph (a) of this Section 6.01 shall not apply to
any of the following items (collectively, “Permitted Debt”):


 


(i) Indebtedness
incurred pursuant to the Senior Secured Asset-Based Revolving Credit Facility
by the Borrower or any Restricted Subsidiary; provided that immediately
after giving effect to any such incurrence, the aggregate principal amount of
all Indebtedness incurred under this clause (i) and then outstanding
does not exceed the greater of (A) $800,000,000 less up to
$150,000,000 in the aggregate of all principal payments with respect to such
Indebtedness made pursuant to Section 2.20(b)(i)(A) and (B) the
lesser of (1) 80% of the value of the eligible inventory of the Borrower
and its Restricted Subsidiaries valued at the lower of cost or market value and
(2) 85% of the net orderly liquidation value of the eligible inventory of
the Borrower and its Restricted Subsidiaries;


 


67

















 


(ii) Indebtedness
incurred pursuant to the Senior Secured Term Loan Facility by the Borrower or
any Restricted Subsidiary; provided that after giving effect to any such
incurrence, the aggregate principal amount of all Indebtedness incurred under
this clause (ii) and then outstanding does not exceed $1,975,000,000
less up to $250,000,000 in the aggregate of all principal payments with respect
to such Indebtedness made pursuant to Section 2.20(a)(i) or Section 2.20(b)(i)(A);


 


(iii) the incurrence by
the Borrower and any Subsidiary Guarantor of Indebtedness represented by the
Senior Notes issued on the Closing Date (including any guarantees thereof) and
the exchange notes and related exchange guarantees to be issued in exchange for
the Senior Notes pursuant to the Registration Rights Agreement (other than any Additional
Senior Notes (as defined in the Senior Notes Indenture));


 


(iv) the incurrence by
the Borrower and any Subsidiary Guarantor of Indebtedness represented by the
Senior Subordinated Notes issued on the Closing Date (including any guarantees
thereof) and the exchange notes and related exchange guarantees to be issued in
exchange for the Senior Subordinated Notes pursuant to the Registration Rights
Agreement (other than any Additional Senior Subordinated Notes (as defined in
the Senior Subordinated Notes Indenture));


 


(v) Indebtedness
existing on the date hereof and set forth in Schedule 6.01;


 


(vi) Indebtedness
(including Capitalized Lease Obligations), Disqualified Stock and Preferred
Stock incurred by the Borrower or any of the Restricted Subsidiaries, to
finance the development, construction, purchase, lease (other than the lease,
pursuant to Sale and Lease-Back Transactions, of property (real or personal),
equipment or other fixed or capital assets owned by the Borrower or any Restricted
Subsidiary as of the Closing Date or acquired by the Borrower or any Restricted
Subsidiary after the Closing Date in exchange for, or with the proceeds of the
sale of, such assets owned by the Borrower or any Restricted Subsidiary as of
the Closing Date), repairs, additions or improvement of property (real or
personal), equipment or other fixed or capital assets that are used or useful
in a Similar Business, whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets; provided that the
aggregate amount of Indebtedness, Disqualified Stock and Preferred Stock
incurred pursuant to this clause (vi) does not exceed $250,000,000 at
any one time outstanding;


 


(vii) Indebtedness
incurred by the Borrower or any Restricted Subsidiary constituting
reimbursement obligations with respect to letters of credit issued in the
ordinary course of business, including letters of credit in respect of workers’
compensation claims, or other Indebtedness with respect to reimbursement type
obligations regarding workers’ compensation claims; provided  that upon the drawing of such letters of credit or the
incurrence of such Indebtedness, such obligations are reimbursed within thirty
(30) days following such drawing or incurrence;


 


(viii) Indebtedness
arising from agreements of the Borrower or a Restricted Subsidiary providing
for indemnification, adjustment of purchase price or similar obligations, in
each case, incurred or assumed in connection with the disposition of any
business, assets or a subsidiary, other than guarantees of Indebtedness
incurred by any Person acquiring all or any portion of such business, assets or
subsidiary for the purpose of financing such acquisition; provided  that (A) such Indebtedness is not reflected on the
balance sheet of the Borrower or any Restricted Subsidiary (contingent
obligations referred to in a footnote to financial statements and not 


 


68

















 


otherwise
reflected on the balance sheet shall not be deemed to be reflected on such
balance sheet for purposes of this clause (A)) and (B) the maximum
assumable liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds including noncash proceeds (the fair market value of such
noncash proceeds being measured at the time received and without giving effect
to any subsequent changes in value) actually received by the Borrower and the Restricted
Subsidiaries in connection with such disposition;


 


(ix) Indebtedness of
the Borrower to a Restricted Subsidiary; provided  that
any such Indebtedness owing to a Restricted Subsidiary that is not a Subsidiary
Guarantor is subordinated in right of payment to the Obligations; provided, further, that that any subsequent issuance or
transfer of any Capital Stock or any other event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent
transfer of any such Indebtedness (except to the Borrower or another Restricted
Subsidiary) shall be deemed, in each case, to be an incurrence of such
Indebtedness;


 


(x) Indebtedness of a Restricted
Subsidiary to the Borrower or another Restricted Subsidiary; provided  that if a Subsidiary Guarantor incurs such Indebtedness to
a Restricted Subsidiary that is not a Subsidiary Guarantor such Indebtedness is
subordinated in right of payment to the obligations of such Subsidiary Guarantor
under its Loan Guaranty; provided,  further,
that any subsequent issuance or transfer of Capital Stock or any other event
that results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of any such Indebtedness (except to the Borrower
or another Restricted Subsidiary) shall be deemed, in each case, to be an
incurrence of such Indebtedness;


 


(xi) shares of Preferred
Stock of a Restricted Subsidiary issued to the Borrower or another Restricted
Subsidiary; provided  that any
subsequent issuance or transfer of any Capital Stock or any other event which
results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary
or any other subsequent transfer of any such shares of Preferred Stock (except
to the Borrower or another Restricted Subsidiary) shall be deemed, in each
case, to be an issuance of such shares of Preferred Stock;


 


(xii) Hedging Obligations
(excluding Hedging Obligations entered into for speculative purposes) for the
purpose of limiting: (A) interest rate risk with respect to any
Indebtedness that is permitted under this Agreement to be outstanding, (B) exchange
rate risk with respect to any currency exchange or (C) commodity pricing
risk with respect to any commodity;


 


(xiii) obligations in
respect of performance, bid, appeal and surety bonds and completion guarantees
and similar obligations provided by the Borrower or any Restricted Subsidiary
in the ordinary course of business;


 


(xiv) (A) any guarantee
by the Borrower or a Restricted Subsidiary of Indebtedness or other obligations
of any Restricted Subsidiary, so long as the incurrence of such Indebtedness by
such Restricted Subsidiary is permitted under the terms of this Agreement or (B) any
guarantee by a Restricted Subsidiary of Indebtedness of the Borrower permitted
to be incurred under the terms of this Agreement; provided  that such guarantee is incurred in accordance with Section 6.08;


 


(xv) the incurrence by the
Borrower or any Restricted Subsidiary of Indebtedness, Disqualified Stock or
Preferred Stock that serves to extend, replace, refund, refinance, renew or
defease  any Indebtedness,
Disqualified Stock or Preferred Stock incurred as permitted under 


 


69

















 


paragraph
(a) of this Section 6.01 and clauses (iii), (iv), (v) and (vi) above,
this clause (xv) and clauses (xvi) and (xxii)(B) of this paragraph (b) or
any Indebtedness, Disqualified Stock or Preferred Stock issued to so extend,
replace, refund, refinance, renew or defease such Indebtedness, Disqualified
Stock or Preferred Stock including additional Indebtedness, Disqualified Stock
or Preferred Stock incurred to pay premiums and fees in connection therewith
(the “Refinancing Indebtedness”) prior to its respective maturity;  provided, however, that such Refinancing
Indebtedness (A) has a Weighted Average Life to Maturity at the time such
Refinancing Indebtedness is incurred which is not less than the remaining
Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or
Preferred Stock being extended, replaced, refunded, refinanced, renewed or
defeased (provided that this clause (A) shall not apply to any
refunding or refinancing of any Senior Indebtedness outstanding under the 2028
Debentures), (B) to the extent such Refinancing Indebtedness extends,
replaces, refunds, refinances, renews or defeases (1) Indebtedness
subordinated to the Obligations or the Loan Guaranty of any Subsidiary
Guarantor, such Refinancing Indebtedness is subordinated to the Obligations or
such Loan Guaranty at least to the same extent as the Indebtedness being
extended, replaced, refunded, refinanced, renewed or defeased or (2) Disqualified
Stock or Preferred Stock, such Refinancing Indebtedness must be Disqualified
Stock or Preferred Stock, respectively, and (C) shall not include (1) Indebtedness,
Disqualified Stock or Preferred Stock of a subsidiary that is not a Subsidiary
Guarantor that refinances Indebtedness, Disqualified Stock or Preferred Stock
of the Borrower, (2) Indebtedness, Disqualified Stock or Preferred Stock
of a subsidiary that is not a Subsidiary Guarantor that refinances
Indebtedness, Disqualified Stock or Preferred Stock of a Subsidiary Guarantor
or (3) Indebtedness, Disqualified Stock or Preferred Stock of the Borrower
or a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or
Preferred Stock of an Unrestricted Subsidiary;


 


(xvi) Indebtedness,
Disqualified Stock or Preferred Stock (x) of the Borrower or any of its Restricted
Subsidiaries incurred to finance the acquisition of any Person or assets or
(y) of Persons that are acquired by the Borrower or any Restricted
Subsidiary or merged into the Borrower or a Restricted Subsidiary in accordance
with the terms of this Agreement; provided  that
either (A) after giving effect to such acquisition or merger, either (1) the
Borrower would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in paragraph (a) of
this Section 6.01; or (2) the Fixed Charge Coverage Ratio of the
Borrower and the Restricted Subsidiaries on a consolidated basis is greater
than immediately prior to such acquisition or merger; or (B) such
Indebtedness, Disqualified Stock or Preferred Stock (1) is not Secured
Indebtedness and is Subordinated Indebtedness with subordination terms no more
favorable to the holders thereof than the subordination terms set forth in the
indenture governing the Senior Subordinated Notes as in effect on the Closing
Date, (2) is not incurred while a Default exists and no Default shall
result therefrom, (3) does not mature (and is not mandatorily redeemable
in the case of Disqualified Stock or Preferred Stock) and does not require any
payment of principal prior to Maturity Date and (4) in the case of
clause (y) above only, is not incurred in contemplation of such
acquisition or merger;


 


(xvii) Indebtedness arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument drawn against insufficient funds in the ordinary course of
business; provided  that such
Indebtedness is extinguished within two (2) Business Days of its
incurrence;


 


(xviii) Indebtedness of the
Borrower or any Restricted Subsidiary supported by a letter of credit issued
pursuant to the Senior Secured Asset-Based Revolving Credit Facility, in a
principal amount not in excess of the stated amount of such letter of credit;


 


70
















 


(xix) Indebtedness,
Disqualified Stock or Preferred Stock of a Restricted Subsidiary incurred to
finance or assumed in connection with an acquisition which, when aggregated
with the principal amount of all other Indebtedness, Disqualified Stock and
Preferred Stock incurred pursuant to this clause (xix) and then outstanding,
does not exceed $75,000,000 (it being understood that any Indebtedness,
Disqualified Stock and Preferred Stock incurred pursuant to this clause (xix)
shall cease to be deemed incurred or outstanding for purposes of this
clause (xix) but shall be deemed incurred pursuant to paragraph (a) of
this Section 6.01 from and after the first date on which the Borrower or
such Restricted Subsidiary could have incurred such Indebtedness, Disqualified
Stock or Preferred Stock pursuant to paragraph (a) of this Section 6.01
without reliance on this clause (xix));


 


(xx) Indebtedness incurred
by a Foreign Subsidiary which, when aggregated with the principal amount of all
other Indebtedness incurred pursuant to this clause (xx) and then
outstanding, does not exceed 5.0% of Foreign Subsidiary Total Assets (it being
understood that any Indebtedness, Disqualified Stock and Preferred Stock
incurred pursuant to this clause (xx) shall cease to be deemed incurred or
outstanding for purposes of this clause (xx) but shall be deemed incurred
pursuant to paragraph (a) of this Section 6.01 from and after the
first date on which the Borrower or such Restricted Subsidiary could have
incurred such Indebtedness, Disqualified Stock or Preferred Stock pursuant to
paragraph (a) of this Section 6.01 without reliance on this
clause (xx));


 


(xxi) Indebtedness
consisting of Indebtedness issued by the Borrower or any Restricted Subsidiary
to current or former officers, managers, directors and employees thereof, their
respective estates, spouses or former spouses, in each case to finance the
purchase or redemption of Equity Interests of the Borrower or any direct or
indirect parent company of the Borrower to the extent described in Section 6.04(b)(iv);


 


(xxii) Indebtedness,
Disqualified Stock and Preferred Stock of the Borrower or any Restricted
Subsidiary not otherwise permitted hereunder in an aggregate principal amount
or liquidation preference, which, when aggregated with the principal amount and
liquidation preference of all other Indebtedness, Disqualified Stock and
Preferred Stock incurred pursuant to this clause (xxii) and then
outstanding, does not at any one time outstanding exceed the sum of (A) $175,000,000
(it being understood that any Indebtedness, Disqualified Stock and Preferred
Stock incurred pursuant to this clause (xxii)(A) shall cease to be
deemed incurred or outstanding for purposes of this clause (xxii)(A) but
shall be deemed incurred pursuant to paragraph (a) of this Section 6.01
from and after the first date on which the Borrower or such Restricted
Subsidiary could have incurred such Indebtedness, Disqualified Stock or
Preferred Stock pursuant to paragraph (a) of this Section 6.01
without reliance on this clause (xxii)(A)), plus (B) 200% of
the net cash proceeds received by the Borrower since after the Closing Date
from the issue or sale of Equity Interests of the Borrower or cash contributed
to the capital of the Borrower (in each case, other than proceeds of Disqualified
Stock or sales of Equity Interests to the Borrower or any of its subsidiaries)
as determined in accordance with Sections 6.04(a)(iii)(B) and (a)(iii)(C) to
the extent such net cash proceeds or cash have not been applied pursuant to
such clauses to make Restricted Payments or to make other investments, payments
or exchanges pursuant to Section 6.04(b) or to make Permitted
Investments (other than Permitted Investments specified in clauses (a) and
(c) of the definition thereof); and


 


(xxiii) Attributable Debt
incurred by the Borrower or any Restricted Subsidiary pursuant to Sale and
Lease-Back Transactions of property (real or personal), equipment or other
fixed or capital assets owned by the Borrower or any Restricted Subsidiary as
of the Closing Date or 


 


71

















 


acquired by the Borrower or any Restricted Subsidiary after the Closing
Date in exchange for, or with the proceeds of the sale of, such assets owned by
the Borrower or any Restricted Subsidiary as of the Closing Date, provided
that the aggregate amount of Attributable Debt incurred under this
clause (xxiii) does not exceed $100,000,000.


 


(c)  For purposes of
determining compliance with this Section 6.01, in the event that an item
of Indebtedness, Disqualified Stock or Preferred Stock meets the criteria of
more than one of the categories of Permitted Debt described in clauses (i) through
(xxiii) of paragraph (b) of this Section 6.01 or is entitled to be
incurred pursuant to paragraph (a) of this Section 6.01, the
Borrower, in its sole discretion, shall classify or reclassify, or later
divide, classify or reclassify, such item of Indebtedness, Disqualified Stock
or Preferred Stock (or any portion thereof) and shall only be required to
include the amount and type of such Indebtedness, Disqualified Stock or
Preferred Stock in one or more of the above clauses; provided that all
Indebtedness outstanding under the Senior Secured Asset-Based Revolving Credit
Facility and the term loan facility provided for herein on the Closing Date
shall be deemed to have been incurred on such date in reliance on the exception
in clauses (i) and (ii) of the definition of “Permitted Debt”.


 


(d)  The accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness, Disqualified Stock or Preferred Stock shall
not be deemed to be an incurrence of Indebtedness, Disqualified Stock or
Preferred Stock for purposes of this Section 6.01.


 


(e)  For purposes of
determining compliance with any Dollar-denominated restriction on the incurrence
of Indebtedness, the Dollar-equivalent principal amount of Indebtedness
denominated in a foreign currency shall be calculated based on the relevant
currency exchange rate in effect on the date such Indebtedness was incurred, in
the case of term debt, or first committed, in the case of revolving credit
debt; provided that if such Indebtedness is incurred to extend, replace,
refund, refinance, renew or defease other Indebtedness denominated in a foreign
currency, and such extension, replacement, refunding, refinancing, renewal or
defeasance would cause the applicable Dollar-denominated restriction to be
exceeded if calculated at the relevant currency exchange rate in effect on the
date of such extension, replacement, refunding, refinancing, renewal or
defeasance, such Dollar-denominated restriction shall be deemed not to have
been exceeded so long as the principal amount of such refinancing Indebtedness
does not exceed the principal amount of such Indebtedness being extended,
replaced, refunded, refinanced, renewed or defeased.


 


(f)  The principal
amount of any Indebtedness incurred to extend, replace, refund, refinance,
renew or defease other Indebtedness, if incurred in a different currency from
the Indebtedness being extended, replaced, refunded, refinanced, renewed or
defeased, shall be calculated based on the currency exchange rate applicable to
the currencies in which such respective Indebtedness is denominated that is in
effect on the date of such extension, replacement, refunding, refinancing,
renewal or defeasance.


 


SECTION 6.02.  Limitation on Liens.  Holdings and the Borrower will not, and the
Borrower will not permit any of the Subsidiary Guarantors to, directly or
indirectly, create, incur, assume or suffer to exist any Lien (the “Initial
Lien”) that secures obligations under any Indebtedness on any asset or
property of Holdings, the Borrower or any Subsidiary Guarantor now owned or
hereafter acquired, or any income or profits therefrom, or assign or convey any
right to receive income therefrom, except:


 


(a) in the case of the Term
Loan First Lien Collateral, any Initial Lien if (i) such Initial Lien
expressly ranks junior to the first-priority security interest intended to be
created in favor of the Agent for the benefit of the Term Loan Secured Parties
(as defined in the Intercreditor Agreement) pursuant to the Collateral
Documents; provided, however, that the terms of such 


 


72

















 


junior
interest shall be no more favorable to the beneficiaries thereof than the terms
contained in the Intercreditor Agreement; or (ii) such Initial Lien is a
Permitted Collateral Lien;


 


(b) in the case of the
Revolving Facility First Lien Collateral, any Initial Lien if (i) the Obligations
or the applicable Loan Guaranty of a Loan Party, as the case may be, are equally
and ratably secured on a second-priority basis by such Revolving Facility First
Lien Collateral until such time as such Initial Lien is released (other than
through the exercise of remedies with respect thereto) or (ii) such
Initial Lien is a Permitted Lien; and


 


(c) in the case of any
other asset or property, any Initial Lien if (i) the Obligations or the
applicable Loan Guaranty of a Loan Party, as the case may be, are equally and
ratably secured with (or on a senior basis to, in the case such Initial Lien
secures any Subordinated Indebtedness) the obligations secured by such Initial
Lien or (ii) such Initial Lien is a Permitted Lien.


 


Any Lien created for the
benefit of the Secured Parties pursuant to clause (b) or (c) of the
preceding paragraph shall provide by its terms that such Lien shall be
automatically and unconditionally released and discharged upon the release and
discharge of the Initial Lien (other than through the exercise of remedies with
respect thereto).


 


SECTION 6.03.  Merger, Consolidation or Sale of All or
Substantially All Assets.  

(a)  The Borrower shall not consolidate or merge with or into or wind up
into (whether or not the Borrower is the surviving entity), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to any Person
unless:


 


(i) the Borrower is the
surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than the Borrower) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation
organized or existing under
the laws of the United States of America, any state thereof, the District of
Columbia, or any territory thereof (the Borrower or such Person, as the case
may be, being herein called the “Successor
Borrower”);


 


(ii) the Successor
Borrower, if other than the Borrower, expressly assumes all the obligations of
the Borrower under this Agreement and the other Loan Documents pursuant to
supplements to the Loan Documents or other documents or instruments in form
reasonably satisfactory to the Agent;


 


(iii) immediately after
such transaction, no Default exists;


 


(iv) immediately after
giving pro forma effect to such transaction, as if such transaction had
occurred at the beginning of the applicable four-quarter period, (A) the Successor
Borrower would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 6.01(a) or
(B) the Fixed Charge Coverage Ratio for the Successor Borrower and the Restricted
Subsidiaries on a consolidated basis would be greater than such ratio for the
Borrower and the Restricted Subsidiaries immediately prior to such transaction;


 


(v) each Loan
Guarantor, unless it is the other party to the transactions described above (in
which case clause (i)(B) of paragraph (c) of this Section 6.03
or clause (ii) of paragraph (e) of this Section 6.03,
as applicable, shall apply) shall have by supplement to the Loan Documents
confirmed that its guarantee of the Obligations shall apply to such Person’s
obligations under the Loan Documents and the Loans; and


 


73

















 


(vi) the Borrower shall
have delivered to the Agent an Officers’ Certificate and an opinion of counsel,
each stating that such consolidation, merger or transfer and such supplements
to the Loan Documents, if any, comply with this Agreement and the other Loan
Documents.


 


(b)  The Successor
Borrower shall succeed to, and be substituted for, the Borrower under this
Agreement and the other Loan Documents and, except in the case of a lease
transaction, the predecessor Borrower will be released from its obligations
hereunder and thereunder. 
Notwithstanding clauses (iii) and (iv) of paragraph (a) of
this Section 6.03, (i) any Restricted Subsidiary may consolidate
with, merge into or transfer all or part of its properties and assets to, the
Borrower, and (ii) the Borrower may merge with an Affiliate of the
Borrower incorporated solely for the purpose of reincorporating the Borrower in
another state of the United States of America so long as the amount of Indebtedness
of the Borrower and the Restricted Subsidiaries is not increased thereby.


 


(c)  Subject to Section 10.12,
no Subsidiary Guarantor shall, and the Borrower shall not permit any Subsidiary
Guarantor to, consolidate or merge with or into or wind up into (whether or not
such Subsidiary Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person unless:


 


(i) (A) such
Subsidiary Guarantor is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than such Subsidiary
Guarantor) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States of America, any state thereof, the District
of Columbia, or any territory thereof (such Subsidiary Guarantor or such
Person, as the case may be, being herein called the “Successor Person”), (B) the Successor Person, if
other than such Subsidiary Guarantor, expressly assumes all the obligations of
such Subsidiary Guarantor under such Subsidiary Guarantor’s Loan Guaranty and
the other Loan Documents, pursuant to a Joinder Agreement and supplements to
the Loan Documents or other documents or instruments in form reasonably
satisfactory to the Agent, (C) immediately after such transaction, no
Default exists and (D) the Borrower shall have delivered to the Agent an Officers’
Certificate and an opinion of counsel, each stating that such consolidation,
merger or transfer and such Joinder Agreement and supplements, if any, comply
with this Agreement and the other Loan Documents; or


 


(ii) the transaction is
made in compliance with Section 2.20.


 


(d)  The Successor
Person shall succeed to, and be substituted for, such Subsidiary Guarantor
under such Subsidiary Guarantor’s Loan Guaranty and the other Loan Documents
and, except in the case of a lease transaction, such Subsidiary Guarantor will
be released from its obligations thereunder. 
Notwithstanding the foregoing, any Subsidiary Guarantor may merge into
or transfer all or part of its properties and assets to another Subsidiary
Guarantor or the Borrower.


 


(e)  Holdings will not
consolidate or merge with or into or wind up into (whether or not Holdings is
the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, any Person unless (i) Holdings is the
surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than Holdings) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States
of America, any state thereof, the District of Columbia, or any territory
thereof (Holdings or such Person, as the case may be, being herein called the “Successor Holdings Guarantor”), (ii) the
Successor Holdings Guarantor, if other than Holdings, expressly assumes all the
obligations of Holdings under 


 


74

















 


Holdings’ Loan Guaranty and the other Loan Documents, pursuant to a
Joinder Agreement or other supplements or other documents or instruments in
form reasonably satisfactory to the Agent, (iii) immediately after such
transaction, no Event of Default or payment Default exists and (iv) the Borrower
shall have delivered to the Agent an Officers’ Certificate and an opinion of
counsel, each stating that such consolidation, merger or transfer and the
Joinder Agreement and such supplements or other documents or instruments, if
any, comply with this Agreement.


 


(f)  The Successor
Holdings Guarantor will succeed to, and be substituted for, Holdings under
Holdings’ Loan Guaranty and the other Loan Documents and, except in the case of
a lease transaction, the predecessor Holdings will be released from its
obligations thereunder.  Notwithstanding
the foregoing, Holdings may merge into or transfer all or part of its
properties and assets to a Subsidiary Guarantor or the Borrower, and Holdings
may merge with an Affiliate of the Borrower incorporated solely for the purpose
of reincorporating Holdings in another state of the United States of America so
long as the amount of Indebtedness of Holdings, the Borrower and the Restricted
Subsidiaries is not increased thereby.


 


(g)  Notwithstanding
the foregoing, the Merger shall be permitted without compliance with this Section 6.03.


 


(h)  For purposes of
this Section 6.03, the sale, lease, conveyance, assignment, transfer or
other disposition of all or substantially all of the properties and assets of
one or more subsidiaries of the Borrower or Holdings, as applicable, which
properties and assets, if held by the Borrower or Holdings, as applicable, instead
of such subsidiaries, would constitute all or substantially all of the
properties and assets of the Borrower and its subsidiaries on a consolidated
basis or Holdings and its subsidiaries on a consolidated basis, as applicable,
shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Borrower or Holdings, as applicable.


 


SECTION 6.04.  Limitation on Restricted Payments.  (a)  The Borrower shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly (w) declare
or pay any dividend or make any distribution on account of the Borrower’s or
any Restricted Subsidiary’s Equity Interests, including any dividend or
distribution payable in connection with any merger or consolidation, other than
(A) dividends or distributions by the Borrower payable in Equity Interests
(other than Disqualified Stock) of the Borrower or (B) dividends or distributions
by a Restricted Subsidiary so long as, in the case of any dividend or
distribution payable on or in respect of any class or series of securities
issued by a Restricted Subsidiary other than a Wholly-Owned Subsidiary, the
Borrower or a Restricted Subsidiary receives at least its pro rata  share of such dividend or distribution in
accordance with its Equity Interests in such class or series of securities, (x) purchase,
redeem, defease or otherwise acquire or retire for value any Equity Interests
of the Borrower or any direct or indirect parent of the Borrower, including in
connection with any merger or consolidation, (y) make any principal
payment on, or redeem, repurchase, defease or otherwise acquire or retire for
value in each case, prior to any scheduled repayment, sinking fund payment or
maturity, any Subordinated Indebtedness other than (A) Indebtedness
permitted under clauses (ix) and (x) of Section 6.01(b) or (B) the
purchase, repurchase or other acquisition of Subordinated Indebtedness purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of purchase, repurchase
or acquisition or (z) make any Restricted Investment (all such payments
and other actions set forth in clauses (w) through (z) above being
collectively referred to as “Restricted Payments”), unless, at the time
of such Restricted Payment:


 


(i) no Default shall
have occurred and be continuing or would occur as a consequence thereof;


 


75

















 


(ii) immediately after
giving effect to such transaction on a pro forma basis, the Borrower could
incur $1.00 of additional Indebtedness under Section 6.01(a); and


 


(iii) such Restricted
Payment, together with the aggregate amount of all other Restricted Payments
made by the Borrower and the Restricted Subsidiaries after the Closing Date
pursuant paragraph (a) of this Section 6.04 or clauses (i), (ii) (with
respect to the payment of dividends on Refunding Capital Stock pursuant to
clause (B) thereof only), (vi)(C), (viii) and (xii) of paragraph
(b) of this Section 6.04 (and excluding, for the avoidance of doubt,
all other Restricted Payments made pursuant to paragraph (b) of this Section 6.04),
is less than the sum, without duplication, of:


 


(A) 50% of the Consolidated Net Income of the
Borrower for the period (taken as one accounting period) from August 1,
2005 to the end of the Borrower’s most recently ended fiscal quarter for which
internal financial statements are available at the time of such Restricted
Payment, or, in the case such Consolidated Net Income for such period is a
deficit, minus 100% of such deficit, provided
that if, at the time of a proposed Restricted Payment under paragraph (a) of
this Section 6.04, the Consolidated Leverage Ratio of the Borrower is less
than 4.50 to 1.00, for purposes of calculating availability of amounts
hereunder for such Restricted Payment only, the reference to 50% in this
clause (A) above shall be deemed to be 75%, plus


 


(B) 100% of the aggregate net cash proceeds and
the fair market value, as determined in good faith by the Borrower, of
marketable securities or other property received by the Borrower after the
Closing Date (less the amount of such net cash proceeds to the extent
such amount has been relied upon to permit the incurrence of Indebtedness or
issuance of Disqualified Stock or Preferred Stock pursuant to Section 6.01(b)(xxii)(B))
from the issue or sale of (x) Equity Interests of the Borrower, including
Retired Capital Stock, but excluding cash proceeds and the fair market value,
as determined in good faith by the Borrower, of marketable securities or other
property received from the sale of (1) Equity Interests to any future,
present or former employees, directors, managers or consultants of the
Borrower, any direct or indirect parent company of the Borrower or any of the
Borrower’s subsidiaries after the Closing Date to the extent such amounts have
been applied to Restricted Payments made in accordance with clause (iv) of
paragraph (b) of this Section 6.04 and (2) Designated
Preferred Stock, and to the extent actually contributed to the Borrower, Equity
Interests of the Borrower’s direct or indirect parent companies (excluding
contributions of the proceeds from the sale of Designated Preferred Stock of
such companies or contributions to the extent such amounts have been applied to
Restricted Payments made in accordance with clause (iv) of paragraph (b) of
this Section 6.04) or (y) debt securities of the Borrower that have
been converted into or exchanged for such Equity Interests of the Borrower; provided  that this clause (B) shall not
include the proceeds from (I) Refunding Capital Stock, (II) Equity
Interests of the Borrower or debt securities of the Borrower that have been
converted into or exchanged for Equity Interests of the Borrower sold to a Restricted
Subsidiary or the Borrower, as the case may be, (III) Disqualified Stock
or debt securities that have been converted into or exchanged for Disqualified
Stock or (IV) Excluded Contributions, plus


 


(C) 100% of the aggregate amount of cash and
the fair market value, as determined in good faith by the Borrower, of
marketable securities or other property contributed to the capital of the
Borrower after the Closing Date (less the amount of such net cash
proceeds to the extent such amount has been relied upon to permit the
incurrence 


 


76

















 


of Indebtedness or issuance of Disqualified Stock or
Preferred Stock pursuant to Section 6.01(b)(xxii)(B)) (other than by a Restricted
Subsidiary and other than by any Excluded Contributions), plus


 


(D) to the extent not already included in
Consolidated Net Income, 100% of the aggregate amount received in cash and the
fair market value, as determined in good faith by the Borrower, of marketable
securities or other property received after the Closing Date by means of (1) the
sale or other disposition (other than to the Borrower or a Restricted
Subsidiary) of Restricted Investments made by the Borrower or any Restricted
Subsidiary and repurchases and redemptions of such Restricted Investments from
the Borrower or any Restricted Subsidiary and repayments of loans or advances
that constitute Restricted Investments by the Borrower or any Restricted
Subsidiary or (2) the sale (other than to the Borrower or a Restricted
Subsidiary) of the Capital Stock of an Unrestricted Subsidiary (other than Kate
Spade) or a distribution from an Unrestricted Subsidiary (other than an
Extraordinary Distribution) (other than in each case to the extent the
Investment in such Unrestricted Subsidiary was made by the Borrower or a Restricted
Subsidiary pursuant to clauses (ix) or (xiii) of paragraph (b) of
this Section 6.04 or to the extent such Investment constituted a Permitted
Investment) or a dividend from an Unrestricted Subsidiary (other than an
Extraordinary Distribution), plus


 


(E) in the case of the redesignation of an
Unrestricted Subsidiary (other than Kate Spade) as a Restricted Subsidiary
after the Closing Date, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Borrower in good faith or if, in
the case of an Unrestricted Subsidiary, such fair market value may exceed $125,000,000,
in writing by an Independent Financial Advisor, at the time of the
redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary, other
than an Unrestricted Subsidiary to the extent the Investment in such
Unrestricted Subsidiary was made by the Borrower or a Restricted Subsidiary pursuant
to clauses (ix) or (xiii) of paragraph (b) of this Section 6.04
or to the extent such Investment constituted a Permitted Investment.


 


(b)  The provisions of
paragraph (a) of this Section 6.04 shall not prohibit:


 


(i) the payment of any
dividend or distribution within 60 days after the date of declaration
thereof, if at the date of declaration such payment would have complied with
the provisions of this Agreement;


 


(ii) (A) the
redemption, repurchase, retirement or other acquisition of any Equity Interests
(“Retired Capital Stock”)  or Subordinated Indebtedness of
the Borrower or any Equity Interests of any direct or indirect parent company
of the Borrower, in exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of
the Borrower (in each case, other than any Disqualified Stock) (“Refunding Capital Stock”) and
(B) if immediately prior to the retirement of Retired Capital Stock, the
declaration and payment of dividends thereon was permitted under clause (vi) of
this paragraph (b), the declaration and payment of dividends on the Refunding
Capital Stock (other than Refunding Capital Stock the proceeds of which were
used to redeem, repurchase, retire or otherwise acquire any Equity Interests of
any direct or indirect parent company of the Borrower) in an aggregate amount
per year no greater than the aggregate amount of dividends per annum that was
declarable and payable on such Retired Capital Stock immediately prior to such
retirement;


 


77

















 


(iii) the defeasance,
redemption, repurchase or other acquisition or retirement of Subordinated
Indebtedness of the Borrower or a Subsidiary Guarantor made by exchange for, or
out of the proceeds of the substantially concurrent sale of, new Indebtedness
of such Person that is incurred in compliance with Section 6.01 so long as
(A) the principal amount of such new Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Subordinated
Indebtedness being so defeased, redeemed, repurchased, acquired or retired for
value, plus the amount of any reasonable premium required to be paid
under the terms of the instrument governing the Subordinated Indebtedness being
so defeased, redeemed, repurchased, acquired or retired and any reasonable fees
and expenses incurred in connection with the issuance of such new Indebtedness,
(B) such Indebtedness is subordinated to the Obligations at least to the
same extent as such Subordinated Indebtedness so defeased, redeemed,
repurchased, acquired or retired, (C) such Indebtedness has a final
scheduled maturity date equal to or later than the final scheduled maturity
date of the Subordinated Indebtedness being so defeased, redeemed, repurchased,
acquired or retired and (D) such Indebtedness has a Weighted Average Life
to Maturity equal to or greater than the remaining Weighted Average Life to
Maturity of the Subordinated Indebtedness being so defeased, redeemed,
repurchased, acquired or retired;


 


(iv) a Restricted
Payment to pay for the repurchase, retirement or other acquisition or
retirement for value of Equity Interests (other than Disqualified Stock) of the
Borrower or any of its direct or indirect parent companies held by any future,
present or former employee, director, manager or consultant of the Borrower,
any of its subsidiaries or any of its direct or indirect parent companies
pursuant to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement; provided  that
the aggregate Restricted Payments made under this clause (iv) do not
exceed in any calendar year $10,000,000 (with unused amounts in any calendar
year being carried over to succeeding calendar years subject to a maximum
(without giving effect to the following proviso) of $20,000,000 in any calendar
year); provided,  further,  that such amount in any calendar year may
be increased by an amount not to exceed (A) the cash proceeds from the
sale of Equity Interests (other than Disqualified Stock) of the Borrower and,
to the extent contributed to the Borrower, Equity Interests of any of the
Borrower’s direct or indirect parent companies, in each case to members of
management, directors, managers or consultants of the Borrower, any of its subsidiaries
or any of its direct or indirect parent companies that occurs after the Closing
Date, to the extent the cash proceeds from the sale of such Equity Interests
have not otherwise been applied to the payment of Restricted Payments by virtue
of clause (iii) of paragraph (a) of this Section 6.04, plus (B) the cash proceeds
of key man life insurance policies received by the Borrower and the Restricted
Subsidiaries after the Closing Date, less
(C) the amount of any Restricted Payments previously made pursuant to
clauses (A) and (B) of this clause (iv); and provided,  further,  that cancellation of Indebtedness owing
to the Borrower from members of management, directors, managers or consultants
of the Borrower, any of its direct or indirect parent companies or any Restricted
Subsidiary in connection with a repurchase of Equity Interests of the Borrower
or any of its direct or indirect parent companies shall not be deemed to
constitute a Restricted Payment for purposes of this Section 6.04 or any
other provision of this Agreement;


 


(v) the declaration and
payment of dividends to holders of any class or series of Disqualified Stock of
the Borrower or any Restricted Subsidiary issued in accordance Section 6.01
to the extent such dividends are included in the definition of “Fixed Charges”;


 


(vi) the declaration
and payment of dividends (A) to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued by the
Borrower after the Closing Date, (B) to a direct or indirect parent
company of the Borrower, the proceeds of which 


 


78

















 


will
be used to fund the payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) of such parent
company issued after the Closing Date; provided that the amount of dividends paid pursuant to this
clause (B) shall not exceed the aggregate amount of cash actually
contributed to the Borrower from the sale of such Designated Preferred Stock,
or (C) on Refunding Capital Stock that is Preferred Stock in excess of the
dividends declarable and payable thereon pursuant to clause (ii) of
this paragraph (b); provided,  however,
in the case of each of (A), (B) and (C) of this clause (vi),
that for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of issuance
of such Designated Preferred Stock or the declaration of such dividends on
Refunding Capital Stock that is Preferred Stock, after giving effect to such
issuance or declaration on a pro forma basis, the Borrower and the Restricted Subsidiaries
on a consolidated basis would have had a Fixed Charge Coverage Ratio of at
least 2.00 to 1.00;


 


(vii) repurchases of
Equity Interests deemed to occur upon exercise of stock options or warrants if
such Equity Interests represent a portion of the exercise price of such options
or warrants;


 


(viii) the declaration
and payment of dividends on the Borrower’s common stock following the first public
offering of the Borrower’s common stock or the common stock of any of its
direct or indirect parent companies after the Closing Date, of up to 6% per
annum of the net proceeds received by or contributed to the Borrower in or from
any such public offering, other than public offerings with respect to the
Borrower’s common stock registered on Form S-4 or Form S-8 and other
than any public sale constituting an Excluded Contribution;


 


(ix) Restricted
Payments that are made with Excluded Contributions;


 


(x) the declaration and
payment of dividends by the Borrower to, or the making of loans to, its direct
parent company in amounts required for the Borrower’s direct or indirect parent
companies to pay (A) franchise taxes and other fees, taxes and expenses
required to maintain their corporate existence, (B) Federal, state and
local income taxes, to the extent such income taxes are attributable to the
income of the Borrower and the Restricted Subsidiaries and, to the extent of
the amount actually received from its Unrestricted Subsidiaries, in amounts
required to pay such taxes to the extent attributable to the income of such
Unrestricted Subsidiaries, (C) customary salary, bonus and other benefits
payable to officers and employees of any direct or indirect parent company of
the Borrower to the extent such salaries, bonuses and other benefits are
attributable to the ownership or operation of the Borrower and the Restricted Subsidiaries,
(D) general corporate overhead expenses of any direct or indirect parent
company of the Borrower to the extent such expenses are attributable to the
ownership or operation of the Borrower and the Restricted Subsidiaries, and (E) reasonable
fees and expenses incurred in connection with any unsuccessful debt or equity
offering by such direct or indirect parent company of the Borrower;


 


(xi) any Restricted Payments
used to fund the Transactions and the fees and expenses related thereto,
including those owed to Affiliates, in each case to the extent permitted under Section 6.05;


 


(xii) the repurchase,
redemption or other acquisition or retirement for value of any Subordinated
Indebtedness pursuant to provisions similar to those set forth in Sections 2.19
and 2.20; provided that, prior to such repurchase, redemption or other
acquisition, the Borrower (or a third party to the extent permitted by this
Agreement) shall have made a Change of Control Offer or Asset Sale Offer, as
the case may be, with respect to the outstanding Loans and shall have 


 


79

















 


repaid
all such Loans validly tendered for prepayment and not withdrawn in connection
with such Change of Control Offer or Asset Sale Offer;


 


(xiii) Investments in
Unrestricted Subsidiaries having an aggregate fair market value, taken together
with all other Investments made pursuant to this clause (xiii) that are at
the time outstanding, without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of cash or
marketable securities, not to exceed the greater of (x) $75,000,000 and
(y) 1.00% of Total Assets at the time of such Investment (with the fair
market value of each Investment being measured at the time such Investment is
made and without giving effect to subsequent changes in value);


 


(xiv) distributions or payments
of Receivables Fees;


 


(xv) the distribution, as a
dividend or otherwise (and the declaration of such dividend), of shares of
Capital Stock of, or Indebtedness owed to the Borrower or a Restricted Subsidiary
by, any Unrestricted Subsidiary (other than Kate Spade); and


 


(xvi) other Restricted
Payments in an amount which, when taken together with all other Restricted
Payments made pursuant to this clause (xvi), does not exceed $75,000,000;


 


provided, however, that at the time of, and after giving effect
to, any Restricted Payment permitted under clauses (xv) and (xvi) of this paragraph
(b), no Default shall have occurred and be continuing or would occur as a
consequence thereof.


 


(c)  Notwithstanding
anything to the contrary herein, the Borrower will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, make any (i) Restricted
Payment covered in clauses (w) through (y) of the definition of Restricted
Payments set forth in paragraph (a) of this Section 6.04 to the
holders of Equity Interests of the Borrower or any of its direct or indirect
parent companies (which shall include the Sponsors, the Co-Investors and their
respective Affiliates) other than to the Borrower and its Restricted
Subsidiaries, future, present or former employees, directors, managers or
consultants of the Borrower, any of its subsidiaries or any of its direct or
indirect parent companies with respect to Equity Interests held by them in such
capacities and other than a Restricted Payment made pursuant to clause (x) of
paragraph (b) of this Section 6.04 or (ii)  Investment in the
Sponsors, the Co-Investors, any Permitted Holders who are members of a group
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act or any successor provision) with the Sponsors or any
Co-Investors or any Person or group who becomes a Permitted Holder following a
Change of Control as provided for in the definition of “Permitted Holders” or
their respective Affiliates (other than in the Borrower and its subsidiaries
and members of management of the Borrower (or its direct parent)), in each case
during any period beginning on the date on which the Borrower makes an election
to pay interest on the Senior Notes by increasing the principal amount of the
outstanding Senior Notes or by issuing additional Senior Notes pursuant to the
Senior Notes Indenture (or an election under any similar provision set forth in
any instrument governing any Indebtedness refinancing, refunding, extending,
renewing or replacing the Senior Notes) with respect to any interest period
relating thereto and ending on the first date after such interest period on
which the Borrower makes a payment of interest in cash on the Senior Notes
pursuant to the Senior Notes Indenture (or pursuant to any such other
instrument) with respect to a subsequent interest period relating thereto on
the Senior Notes pursuant to the Senior Notes Indenture with respect to a
subsequent interest period.


 


(d)  The Borrower shall
not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the penultimate paragraph of the definition of “Unrestricted
Subsidiary”.


 


80

















 


For purposes of designating any Restricted Subsidiary as an Unrestricted
Subsidiary, all outstanding Investments by the Borrower and the Restricted Subsidiaries
(except to the extent repaid) in the subsidiary so designated shall be deemed
to be Restricted Payments in an amount determined as set forth in the last
sentence of the definition of “Investment”. 
Such designation shall be permitted only if a Restricted Payment in such
amount would be permitted at such time, whether pursuant to paragraph (a) of
this Section 6.04 or under clauses (ix), (xiii) or (xvi) of paragraph
(b) of this Section 6.04, or pursuant to the definition of “Permitted
Investments”, and if such subsidiary otherwise meets the definition of an “Unrestricted
Subsidiary”.


 


SECTION 6.05.  Limitations on Transactions with
Affiliates.  (a)  The Borrower shall
not, and shall not permit any Restricted Subsidiary to, make any payment to, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of the Borrower (each of the
foregoing, an “Affiliate Transaction”) involving aggregate payments or
consideration in excess of $10,000,000, unless (i) such Affiliate
Transaction is on terms that are not materially less favorable to the Borrower
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Borrower or such Restricted Subsidiary with
an unrelated Person and (ii) the Borrower delivers to the Agent with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in excess of $30,000,000,
a Board Resolution adopted by the majority of the members of the Board of Directors
of the Borrower approving such Affiliate Transaction and set forth in an
Officers’ Certificate certifying that such Affiliate Transaction complies with
clause (i) above.


 


(b)  The limitations
set forth in paragraph (a) of this Section 6.05 shall not apply to:


 


(i) transactions
between or among the Borrower or any of the Restricted Subsidiaries;


 


(ii) Restricted
Payments that are permitted by the provisions of Section 6.04 and the
definition of “Permitted Investments”;


 


(iii) the payment of
management, consulting, monitoring and advisory fees and related expenses to
the Sponsors and any termination or other fee payable to the Sponsors upon a
change of control or initial public equity offering of the Borrower or any
direct or indirect parent company thereof pursuant to the Management Services
Agreement as in effect on the Closing Date;


 


(iv) the payment of
reasonable and customary fees paid to, and indemnities provided on behalf of,
officers, directors, managers, employees or consultants of the Borrower, any of
its direct or indirect parent companies or any Restricted Subsidiary;


 


(v) payments by the
Borrower or any Restricted Subsidiary to any of the Sponsors and the
Co-Investors for any financial advisory, financing, underwriting or placement
services or in respect of other investment banking activities, including in
connection with acquisitions or divestitures, which payments are approved by a
majority of the members of the Board of Directors of the Borrower in good faith;


 


(vi) transactions in
which the Borrower or any Restricted Subsidiary, as the case may be, delivers
to the Agent a letter from an Independent Financial Advisor stating that such
transaction is fair to the Borrower or such Restricted Subsidiary from a
financial point of view or meets the requirements of clause (i) of
paragraph (a) of this Section 6.05;


 


81
















 


(vii) payments or loans
(or cancellations of loans) to employees or consultants of the Borrower, any of
its direct or indirect parent companies or any Restricted Subsidiary and
employment agreements, stock option plans and other compensatory arrangements with
such employees or consultants that are, in each case, approved by the Borrower
in good faith;


 


(viii) any agreement,
instrument or arrangement as in effect as of the Closing Date, or any amendment
thereto (so long as any such amendment is not disadvantageous to the Lenders in
any material respect as compared to the applicable agreement as in effect on
the Closing Date as reasonably determined in good faith by the Borrower);


 


(ix) the existence of,
or the performance by the Borrower or any of the Restricted Subsidiaries of its
obligations under the terms of, any stockholders agreement or its equivalent
(including any registration rights agreement or purchase agreement related
thereto) to which it is a party as of the Closing Date and any similar agreements
which it may enter into thereafter; provided, however, that the existence of, or the
performance by the Borrower or any Restricted Subsidiary of obligations under
any future amendment to any such existing agreement or under any similar
agreement entered into after the Closing Date shall only be permitted by this
clause (ix) to the extent that the terms of any such existing
agreement together with all amendments thereto, taken as a whole, or new
agreement are not otherwise more disadvantageous to the Lenders in any material
respect than the terms of the original agreement in effect on the Closing Date
as reasonably determined in good faith by the Borrower;


 


(x) the Transactions, the
Credit Card Sale and the payment of all fees and expenses related to the Transactions
and the Credit Card Sale, in each case as disclosed in the offering circular
relating to the New Notes;


 


(xi) transactions with
customers, clients, suppliers, or purchasers or sellers of goods or services,
in each case in the ordinary course of business and otherwise in compliance
with the terms of this Agreement that are fair to the Borrower and the Restricted
Subsidiaries, in the reasonable determination of the Board of Directors or the
senior management of the Borrower, or are on terms at least as favorable as
might reasonably have been obtained at such time from an unaffiliated party;


 


(xii) the issuance of Equity
Interests (other than Disqualified Stock) of the Borrower to any Permitted
Holder or to any director, manager, officer, employee or consultant of the
Borrower or any direct or indirect parent company thereof;


 


(xiii) sales of accounts
receivable, or participations therein, in connection with any Receivables
Facility; and


 


(xiv) investments by the
Sponsors and the Co-Investors in securities of the Borrower or any of its Restricted
Subsidiaries so long as (A) the investment is being offered generally to
other investors on the same or more favorable terms and (B) the investment
constitutes less than 5.0% of the proposed or outstanding issue amount of such
class of securities.


 


SECTION 6.06.  Limitations on Asset Sales.  (a)  The Borrower shall not, and shall
not permit any Restricted Subsidiary to, cause, make or suffer to exist an
Asset Sale of any Term Loan First Lien Collateral, unless:


 


82

















 


(i) the Borrower or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (as determined
in good faith by the Borrower) of the assets sold or otherwise disposed of;


 


(ii) except in the case
of a Permitted Asset Swap, at least 75% of the consideration therefor received
by the Borrower or such Restricted Subsidiary, as the case may be, is in the
form of cash or Cash Equivalents (provided  that the amount of (A) any
liabilities (as shown on the Borrower’s or such Restricted Subsidiary’s most
recent balance sheet or in the notes thereto) of the Borrower or such Restricted
Subsidiary, other than liabilities that are by their terms subordinated to the Obligations,
that are assumed by the transferee of any such assets (or a third party on
behalf of the transferee) and for which the Borrower or such Restricted
Subsidiary has been validly released by all creditors in writing, (B) any
securities, notes or other obligations or assets received by the Borrower or
such Restricted Subsidiary from such transferee that are converted by the
Borrower or such Restricted Subsidiary into cash (to the extent of the cash
received) within 180 days following the closing of such Asset Sale and (C) any
Designated Noncash Consideration received by the Borrower or such Restricted
Subsidiary in such Asset Sale having an aggregate fair market value, taken
together with all other Designated Noncash Consideration received pursuant to
this clause (C) that is at that time outstanding, not to exceed the
greater of (I) $125,000,000 and (II) 1.75% of Total Assets at the
time of the receipt of such Designated Noncash Consideration, with the fair
market value of each item of Designated Noncash Consideration being measured at
the time received and without giving effect to subsequent changes in value,
shall be deemed to be cash for purposes of this provision and for no other
purpose);


 


(iii) an amount equal
to 100% of the Net Proceeds of such Asset Sale (less, in the case of the
sale of Capital Stock of a Person, the amount allocable to the inventory and
related assets of such Person, as determined by the Borrower in good faith) is paid
directly by the purchaser thereof to the Agent to be held in trust for
application in accordance with Section 2.20; and


 


(b)  The Borrower shall
not, and shall not permit any Restricted Subsidiary to, cause, make or suffer
to exist an Asset Sale (other than an Asset Sale of Term Loan First Lien
Collateral), unless:


 


(i) the Borrower or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (as determined
in good faith by the Borrower) of the assets sold or otherwise disposed of;


 


(ii) except in the case
of a Permitted Asset Swap, at least 75% of the consideration therefor received
by the Borrower or such Restricted Subsidiary, as the case may be, is in the
form of cash or Cash Equivalents (provided  that the amount of (A) any
liabilities (as shown on the Borrower’s or such Restricted Subsidiary’s most
recent balance sheet or in the notes thereto) of the Borrower or such
Restricted Subsidiary, other than liabilities that are by their terms
subordinated to the Obligations, that are assumed by the transferee of any such
assets (or a third party on behalf of the transferee) and for which the
Borrower or such Restricted Subsidiary has been validly released by all
creditors in writing, (B) any securities, notes or other obligations or
assets received by the Borrower or such Restricted Subsidiary from such
transferee that are converted by the Borrower or such Restricted Subsidiary
into cash (to the extent of the cash received) within 180 days following
the closing of such Asset Sale and (C) any Designated Noncash
Consideration received by the Borrower or such Restricted Subsidiary in such
Asset Sale having an aggregate fair market value, taken together with all other
Designated Noncash Consideration received pursuant to this clause (C) that
is at that time outstanding, not to exceed the greater of (I) $125,000,000 and
(II) 1.75% of Total Assets at the time of the receipt of such Designated
Noncash Consideration, with the fair market value of each item of Designated
Noncash 


 


83

















 


Consideration
being measured at the time received and without giving effect to subsequent
changes in value, shall be deemed to be cash for purposes of this provision and
for no other purpose); and


 


(iii) the Net Proceeds
of such Asset Sale are applied in accordance with Section 2.20.


 


SECTION 6.07.  Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.  (a) 
The Borrower shall not, and shall not permit any Restricted Subsidiary that is
not a Subsidiary Guarantor to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
consensual restriction on the ability of any such Restricted Subsidiary to:


 


(i) (A) pay dividends
or make any other distributions to the Borrower or any Restricted Subsidiary on
its Capital Stock or with respect to any other interest or participation in, or
measured by, its profits, or (B) pay any Indebtedness owed to the Borrower
or any Restricted Subsidiary;


 


(ii) make loans or
advances to the Borrower or any Restricted Subsidiary; or


 


(iii) sell, lease or
transfer any of its properties or assets to the Borrower or any Restricted Subsidiary.


 


(b)  The limitations
set forth in paragraph (a) of this Section 6.07 shall not apply
(in each case) to such encumbrances or restrictions existing under or by reason
of:


 


(i) contractual
encumbrances or restrictions in effect on the Closing Date, including pursuant
to the Loan Documents, the Senior Secured Asset-Based Revolving Credit Facility
and the related documentation (including security documents and intercreditor
agreements) and Hedging Obligations, the 2008 Notes and the 2028 Debentures;


 


(ii) the New Note
Documents and the New Notes and the subsidiary guarantees of the New Notes
issued thereunder, the Collateral Documents, the ABL Security Documents and the
Intercreditor Agreement;


 


(iii) purchase money
obligations for property acquired in the ordinary course of business and
Capitalized Lease Obligations that impose restrictions of the nature discussed
in clause (iii) of paragraph (a) of this Section 6.07
on the property so acquired;


 


(iv) applicable law or
any applicable rule, regulation or order;


 


(v) any agreement or
other instrument of a Person acquired by the Borrower or any Restricted Subsidiary
in existence at the time of such acquisition (but not created in connection
therewith or in contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired;


 


84

















 


(vi) contracts for the
sale of assets, including customary restrictions with respect to a subsidiary
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such subsidiary;


 


(vii) Secured
Indebtedness otherwise permitted to be incurred pursuant to Sections 6.01 and
6.02 that limit the right of the debtor to dispose of the assets securing such
Indebtedness;


 


(viii) restrictions on
cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business;


 


(ix) other Indebtedness,
Disqualified Stock or Preferred Stock of Restricted Subsidiaries permitted to
be incurred after the Closing Date pursuant to Section 6.01;


 


(x) customary provisions in
joint venture agreements and other similar agreements;


 


(xi) customary provisions
contained in leases and other agreements entered into in the ordinary course of
business;


 


(xii) restrictions created in
connection with any Receivables Facility; provided that in the case of Receivables Facilities
established after the Closing Date, such restrictions are necessary or
advisable, in the good faith determination of the Borrower, to effect such
Receivables Facility;


 


(xiii) restrictions or
conditions contained in any trading, netting, operating, construction, service,
supply, purchase or other agreement to which the Borrower or any of its Restricted
Subsidiaries is a party entered into in the ordinary course of business; provided
that such agreement prohibits the encumbrance of solely the property or assets
of the Borrower or such Restricted Subsidiary that are the subject of such
agreement, the payment rights arising thereunder or the proceeds thereof and
does not extend to any other asset or property of the Borrower or such Restricted
Subsidiary or the assets or property of any other Restricted Subsidiary; and


 


(xiv) any encumbrances or
restrictions of the type referred to in clauses (i), (ii) and (iii) of
paragraph (a) of this Section 6.07 imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations referred
to in clauses (i) through (xiii) of this paragraph (b); provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Borrower,
not materially more restrictive with respect to such encumbrance and other
restrictions than those prior to such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing; provided,
further, that with respect to contracts, instruments or obligations
existing on the Closing Date, any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings are
not materially more restrictive with respect to such encumbrances and other
restrictions than those contained in such contracts, instruments or obligations
as in effect on the Closing Date.


 


SECTION 6.08.  Limitations on Guarantees of Indebtedness
by Restricted Subsidiaries.  The
Borrower will not permit any of its Wholly-Owned Subsidiaries that are Restricted
Subsidiaries (and non-Wholly-Owned Subsidiaries if such non-Wholly-Owned
Subsidiaries guarantee other capital markets debt securities), other than a
Subsidiary Guarantor or a Foreign Subsidiary, to guarantee the payment of any
Indebtedness of the Borrower or any other Subsidiary Guarantor unless:


 


85

















 


(a) such Restricted Subsidiary
within thirty (30) days executes and delivers a Joinder Agreement providing for
a Loan Guaranty by such Restricted Subsidiary, except that with respect to a guarantee
of Indebtedness of the Borrower or any Subsidiary Guarantor, that is by its
express terms subordinated in right of payment to the Obligations or the Loan
Guaranty of such Restricted Subsidiary, any such guarantee by such Restricted Subsidiary
with respect to such Indebtedness shall be subordinated in right of payment to
such Loan Guaranty substantially to the same extent as such Indebtedness is
subordinated to the Obligations;


 


(b) such Restricted Subsidiary
waives and will not in any manner whatsoever claim or take the benefit or
advantage of, any rights of reimbursement, indemnity or subrogation or any
other rights against the Borrower or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary under its Loan Guaranty;
and


 


(c) such Restricted Subsidiary
shall deliver to the Agent an opinion of counsel to the effect that (i) such
Loan Guaranty has been duly executed and authorized and (ii) such Loan Guaranty
constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary,
except insofar as enforcement thereof may be limited by bankruptcy, insolvency
or similar laws (including all laws relating to fraudulent transfers) and
except insofar as enforcement thereof is subject to general principles of
equity;


 


provided  that this Section 6.08 shall not be
applicable to any guarantee of any Restricted Subsidiary that existed at the
time such Person became a Restricted Subsidiary and was not incurred in
connection with, or in contemplation of, such Person becoming a Restricted Subsidiary.


 


SECTION 6.09.  Limitations on Sale and Lease-Back
Transactions.  The Borrower will not,
and will not permit any Restricted Subsidiary to, enter into any Sale and
Lease-Back Transaction with respect to any property unless:


 


(a) the Borrower or
such Restricted Subsidiary would be entitled to (i) incur Indebtedness in
an amount equal to the Attributable Debt with respect to such Sale and
Lease-Back Transaction pursuant to Section 6.01 and (ii) create a
Lien on such property securing such Attributable Debt without securing the Obligations
pursuant to Section 6.02;


 


(b) the consideration received
by the Borrower or any Restricted Subsidiary in connection with such Sale and
Lease-Back Transaction is at least equal to the fair market value (as
determined in good faith by the Borrower) of such property; and


 


(c) the Borrower
applies the proceeds of such transaction in compliance with Section 2.20.


 


SECTION 6.10.  Amendments to Subordination Provisions.  Without the consent of the Required Lenders,
the Borrower will not amend, modify or alter the Senior Subordinated Notes Indenture
in any way to:


 


(a) increase the rate
of or change the time for payment of interest on any Senior Subordinated Notes;


 


(b) increase the
principal of, advance the final maturity date of or shorten the Weighted
Average Life to Maturity of any Senior Subordinated Notes;


 


86

















 


(c) alter the
redemption provisions or the price or terms at which the Borrower is required
to offer to purchase any Senior Subordinated Notes; or


 


(d) amend the
provisions of the Senior Subordinated Notes Indenture that relate to
subordination.


 


SECTION 6.11.  Obligations of the Borrower and the
Restricted Subsidiaries Relating to Kate Spade.  In the event that Kate Spade sells, conveys,
transfers or otherwise disposes of, all or substantially all of its properties
or assets, in one or more related transactions, the Borrower shall, subject to
its fiduciary duties to the holders of minority Equity Interests in Kate Spade and
subject to any other obligations in the organizational documents of Kate Spade or
other agreements with Kate Spade or holders of its Equity Interests (in each
case, as in effect on the Closing Date), exercise its rights and powers as a
controlling holder of Equity Interests in Kate Spade to cause Kate Spade to
distribute to the Borrower its pro rata share of the net proceeds of such sale,
conveyance, transfer or other disposition, the Borrower shall apply such
proceeds in accordance with Section 2.20 and such proceeds will constitute
Net Proceeds thereunder.  In addition,
the Borrower will, and will cause its Restricted Subsidiaries to, apply the
amount of any other Extraordinary Distribution in accordance with Section 2.20
and such amount will constitute Net Proceeds thereunder.  Furthermore, the Borrower, in its capacity as
a holder of Equity Interests in Kate Spade, will not, and will cause its
Restricted Subsidiaries not to, waive any of its rights to receive dividends,
distributions or other payments from Kate Spade or consent to an amendment of
Kate Spade’s organizational documents or other agreements that would restrict
Kate Spade’s ability to make any such distributions.


 


SECTION 6.12.  Impairment of Security Interest.  Subject to the rights of the holders of
Permitted Liens or Permitted Collateral Liens and except as permitted by this
Agreement or the Loan Documents, the Borrower shall not, and shall not permit
any of its Restricted Subsidiaries to, take or knowingly or negligently omit to
take, any action which action or omission would reasonably be expected to have
the result of materially impairing the security interest with respect to the
Collateral for the benefit of the Secured Parties.


 


SECTION 6.13.  Business of Borrower and Restricted
Subsidiaries.  The Borrower will not,
and will not permit any Restricted Subsidiary to, engage to any material extent
in any material line of business substantially different from those lines of
business conducted by the Borrower and the Restricted Subsidiaries on the date
of execution of this Agreement or businesses reasonably related or ancillary thereto.


 


ARTICLE VII


 


Events of Default


 


If any of the following
events (“Events of Default”) shall occur:


 


(a) the Borrower shall
fail to pay any principal of any Loan when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise;


 


(b) the Borrower shall
fail to pay any interest on any Loan or any fee or any other amount (other than
an amount referred to in clause (a) of this Article) payable under this
Agreement or any other Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of thirty (30)
days;


 


87

















 


(c) any representation
or warranty made or deemed made by or on behalf of any Loan Party herein or in
any other Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report or other certificate, financial statement or other
document furnished pursuant to or in connection with this Agreement or any Loan
Document, shall prove to have been materially incorrect when made or deemed
made;


 


(d) failure by Holdings,
the Borrower or any Subsidiary Guarantor for sixty (60) days after receipt of
written notice given by the Agent or the Required Lenders to comply with any of
its other agreements in this Agreement or any Loan Document;


 


(e) (i) any Loan
Party shall fail to make any payment beyond the applicable grace period
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to any Material Indebtedness, or (ii) any event or
condition occurs (other than with respect to Material Indebtedness constituting
Derivative Transactions, termination events or equivalent events pursuant to the
terms of the related Hedge Agreements in accordance with the terms thereof and
not as a result of any default thereunder by any Loan Party) that results in
any Material Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with the giving of notice, if required) the holder or
holders of any such Material Indebtedness or any trustee or agent on its or
their behalf to cause any such Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity; provided that this paragraph (e) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness if such sale or
transfer is permitted hereunder and under the documents providing for such
Indebtedness;


 


(f) an involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of Holdings,
the Borrower or any Significant Subsidiary (or any group of Subsidiaries that
together would constitute a Significant Subsidiary) or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Holdings, the Borrower or any Significant Subsidiary (or
any group of Subsidiaries that together would constitute a Significant
Subsidiary) or for a substantial part of its assets, and, in any such case of
clause (i) or (ii), such proceeding or petition shall continue undismissed
and unstayed for sixty (60) days or an order or decree approving or
ordering any of the foregoing shall be entered;


 


(g) Holdings, the
Borrower or any Significant Subsidiary (or any group of Subsidiaries that
together would constitute a Significant Subsidiary) shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (f) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Holdings, the Borrower or any
Significant Subsidiary (or any group of Subsidiaries that together would
constitute a Significant Subsidiary) or for a substantial part of its assets, (iv) file
an answer admitting the material allegations of a petition filed against it in
any such proceeding or (v) make a general assignment for the benefit of
creditors;


 


(h) failure by Holdings,
the Borrower or any Significant Subsidiary (or any group of Subsidiaries that
together would constitute a Significant Subsidiary) to pay final judgments
aggregating in excess of $50,000,000, which final judgments remain unpaid,
undischarged and 


 


88

















 


unstayed
for a period of more than sixty (60) days after such judgment becomes
final, and in the event such judgment is covered by insurance, an enforcement
proceeding has been commenced by any creditor upon such judgment or decree
which is not promptly stayed;


 


(i) the Loan Guaranty
of any Significant Subsidiary (or any group of Subsidiaries that together would
constitute a Significant Subsidiary) or Holdings shall for any reason cease to
be in full force and effect or be declared null and void or any Responsible Officer
of any Subsidiary Guarantor that is a Significant Subsidiary (or the
Responsible Officers of any group of Subsidiaries that together would
constitute a Significant Subsidiary) or Holdings, as the case may be, denies
that it has any further liability under its Loan Guaranty or gives notice to
such effect, other than by reason of the termination of this Agreement or the
release of any such Loan Guaranty in accordance with this Agreement;


 


(j) unless all of the
Collateral has been released from the Liens in accordance with the provisions
of the Collateral Documents, any Collateral Document shall for any reason cease
to be in full force and effect or the assertion by Holdings, the Borrower or
any Restricted Subsidiary, in any pleading in any court of competent
jurisdiction, that any security interest thereunder is invalid or unenforceable
and, in the case of any such Restricted Subsidiary, the failure by the Borrower
to cause such Restricted Subsidiary to rescind such assertions within thirty (30)
days after the Borrower has actual knowledge of such assertions; or


 


(k) the failure by Holdings,
the Borrower or any Restricted Subsidiary to comply for sixty (60) days
after receipt of written notice given by the Agent or the Required Lenders with
its other agreements contained in the Collateral Documents, except for a
failure that would not materially affect the value of the Collateral, or the
remedies with respect thereto, in each case taken as a whole,


 


then, and in every such
event (other than an event with respect to any Loan Party described in
clause (f) or (g) of this Article), and at any time thereafter
during the continuance of such event, the Agent may, and at the request of the
Required Lenders shall, by notice to the Borrower, take any of the following
actions, at the same or different times:  (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately and (ii) declare
the Loans then outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; provided
that upon the occurrence of an event with respect to any Loan Party described
in clause (f) or (g) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding, together
with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower, without further action of the Agent or any
Lender.  Upon the occurrence and the
continuance of an Event of Default, the Agent may, and at the request of the
Required Lenders shall, exercise any rights and remedies provided to the Agent
under the Loan Documents or at law or equity, including all remedies provided
under the UCC.


 


In the event of any Event of
Default specified in clause (e) of the preceding paragraph of this Article,
such Event of Default and all consequences thereof (excluding any resulting
payment default) shall be annulled, waived and rescinded automatically and
without any action by the Agent or the Lenders if, within twenty (20) days
after such Event of Default arose, (i) the Indebtedness or guarantee that
is the basis for such Event of Default has been discharged, (ii) the
holders thereof have rescinded or waived the 


 


89

















 


acceleration, notice or
action (as the case may be) giving rise to such Event of Default or (iii) the
default that is the basis for such Event of Default has been cured.


 


ARTICLE VIII


 


The Agent


 


Each of the Lenders hereby
irrevocably appoints the Agent as its agent and authorizes the Agent to take
such actions on its behalf, including execution of the other Loan Documents,
and to exercise such powers as are delegated to the Agent by the terms of the
Loan Documents, together with such actions and powers as are reasonably
incidental thereto.


 


The bank serving as the Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Loan Parties or any subsidiary
of a Loan Party or other Affiliate thereof as if it were not the Agent
hereunder.


 


The Agent shall not have any
duties or obligations except those expressly set forth in the Loan
Documents.  Without limiting the
generality of the foregoing, (a) the Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the Agent
is required to exercise in writing as directed by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to any Loan Party or any of its Subsidiaries that is communicated to
or obtained by the bank serving as Agent or any of its Affiliates in any
capacity.  The Agent shall not be liable
for any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02) or
in the absence of its own gross negligence or willful misconduct.  The Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to
the Agent by the Borrower or a Lender, and the Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or in
connection with any Loan Document, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth in any
Loan Document, (iv) the validity, enforceability, effectiveness or
genuineness of any Loan Document or any other agreement, instrument or
document, (v) the creation, perfection or priority of Liens on the
Collateral or the existence of the Collateral, or (vi) the satisfaction of
any condition set forth in Article IV or elsewhere in any Loan Document,
other than to confirm receipt of items expressly required to be delivered to
the Agent.


 


The Agent shall be entitled
to rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper
Person.  The Agent also may rely upon any
statement made to it orally or by telephone and believed by it to be made by
the proper Person, and shall not incur any liability for relying thereon.  The Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be 


 


90

















 


liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.


 


The Agent may perform any
and all its duties and exercise its rights and powers by or through any one or
more sub-agents appointed by the Agent. 
The Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the Agent
and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Agent.


 


Subject to the appointment
and acceptance of a successor Agent as provided in this paragraph, the Agent
may resign at any time by notifying the Lenders and the Borrower.  Upon any such resignation, the Required
Lenders shall have the right, with the consent (not to be unreasonably withheld
or delayed) of the Borrower, to appoint a successor; provided that,
during the existence and continuation of an Event of Default, no consent of the
Borrower shall be required.  If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty (30) days after the retiring Agent gives
notice of its resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a commercial bank or an
Affiliate of any such commercial bank reasonably acceptable to the Borrower.  Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the
Borrower to a successor Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor.  After the Agent’s resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect
for the benefit of such retiring Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any
of them while it was acting as Agent.


 


Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender also acknowledges
that it will, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.


 


The co-arrangers, joint
bookrunners, co-syndication agents and the documentation agent shall not have
any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such.


 


ARTICLE IX


 


Miscellaneous


 


SECTION 9.01.  Notices.  (a)  Except in the case of notices and
other communications expressly permitted to be given by telephone (and subject
to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by facsimile, as
follows:


 


(i) if to any Loan
Party, to the Borrower at:


 


91

















 


One
Marcus Square

1618 Main Street

Dallas, Texas 75201

Attention: General Counsel

Facsimile No: (214) 743-7611


 


(ii) if to the Agent,
to Credit Suisse at:


 


Eleven
Madison Avenue

New York, NY 10010

Attention: Agency Group

Facsimile No: (212) 325-8304


 


(iii) if to any other
Lender, to it at its address or facsimile number set forth in its
Administrative Questionnaire.


 


All such notices and other
communications (i) sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received
or (ii) sent by facsimile shall be deemed to have been given when sent and
when receipt has been confirmed by telephone, provided that if not given
during normal business hours for the recipient, shall be deemed to have been given
at the opening of business on the next Business Day for the recipient.


 


(b)  Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites)
pursuant to procedures approved by the Agent; provided that the
foregoing shall not apply to notices pursuant to Article II or to
compliance and no Event of Default certificates delivered pursuant to Section 5.01(d) unless
otherwise agreed by the Agent and the applicable Lender.  The Agent or the Borrower (on behalf of the
Loan Parties) may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications. All such notices and other
communications (i) sent to an e-mail address shall be deemed received upon
the sender’s receipt of an acknowledgement from the intended recipient (such as
by the “return receipt requested” function, as available, return e-mail or
other written acknowledgement), provided that if not given during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been given at the opening of business on the next Business Day for the
recipient, and (ii) posted to an Internet or intranet website shall be
deemed received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (b)(i) of notification
that such notice or communication is available and identifying the website
address therefor.


 


(c)  Any party hereto
may change its address or facsimile number for notices and other communications
hereunder by notice to the other parties hereto.


 


SECTION 9.02.  Waivers; Amendments.  (a)  No failure or delay by the Agent or
any Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.  The rights and remedies of the Agent and the
Lenders hereunder and under any other Loan Document are cumulative and are not
exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific 


 


92

















 


instance and for the purpose for which given.  Without limiting the generality of the
foregoing, to the extent permitted by law, the making of a Loan shall not be
construed as a waiver of any Default, regardless of whether the Agent or any
Lender may have had notice or knowledge of such Default at the time.


 


(b)  Neither this
Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except (i) in the case of this Agreement,
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Required Lenders or, (ii) in the case of any other Loan Document
(other than any such amendment to effectuate any modification thereto expressly
contemplated by the terms of such other Loan Documents), pursuant to an
agreement or agreements in writing entered into by the Agent and the Loan Party
or Loan Parties that are parties thereto, with the consent of the Required
Lenders; provided that no such agreement shall (A) increase the
Commitment of any Lender without the written consent of such Lender; it being
understood that a waiver of any condition precedent set forth in Article IV
or the waiver of any Default or mandatory prepayment shall not constitute an
increase of any Commitment of any Lender, (B) reduce or forgive the
principal amount of any Loan or reduce the rate of interest thereon, or reduce
or forgive any interest or fees (including fees set forth in Sections 2.08, 2.19
and 2.21) payable hereunder, without the written consent of each Lender
directly affected thereby, (C) postpone any scheduled date of payment of
the principal amount of any Loan, or any date for the payment of any interest,
fees or other Obligations payable hereunder, or reduce the amount of, waive or
excuse any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender directly affected
thereby; provided that only the consent of the Required Lenders shall be
necessary to amend the provisions of Section 2.11(c) providing for
the default rate of interest, or to waive any obligations of the Borrower to
pay interest at such default rate, (D) change Section 2.16(b) or
(c) in a manner that would alter the manner in which payments are shared,
without the written consent of each Lender, (E) change any of the
provisions of this Section or the definition of “Required Lenders” or any
other provision of any Loan Document specifying the number or percentage of
Lenders required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender, (F) release any material Loan Guarantor from its obligation
under its Loan Guaranty (except as otherwise permitted herein or in the other
Loan Documents), without the written consent of each Lender, or (G) except
as provided in clauses (c) and (d) of this Section or in any
Collateral Document, release all or substantially all of the Collateral,
without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Agent hereunder without the prior written consent of the Agent.  The Agent may also amend the Commitment Schedule to
reflect assignments entered into pursuant to Section 9.04.


 


(c)  The Lenders hereby
irrevocably agree that the Liens granted to the Agent by the Loan Parties on
any Collateral shall be automatically released (i) upon the termination of
the Commitments, payment and satisfaction in full in cash of all Secured
Obligations (other than Unliquidated Obligations), and the cash
collateralization of all Unliquidated Obligations in a manner satisfactory to the
Agent, (ii) upon the sale or other disposition of the property
constituting such Collateral (including as part of or in connection with any
other sale or other disposition permitted hereunder) to any Person other than
another Loan Party, to the extent such sale or other disposition is made in
compliance with the terms of this Agreement (and the Agent may rely
conclusively on a certificate to that effect provided to it by any Loan Party
upon its reasonable request without further inquiry), (iii) to the extent
such Collateral is comprised of property leased to a Loan Party, upon
termination or expiration of such lease, (iv) subject to paragraph (b) of
this Section 9.02, if the release of such Lien is approved, authorized or
ratified in writing by the Required Lenders, (v) to the extent the
property constituting such Collateral is owned by any Loan Guarantor, upon the
release of such Guarantor from its obligations under its Loan Guaranty in
accordance with the provisions of this Agreement, (vi) as required to
effect any sale or other disposition of such 


 


93

















 


Collateral in connection with any exercise of remedies of the Agent and
the Lenders pursuant to the Collateral Documents or (vii) as required
pursuant to the terms of the Intercreditor Agreement; provided that the Agent
may, in its discretion, release the Lien on Collateral valued in the aggregate
not in excess of $5,000,000 during each fiscal year without consent of any
Lender.  Any such release shall not
in any manner discharge, affect, or impair the Obligations or any Liens (other
than those expressly being released) upon (or obligations of the Loan Parties
in respect of) all interests retained by the Loan Parties, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral to the extent required under the provisions of the Loan Documents.


 


(d)  Notwithstanding
anything to the contrary contained in this Section 9.02, guarantees,
collateral security documents and related documents executed by Foreign
Subsidiaries in connection with this Agreement may be in a form reasonably
determined by the Agent and may be amended and waived with the consent of the
Agent at the request of the Borrower without the need to obtain the consent of
any other Lenders if such amendment or waiver is delivered in order (i) to
comply with local law or advice of local counsel, (ii) to cure ambiguities
or defects or (iii) to cause such guarantee, collateral security document
or other document to be consistent with this Agreement and the other Loan
Documents.


 


(e)  If, in connection
with any proposed amendment, waiver or consent requiring the consent of “each Lender”
or “each Lender directly affected thereby”, the consent of the Required Lenders
is obtained, but the consent of other necessary Lenders is not obtained (any
such Lender whose consent is necessary but not obtained being referred to
herein as a “Non-Consenting Lender”), then the Borrower may elect to
replace a Non-Consenting Lender as a Lender party to this Agreement, provided
that, concurrently with such replacement, (i) another bank or other entity
which is reasonably satisfactory to the Borrower and the Agent shall agree, as
of such date, to purchase for cash the Loans and other Obligations due to the
Non-Consenting Lender pursuant to an Assignment and Assumption and to become a
Lender for all purposes under this Agreement and to assume all obligations of
the Non-Consenting Lender to be terminated as of such date and to comply with
the requirements of clause (b) of Section 9.04, (ii) the
replacement Lender shall pay the processing and recordation fee referred to in Section 9.04(b)(ii)(C),
if applicable in accordance with the terms of such Section, (iii) the
replacement Lender shall grant its consent with respect to the applicable
proposed amendment, waiver or consent and (iv) the Borrower shall pay to
such Non-Consenting Lender in same day funds on the day of such replacement (1) all
interest, fees and other amounts then accrued but unpaid to such Non-Consenting
Lender by the Borrower hereunder to and including the date of termination,
including without limitation payments due to such Non-Consenting Lender under
Sections 2.13, 2.15 and 2.21, and (2) an amount, if any, equal to the
payment which would have been due to such Lender on the day of such replacement
under Section 2.14 had the Loans of such Non-Consenting Lender been
prepaid on such date rather than sold to the replacement Lender.


 


SECTION 9.03.  Expenses; Indemnity; Damage Waiver.  (a)  The Borrower shall pay (i) all
reasonable documented out-of-pocket expenses incurred by the Agent and its
Affiliates, including the reasonable fees, charges and disbursements of
Cravath, Swaine & Moore LLP, counsel for the Agent, in connection with
the syndication and distribution (including, without limitation, via the
internet or through a service such as Intralinks) of the credit facilities
provided for herein, the preparation of the Loan Documents and related
documentation, (ii) all reasonable documented out-of-pocket expenses
incurred by the Agent and its Affiliates, including the reasonable fees,
charges and disbursements of outside legal counsel to the Agent, in connection
with any amendments, modifications or waivers of the provisions of any Loan
Documents (whether or not the transactions contemplated thereby shall be
consummated), (iii) all reasonable documented out-of-pocket expenses
incurred by the Agent or the Lenders, including the reasonable documented fees,
charges and disbursements of any counsel for the Agent and for one law firm
retained by the Lenders, in connection with the enforcement, collection or 


 


94

















 


protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made
hereunder, including all such reasonable documented out-of-pocket expenses
incurred during any workout, restructuring or related negotiations in respect
of such Loans, and (iv) subject to any other provisions of this Agreement,
of the Loan Documents or of any separate agreement entered into by the Borrower
and the Agent with respect thereto, all reasonable documented out-of-pocket
expenses incurred by the Agent in the administration of the Loan
Documents.  Expenses reimbursable by the
Borrower under this Section include, without limiting the generality of
the foregoing, subject to any other applicable provision of any Loan Document,
reasonable documented out-of-pocket costs and expenses incurred in connection
with:


 


(i) lien and title
searches and title insurance; and


 


(ii) taxes, fees and
other charges for recording the Mortgages, filing financing statements and
continuations, and other actions to perfect, protect, and continue the Agent’s
Liens.


 


Other than to the extent
required to be paid on the Closing Date, all amounts due under this paragraph (a) shall
be payable by the Borrower within ten (10) Business Days of receipt of an
invoice relating thereto and setting forth such expenses in reasonable detail.


 


(b)  The Borrower shall
indemnify the Agent and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
penalties, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted
against any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Loan Documents or any agreement or instrument
contemplated thereby, the performance by the parties hereto of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Environmental Liability related
in any way to the Borrower or any of its Subsidiaries or to any property owned
or operated by the Borrower or any of its Subsidiaries, or (iii) any
actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnitee is a party thereto (and regardless of
whether such matter is initiated by a third party or by the Borrower, any other
Loan Party or any of their respective Affiliates); provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, penalties, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.


 


(c)  To the extent that
the Borrower fails to pay any amount required to be paid by it to the Agent
under paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to the Agent such Lender’s Applicable Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, penalty, liability or related expense, as the
case may be, was incurred by or asserted against the Agent in its capacity as
such.


 


(d)  To the extent
permitted by applicable law, no party to this Agreement shall assert, and each
hereby waives, any claim against any other party hereto or any Related Party thereof,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or the use of the proceeds
thereof.


 


(e)  All amounts due
under this Section shall be paid promptly after written demand therefor.


 


95
















 


SECTION 9.04.  Successors and Assigns.  (a)  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section (any
attempted assignment or transfer not complying with the terms of this Section shall
be null and void).  Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby, Participants (to the extent provided in paragraph (c) of
this Section) and, to the extent expressly contemplated hereby, the Related Parties
of each of the Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.


 


(b)  (i) Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment or
the Loans at the time owing to it) with the prior written consent (such consent
not to be unreasonably withheld or delayed) of:


 


(A) the Borrower, provided that no consent of the Borrower
shall be required for an assignment to another Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default specified in paragraphs
(a), (b), (f) or (g) of Article VII has occurred and is
continuing, any other Eligible Assignee and provided  further that
no consent of the Borrower shall be required for an assignment during the
primary syndication of the Loans to Persons identified by the Agent to the
Borrower on or prior to the Closing Date and reasonably acceptable to the
Borrower; and


 


(B) the Agent.


 


(ii) Assignments shall be subject to the following additional
conditions:


 


(A) except in the case of an assignment to another Lender, an
Affiliate of a Lender or an Approved Fund or an assignment of the entire
remaining amount of the assigning Lender’s Commitment or Loans, the amount of
the Commitment or the principal amount of Loans of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Agent and determined on an
aggregate basis in the event of concurrent assignments to Related Funds (as
defined below)) shall not be less than $1,000,000 unless each of the Borrower
and the Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default specified in paragraphs (a),
(b), (f) or (g) of Article VII has occurred and is continuing;


 


(B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement;


 


(C) the parties to each assignment shall execute and deliver to
the Agent an Assignment and Assumption via an electronic settlement system
acceptable to the Agent (or, if previously agreed with the Agent, manually),
and shall pay to the Agent a processing and recordation fee of $3,500 (which
fee may be waived or reduced in the sole discretion of the Agent and shall not
be payable in the case of any assignment by any Joint Lead Arranger or any of
its Affiliates); provided that only one such fee shall be payable in the
case of concurrent assignments to two or more Related Funds; and


 


96

















 


(D)  the assignee, if it shall not be a Lender, shall deliver
on or prior to the effective date of such assignment, to the Agent (1) an
Administrative Questionnaire and (2) if applicable, an appropriate
Internal Revenue Service form (such as Form W-8BEN or W-8ECI or any
successor form adopted by the relevant United States taxing authority) as
required by applicable law supporting such assignee’s position that no
withholding by any Borrower or the Agent for United States income tax payable
by such assignee in respect of amounts received by it hereunder is required.


 


The term “Related Funds”
shall mean with respect to any Lender that is an Approved Fund, any other
Approved Fund that is managed or advised by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.


 


(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 9.03 with respect to facts and
circumstances occurring on or prior to the effective date of such assignment).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 9.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.


 


(iv) The Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, or principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”).  The entries in the
Register shall be conclusive, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.


 


(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee’s completed
Administrative Questionnaire and tax certifications required by Section 9.04(b)(ii)(D)(2)(unless
the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either
the assigning Lender or the assignee shall have failed to make any payment
required to be made by it pursuant to Section 2.04(a), 2.16(c) or 9.03(c),
the Agent shall have no obligation to accept such Assignment and Assumption and
record the information therein in the Register unless and until such payment
shall have been made in full, together with all accrued interest thereon.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.


 


(vi) By executing and delivering an Assignment and Assumption, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the 


 


97

















 


other parties hereto as follows:  (i) such assigning
Lender warrants that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim and that its Commitment,
and the outstanding balances of its Loans, in each case without giving effect
to assignments thereof which have not become effective, are as set forth in
such Assignment and Assumption, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is an Eligible Assignee, legally authorized to
enter into such Assignment and Assumption; (iv) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most
recent financial statements referred to in Section 3.04(a) or
delivered pursuant to Section 5.01 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Assumption; (v) such assignee
will independently and without reliance upon the Agent, such assigning Lender
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the Agent,
by the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance
with their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.


 


(c)  (i)  Any
Lender may, without the consent of the Borrower or the Agent, sell
participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment or the Loans owing to
it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (C) the Borrower, the Agent, and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and (D) no such
Participant shall be a “creditor” as defined in Regulation T or a “foreign
branch of a broker-dealer” within the meaning of Regulation X.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such
Participant.  Subject to paragraph (c)(ii) of
this Section, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it
were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. 
To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 9.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.16(c) as though it were
a Lender.


 


(ii)  A
Participant shall not be entitled to receive any greater payment under Section 2.13
or 2.15 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower is notified of the participation sold to 


 


98

















 


such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.


 


(d)  Any Lender may at
any time pledge or assign a security interest in all or any portion of its
rights under this Agreement to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.


 


(e)  Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”)
may grant to a special purpose funding vehicle (an “SPC”), identified as
such in writing from time to time by the Granting Lender to the Agent and the
Borrower, the option to provide to the Borrower all or any part of any Loan
that such Granting Lender would otherwise be obligated to make to the Borrower
pursuant to this Agreement; provided that (i) nothing herein
shall constitute a commitment by any SPC to make any Loan, (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof and (iii) no SPC shall be a “creditor” as
defined in Regulation T or a “foreign branch of a broker-dealer” within
the meaning of Regulation X.  The
making of a Loan by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender.  Each party hereto
hereby agrees that (i) neither the grant to any SPC nor the exercise by
any SPC of such option shall increase the costs or expenses or otherwise
increase or change the obligations of the Borrower under this Agreement
(including its obligations under Section 2.13, 2.14 or 2.15), (ii) no
SPC shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Lender) and (iii) the
Granting Lender shall for all purposes including approval of any amendment, waiver
or other modification of any provision of the Loan Documents, remain the Lender
of record hereunder.  In furtherance of
the foregoing, each party hereto hereby agrees (which agreement shall survive
the termination of this Agreement) that, prior to the date that is one year and
one day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any
other Person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any state thereof.  In
addition, notwithstanding anything to the contrary contained in this Section 9.04,
any SPC may (i) with notice to, but without the prior written consent of,
the Borrower and the Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by the Borrower and Agent)
providing liquidity and/or credit support to or for the account of such SPC to
support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC.


 


SECTION 9.05.  Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Agent or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments
have not expired or terminated.  The
provisions of Sections 2.13, 2.14, 2.15 and 9.03 and 


 


99

















 


Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the repayment
of the Loans, the expiration or termination of the Commitments or the
termination of this Agreement or any provision hereof.


 


SECTION 9.06.  Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement, the other Loan Documents and the Fee Letter and any separate letter
agreements with respect to fees payable to the Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating
to the subject matter hereof.  Except as
provided in Article IV, this Agreement shall become effective when it
shall have been executed by the Agent and when the Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement.


 


SECTION 9.07.  Severability.  To the extent permitted by law, any provision
of any Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.


 


SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
or any Loan Guarantor against any of and all the Secured Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under the Loan Documents and although such obligations may be unmatured.  The applicable Lender shall notify the
Borrower and the Agent of such set-off or application, provided that any
failure to give or any delay in giving such notice shall not affect the
validity of any such set-off or application under this Section.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have. NOTWITHSTANDING THE FOREGOING, AT ANY TIME THAT ANY
OF THE SECURED OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY LOCATED IN CALIFORNIA,
NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LENDER’S LIEN OR COUNTERCLAIM OR
TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY PROCEEDING TO ENFORCE
ANY PROVISION OF THIS AGREEMENT OR ANY LOAN DOCUMENT UNLESS IT IS TAKEN WITH
THE CONSENT OF THE LENDERS REQUIRED BY SECTION 9.02 OF THIS AGREEMENT, IF
SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT TO SECTIONS 580a,
580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR SECTION 2924
OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT OR IMPAIR THE
VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO THE AGENT
PURSUANT TO THE COLLATERAL DOCUMENTS OR THE ENFORCEABILITY OF THE OBLIGATIONS
HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OR ANY SUCH RIGHT WITHOUT
OBTAINING SUCH CONSENT OF THE PARTIES AS REQUIRED ABOVE, SHALL BE NULL AND
VOID.  THIS PARAGRAPH SHALL BE SOLELY FOR
THE BENEFIT OF EACH OF THE LENDERS.


 


100

















 


SECTION 9.09.  Governing Law; Jurisdiction; Consent to
Service of Process.  (a)  THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN
ANY OTHER LOAN DOCUMENT) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.


 


(b)  Each Loan Party
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any U.S. Federal or New York State court
sitting in the Borough of Manhattan, New York, New York in any action or
proceeding arising out of or relating to any Loan Documents, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement or any other Loan Document shall affect any right that the Agent or
any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against any Loan Party or its
properties in the courts of any jurisdiction.


 


(c)  Each Loan Party
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any other Loan Document in any court referred to
in paragraph (b) of this Section. 
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.


 


(d)  To the extent
permitted by law, each party to this Agreement hereby irrevocably waives
personal service of any and all process upon it and agrees that all such
service of process may be made by registered mail (return receipt requested)
directed to it at its address for notices as provided for in Section 9.01.  Nothing in this Agreement or any other Loan
Document will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.


 


SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


SECTION 9.11.  Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.


 


SECTION 9.12.  Confidentiality.  The Agent and each Lender agrees (and each
Lender agrees to cause its SPC, if any) to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to 


 


101

















 


whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory, governmental
or administrative authority, (c) to the extent required by law or by any
subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, including, without limitation, any SPC, (ii) any pledgee
referred to in Section 9.04(d) or (iii) any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Loan Parties and their obligations, (g) with
the consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii) becomes
available to the Agent or any Lender on a nonconfidential basis from a source
other than the Borrower.  For the
purposes of this Section, “Information” means all information received
from any Loan Party relating to the Loan Parties or their businesses, the
Sponsors or the Transactions other than any such information that is available
to the Agent or any Lender on a nonconfidential basis prior to disclosure by any
Loan Party.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.


 


SECTION 9.13.  Several Obligations; Nonreliance;
Violation of Law.  The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder shall
not relieve any other Lender from any of its obligations hereunder. Each Lender
hereby represents that (a) it is not relying on or looking to any Margin
Stock for the repayment of the Borrowings provided for herein and acknowledges
that the Collateral shall not include any Margin Stock and (b) it is not
and will not become a “creditor” as defined in Regulation T or a “foreign
branch of a broker-dealer” within the meaning of Regulation X.  Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any Requirement of Law.


 


SECTION 9.14.  USA PATRIOT Act.  Each Lender that is subject to the
requirements of the USA Patriot Act hereby notifies the Borrower that pursuant
to the requirements of the USA Patriot Act, it is required to obtain, verify
and record information that identifies the Borrower, which information includes
the name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the USA Patriot Act.


 


SECTION 9.15.  Disclosure.  Each Loan Party and each Lender hereby
acknowledges and agrees that the Agent and/or its Affiliates from time to time
may hold investments in, make other loans to or have other relationships with
any of the Loan Parties and their respective Affiliates. In addition, each Loan
Party and each Lender hereby acknowledges that (i) the Agent or its
Affiliate may be a lender under the Senior Secured Asset-Based Revolving Credit
Facility and (ii) an Affiliate of the Agent will be an initial purchaser
of the New Notes.


 


SECTION 9.16.  Appointment for Perfection.  Each Lender hereby appoints each other Lender
as its agent for the purpose of perfecting Liens, for the benefit of the Agent
and the Lenders, in assets which, in accordance with Article 9 of the UCC
or any other applicable law can be perfected only by possession.  Should any Lender (other than the Agent)
obtain possession of any such Collateral, such Lender shall notify the Agent thereof,
and, promptly upon the Agent’s request therefor shall deliver such Collateral
to the Agent or otherwise deal with such Collateral in accordance with the Agent’s
instructions.


 


102

















 


SECTION 9.17.  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.


 


SECTION 9.18.  Effectiveness of the Merger.  Neiman Marcus shall have no rights or
obligations hereunder until the consummation of the Merger and any representations
and warranties of Neiman Marcus hereunder shall not become effective until such
time.  Upon consummation of the Merger,
Neiman Marcus succeed to all the rights and obligations of Merger Sub as the
Borrower under this Agreement and all representations and warranties of Neiman
Marcus as the Borrower shall become effective as of the date hereof, without
any further action by any Person.


 


SECTION 9.19.  INTERCREDITOR AGREEMENT.  REFERENCE
IS MADE TO THE INTERCREDITOR AGREEMENT. 
EACH LENDER HEREUNDER (A) CONSENTS TO THE SUBORDINATION OF LIENS
PROVIDED FOR IN THE INTERCREDITOR AGREEMENT, (B) AGREES THAT IT WILL BE
BOUND BY AND WILL TAKE NO ACTIONS CONTRARY TO THE PROVISIONS OF THE
INTERCREDITOR AGREEMENT AND (C) AUTHORIZES AND INSTRUCTS THE AGENT TO ENTER
INTO THE INTERCREDITOR AGREEMENT AS TERM LOAN AGENT AND ON BEHALF OF SUCH
LENDER.  THE FOREGOING PROVISIONS ARE
INTENDED AS AN INDUCEMENT TO THE LENDERS UNDER THIS AGREEMENT TO EXTEND CREDIT
AND SUCH LENDERS ARE INTENDED THIRD PARTY BENEFICIARIES OF SUCH PROVISIONS AND
THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.


 


ARTICLE X


 


Loan Guaranty 


 


SECTION 10.01.  Guaranty.  Each Loan Guarantor hereby agrees that it is
jointly and severally liable for, and, as primary obligor and not merely as
surety, and absolutely and unconditionally guarantees to the Lenders the prompt
payment when due, whether at stated maturity, upon acceleration or otherwise,
and at all times thereafter, of the Secured Obligations (collectively the “Guaranteed
Obligations”). Each Loan Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal.


 


SECTION 10.02.  Guaranty of Payment.  This Loan Guaranty is a guaranty of payment
and not of collection. Each Loan Guarantor waives any right to require the Agent
or any Lender to sue the Borrower, any Loan Guarantor, any other guarantor, or
any other Person obligated for all or any part of the Guaranteed Obligations
(each, an “Obligated Party”), or otherwise to enforce its payment
against any collateral securing all or any part of the Guaranteed Obligations.


 


103

















 


SECTION 10.03.  No Discharge or Diminishment of Loan
Guaranty.  (a)  Except as
otherwise provided for herein, the obligations of each Loan Guarantor hereunder
are unconditional and absolute and not subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment
in full in cash of the Guaranteed Obligations), including:  (i) any claim of waiver, release,
extension, renewal, settlement, surrender, alteration, or compromise of any of
the Guaranteed Obligations, by operation of law or otherwise; (ii) any
change in the corporate existence, structure or ownership of the Borrower or
any other guarantor of or other Person liable for any of the Guaranteed
Obligations; (iii) any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any Obligated Party, or their assets or any resulting
release or discharge of any obligation of any Obligated Party; or (iv) the
existence of any claim, setoff or other rights which any Loan Guarantor may
have at any time against any Obligated Party, the Agent, any Lender, or any
other Person, whether in connection herewith or in any unrelated transactions.


 


(b)  The obligations of
each Loan Guarantor hereunder are not subject to any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of the
invalidity, illegality, or unenforceability of any of the Guaranteed
Obligations or otherwise, or any provision of applicable law or regulation
purporting to prohibit payment by any Obligated Party, of the Guaranteed Obligations
or any part thereof.


 


(c)  Further, the
obligations of any Loan Guarantor hereunder are not discharged or impaired or otherwise
affected by: (i) the failure of the Agent or any Lender to assert any
claim or demand or to enforce any remedy with respect to all or any part of the
Guaranteed Obligations; (ii) any waiver or modification of or supplement
to any provision of any agreement relating to the Guaranteed Obligations; (iii) any
release, non-perfection, or invalidity of any indirect or direct security for
the obligations of the Borrower for all or any part of the Guaranteed
Obligations or any obligations of any other guarantor of or other Person liable
for any of the Guaranteed Obligations; (iv) any action or failure to act
by the Agent or any Lender with respect to any collateral securing any part of
the Guaranteed Obligations; or (v) any default, failure or delay, willful
or otherwise, in the payment or performance of any of the Guaranteed
Obligations, or any other circumstance, act, omission or delay that might in
any manner or to any extent vary the risk of such Loan Guarantor or that would
otherwise operate as a discharge of any Loan Guarantor as a matter of law or
equity (other than the indefeasible payment in full in cash of the Guaranteed
Obligations).


 


SECTION 10.04.  Defenses Waived.  To the fullest extent permitted by applicable
law, each Loan Guarantor hereby waives any defense based on or arising out of
any defense of the Borrower or any Loan Guarantor or the unenforceability of
all or any part of the Guaranteed Obligations from any cause, or the cessation
from any cause of the liability of the Borrower or any Loan Guarantor, other
than the indefeasible payment in full in cash of the Guaranteed Obligations.
Without limiting the generality of the foregoing, each Loan Guarantor
irrevocably waives acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against any
Obligated Party, or any other Person. 
The Agent may, at its election, foreclose on any Collateral held by it
by one or more judicial or nonjudicial sales, accept an assignment of any such
Collateral in lieu of foreclosure or otherwise act or fail to act with respect
to any collateral securing all or a part of the Guaranteed Obligations,
compromise or adjust any part of the Guaranteed Obligations, make any other
accommodation with any Obligated Party or exercise any other right or remedy
available to it against any Obligated Party, without affecting or impairing in
any way the liability of such Loan Guarantor under this Loan Guaranty except to
the extent the Guaranteed Obligations have been fully and indefeasibly paid in
cash.  To the fullest extent permitted by
applicable law, each Loan Guarantor waives any defense arising out of any such
election even though that election 


 


104

















 


may operate, pursuant to applicable law, to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any Loan
Guarantor against any Obligated Party or any security.


 


SECTION 10.05.  Rights of Subrogation.  No Loan Guarantor will assert any right,
claim or cause of action, including, without limitation, a claim of
subrogation, contribution or indemnification that it has against any Obligated
Party, or any collateral, until the Loan Parties and the Loan Guarantors have
fully performed all their obligations to the Agent and the Lenders.


 


SECTION 10.06.  Reinstatement; Stay of Acceleration.  If at any time any payment of any portion of
the Guaranteed Obligations is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, or reorganization of the Borrower or
otherwise, each Loan Guarantor’s obligations under this Loan Guaranty with
respect to that payment shall be reinstated at such time as though the payment
had not been made. If acceleration of the time for payment of any of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Lender.


 


SECTION 10.07.  Information.  Each Loan Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower’s
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that each Loan Guarantor assumes and incurs under this Loan
Guaranty, and agrees that neither the Agent nor any Lender shall have any duty
to advise any Loan Guarantor of information known to it regarding those
circumstances or risks.


 


SECTION 10.08.  Taxes. 
All payments of the Guaranteed Obligations will be made by each Loan
Guarantor free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if any Loan Guarantor shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Agent or Lender (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (ii) such
Loan Guarantor shall make such deductions and (iii) such Loan Guarantor
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.


 


SECTION 10.09.  Maximum Liability.  The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law,
or any state, Federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of
any Loan Guarantor under this Loan Guaranty would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount
of such Loan Guarantor’s liability under this Loan Guaranty, then,
notwithstanding any other provision of this Loan Guaranty to the contrary, the
amount of such liability shall, without any further action by the Loan
Guarantors or the Lenders, be automatically limited and reduced to the highest
amount that is valid and enforceable as determined in such action or proceeding
(such highest amount determined hereunder being the relevant Loan Guarantor’s “Maximum
Liability”.  This Section with
respect to the Maximum Liability of each Loan Guarantor is intended solely to
preserve the rights of the Lenders to the maximum extent not subject to
avoidance under applicable law, and no Loan Guarantor nor any other Person or
entity shall have any right or claim under this Section with respect to
such Maximum Liability, except to the extent necessary so that the obligations
of any Loan Guarantor hereunder shall not be rendered voidable under applicable
law. Each Loan Guarantor agrees that the Guaranteed Obligations may at any time
and from time to time exceed the Maximum Liability of each Loan Guarantor
without impairing this Loan Guaranty or affecting the 


 


105

















 


rights and remedies of the Lenders hereunder, provided that,
nothing in this sentence shall be construed to increase any Loan Guarantor’s
obligations hereunder beyond its Maximum Liability.


 


SECTION 10.10.  Contribution.  In the event any Loan Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or
shall suffer any loss as a result of any realization upon any collateral
granted by it to secure its obligations under this Loan Guaranty, each other
Loan Guarantor (each a “Non-Paying Guarantor”) shall contribute to such
Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Guarantor
Percentage” of such payment or payments made, or losses suffered, by such
Paying Guarantor.  For purposes of this Article X,
each Non-Paying Guarantor’s “Guarantor Percentage” with respect to any
such payment or loss by a Paying Guarantor shall be determined as of the date
on which such payment or loss was made by reference to the ratio of (i) such
Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder) or,
if such Non-Paying Guarantor’s Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Guarantor from the
Borrower after the date hereof (whether by loan, capital infusion or by other
means) to (ii) the aggregate Maximum Liability of all Loan Guarantors
hereunder (including such Paying Guarantor) as of such date (without giving
effect to any right to receive, or obligation to make, any contribution
hereunder), or to the extent that a Maximum Liability has not been determined
for any Loan Guarantor, the aggregate amount of all monies received by such
Loan Guarantors from the Borrower after the date hereof (whether by loan,
capital infusion or by other means). 
Nothing in this provision shall affect any Loan Guarantor’s several
liability for the entire amount of the Guaranteed Obligations (up to such Loan
Guarantor’s Maximum Liability).  Each of
the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of
the Guaranteed Obligations.  This provision
is for the benefit of both the Agent, the Lenders and the Loan Guarantors and
may be enforced by any one, or more, or all of them in accordance with the
terms hereof.


 


SECTION 10.11.  Liability Cumulative.  The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative
with all liabilities of each Loan Party to the Agent and the Lenders under this
Agreement and the other Loan Documents to which such Loan Party is a party or
in respect of any obligations or liabilities of the other Loan Parties, without
any limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.


 


SECTION 10.12.  Release of Loan Guarantors.  Notwithstanding anything in Section 9.02(b) to
the contrary (i) a Subsidiary Guarantor shall automatically be released
from its obligations hereunder and its Loan Guaranty shall be automatically
released upon the consummation of any transaction permitted hereunder as a
result of which such Subsidiary Guarantor ceases to be a subsidiary of the
Borrower and (ii) so long as no Event of Default has occurred and is
continuing (A) if a Loan Guarantor is or becomes an Immaterial Subsidiary,
and such release would not result in any Immaterial Subsidiary being required
pursuant to Section 5.11(e) to become a Loan Party hereunder (except
to the extent that on and as of the date of such release, one or more other
Immaterial Subsidiaries become Loan Guarantors hereunder and the provisions of Section 5.11(e) are
satisfied upon giving effect to all such additions and releases), or (B) a
Restricted Subsidiary is redesignated as an Unrestricted Subsidiary in
accordance with Section 6.04(d), then in the case of each of clauses (A) and
(B), such Subsidiary Guarantor shall be automatically released from its
obligations hereunder and its Loan Guaranty shall be automatically released
upon notification thereof from the Borrower to the Agent.  In connection with any such release, the
Agent shall execute and deliver to any Subsidiary Guarantor, at such Subsidiary
Guarantor’s expense, all documents that such Subsidiary Guarantor shall
reasonably 


 


106

















 


request to evidence such termination or release.  Any execution and delivery of documents
pursuant to the preceding sentence of this Section 10.12 shall be without
recourse to or warranty by the Agent.


 


107

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.


 


 


	
   

  	
  NEWTON ACQUISITION MERGER
  SUB, INC.,

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  /s/ Kewsong Lee

  
	
   

  	
   

  	
  Name:

  	
  Kewsong Lee

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  NEWTON ACQUISITION, INC.,

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  /s/ Nelson A. Bangs

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
  and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  THE NEIMAN MARCUS GROUP, INC.,

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  /s/ Nelson A. Bangs

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
  and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEIMAN
  MARCUS SPECIAL EVENTS, INC.

  NEMA
  BEVERAGE CORPORATION

  NM
  FINANCIAL SERVICES, INC.

  NM
  KITCHENS, INC.

  BERGDORFGOODMAN.COM,
  LLC

  BERGDORF
  GOODMAN, INC.

  BERGDORF
  GRAPHICS, INC.

  NEIMAN
  MARCUS HOLDINGS, INC.

  NEMA
  BEVERAGE HOLDING CORPORATION

  NEMA
  BEVERAGE PARENT CORPORATION

  WORTH
  AVENUE LEASING COMPANY

  NMGP, LLC,

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  /s/ Nelson A. Bangs

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


108

















 


	
   

  	
  NM NEVADA TRUST, 

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  /s/ Nelson A. Bangs

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


109

















 


	
   

  	
  CREDIT SUISSE, CAYMAN ISLANDS BRANCH, individually and as Agent, 

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  /s/ Robert Hetu

  
	
   

  	
   

  	
  Name:

  	
  Robert Hetu

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  /s/ Vanessa Gomez

  
	
   

  	
   

  	
  Name:

  	
  Vanessa Gomez

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


110
















 


COMMITMENT
SCHEDULE


 


	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
  Credit Suisse

  	
   

  	
  $

  	
  1,950,000,000

  	
   

  
	
  Deutsche Bank Trust Company Americas

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  Wachovia Bank, N.A.

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
  LaSalle Retail Finance, a Division of LaSalle Business Credit, LLC

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  National City Bank

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  PNC Bank, N.A.

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  The Bank of New York

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  U.S. Bank, National Association

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Credit Industriel et Commercial

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Total

  	
   

  	
  $

  	
  1,975,000,000

  	
   

  



 

















 


SCHEDULE 1.01(a)


 


Immaterial Subsidiaries


 


Willow Bend Beverage
Corporation


 

















 


SCHEDULE 1.01(b)


 


Mortgaged Properties


 


	
  Store

  	
   

  	
  Address

  	
   

  	
  County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Owned

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  San Francisco

  	
   

  	
  150 Stockton Street 

  San Francisco, CA 94108

  	
   

  	
  San Francisco County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tyson’s Corner II

  	
   

  	
  2255 International Drive 

  McLean, VA 22102

  	
   

  	
  Fairfax County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Plano Willowbend

  	
   

  	
  2201 Dallas Pkwy 

  Plano, TX 75093

  	
   

  	
  Collin County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Orlando

  	
   

  	
  4170 Conroy Rd 

  Orlando, FL 32839

  	
   

  	
  Orange County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  San Antonio

  	
   

  	
  The Shops at La Cantera 

  15900 La Cantera Parkway 

  San Antonio, TX 78357

  	
   

  	
  Bexar County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leased

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Houston Galleria

  	
   

  	
  2600 S. Post Oak Blvd. 

  Houston, TX 77056

  	
   

  	
  Harris County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Short Hills

  	
   

  	
  1200 Morris Tnpke 

  Short Hills, NJ 07078

  	
   

  	
  Essex County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  King of Prussia

  	
   

  	
  The Plaza 

  170 North Gulph Rd. 

  King of Prussia, PA 19406 

  Township of Upper Merion

  	
   

  	
  Montgomery County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Scottsdale

  	
   

  	
  6900 East Camelback Road 

  Scottsdale, AZ 85251

  	
   

  	
  Maricopa County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Troy

  	
   

  	
  2705 West Big Beaver Road 

  Troy, MI 48084

  	
   

  	
  Oakland County

  



 


2

















 


	
  Paramus

  	
   

  	
  503 Garden State Plaza 

  Paramus, NJ 07652

  	
   

  	
  Bergen County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fort Lauderdale

  	
   

  	
  2442 East Sunrise 

  Boulevard Ft. 

  Lauderdale, FL 33304

  	
   

  	
  Broward County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Coral Gables

  	
   

  	
  390 San Lorenzo Avenue 

  Coral Gables, FL 33146

  	
   

  	
  Miami-Dade County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Palo Alto

  	
   

  	
  400 Stamford Shop Center 

  Palo Alto, CA 94304

  	
   

  	
  Santa Clara County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Denver

  	
   

  	
  Cherry Creek Mall 

  3030 East 1st Avenue 

  Denver, CO 80206

  	
   

  	
  Denver County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tampa Bay

  	
   

  	
  2223 WestShore Blvd. 

  Tampa, FL 33607

  	
   

  	
  Hillsborough County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Los Angeles

  	
   

  	
  9700 Wilshire Boulevard 

  Beverly Hills, CA 90212

  	
   

  	
  Los Angeles County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Northpark

  	
   

  	
  400 Northpark Center 

  Dallas, TX 75225

  	
   

  	
  Dallas County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Atlanta

  	
   

  	
  3393 Peachtree Road, N.E. 

  Atlanta, GA 30326

  	
   

  	
  Fulton County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Westchester

  	
   

  	
  Maple & Paulding
  Avenues 

  (2 Maple Ave.) 

  White Plains, NY 10601

  	
   

  	
  Westchester County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fashion Island(1)

  	
   

  	
  601 Newport Center Drive 

  Newport Beach, CA 92660

  	
   

  	
  Orange County

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Washington

  	
   

  	
  5300 Wisconsin Avenue, N.W.

  Washington DC 20015

  	
   

  	
  Washington DC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bergdorf Goodman Men’s
  Store

  	
   

  	
  745 Fifth Avenue 

  New York, NY 10019

  	
   

  	
  New York County

  



 






(1) The executed mortgage for this site will be
delivered on the Closing Date to First American Title Insurance Company to be
held in escrow until such time as the Borrower may, using commercially
reasonable efforts, obtain the landlord’s consent to grant the mortgage.


 


3
















 


SCHEDULE 3.05(a)


 


Properties


 


I. Real Estate Owned or
Leased


 


The Neiman Marcus Group, Inc. (or “NMG”)


 


	
  ADDRESS 

  	
   

  	
  CITY 

  	
   

  	
  STATE 

  	
   

  	
  ZIP 

  	
   

  	
  LESSOR(S) (IF  

  APPLICABLE) 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1618 Main Street

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75201

  	
   

  	
  Trustees of the Estate of  James Charles O’Connor

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Trustee for S.P. Cimiotti  Trust Gregg Edwards

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Cholly Edwards

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Carolyn Edwards Kazmann

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas Foundation Trust

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Trustees for C.C. Slaughter William Slaughter Rogers

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Nancy MacGregor Rogers  O’Neil

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Richard Slaughter Bauer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  SunTrust Bank N.A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Pacifico Partners, Ltd.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commerce St.

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75201

  	
   

  	
  Dalpark Partners, Ltd

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  400 North Park Center

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75225

  	
   

  	
  Raymond D. Nasher

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2201 Dallas Parkway

  	
   

  	
  Plano

  	
   

  	
  TX

  	
   

  	
  75093

  	
   

  	
  Owned by NMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2100 Green Oaks Rd.

  	
   

  	
  Ft. Worth

  	
   

  	
  TX

  	
   

  	
  76116

  	
   

  	
  Eversan Limited Partnership  (77%) and Susan  Sandelman, as Trustee of the  Sansteve Trust (23%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2600 S. Post Oak Road

  	
   

  	
  Houston

  	
   

  	
  TX

  	
   

  	
  77056

  	
   

  	
  Galleria Limited, Inc.

  



 


4

















 


	
  ADDRESS

  	
   

  	
  CITY

  	
   

  	
  STATE

  	
   

  	
  ZIP

  	
   

  	
  LESSOR(S) (IF  

  APPLICABLE)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3393 Peachtree Rd.,  NE

  	
   

  	
  Atlanta

  	
   

  	
  GA

  	
   

  	
  30326

  	
   

  	
  The Retail Property Trust  Broad Atlantic Properties  Corp.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9700 Collins Avenue

  	
   

  	
  Bal Harbour

  	
   

  	
  FL

  	
   

  	
  33154

  	
   

  	
  Bal Harbour Shops, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2442 E. Sunrise Blvd.

  	
   

  	
  Ft. Lauderdale

  	
   

  	
  FL

  	
   

  	
  33304

  	
   

  	
  Keystone-Florida Property  Holding Corp.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  151 Worth Avenue

  	
   

  	
  Palm Beach

  	
   

  	
  FL

  	
   

  	
  33480

  	
   

  	
  151 Worth Avenue  Partnership, Ltd.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2223 Westshore Blvd.

  	
   

  	
  Tampa

  	
   

  	
  FL

  	
   

  	
  33607

  	
   

  	
  Tampa Westshore  Associates, LLP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Mall at Millenia

  4170 Conroy Road

  	
   

  	
  Orlando

  	
   

  	
  FL

  	
   

  	
  32839

  	
   

  	
  NMG Owned Property

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Village of Merrick  Park 

  390 San Lorenzo

  	
   

  	
  Coral Gables

  	
   

  	
  FL

  	
   

  	
  33146

  	
   

  	
  Rouse-Coral Gables, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maple & Paulding  Ave.

  	
   

  	
  White Plains

  	
   

  	
  NY

  	
   

  	
  10601

  	
   

  	
  Fashion Mall Partners, LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2255 International Dr.

  	
   

  	
  McLean

  	
   

  	
  VA

  	
   

  	
  22102

  	
   

  	
  Owned by NMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  503 Garden State Plaza

  	
   

  	
  Paramus

  	
   

  	
  NJ

  	
   

  	
  07652

  	
   

  	
  Westland Garden State  Plaza, LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Plaza @ King of  Prussia,

  170 N. Gulph  Road

  	
   

  	
  King of Prussia

  	
   

  	
  PA

  	
   

  	
  19406

  	
   

  	
  King of Prussia Associates

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1200 Morris Turnpike

  	
   

  	
  Short Hills

  	
   

  	
  NJ

  	
   

  	
  07078

  	
   

  	
  Short Hills Associates

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5 Copley Place

  	
   

  	
  Boston

  	
   

  	
  MA

  	
   

  	
  02116

  	
   

  	
  7611- Copley Place  Associates, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5300 Wisconsin Ave.,  N.W.

  	
   

  	
  Washington

  	
   

  	
  DC

  	
   

  	
  20015

  	
   

  	
  TIAA-CREF

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2705 W. Big Beaver

  	
   

  	
  Troy

  	
   

  	
  MI

  	
   

  	
  48048

  	
   

  	
  Somerset Collection Limited  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  100 Plaza Frontenac

  	
   

  	
  St. Louis

  	
   

  	
  MO

  	
   

  	
  63131

  	
   

  	
  BROAD FRONTENAC  ASSOC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  505 Nicollet Mall  on 5th St.

  	
   

  	
  Minneapolis

  	
   

  	
  MN

  	
   

  	
  55402

  	
   

  	
  Brookfield DB Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  737 N. Michigan Avenue

  	
   

  	
  Chicago

  	
   

  	
  IL

  	
   

  	
  60611

  	
   

  	
  M & J Wilkow, Ltd.

  



 


5

















 


	
  ADDRESS

  	
   

  	
  CITY

  	
   

  	
  STATE

  	
   

  	
  ZIP

  	
   

  	
  LESSOR(S) (IF  

  APPLICABLE)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6 Oakbrook Center

  	
   

  	
  Oak Brook

  	
   

  	
  IL

  	
   

  	
  60523

  	
   

  	
  Urban Investment and  Development Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ML Dover Associates

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5000 Northbrook Ct.

  	
   

  	
  Northbrook

  	
   

  	
  IL

  	
   

  	
  60062

  	
   

  	
  General Growth Properties

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Westcoast Estates

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9700 Wilshire Blvd.

  	
   

  	
  Beverly Hills

  	
   

  	
  CA

  	
   

  	
  90212

  	
   

  	
  Joan Keller Selznick, Larry  Larson, and as  Administrator of the Estates  of Melissa Oshier and  Florence Selznick Howard, Susan Archer
  and Barbara  Selznick

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Larry Larson

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Estate of Melissa Oshier  Larson

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Barbara Smalley-Selznick

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Joan Keller-Selznick

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Larry Larson as Special  Administrator Re: the  Estate of Florence Selznick  Howard

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  150 Stockton St.

  	
   

  	
  San Francisco

  	
   

  	
  CA

  	
   

  	
  94108

  	
   

  	
  Owned by NMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Scottsdale Fashion  Square

  6900 E. Camelback  Rd.

  	
   

  	
  Scottsdale

  	
   

  	
  AZ

  	
   

  	
  85251

  	
   

  	
  Business Realty of Arizona,  Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Scottsdale Fashion Square  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  601 Newport Center  Dr.

  	
   

  	
  Newport Beach

  	
   

  	
  CA

  	
   

  	
  92660

  	
   

  	
  The Irvine Company Retail  Properties-Fashion Island

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  400 Stanford Shop.  Ctr.

  	
   

  	
  Palo Alto

  	
   

  	
  CA

  	
   

  	
  94304

  	
   

  	
  The Trustees of The Leland  Standford Junior University

  



 


6

















 


	
  ADDRESS

  	
   

  	
  CITY

  	
   

  	
  STATE

  	
   

  	
  ZIP

  	
   

  	
  LESSOR(S) (IF

  APPLICABLE)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1450 Ala Moana Blvd. 

  	
   

  	
  Honolulu 

  	
   

  	
  HI 

  	
   

  	
  96814 

  	
   

  	
  D/E Hawaii Joint Venture  Hawaii Central  Development, Inc. 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fujiyama, Duffy &  Fujiyama 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fashion Valley Center  

  7027 Friars Road 

  	
   

  	
  San Diego 

  	
   

  	
  CA 

  	
   

  	
  92108 

  	
   

  	
  I.T.C. Fashion Valley  Corporation 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ML Dover Associates

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cherry Creek Mall  

  3030 E. 1st Avenue 

  	
   

  	
  Denver 

  	
   

  	
  CO 

  	
   

  	
  80206 

  	
   

  	
  Taubman—Cherry Creek, LP 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15900 LaCantera  Parkway, Suite 14 

  	
   

  	
  San Antonio 

  	
   

  	
  TX 

  	
   

  	
  78256 

  	
   

  	
  Owned by NMG 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5860 Glades Road 

  	
   

  	
  Boca Raton 

  	
   

  	
  FL 

  	
   

  	
  33431 

  	
   

  	
  The Town Center at Boca  Raton Trust 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32100 Las Vegas  Blvd. South, Suite 116 

  	
   

  	
  Primm 

  	
   

  	
  NV 

  	
   

  	
  89019 

  	
   

  	
  Fashion Outlet of Las Vegas  Associates 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  934 Grapevine Court 

  	
   

  	
  Central Valley 

  	
   

  	
  NY 

  	
   

  	
  10917 

  	
   

  	
  Chelsea GCA Realty  Partnership, LP 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  651 Kapkowski Rd.,  Suite 0200 

  	
   

  	
  Elizabeth 

  	
   

  	
  NJ 

  	
   

  	
  07201 

  	
   

  	
  JG Elizabeth, LLC 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4115 Capital of Texas  Hwy. S. 

  	
   

  	
  Austin 

  	
   

  	
  TX 

  	
   

  	
  78704 

  	
   

  	
  Austin Retail BOA I & II 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5000 Arizona Mills  Cir. 

  	
   

  	
  Tempe 

  	
   

  	
  AZ 

  	
   

  	
  85282 

  	
   

  	
  Arizona Mills, LLC 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4030 Baldwin Road 

  	
   

  	
  Auburn Hills 

  	
   

  	
  MI 

  	
   

  	
  48326 

  	
   

  	
  Taubman Auburn Hills  

  Associates Limited  Partnership 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1634 Franklin Mills  Cir. 

  	
   

  	
  Philadelphia 

  	
   

  	
  PA 

  	
   

  	
  19154 

  	
   

  	
  Franklin Mills Associates,  L.P. 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12801 W. Sunrise  Blvd. 

  	
   

  	
  Sunrise 

  	
   

  	
  FL 

  	
   

  	
  33323 

  	
   

  	
  Sawgrass Mills Phase II, LP 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5900 Sugarloaf Pkwy.  

  Space 235/A4 

  	
   

  	
  Lawrenceville 

  	
   

  	
  GA 

  	
   

  	
  30043 

  	
   

  	
  Sugarloaf Mills, L.P. 

  



 


7

















 


	
  ADDRESS

  	
   

  	
  CITY

  	
   

  	
  STATE

  	
   

  	
  ZIP

  	
   

  	
  LESSOR(S) (IF

  APPLICABLE)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3000 Grapevine Mills  Pkwy. Suite 233

  	
   

  	
  Grapevine Mills

  	
   

  	
  TX

  	
   

  	
  76051

  	
   

  	
  Grapevine Mills IV Limited  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14500 W. Colfax Ave.  Space 241

  	
   

  	
  Lakewood

  	
   

  	
  CO

  	
   

  	
  80401

  	
   

  	
  Colorado Mills Limited  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11441 NW 12th St.  #D100

  	
   

  	
  Miami

  	
   

  	
  FL

  	
   

  	
  33172

  	
   

  	
  Taubman-Dolphin Mall  Associates, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5000 Katy Mills Circle  Suite 321

  	
   

  	
  Katy

  	
   

  	
  TX

  	
   

  	
  77494

  	
   

  	
  Katy Mills, Limited  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4061 Camino de la  Plaza — Suite 490

  	
   

  	
  San Diego

  	
   

  	
  CA

  	
   

  	
  92173

  	
   

  	
  PCCP/SB Las Americas,  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Prime Outlets @ San  Marcos 3939-IH-35  South

  	
   

  	
  San Marcos

  	
   

  	
  TX

  	
   

  	
  78666

  	
   

  	
  Prime Outlets at San Marcos  II Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7000 Arundel Mills Cir. — Suite D-2

  	
   

  	
  Hanover

  	
   

  	
  MD

  	
   

  	
  21076

  	
   

  	
  Arundel Mills Limited  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3046 Mockingbird Ln.

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75205

  	
   

  	
  Park Cities Village Joint  Venture

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3400 Preston Rd.  Suite 210

  	
   

  	
  Plano

  	
   

  	
  TX

  	
   

  	
  75093

  	
   

  	
  Thames Financial Services,  LTD.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  754 5th Avenue

  	
   

  	
  New York

  	
   

  	
  NY

  	
   

  	
  10019

  	
   

  	
  754 Fifth Avenue Associates

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  745 5th Avenue

  	
   

  	
  New York

  	
   

  	
  NY

  	
   

  	
  10022

  	
   

  	
  745 Associates  WvF-Paramount 745  Property, LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  625 Madison Avenue

  	
   

  	
  New York

  	
   

  	
  NY

  	
   

  	
  10022

  	
   

  	
  625 Madison Avenue  Associates, L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  43-30 24th Street

  	
   

  	
  Long Island  City

  	
   

  	
  NY

  	
   

  	
  11101

  	
   

  	
  Leon Levin & Sons, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1201 Elm Street

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75270

  	
   

  	
  Trizechahn Renaissance  Tower, LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1700 Pacific

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75201

  	
   

  	
  Berkeley First City, LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1450 Broadway

  	
   

  	
  New York

  	
   

  	
  NY

  	
   

  	
  10018

  	
   

  	
  1450 Broadway Associates,  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  125 Worth Avenue

  	
   

  	
  Palm Beach

  	
   

  	
  FL

  	
   

  	
  33480

  	
   

  	
  125 Worth Ave. Ltd.  Partnership

  



 


8
















 


	
  ADDRESS

  	
   

  	
  CITY

  	
   

  	
  STATE

  	
   

  	
  ZIP

  	
   

  	
  LESSOR(S) (IF

  APPLICABLE)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Space I-2A, 670 Auahi  Street

  	
   

  	
  Honolulu

  	
   

  	
  HI

  	
   

  	
  96813

  	
   

  	
  Campbell Hawaii Investor, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9701 Wilshire Blvd.

  	
   

  	
  Beverly Hills

  	
   

  	
  CA

  	
   

  	
  90212

  	
   

  	
  Lantana Wilshire Associates, LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  400 E. Royal Lane  Suite 112

  	
   

  	
  Irving

  	
   

  	
  TX

  	
   

  	
  75039

  	
   

  	
  Charter DCC Partners

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5044 Sharp Street 

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75247

  	
   

  	
  ProLogis Limited  Partnership II

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2301 Neiman Marcus  Pkwy.

  	
   

  	
  Longview

  	
   

  	
  TX

  	
   

  	
  75602

  	
   

  	
  Longview Warehouse and  Storage, Ltd.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5950 Colwell Blvd.

  	
   

  	
  Irving

  	
   

  	
  TX

  	
   

  	
  75039

  	
   

  	
  Owned by NMG

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4121 Pinnacle Point  Dr.

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75211

  	
   

  	
  PDC Properties, Inc.  Pinnacle West Land, L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2784 Executive Way

  	
   

  	
  Miramar

  	
   

  	
  FL

  	
   

  	
  33025

  	
   

  	
  Sunbeam Properties, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9501 Winona 

  	
   

  	
  Schiller Park

  	
   

  	
  IL

  	
   

  	
  60175

  	
   

  	
  Northern Equities, LLC,  Trustee U/T 

  26-2649-00  

   

  Winona Building Account

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2500 S. Workman Mill  City of Industry

  	
   

  	
  Whittier

  	
   

  	
  CA

  	
   

  	
  90601

  	
   

  	
  RR&C Development Co.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3302 Miller Road,  Suite 700

  	
   

  	
  Garland

  	
   

  	
  TX

  	
   

  	
  75041

  	
   

  	
  Duke-Weeks Realty Limited  Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  727 Regal Row 

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75247

  	
   

  	
  Charter Asset Management,  LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1125 Globe Avenue

  	
   

  	
  Mountainside

  	
   

  	
  NJ

  	
   

  	
  07092

  	
   

  	
  Jackal Holdings, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8919 Diplomacy Row

  	
   

  	
  Dallas

  	
   

  	
  TX

  	
   

  	
  75247

  	
   

  	
  Cullum-Thomas

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3832 Green Industrial  Way

  	
   

  	
  Chamblee

  	
   

  	
  GA

  	
   

  	
  30341

  	
   

  	
  MDM Family, LP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3393 Peachtree Road  NE

  	
   

  	
  Atlanta

  	
   

  	
  GA

  	
   

  	
  30326

  	
   

  	
  Lenox Square

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3225 Third Street 

  	
   

  	
  San Francisco

  	
   

  	
  CA

  	
   

  	
  94124

  	
   

  	
  William D Spencer  Spencer Properties

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  261 S. Kenmore  Avenue

  	
   

  	
  Los Angeles

  	
   

  	
  CA

  	
   

  	
  90004

  	
   

  	
  Mr. Young Hoon Choi

  



 


9

















 


	
  ADDRESS

  	
   

  	
  CITY

  	
   

  	
  STATE

  	
   

  	
  ZIP

  	
   

  	
  LESSOR(S) (IF

  APPLICABLE)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Opakapaka Street 

  	
   

  	
  Kapolai

  	
   

  	
  HI

  	
   

  	
   

  	
   

  	
  Fort Street Investment  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2700 Post Oak 

  	
   

  	
  Houston

  	
   

  	
  TX

  	
   

  	
  77056

  	
   

  	
  Walton Houston Galleria  Office, L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1499 N. Post Oak

  	
   

  	
  Houston

  	
   

  	
  TX

  	
   

  	
  77055

  	
   

  	
  Warehouse Associates

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3585 S. Highland  Drive

  	
   

  	
  Las Vegas

  	
   

  	
  NV

  	
   

  	
  89103

  	
   

  	
  Plaza Vegas Ministorage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Storage Room M1 @  Galleria

  	
   

  	
  Ft. Lauderdale

  	
   

  	
  FL

  	
   

  	
  33304

  	
   

  	
  Keystone-Florida Property  Holding Corp.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Storage Space 2137-S  @ Scottsdale Fashion  Square Center

  	
   

  	
  Scottsdale

  	
   

  	
  AZ

  	
   

  	
  85251

  	
   

  	
  Scottsdale Fashion Square  Partnership

  



 


NM Nevada Trust


 


	
  ADDRESS

  	
   

  	
  CITY

  	
   

  	
  STATE

  	
   

  	
  ZIP

  	
   

  	
  LESSORS

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3200 Las Vegas  Blvd. So. 

  	
   

  	
  Las Vegas

  	
   

  	
  NV

  	
   

  	
  89109

  	
   

  	
  H-S Las Vegas Associates

   

  Rouse FS, LLC and Fashion Show Expansion, LLC

  



 


10

















 


II.
Principal Place of Business and Chief Executive Office of each Loan Party


 


	
  Loan Party

  	
   

  	
  Principal place of business

  	
   

  	
  Chief executive office

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Newton
  Acquisition, Inc.

  	
   

  	
  301 Commerce Street,
  Suite 3300

  Forth Worth, TX 76102

  	
   

  	
  301 Commerce Street,
  Suite 3300  

  Forth Worth, TX 76102

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Newton Acquisition
  Sub, Inc. (2)

  	
   

  	
  301 Commerce Street,
  Suite 3300  

  Forth Worth, TX 76102

  	
   

  	
  301 Commerce Street,
  Suite 3300  

  Forth Worth, TX 76102

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Neiman Marcus
  Group, Inc.

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bergdorf Goodman, Inc.

  	
   

  	
  754 Fifth Avenue  

  New York, NY 10019

  	
   

  	
  754 Fifth Avenue  

  New York, NY 10019

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bergdorf
  Graphics, Inc.

  	
   

  	
  754 Fifth Avenue  

  New York, NY 10019

  	
   

  	
  754 Fifth Avenue  

  New York, NY 10019

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BergdorfGoodman.com, LLC

  	
   

  	
  5950 Colwell Blvd.  

  Irving, TX 75039

  	
   

  	
  5950 Colwell Blvd.  

  Irving, TX 75039

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NEMA Beverage Corporation

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NEMA Beverage Holding Corporation

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NEMA Beverage Parent Corporation

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NM Financial
  Services, Inc.

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NMGP, LLC

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NM Kitchens, Inc.

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NM Nevada Trust

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Neiman Marcus
  Holdings, Inc.

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Neiman Marcus Special Events, Inc.

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Willow Bend Beverage Corporation

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Worth Avenue Leasing
  Company

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  	
   

  	
  1618 Main Street  

  Dallas, TX 75201

  



 






(2) Is a Loan Party (the
Borrower) prior to the Merger.


 


11

















 


SCHEDULE 3.05(g)


 


Intellectual Property


 


NONE


 


12

















 


SCHEDULE 3.06


 


Disclosed Matters


 


NECA-IBEW Pension Fund (The
Decatur Plan) v. The Neiman Marcus Group, Inc. et al. (CA No. 3-05
CV-0898B)


 


13

















 


SCHEDULE 3.14


 


Insurance


 


SEE FOLLOWING PAGES


 


14

















0


	
  NAME

  	
  THE
  NEIMAN MARCUS GROUP, INC.

  	
   

  	
  Aon Risk
  Services

  	
   

  	
  

  
	
   

  	
   

  	
   

  	
  Cityplace
  Center East

  	
   

  
	
  ADDRESS

  	
  1618 Main
  Street, Dallas, Texas 75201

  	
   

  	
  2711 N.
  Haskell Avenue

  	
   

  
	
   

  	
   

  	
   

  	
  Suite 800
  – Lock Box #8

  	
   

  
	
  DATE OF ANALYSIS

  	
  September 12,
  2005

  	
   

  	
  Dallas,
  Texas 75204-2999

  	
   

  
	
   

  	
   

  	
   

  	
  Telephone
  214 989-0000

  	
   

  
	
  NAME OF ANALYST

  	
  Annie K.
  McCarley

  	
   

  	
   

  	
   

  



 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liberty Mutual
  Insurance Group

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  COMMERCIAL GENERAL LIABILITY

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides legal liability coverage for bodily
  injury and property damage 

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  claims from the public. Limits of Liability are:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits
  of Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  General Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Products/Completed Operations Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Personal & Advertising Injury

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Each Occurrence

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Damages to Premises Rented to You Limit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (subject to occurrence limit)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Excess Employers
  Liability – Maritime Coverage:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Accident Annual Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury Each Accident

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Disease Annual Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Excess Employers
  Liability – Other than Maritime Coverage:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Accident Annual Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury Each Accident

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Disease Annual Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Disease Each Employee

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Deductible:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Employee Benefit Liability Each Claim

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury, Property Damage, Advertising Injury
  Each

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Occurrence

  
																



 


15

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Coverage is generally described as
  your liability arising from:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Premises/Operations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Acts of
  Independent Contractors

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Products/Completed
  Operations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Contractual
  Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Personal &
  Advertising Injury

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Host Liquor

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fire Legal

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Broad
  Form Property Damage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Incidental
  Medical Malpractice

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Non-Owned
  Watercraft

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limited
  Worldwide Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Additional
  Persons Insured

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Extended Bodily
  Injury

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Automatic
  Coverage on Newly Acquired Organizations (90 Days)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Terrorism Per
  the Terrorism Risk Insurance Act of 2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The policy is
  subject to audit for final determination of premium.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liberty Mutual
  Insurance Group

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  COMMERCIAL
  GENERAL LIABILITY – CANADA

  	
   

  
	
  [***]

  	
   

  	
  to

  August 1, 2006 

  	
   

  	
  Coverage 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides legal
  liability coverage for bodily injury and property  damage claims from the public. Limits of Liability
  are: 

  	
   

  
													



 


16

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits
  of Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  General Aggregate (at inception)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Products/Completed Operations Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Personal & Advertising Injury

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Each Occurrence

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Fire Damage (any one fire)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Each Occurrence and Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Excess Employers
  Liability – Maritime Coverage:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Accident Annual Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury Each Accident

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Disease Annual Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Excess Employers
  Liability – Other than Maritime Coverage:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Accident Annual Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury Each Accident

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Disease Annual Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury by Disease Each Employee

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Deductible:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Employee Benefit
  Liability Each Claim

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury,
  Property Damage, Advertising Injury Each Occurrence

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Coverage
  is generally described as your liability arising from:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Premises/Operations

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Acts of
  Independent Contractors

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Products/Completed
  Operations

  
															



 


17

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Contractual
  Liability

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Personal &
  Advertising Injury

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Premises Medical
  Payments

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Host Liquor

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Fire Legal

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Broad Form Property
  Damage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Incidental
  Medical Malpractice

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Non-Owned
  Watercraft

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limited
  Worldwide Liability

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Additional
  Persons Insured

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Extended Bodily
  Injury

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Automatic
  Coverage on Newly Acquired Organizations (90 Days)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Terrorism Per
  the Terrorism Risk Insurance Act of 2002

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The policy is subject to audit for final
  determination of premium.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liberty Mutual
  Insurance Group

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  COMMERCIAL
  AUTOMOBILE LIABILITY

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  liability to the public arising from All Owned, Nonowned and Hired  

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  automobiles.
  Coverages are briefly described as follows:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Public Liability with bodily injury and property damage
  [***] should the public be injured or their property damaged.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Medical Payments providing [***] each passenger for
  medical, hospital, first aid, and funeral expenses on passengers injured in
  owned automobiles owned by you.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Personal Injury
  Protection
  providing Minimum Required Limits each passenger for

  
												



 


18

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  medical, loss wages,
  and services for persons occupying automobiles  owned by you and subject to No Fault benefits in the
  state where the  automobile is licensed or principally
  garaged. 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Drive Other Car
  Coverage:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Provided for all
  employees who are furnished company vehicles.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Uninsured/Underinsured
  Motorist:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Rejected except
  vehicles that are licensed in states that require you to have and  where you cannot reject the coverage. 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  VEHICLES INSURED:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  All Owned,
  Nonowned and Hired

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The policy is
  subject to audit for final determination of premium.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liberty Mutual Insurance Group

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  WORKERS’
  COMPENSATION

  
	
   

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  medical, disability and death benefits to injured employees pursuant

  
												



 


19

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  to the Workers’
  Compensation statutory requirement of states scheduled in the  policy. declaration. Section C of
  the policy provides an extension for still other  states, except monopolistic state fund
  states (North Dakota, Ohio, Washington, West  Virginia and Wyoming). The policy is
  subject to audit for final determination of  premium.  

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Employer’s
  Liability included for limits of: 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Bodily Injury by
  Accident - 

  	
  [***]   each
  accident

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Bodily Injury by
  Disease -  

  	
  [***]   policy
  limit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Bodily Injury by
  Disease -  

  	
  [***]   each
  employee

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Deductible:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
  Bodily Injury by
  Accident Each Occurrence

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
  Bodily Injury By
  Disease Each Claim

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Additional
  Coverage Included:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · United States Longshore and Harbor Workers
  Compensation Act

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · Terrorism Risk Insurance Act of 2002

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · Waiver of Subrogation as required by contract

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · Voluntary Compensation and Employers Liability

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · Unintentional Errors & Omissions

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · Unintentional Failure to Disclose

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · Inclusion of Sports and Recreational Activities

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · Maritime Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  · Foreign Employers Liability [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  St. Paul Fire & Marine

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  COMPREHENSIVE
  CATASTROPHE LIABILITY (UMBRELLA)

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
														



 


20

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  liability limit(s) of $[***] should the public be injured or their  property damaged for which the insured
  is legally liable. The coverage is essentially excess over Employer’s,
  General, Automobile and other primary liability as designated in the schedule
  of underlying insurance. Retained limit $[***] applies when coverage is
  afforded by Umbrella but not by primary liability.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal Insurance Company

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS
  LIABILITY

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  liability limits of $[***] excess of $  [***] 

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XL Insurance America, Inc.

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS
  LIABILITY

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  liability limits of [***] Part of $50,000,000 excess of [***] 

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Great American Ins. Co.

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS
  LIABILITY

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  liability limits of [***] Part of $50,000,000 excess of [***] 

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  American Guarantee and

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS
  LIABILITY

  
	
  Liability Ins. Co.

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  liability limits of $[***] Part of $100,000,000 excess of $[***] 

  
	
  [***]

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RSUI Indemnity Company

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS
  LIABILITY

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  liability limits of [***] Part of [***] excess of [***] 

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fireman’s Fund Ins. Co.

  	
   

  	
  August 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS
  LIABILITY

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  liability limits of [***] Part of [***] excess of $[***] 

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FM Global Ins. Co.

  	
   

  	
  December 1, 2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
   

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PRIMARY
  PROPERTY & BOILER & MACHINERY POLICY

  
	
   

  	
   

  	
  December 1, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


21

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PROPERTY
  COVERAGE:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  All Risk subject
  to policy terms, conditions and exclusions.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  VALUATION BASIS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Replacement Cost
  - Furniture, Fixtures, Equipment and Building

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Selling Price –
  Inventory

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMITS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  per occurrence for Real
  Property, Personal Property, Leasehold Interest, Business Interruption and
  Extra Expense subject to a separate annual aggregate limit for flood and
  earthquake of [***] except:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence and annual aggregate – California
  Earthquake

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence – Accounts Receivable

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence – Contingent Business Income

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence Fine Arts

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence Off Premises Power/Service
  Interruption

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Unintentional Errors & Omissions

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence – Valuable Papers & Records

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence – Automatic Coverage (90 Days
  Reporting)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence – Miscellaneous Unnamed Locations

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  per occurrence – Pollution Cleanup and Removal

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Earth Movement Except $[***] for California

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Flood Except $[***] for property located below grade
  and/or bin 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  basements.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  DEDUCTIBLES

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $       [***] - Per loss except

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $       [***] Furs of Customers combined all
  losses

  



 


22

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  With
  respects to California Earthquake

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] of the 100%
  Property Damage value of the locations sustaining loss  or damage each applied separately: Each
  Building or Structure,Contents & PP  of each building or structure,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] of the full 12
  month Time Element values at the location where the  physical damage occurred and all other
  locations where Time Element loss ensues

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The above deductibles are subject to a minimum of [***] per location

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  With
  respects to Flood

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $[***] Combined all
  coverages except as follows:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  For locations in
  Honolulu, Hawaii, Boca Raton, Fort Lauderdale, Palm Beach, Sunrise, Bal Habor
  and Orlando Florida:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $[***] per building
  Real Property

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $[***] per building
  Personal Property

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $[***] Time Element

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS
  COVERED:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on file with
  the Insurance Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Insurance Company of the West 

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] Part of
  $[***] Excess of Primary [***]

  
												



 


23

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Underwriters at Lloyds

  	
   

  	
  December 1, 2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $[***] Part of
  $[***] Excess of Primary $[***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Westchester Surplus Lines

  	
   

  	
  December 1, 2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS - 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $[***] Part of
  $[***] Excess of Primary [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Essex Ins. Co.

  	
   

  	
  December 1, 2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1, 2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] Part of
  $[***] Excess of Primary $[***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alea London LTD

  	
   

  	
  December 1, 2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
   

  	
   

  	
  to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
													



 


24

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  December 1,
  2005

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] Part of
  $[***] Excess of $[***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greenwich Ins. Co.

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] Part of
  $[***] Excess of $[***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Westchester Surplus Lines

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] Part of
  $[***] Excess of [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


25

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Insurance Company of the West 

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] Part of
  [***] Excess of [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Essex Ins. Co.

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] Part of
  $[***] Excess of $[***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Insurance Company of the West 

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***] Part of
  $[***] Excess of $[***]

  



 


26

















 


	
  Company/Policy Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Westchester
  Surplus Lines

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]
  Part of [***] Excess of [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lloyds of London

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]
  Part of [***] Excess of $[***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lloyds of London

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]
  Part of [***] Excess of $[***]

  



 


27

















 


	
  Company/Policy
  Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Essex Insurance Company

  	
   

  	
  December 1,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIFFERENCE
  IN CONDITIONS – 1ST Layer

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Excess
  Flood and Earth Movement)

  
	
   

  	
   

  	
  December 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LOCATIONS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Per schedule on
  file with the insurance company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  LIMIT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $[***]
  Part of $[***] Excess of $[***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Affiliated FM Ins. Co.

  	
   

  	
  December 1,
  2002

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Adjustable

  	
   

  	
  OCEAN
  CARGO POLICY

  
	
  [***]

  	
   

  	
  Until Canceled

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Annually

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Insurance:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Any one aircraft or connecting conveyance

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  While on deck of any one vessel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Any one parcel post or mail package

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Valuation:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Amount of invoice
  including all charges therein, including any prepaid and/or advanced and/or
  guaranteed freight, plus 10%, except the Assured’s selling price on pre-sold
  catalog items.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Deductible:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AIG WorldSource

  	
   

  	
  August 1,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  FOREIGN
  LIABILITY PACKAGE

  
	
  [***]

  	
   

  	
  to

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  August 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Coverage
  Territory:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Anywhere in the
  world, including international waters or airspace, but excluding:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The United States of
  America (including its territories or possessions), Puerto Rico and Canada;
  and those countries against which the Office of Foreign Asses Control of the
  U.S. Department of the Treasury administers and enforces economic and trade
  sanctions.

  
															



 


28

















 


	
  Company/Policy
  Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (GENERAL
  LIABILITY)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Liability:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Master Control Program Aggregate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  General Aggregate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Products Completed Operations Aggregate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Personal & Advertising Injury

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Each Occurrence

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Damages to Premises Rented to You

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Medical Expense

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (EMPLOYEE
  BENEFITS LIABILITY)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Liability:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Each Wrongful Act or series of related wrongful acts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Each Annual Aggregate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Deductible:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Each Wrongful Act or series of related wrongful acts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (COMMERCIAL
  AUTOMOBILE LIABILITY)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Liability:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury Each Person

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Bodily Injury Each Occurrence

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Property Damage Each Occurrence

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Medical Expense Coverage Each Person

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Medical Expense Coverage Each Accident

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Covered Vehicles:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  All Owned,
  Leased, Hired and Non Owned Automobiles

  	
   

  



 


29

















 


	
  Company/Policy
  Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Additional Coverage Territory exclusions: Cuba, North
  Korea, Libya, Iran, Iraq and territorial waters of the U.S. its territories
  or possessions, Canada, Puerto Rico, Gulf of Mexico and international waters
  or air space when the BI or PD occurs in the course of travel or
  transportation which is both to or from any country or place named above.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (VOLUNTARY
  WORKERS’ COMPENSATION/EMPLOYERS LIABILITY)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Employers
  Liability Limits of Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  Per Occurrence

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  Excess Repatriation Expenses Per Person

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  State of Hire
  Benefits for U.S. Hired and/or U.S. Citizens

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Workers’ Compensation
  Limits:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Country of Hire
  for Third Country Nationals

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Excludes Local
  Nationals

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Insurance Company

  	
   

  	
  July 31,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  DIRECTORS &
  OFFICERS (Claims-Made Policy)

  
	
  [***]

  	
   

  	
  to

  July 31, 2006 

  	
   

  	
  Coverage 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Policy provides
  coverage for losses arising from claims made against a Director or Officer
  for any wrongful act while acting in their capacity as officers or directors
  of the company. 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  Each Loss

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $ 

  	
   

  	
  [***]   Each
  Policy Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Deductible:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  Executive Indemnification

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Pending or Prior Date:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  August 26,
  1987

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Continuity Date:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  August 26,
  1987

  
															



 


30

















 


	
  Company/Policy
  Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Illinois
  National Insurance Company

  	
   

  	
  July 31,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS
  DIRECTORS & OFFICERS  (Claims-Made Policy)

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  July 31,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Loss

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Policy Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Arch Insurance
  Company

  	
   

  	
  July 31,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS DIRECTORS &
  OFFICERS  (Claims-Made Policy)

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  July 31,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Loss

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Policy Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twin City Fire
  Ins. Co.

  	
   

  	
  July 31,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS DIRECTORS &
  OFFICERS  (Claims-Made Policy)

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  July 31,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Loss

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Policy Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Great American
  Ins. Co.

  	
   

  	
  July 31,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS DIRECTORS &
  OFFICERS  (Claims-Made Policy)

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  July 31,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Loss

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Policy Period

  



 


31

















 


	
  Company/Policy
  Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AXIS Reinsurance
  Compamy

  	
   

  	
  July 31,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  EXCESS DIRECTORS &
  OFFICERS  (Claims-Made Policy)

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  July 31,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Loss

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Policy Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Insurance Company

  	
   

  	
  July 31,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  FIDUCIARY
  LIABILITY  (Claims-Made Policy)

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Provides coverages for
  any breach of Fiduciary Duty for which the Insured is legally liable to pay
  as damages for any claim or claims made.

  
	
   

  	
   

  	
  July 31,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limit of
  Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Claim Limit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Each Policy Period Limit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Retention:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Federal
  Insurance Company

  	
   

  	
  July 31,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  CRIME
  COVERAGE

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  July 31,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limit of
  Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Employee Theft

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Premises Theft

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
  In Transit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Forgery

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Computer Theft and Funds Transfer Fraud

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Money Orders and Counterfeit Fraud

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
  Credit Card Fraud

  



 


32

















 


	
  Company/Policy
  Number

  	
   

  	
  Policy Term

  	
   

  	
  Limits

  	
   

  	
  Coins.

  	
   

  	
  Premium

  	
   

  	
  Coverage

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
   

  	
  Client

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
   

  	
  Expense

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Retention:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executive Risk
  Indemnity Inc.

  	
   

  	
  July 1,
  2005

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  ERRORS &
  OMISSIONS

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  July 1,
  2006

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limit of
  Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
   

  	
  Each Claim or Related Claims

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
   

  	
  Aggregate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Deductible:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
   

  	
  Each Claim or Related Claim

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Retroactive Date:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  July 1,
  2005

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National Union
  Fire Ins. Co.

  	
   

  	
  December 21,
  2004

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  NON
  OWNED AIRCRAFT LIABILITY:

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  December 21,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limit of
  Liability:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $  

  	
  [***]

  	
   

  	
  Single Limit Including Passengers

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  National Union
  Fire

  	
   

  	
  December 31,
  2002

  	
   

  	
  See

  	
   

  	
   

  	
   

  	
  $

  	
  [***]

  	
   

  	
  SPECIAL
  CRIME:

  
	
  [***]

  	
   

  	
  to

  	
   

  	
  Coverage

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  December 31,
  2005

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Limits of
  Liability: SEE
  POLICY

  



 


33
















 


SCHEDULE 3.15


 


Capitalization and Subsidiaries


 


	
  Subsidiary 

  (unless otherwise indicated)

  	
   

  	
  Type of
  Entity

  	
   

  	
  Each
  Class of 

  Authorized and 

  Validly Issued 

  Equity Interests

  	
   

  	
  Record
  and 

  Beneficial 

  Owner

  	
   

  	
  Percentage
  

  Ownership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Newton Acquisition Merger  Sub, Inc.
  (the Borrower prior  to the Merger)

  	
   

  	
  Corporation

  	
   

  	
  900 shares of  Common Stock $0.01
  par value

  	
   

  	
  Newton  Acquisition, Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Neiman Marcus Group,  Inc. (the
  Borrower after the  Merger)

  	
   

  	
  Corporation

  	
   

  	
  900 shares of  Common Stock $0.01
  par value

  	
   

  	
  Newton
  Acquisition, Inc. (3)

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bergdorf Goodman, Inc.

  	
   

  	
  Corporation

  	
   

  	
  1,000 shares of  Common Stock $1.00
  par value

  	
   

  	
  Neiman Marcus  Holdings, Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bergdorf Graphics, Inc.

  	
   

  	
  Corporation

  	
   

  	
  1,000 shares of  Common Stock $0.01
  par value

  	
   

  	
  Bergdorf  Goodman, Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BergdorfGoodman.com, LLC

  	
   

  	
  Limited  Liability  Company

  	
   

  	
  Membership  Interests

  	
   

  	
  The Neiman  Marcus Group,  Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Neiman Marcus Holdings,  Inc.

  	
   

  	
  Corporation

  	
   

  	
  100 shares of  Common Stock $1.00
  par value

  	
   

  	
  The Neiman Marcus Group,
  Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Neiman Marcus Special  Events, Inc.

  	
   

  	
  Corporation

  	
   

  	
  10 shares of  Common Stock

  No par value

  	
   

  	
  The Neiman  Marcus Group,  Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NEMA Beverage Corporation

  	
   

  	
  Corporation

  	
   

  	
  100 shares of  Common Stock $1.00
  par value

  	
   

  	
  NEMA Beverage  Holding  Corporation

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NEMA Beverage Holding  Corporation

  	
   

  	
  Corporation

  	
   

  	
  100 shares of  Common Stock $1.00
  par value

  	
   

  	
  NEMA Beverage  Parent  Corporation

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NEMA Beverage Parent 

  	
   

  	
  Corporation

  	
   

  	
  100 shares of 

  	
   

  	
  The Neiman 

  	
   

  	
  100

  	
  %

  



 






(3) After the Merger.


 


34

















 


	
  Corporation

  	
   

  	
   

  	
   

  	
  Common Stock

  $1.00 par value

  	
   

  	
  Marcus Group, Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NM Financial
  Services, Inc.

  	
   

  	
  Corporation

  	
   

  	
  10 shares of  Common Stock

  No par value

  	
   

  	
  The Neiman  Marcus Group,  Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NM Nevada Trust

  	
   

  	
  Business Trust

  	
   

  	
  100 shares

  No par value

  	
   

  	
  1. The Neiman  Marcus Group,  Inc.



  2. Bergdorf  Goodman, Inc.

  	
   

  	
  1. 90

  

  2. 10

  	
  %

   

  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NMGP, LLC

  	
   

  	
  Limited  Liability  Company

  	
   

  	
  Membership  Interests

  	
   

  	
  The Neiman  Marcus Group,  Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NM Kitchens, Inc.

  	
   

  	
  Corporation

  	
   

  	
  10 shares of  Common Stock

  No par value

  	
   

  	
  The Neiman  Marcus Group,  Inc.

  	
   

  	
  100

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Willow Bend Beverage  Corporation(4)

  	
   

  	
  Nonprofit  Corporation

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Worth Avenue Leasing  Company

  	
   

  	
  Corporation

  	
   

  	
  10 shares of  Common Stock $1.00
  par value

  	
   

  	
  The Neiman Marcus Group,
  Inc.

  	
   

  	
  100

  	
  %

  



 






(4) As a Texas nonprofit corporation, Willow Bend
Beverage Corporation does not issue equity interests.


 


35

















 


Name and Relationship to the Borrower of each of
Borrower’s Subsidiaries


 


THE NEIMAN MARCUS GROUP, INC.


Delaware


 


	
  NM Kitchens, Inc.

  	
   

  	
  NEMA Beverage Parent Corporation

  
	
  Delaware

  	
   

  	
  Texas

  
	
   

  	
   

  	
   

  
	
  Gurwitch Products, L.L.C.

  	
   

  	
  NEMA Beverage Holding

  
	
  Delaware(5)

  	
   

  	
  Corporation

  
	
   

  	
   

  	
  Texas

  
	
   

  	
   

  	
   

  
	
  Kate Spade LLC

  	
   

  	
  NEMA Beverage Corporation

  
	
  Delaware(6)

  	
   

  	
  Texas

  
	
   

  	
   

  	
   

  
	
  NM Financial Services, Inc.

  	
   

  	
  Neiman Marcus Holdings, Inc.

  
	
  Delaware

  	
   

  	
  California

  
	
   

  	
   

  	
   

  
	
  NM Nevada Trust

  	
   

  	
  Bergdorf Goodman, Inc.

  
	
  Massachusetts(7)

  	
   

  	
  New York

  
	
   

  	
   

  	
   

  
	
  Neiman Marcus Funding Corp.

  	
   

  	
  Bergdorf Graphics, Inc.

  
	
  Delaware

  	
   

  	
  New York

  
	
   

  	
   

  	
   

  
	
  Neiman Marcus Special Events, Inc.

  	
   

  	
  BergdorfGoodman.com, LLC

  
	
  Delaware

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Quality Call Care Solutions, Inc.

  	
   

  	
  Worth Avenue Leasing

  
	
  Ontario, Canada

  	
   

  	
  Company

  
	
   

  	
   

  	
  Florida

  
	
   

  	
   

  	
   

  
	
  NMGP, LLC

  	
   

  	
  Willow Bend Beverage Corporation

  
	
  Virginia

  	
   

  	
  Texas(8)

  



 






(5) 51% NMG; 49%
Others 


(6) 56% NMG; 44%
Others 


(7) 90% NMG; 10% BG


(8) As a Texas nonprofit corporation, Willow Bend
Beverage Corporation does not issue equity interests.


 


36

















 


SCHEDULE 3.17


 


Labor Disputes


 


NONE


 


37
















 


SCHEDULE 4.01(b)


 


Local Counsel


 


	
  Law Firm

  	
   

  	
  State

  	
   

  	
  Street Address

  	
   

  	
  Contact

  	
   

  	
  Telephone/Fax

  	
   

  	
  Email

  
	
  Quarles &  Brady

  	
   

  	
  AZ

  	
   

  	
  One Renaissance

  	
   

  	
  Jim Morrow,

  	
   

  	
  Tel: (602) 229-5644

  	
   

  	
  jmorrow@quarles.com

  
	
  Square Two

  	
  Partner

  	
   

  	
  Tel: (520) 770-8719

  	
   

  	
   

  
	
  North Central

  	
   

  	
   

  	
  Fax: (602) 420-5013

  	
   

  	
   

  
	
  Ave., Phoenix,

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AZ 85004, One

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  South Church
  St.,

  	
  Bob Bornhoft,

  	
   

  	
  Tel: (602) 230-5576

  	
   

  	
  rbornhoft@quarles.com

  
	
  Suite

  	
  Partner

  	
   

  	
  Fax: (602) 229-5690

  	
   

  	
   

  
	
  1700,Tucson, AZ

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  85701

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kirkpatrick

  & Lockhart

  Nicholson

  Graham

  	
   

  	
  CA
  

  	
   

  	
  10100 Santa

  	
   

  	
  Bill Bernfeld,

  	
   

  	
  Tel: (310) 552-5014

  	
   

  	
  wbernfeld@klng.com

  
	
   

  	
  Monica

  	
  Partner

  	
   

  	
  Fax: (310) 552-5001

  	
   

  	
   

  
	
   

  	
  Boulevard, 7th

  	
  David Schack,

  	
   

  	
  Tel: (310) 552-5061

  	
   

  	
  dschack@klng.com

  
	
   

  	
  Floor, Los

  	
  Partner

  	
   

  	
  Fax: (310) 552-5001

  	
   

  	
   

  
	
   

  	
  Angeles, CA

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  90067

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DC

  &

  VA 

  	
   

  	
  1800 Massachusetts

  	
   

  	
  Bruce Nielson,

  	
   

  	
  Tel: (202) 778-9256

  	
   

  	
  bnielson@klng.com

  
	
   

  	
  Ave, NW,

  	
  Partner

  	
   

  	
  Fax: (202) 778-9100

  	
   

  	
   

  
	
   

  	
  Washington, D.C.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  20036

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FL

  	
   

  	
  559 Lexington

  Ave, New York,

  NY 10022

  	
   

  	
  Jon Grouf,

  	
   

  	
  Tel: (212) 536-3940

  	
   

  	
  jgrouf@klng.com

  
	
  Partner

  	
   

  	
  Fax: (212) 536-3901

  	
   

  	
   

  
	
  Jeffrey Kucera,

  	
   

  	
  Tel: (305) 539-3322

  	
   

  	
  jkucera@klng.com

  
	
  Partner

  	
   

  	
  Fax: (305) 358-7095

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NJ
  

  	
   

  	
  One Newark

  	
   

  	
  John Marmora,

  	
   

  	
  Tel: (973) 848-4016

  	
   

  	
  jmarmora@klng.com

  
	
  Center, 10th

  	
  Partner

  	
   

  	
  Fax: (973) 848-4001

  	
   

  	
   

  
	
  Floor, Newark,

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NJ 07102

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NY
  

  	
   

  	
  559 Lexington

  	
   

  	
  Jeff Weitzman,

  	
   

  	
  Tel: (212) 536-3956

  	
   

  	
  jweitzman@klng.com

  
	
  Ave, New York,

  	
  Partner

  	
   

  	
  Fax: (212) 536-3901

  	
   

  	
   

  
	
  NY 10022

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PA
  

  	
   

  	
  Henry W. Oliver

  	
   

  	
  Pierce Richardson,

  	
   

  	
  Tel: (412) 355-6786

  	
   

  	
  prichardson@klng.com

  
	
  Bldg.

  	
  Partner

  	
   

  	
  Fax: (412) 355-6501

  	
   

  	
   

  
	
  535 Smithfield

  	
  Charles Harris,

  	
   

  	
  Tel: (412) 355-6730

  	
   

  	
  charris@klng.com

  
	
  Street,
  Pittsburgh,

  	
  Partner

  	
   

  	
  Fax: (412) 355-6501

  	
   

  	
   

  
	
  PA 15222

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TX
  

  	
   

  	
  2828 North

  Harwood St.,

  Suite 1800,

  Dallas, TX 75201

  	
   

  	
  Eugene Segrest,

  	
   

  	
  Tel: (214) 939-4991

  	
   

  	
  esegrest@klng.com

  
	
  Partner

  	
   

  	
  Fax: (214) 939-4949

  	
   

  	
   

  
	
  John Dickey,

  	
   

  	
  Tel: (214) 939-4941

  	
   

  	
  jdickey@klng.com

  
	
  Partner

  	
   

  	
  Fax: (214) 939-4949

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sutherland,

  Asbill &

  Brennan

  	
   

  	
   

  	
   

  	
  999 Peachtree

  	
   

  	
  Alfred G. Adams,

  	
   

  	
  Tel: (404) 853-8014

  	
   

  	
  al.adams@sablaw.com

  
	
   

  	
  Street, NE,

  	
  Jr., Partner

  	
   

  	
  Fax: (404) 853-8806

  	
   

  	
   

  
	
  GA

  	
  Atlanta, GA

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  30309

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


38

















 


	
  Allen &  Vellone, PC

  	
   

  	
  CO

  	
   

  	
  1600 Stout
  Street,

  	
   

  	
  Mike Vellone,

  	
   

  	
  Tel: (303) 534-4499

  	
   

  	
  mvellone@allen-vellone.com

  
	
  Suite 1100,

  	
  Partner

  	
   

  	
  Fax: (303) 893-8332

  	
   

  
	
  Denver, CO

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  80202

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clark
  Hill,  PLC

  	
   

  	
  MI

  	
   

  	
  500 Woodward

  	
   

  	
  Bill Dunn,

  	
   

  	
  Tel: (313) 965-8511

  	
   

  	
  wdunn@clarkhill.com

  
	
  Ave.,
  Suite 3500

  	
  Partner

  	
   

  	
  Fax: (313) 965-8252

  	
   

  	
   

  
	
  Detroit, MI
  48226

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Morris,

  James,

  Hitchens &

  Williams

  LLP

  	
   

  	
  DE
  

  	
   

  	
  222 Delaware

  Ave, 10th floor

  P.O. Box 2306

  Wilmington, DE

  19899-2306

  	
   

  	
  Robert Symonds,

  	
   

  	
  Tel: (302) 888-6803

  	
   

  	
  rsymonds@morrisjames.com

  
	
  Partner

  	
   

  	
  Fax: (302) 888-6989

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Norman M. Powell,

  	
   

  	
  Tel: (302) 888-6975

  	
   

  	
  npowell@morrisjames.com

  
	
  Partner

  	
   

  	
  Fax: (302) 888-6989

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Matt O’Toole,

  	
   

  	
  Tel: (302) 888-6875

  	
   

  	
  motoole@morrisjames.com

  
	
  Partner

  	
   

  	
  Fax: (302) 888-6989

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wilmer

  Cutler

  Pickering

  Hale
  and

  Dorr
  LLP

  	
   

  	
  MA
  

  	
   

  	
  60 State Street

  Boston, MA

  02109

  	
   

  	
  Jeffrey Hermanson,

  	
   

  	
  Tel: (617) 526-6229

  	
   

  	
  Jeffrey.Hermanson@wilmerhale.com

  
	
   

  	
  Partner

  	
   

  	
  Fax: (617) 526-5000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  John Sigel,

  	
   

  	
  Tel: (617) 526-6728

  	
   

  	
  john.sigel@wilmerhale.com

  
	
   

  	
  Partner

  	
   

  	
  Fax: (617) 526-5000

  	
   

  



 


39

















 


SCHEDULE 6.01


 


Existing Indebtedness


 


2008 Notes


 


2028 Debentures


 


$1.4 million of other
indebtedness


 


40

















 


SCHEDULE 9.01


 


Borrower’s Website for Electronic Delivery


 


www.neimanmarcusgroup.com


 


41
















EXHIBIT A


 


[FORM OF]

ADMINISTRATIVE QUESTIONNAIRE


 


NEIMAN MARCUS GROUP, INC.


 


	
  Agent Information

  	
   

  	
  Agent Closing Contact

  
	
  Credit Suisse

  	
   

  	
  Jeannette Crespo

  
	
  Eleven Madison Avenue

  	
   

  	
  Tel: 212-325-5683

  
	
  New York, NY 10010

  	
   

  	
  Fax: 212-325-8304

  
	
   

  	
   

  	
  E-Mail: jeannette.crespo@csfb.com

  



 


	
  Agent Wire Instructions

  
	
  Bank of New York

  
	
  ABA [***]

  
	
  Account Name: [***]

  
	
  Account Number: [***]

  



 


It is very important that all of the
requested information be completed accurately and that this questionnaire be
returned promptly. If your institution is sub-allocating its allocation, please
fill out an administrative questionnaire for each legal entity.


 


	
  Legal Name of Lender to appear in Documentation:

  
	
   

  
	
   

  	
   

  
	
  Signature
  Block Information:

  	
   

  



 


·             Signing
Credit Agreement o Yes                  oNo


 


·             Coming
in via Assignment o Yes                 o No


 


	
  Type of Lender:

  	
   

  



 


(Bank, Asset Manager, Broker/Dealer, CLO/CDO; Finance
Company, Hedge Fund, Insurance, Mutual Fund, Pension Fund, Other Regulated
Investment Fund, Special Purpose Vehicle, Other-please specify)


 


	
  Lender Parent:

  	
   

  



 


	
  Lender Domestic Address

  	
   

  	
  Lender Eurodollar Address

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 

















 


Contacts/Notification Methods:
Borrowings, Paydowns, Interest, Fees, etc.


 


	
   

  	
   

  	
  Primary Credit Contact

  	
   

  	
  Secondary Credit Contact

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E-Mail Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
   

  	
   

  	
  Primary Operations Contact

  	
   

  	
  Secondary Operations Contact

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E-Mail Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Lender’s Domestic Wire
Instructions


 


	
  Bank Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ABA/Routing No.:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Account Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Account No.:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  FFC Account Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  FFC Account No.:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Reference:

  	
   

  	
   

  	
   

  



 


2

















 


Tax Documents


 


NON-U.S. LENDER INSTITUTIONS:


 


I.  Corporations:


If your institution is incorporated outside of the United
States for U.S. federal income tax purposes, and is the beneficial owner
of the interest and other income it receives, you must complete one of the
following three tax forms, as applicable to your institution: a.) Form W-8BEN (Certificate of Foreign Status of Beneficial Owner),
b.) Form W-8ECI (Income
Effectively Connected to a U.S. Trade or Business), or c.) Form W-8EXP (Certificate of Foreign Government or Governmental
Agency).


 


A U.S. taxpayer identification number is required for any
institution submitting Form W-8ECI. It is also required on Form W-8BEN for
certain institutions claiming the benefits of a tax treaty with the U.S. Please
refer to the instructions when completing the form applicable to your
institution. In addition, please be advised that U.S. tax regulations do not
permit the acceptance of faxed forms. An
original tax form must be submitted.


 


II.  Flow-Through
Entities:


If your institution is organized outside the U.S., and is
classified for U.S. federal income tax purposes as either a Partnership, Trust,
Qualified or Non-Qualified Intermediary, or other non-U.S. flow-through entity,
an original Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through
Entity, or Certain U.S. Branches for United States Tax Withholding) must
be completed by the intermediary together with a withholding statement.
Flow-through entities other than Qualified Intermediaries are required to
include tax forms for each of the underlying beneficial owners.


 


Please refer to the instructions when completing this
form. In addition, please be advised that U.S. tax regulations do not permit
the acceptance of faxed forms. Original tax
form(s) must be submitted.


 


U.S. LENDER INSTITUTIONS:


 


If your institution is incorporated or organized within the United States, you must complete and return Form W-9 (Request for Taxpayer Identification Number and
Certification). Please be advised
that we request that you submit an original Form W-9.


 


Pursuant to the
language contained in the tax section of the Credit Agreement, the applicable
tax form for your institution must be completed and returned prior to the first
payment of income. Failure to provide the proper tax form when requested may
subject your institution to U.S. tax withholding.


 


3

















 


EXHIBIT B


 


[FORM OF]

ASSIGNMENT AND ASSUMPTION


 


This Assignment and Assumption (the “Assignment and
Assumption”) is dated as of the Effective Date set forth below and is
entered into by and between [Insert name of
Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), receipt of a copy
of which is hereby acknowledged by the Assignee. The Standard Terms and
Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.


 


For an agreed consideration, the Assignor hereby
irrevocably sells and assigns to the Assignee, and the Assignee hereby
irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by the Agent as contemplated below (i) all
of the Assignor’s rights and obligations in its capacity as a Lender under the
Credit Agreement and any other documents or instruments delivered pursuant
thereto to the extent related to the amount and percentage interest identified
below of all of such outstanding rights and obligations of the Assignor under
the respective facilities identified below (including any guarantees included
in such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims
and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations
sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale
and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by the Assignor.


 


	
  1.

  	
   

  	
  Assignor:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [and is an Affiliate/Approved Fund of [identify Lender](1)]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower(s)

  	
   

  	
  The Neiman Marcus Group, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Agent:

  	
   

  	
  Credit Suisse as the administrative agent and collateral
  agent under the Credit Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5. 

  	
   

  	
  Credit Agreement:

  	
   

  	
  The Credit Agreement dated as of October 6, 2005,
  among The Neiman Marcus Group, Inc., a Delaware corporation (the “Borrower”,
  formerly known as Newton Acquisition Merger Sub, Inc.), Newton
  Acquisition, Inc., a Delaware corporation, the Subsidiaries of the Borrower
  from time to time party thereto, the Lenders parties thereto, and Credit
  Suisse, as Agent. 

  	
   

  



 






(1) Select as applicable.


 

















 


	
  6.

  	
  Assigned Interest:

  



 


	
  Aggregate Amount of

  Commitment/Loans

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned of
  Commitments/Loans(2)

  	
   

  	
  CUSIP

  	
   

  
	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  



 


Effective Date:                               ,
20        [TO BE INSERTED BY AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.]


 


The terms set forth in this Assignment and Assumption are
hereby agreed to:


 


	
   

  	
   

  	
  ASSIGNOR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  by

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  
					



 


 


	
   

  	
   

  	
  ASSIGNEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [NAME OF ASSIGNEE] 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  by

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  
					



 






(2) Set forth, to at least 9
decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.


 


2

















 


Consented to and Accepted:


 


CREDIT SUISSE, as Agent


 


	
  by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


	
  by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


[Consented to:](3)


 


[THE NEIMAN MARCUS GROUP, INC.]


 


 


	
  by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 






(3) To be added only if the consent
of the Borrower is required by the terms of the Credit Agreement.


 


3

















 


ANNEX 1


 


STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION


 


1.  Representations and Warranties.


 


1.1  Assignor.
The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim, (iii) its
Commitment, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as
set forth herein, and (iv) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and
to consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.


 


1.2.  Assignee. The Assignee (a) represents
and warrants that (i) it is an Eligible Assignee and has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements referred to in Section 3.04(a) or
delivered pursuant to Section 5.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Agent or any other
Lender, and (v) if it is a Foreign Lender, attached to the Assignment and
Assumption is any documentation required to be delivered by it pursuant to the
terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on
the Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, (ii) it
appoints and authorizes the Agent to take such action on its behalf and to
exercise such powers under the Credit Agreement as are delegated to the Agent,
by the terms thereof, together with such powers as are reasonably incidental
thereto, and (iii) it will perform in accordance with their terms all of
the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.


 


2.  Payments. From and after the
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.


 


3.  General Provisions. This
Assignment and Assumption shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns. This Assignment
and Assumption may be executed in any number of counterparts, which together
shall constitute one instrument. Delivery of an executed counterpart of a
signature page of this Assignment and Assumption by facsimile shall be
effective as delivery of a manually executed counterpart of this Assignment and
Assumption. This Assignment and Assumption shall be construed in accordance
with and governed by the laws of the State of New York.


 

















 


EXHIBIT C


 


[FORM OF]

COMPLIANCE CERTIFICATE


 


	
  To:

  	
  The Lenders parties to the

  
	
   

  	
  Credit Agreement described below

  



 


This Compliance Certificate is furnished pursuant to that
certain Credit Agreement dated as of October 6, 2005 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among The Neiman Marcus Group, Inc. (formerly known as Newton Acquisition
Merger Sub, Inc.) (the “Borrower”), the other Loan Parties, the
Lenders party thereto and Credit Suisse, as Agent for the Lenders. Unless
otherwise defined herein, capitalized terms used in this Compliance Certificate
have the meanings ascribed thereto in the Credit Agreement.


 


THE UNDERSIGNED HEREBY CERTIFIES THAT:


 


1.             I am
the duly elected                                 of
the Borrower and a Financial Officer of the Borrower;


 


2.             I have
reviewed the terms of the Credit Agreement and I have made, or have caused to
be made under my supervision, a detailed review of the transactions and
conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements;


 


3.             The
examinations described in paragraph 2 did not disclose, except as set forth
below, and I have no knowledge of (i) the existence of any condition or
event which constitutes a Default or Event of Default during or at the end of
the accounting period covered by the attached financial statements or as of the
date of this Certificate and (ii) the disclosure set forth below specifies
the details of any such condition or event and any action taken or proposed to
be taken with respect thereto;


 


4.  No Loan Party (a) has changed (i) its
name, (ii) the location of its chief executive office or its principal
place of business, (iii) its organizational legal entity designation or
jurisdiction of incorporation or formation, or (iv) its Federal Taxpayer
Identification Number or organizational identification number assigned to it by
its jurisdiction of incorporation or formation, or (b) has made an
acquisition of any material property for which additional filings or recordings
are necessary to perfect and maintain the Agent’s security interest therein, in
each case, without having given the Agent the notice required by Section 4.1
of the Security Agreement; and


 


5.             [For
annual certificates, add: Schedule I attached hereto sets forth
reasonably detailed calculations of the Borrower’s Excess Cash Flow for such
fiscal year.] and


 


6.             [For
annual certificates, add: Schedule II sets forth a list of names of all
Immaterial Subsidiaries, each Subsidiary set forth on Schedule II individually
qualifies as an Immaterial Subsidiary and all Domestic Subsidiaries listed as
Immaterial Subsidiaries in the aggregate comprise less than 5% of consolidated
total assets of the Borrower and the Subsidiaries at the end of the accounting
period covered by the attached financial statements and represented (on a
contribution basis) less than 5% of EBITDA for such period;] and


 
















 


The description below sets forth the exceptions, if any,
to paragraph 3 by listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which the Borrower has taken,
is taking, or proposes to take with respect to each such condition or event:


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


The foregoing certifications, together with the
information set forth in the Schedules hereto and the financial statements
delivered with this Certificate in support hereof, are made and delivered this
day of
             ,
     20    .


 


 


	
   

  	
   

  	
  THE NEIMAN MARCUS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


2

















 


SCHEDULE
I


 


Calculations of the Borrower’s

Excess Cash Flows


 

















 


SCHEDULE
II


 


Immaterial Subsidiaries


 

















 


EXHIBIT D


 


[FORM OF]

JOINDER AGREEMENT


 


THIS JOINDER AGREEMENT (this “Agreement”), dated as
of                ,
         , 20     ,
is entered into between
                                                    ,
a
                                 
(the “New Subsidiary”) and CREDIT SUISSE, as Agent, under that certain
Credit Agreement, dated as of October 6, 2005 (as the same may be amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among The Neiman Marcus Group, Inc., a Delaware corporation (the “Borrower”,
formerly known as Newton Acquisition Merger Sub, Inc.), Newton Acquisition, Inc.,
a Delaware corporation, the Subsidiaries of the Borrower from time to time
party thereto, the other Loan Parties from time to time party thereto, the
Lenders from time to time party thereto and the Agent. All capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.


 


The New Subsidiary and the Agent, for the benefit of the
Lenders, hereby agree as follows:


 


1.             The
New Subsidiary hereby acknowledges, agrees and confirms that, by its execution
of this Agreement, the New Subsidiary will be deemed to be a Loan Party under
the Credit Agreement and a Loan Guarantor for all purposes of the Credit
Agreement and shall have all of the obligations of a Loan Party and a Loan
Guarantor thereunder as if it had executed the Credit Agreement. The New
Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Agreement,
including without limitation (a) all of the representations and warranties
of the Loan Parties set forth in Article III of the Credit Agreement (to
the extent made or deemed made on or after the effective date hereof), (b) all
of the covenants set forth in Articles V and VI of the Credit Agreement and (c) all
of the guaranty obligations set forth in Article X of the Credit
Agreement. Without limiting the generality of the foregoing terms of this paragraph
1, the New Subsidiary, subject to the limitations set forth in Section 10.09
of the Credit Agreement, hereby absolutely and unconditionally guarantees,
jointly and severally with the other Loan Guarantors, to the Agent and the
Lenders, the prompt payment of the Guaranteed Obligations in full when due
(whether at stated maturity, upon acceleration or otherwise) to the extent of
and in accordance with Article X of the Credit Agreement.


 


2.             If
required, the New Subsidiary is, simultaneously with the execution of this
Agreement, executing and delivering such Collateral Documents (and such other
documents and instruments) as requested by the Agent in accordance with the
Credit Agreement.


 


3.             The
New Subsidiary hereby waives acceptance by the Agent and the Lenders of the guaranty
by the New Subsidiary upon the execution of this Agreement by the New
Subsidiary.


 


4.             This
Agreement may be executed in any number of counterparts, each of which when so executed
and delivered shall be an original, but all of which shall constitute one and
the same instrument.


 


5.             THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.


 

















 


IN WITNESS WHEREOF, the New Subsidiary has caused this
Agreement to be duly executed by its authorized officer, and the Agent, for the
benefit of the Lenders, has caused the same to be accepted by its authorized
officer, as of the day and year first above written.


 


 


	
   

  	
   

  	
  [NEW SUBSIDIARY]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Acknowledged and accepted:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CREDIT SUISSE, as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


2

















 


EXHIBIT E


 


[FORM OF]

BORROWING REQUEST


 


Credit Suisse,


as Agent for the Lenders referred to below,


Eleven Madison Avenue


New York, NY 10010


 


Attention: Agency Group


Fax: (212) 325-8304


 


[Date](1)


 


Ladies and Gentlemen:


 


Reference is made to the Credit Agreement dated as of October 6,
2005, among Newton Acquisition Merger Sub, Inc., a Delaware corporation
(prior to the Merger, the “Borrower”), The Neiman Marcus Group, Inc.,
a Delaware corporation (after the Merger, the “Borrower”), Newton
Acquisition, Inc., a Delaware corporation, the Subsidiaries of the
Borrower from time to time party thereto, the Lenders parties thereto, and
Credit Suisse, as Agent (as amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”). Terms defined in the Credit
Agreement are used herein with the same meanings.


 


The undersigned hereby gives you notice pursuant to Section 2.03
of the Credit Agreement that it requests the Borrowing under the Credit
Agreement to be made on the Closing Date, and in that connection sets forth
below the terms on which the Borrowing is requested to be made:


 


	
  (A)

  	
   

  	
  Date of Borrowing

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (which shall be a Business Day)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (B)

  	
   

  	
  Principal Amount of Borrowing

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (C)

  	
   

  	
  Type of Borrowing(2)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (D)

  	
   

  	
  Interest Period and the last day thereof(3)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (E)

  	
   

  	
  Account Number and Location

  	
   

  	
   

  	
   

  



 






(1)          Must be notified in
writing or by telephone (with such telephonic notification to be confirmed
promptly in writing) (i) in the case of a LIBOR Rate Borrowing, not later
than 11:00 a.m., New York City time, two (2) Business Days before the
Closing Date or (ii) in the case of an ABR Borrowing, not later than 10:00
a.m., New York City time, on the Closing Date.


(2)          Specify a LIBOR Rate
Borrowing or an ABR Borrowing.


(3)          The initial Interest
Period applicable to a LIBOR Rate Borrowing shall be subject to the definition
of “Interest Period”.


 

















 


	
   

  	
   

  	
  NEWTON ACQUISITION MERGER SUB,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 


2

















 


EXHIBIT F


 


[FORM OF]

PROMISSORY NOTE


 


	
  $[          ]

  	
  New York, New York

  
	
   

  	
  [·],
  200[·]

  



 


FOR VALUE RECEIVED, the undersigned, THE NEIMAN MARCUS
GROUP, INC., a Delaware corporation (the “Borrower”), hereby promises to
pay to [ ] (the “Lender”) or its registered assigns, at the office of
Credit Suisse (the “Agent”) at Eleven Madison Avenue, New York, New York
10010, on the dates and in the amounts set forth in the Credit Agreement dated
as of October 6, 2005 (as the same may be amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrower, Newton Acquisition, Inc., the Subsidiaries from time to time
party thereto, the Lenders party thereto and the Agent, in lawful money of the
United States of America in immediately available funds, the aggregate unpaid
principal amount of all Loans made by the Lender to the Borrower pursuant to
the Credit Agreement and to pay interest from the date of such Loans on the
principal amount thereof from time to time outstanding, in like funds, at said
office, at the rate or rates per annum and payable on the dates provided in the
Credit Agreement. Terms used but not defined herein shall have the meanings
assigned to them in the Credit Agreement.


 


The Borrower promises to pay interest, on demand, on any
overdue principal and, to the extent permitted by law, overdue interest from
the due dates at a rate or rates provided in the Credit Agreement.


 


The Borrower hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by the holder hereof
of any of its rights hereunder in any particular instance shall not constitute
a waiver thereof in that or any subsequent instance.


 


All borrowings evidenced by this promissory note and all
payments and prepayments of the principal hereof and interest hereon and the
respective dates thereof shall be endorsed by the holder hereof on the
schedules attached hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof, or otherwise recorded by
such holder in its internal records; provided, however, that
the failure of the holder hereof to make such a notation or any error in such
notation shall not affect the obligations of the Borrower under this Note.


 


This promissory note is one of the promissory notes referred
to in the Credit Agreement that, among other things, contains provisions for
the acceleration of the maturity hereof upon the happening of certain events,
for optional and mandatory prepayment of the principal hereof prior to the
maturity hereof and for the amendment or waiver of certain provisions of the
Credit Agreement, all upon the terms and conditions therein specified. This
promissory note is entitled to the benefit of the Credit Agreement and is
guaranteed and secured as provided therein and in the other Loan Documents
referred to in the Credit Agreement. THIS PROMISSORY NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.


 


	
   

  	
   

  	
  THE NEIMAN MARCUS GROUP, INC.,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  by:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 

















 


Schedule A to Note


 


LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS


 


	
  Date

  	
   

  	
  Amount of ABR Loans

  	
   

  	
  Amount Converted to ABR

  Loans

  	
   

  	
  Amount of Principal of

  ABR Loans Repaid

  	
   

  	
  Amount of ABR Loans

  Converted to LIBOR Rate

  Loans

  	
   

  	
  Unpaid Principal Balance

  of ABR Loans

  	
   

  	
  Notation Made By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


Schedule B to Note


 


LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF
LIBOR RATE LOANS


 


	
  Date

  	
   

  	
  Amount of LIBOR

  Rate Loans

  	
   

  	
  Amount Converted

  to LIBOR Rate

  Loans

  	
   

  	
  Interest Period and

  Adjusted LIBOR with

  Respect Thereto

  	
   

  	
  Amount of Principal of

  LIBOR Rate Loans

  Repaid

  	
   

  	
  Amount of LIBOR

  Rate Loans Converted

  to ABR Loans

  	
   

  	
  Unpaid Principal

  Balance of LIBOR

  Rate Loans

  	
   

  	
  Notation Made By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


2