**EXHIBIT4.2**

 

FORM OF 7.125% SENIOR NOTE DUE 2008

 

Unless thiscertificate is presented by an authorized representative of The DepositoryTrust Company, a New York corporation (“DTC”), to Issuer or its agent forregistration of transfer, exchange or payment and any certificate issued isregistered in the name of Cede & Co. or in such other name as is requestedby an authorized representative of DTC, ANY TRANSFER, PLEDGE OR OTHER USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as theregistered owner hereof, Cede & Co., has an interest herein.

 

THE NEIMAN MARCUS GROUP,INC.

7.125% Senior DebentureDue 2028

 
| REGISTERED | CUSIP 640204 AB 9 |
|------------|-------------------|

 

No. R-1

 

THE NEIMAN MARCUSGROUP, INC., a corporation duly organized and existing under the laws of theState of Delaware (herein called the “Company,” which term includes anysuccessor under the Indenture hereinafter referred to), for value received,hereby promises to pay to

 

Cede & Co.

 

or registered assigns, the principal sum of$125,000,000 at the office or agency of the Company in the Borough ofManhattan, The City of New York, on June 1, 2028 in such coin or currency ofthe United States of America as at the time of payment shall be legal tenderfor the payment of public and private debts, and to pay interest on saidprincipal sum semiannually on June 1 and December 1 of each year (each an“Interest Payment Date”), commencing December 1, 1998 at said office or agency,in like coin or currency, at the rate per annum specified in the title hereof, fromthe most recent Interest Payment Date to which interest on the Debentures hasbeen paid, or, if no interest has been paid on the Debentures since May 27,1998, from May 27, 1998, until payment of said principal sum has been made orduly provided for. The interest so payable, and punctually paid or dulyprovided for, on any June 1 or December 1 will, except as provided in theIndenture dated as of May 27, 1998 (the “Indenture”), duly executed anddelivered by the Company to The Bank of New York, Trustee (herein called the“Trustee”), be paid to the Person in whose name this Debenture (or one or morePredecessor Securities) is registered at the close of business on the 15th dayof the next preceding May or November (herein called the “Regular Record Date”)whether or not a Business Day, and may, at the option of the Company, be paidby check mailed to the registered address of such Person. Any such interestwhich is payable, but is not so punctually paid or duly provided for, shallforthwith cease to be payable to the registered Holder on such Regular RecordDate and may be paid either to the Person in whose name this Debenture (or oneor more Predecessor Securities) is registered at the close of business on aSpecial Record Date for the payment of such Defaulted Interest to be fixed bythe Trustee, notice whereof shall be given to Holders of Debentures not lessthan 10 days prior to such Special Record Date, or may be paid at any time inany other lawful manner not inconsistent with the requirements of any securitiesexchange on which the Debentures may be listed and upon such notice as may berequired by such exchange, if such manner of payment shall be deemed practicalby the Trustee, all as more fully provided in the Indenture.

 

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The Bank of New York willbe the Paying Agent and the Security Registrar with respect to this Debenture.The Company reserves the right at any time to vary or terminate the appointmentof any Paying Agent or Security Registrar, to appoint additional or otherPaying Agents and other Security Registrars, which may include the Company, andto approve any change in the office through which any Paying Agent or SecurityRegistrar acts; provided, that there will at all times be a Paying Agent in theCity of New York.

 

This Debenture is one ofthe duly authorized issue of debentures, notes, bonds or other evidences ofindebtedness (hereinafter called the “Securities”) of the Company, of theseries hereinafter specified, all issued or to be issued under and pursuant tothe Indenture, to which Indenture and all other indentures supplemental theretoreference is hereby made for a statement of the respective rights, limitationsof rights, obligations, duties and immunities thereunder of the Trustee and anyagent of the Trustee, any Paying Agent, the Company and the Holders of theSecurities and the terms upon which the Securities are issued and are to beauthenticated and delivered.

 

The Securities may beissued in one or more series, which different series may be issued in variousaggregate principal amounts, may mature at different times, may bear interest(if any) at different rates, may be subject to different redemption provisions(if any), may be subject to different sinking, purchase or analogous funds (ifany), may be subject to different covenants and Events of Default and mayotherwise vary as provided or permitted in the Indenture. This Debenture is oneof the series of Securities of the Company issued pursuant to the Indenture anddesignated as the 7.125% Senior Debentures Due 2028 (herein called the“Debentures”), limited in aggregate principal amount to $125,000,000.

 

The Debentures of thisseries are not redeemable prior to the Stated Maturity of the principal hereofexcept as provided herein and will not be subject to any sinking fund.

 

This Debenture isredeemable, as a whole or in part, at the option of the Company at any time, ata redemption price equal to the greater of (a) 100% of the principal amount ofthis Debenture to be redeemed and (b) the sum of the present values of theRemaining Scheduled Payments thereon discounted to the redemption date on asemiannual basis (assuming a 360-day year consisting of twelve 30-day months)at the Treasury Rate plus 20 basis points, plus accrued interest on theprincipal amount being redeemed to the date of redemption.

 

“Treasury Rate” means,with respect to any redemption date, the rate per annum equal to the semiannualequivalent yield to maturity of the Comparable Treasury Issue, assuming a pricefor the Comparable Treasury Issue (expressed as a percentage of its principalamount) equal to the Comparable Treasury Price for such redemption date.

 

“Comparable TreasuryIssue” means the United States Treasury security selected by an IndependentInvestment Banker as having a maturity comparable to the remaining term of theDebentures that would be utilized, at the time of selection and in accordancewith customary financial practice, in pricing new issues of corporate debtsecurities of comparable maturity to the remaining term of such Securities.“Independent Investment Banker” means one of the Reference Treasury Dealersappointed by the Company.

 

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“Comparable TreasuryPrice” means, with respect to any redemption date, (a) the average of the bidand asked prices for the Comparable Treasury Issue (expressed in each case as apercentage of its principal amount) on the third business day preceding suchredemption date, as set forth in the daily statistical release (or anysuccessor release) published by the Federal Reserve Bank of New York and designated“Composite 3:30 p.m. Quotations for U.S. Government Securities” or (b) if suchrelease (or any successor release) is not published or does not contain suchprices on such business day, (i) the average of the Reference Treasury DealerQuotations for such redemption date, after excluding the highest and lowestsuch Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewerthan four such Reference Treasury Dealer Quotations, the average of all suchQuotations. “Reference Treasury Dealer Quotations” means, with respect to eachReference Treasury Dealer and any redemption date, the average, as determinedby the Trustee, of the bid and asked prices for the Comparable Treasury Issue(expressed in each case as a percentage of its principal amount) quoted inwriting to the Trustee by such Reference Treasury Dealer at 5:00 p.m. New Yorktime on the third business day preceding such redemption date.

 

“Reference TreasuryDealer” means each of Salomon Brothers Inc, Chase Securities Inc. and MerrillLynch, Pierce, Fenner & Smith, Incorporated and their respective successorsand any such other Primary Treasury Dealer as the Company designates; provided,however, that if any of the foregoing shall cease to be a primary U.S.Government securities dealer in New York City (a “Primary Treasury Dealer”),the Company shall substitute therefor another Primary Treasury Dealer.

 

“Remaining ScheduledPayments” means the remaining scheduled payments of the principal of theDebentures to be redeemed and interest thereon that would be due after therelated redemption date but for such redemption; provided, however, that, ifsuch redemption date is not an Interest Payment Date, the amount of the nextsucceeding scheduled interest payment thereon will be reduced by the amount ofinterest accrued thereon to such redemption date.

 

Unless the Companydefaults in payment of the redemption price, on and after the applicableredemption date, interest will cease to accrue on the Securities or portionsthereof called for redemption.

 

If an Event of Defaultwith respect to the Debentures shall occur and be continuing, the principal ofall of the Debentures may be declared due and payable in the manner, with theeffect and subject to the conditions provided in the Indenture.

 

The Indenture permits,with certain exceptions as therein provided, the Company and the Trustee toenter into supplemental indentures to the Indenture for the purpose of addingany provisions to or changing in any manner or eliminating any of the provisionsof the Indenture or of modifying in any manner the rights or the Holders of theSecurities of each series under the Indenture with the consent of the Holdersof not less than a majority in principal amount of the Securities at the timeOutstanding of each series to be affected thereby on behalf of the Holders ofall Securities of such series. The Indenture also permits the Holders of amajority in principal amount of the Securities at the time Outstanding of eachseries on behalf of the Holders of all Securities of such series, to waivecompliance by the Company with certain provisions of the Indenture and certainpast defaults and their consequences with respect to such series under theIndenture.  Any such consent or waiver bythe Holder of this Debenture shall be conclusive and binding upon such Holderand upon all future Holders of this Debenture and of any Debenture issued uponthe registration of transfer hereof or in exchange hereof or in lieu hereof,whether or not notation of such consent or waiver is made upon this Debentureor such other Debentures.

 

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No reference herein tothe Indenture and no provision of this Debenture or of the Indenture shallalter or impair the obligation of the Company, which is absolute andunconditional, to pay the principal and any premium of and any interest on thisDebenture at the place, rate and respective times and in the coin or currencyherein and in the Indenture prescribed.

 

As provided in theIndenture and subject to the satisfaction of certain conditions therein setforth, including the deposit of certain trust funds in trust, at the Company’soption, either the Company shall be deemed to have paid and discharged theentire indebtedness represented by, and the obligations under, the Securitiesof any series and to have satisfied all the obligations (with certainexceptions) under the Indenture relating to the Securities of such series orthe Company shall cease to be under any obligation to comply with any term,provision or condition of certain restrictive covenants or provisions withrespect to the Securities of such series.

 

The Debentures areissuable in registered form without coupons in denominations of $1,000 and anyintegral multiple of $1,000. Debentures may be exchanged for a like aggregateprincipal amount and Stated Maturity of Debentures of other authorizeddenominations at the office or agency of the Company in the Borough ofManhattan, The City of New York, designated for such purpose and in the mannerand subject to the limitations provided in the Indenture.

 

Upon due presentment forregistration of transfer of this Debenture at the office or agency of theCompany in the Borough of Manhattan, The City of New York designated for suchpurpose, a new Debenture or Debentures of authorized denominations for a likeaggregate principal amount and Stated maturity will be issued to the transfereein exchange therefor, subject to the limitations provided in the Indenture.

 

No charge shall be madefor any such transfer or exchange, but the Company may require payment of a sumsufficient to cover any tax or other governmental charge imposed in connectiontherewith.

 

Prior to due presentmentfor registration of transfer of this Debenture, the Company, the Trustee andany agent of the Company or the Trustee may treat the Person in whose name thisDebenture is registered as the owner hereof for all purposes, whether or notthis Debenture is overdue, and neither the Company, the Trustee nor any suchagent shall be affected by notice to the contrary.

 

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Unless otherwise definedherein, all terms used in this Debenture which are defined in the Indentureshall have the meanings assigned to them in the Indenture.

 

This Debenture shall beconstrued in accordance with and governed by the laws of the State of New York.

 

Unless the certificate ofauthentication hereon has been manually executed by or on behalf of the Trusteeunder the Indenture, this Debenture shall not be entitled to any benefits underthe Indenture, or be valid or obligatory for any purpose

 

IN WITNESS WHEREOF, THENEIMAN MARCUS GROUP, INC. has caused this Debenture to be duly executed.

 
| Dated: May 27, 1998 | THE NEIMAN MARCUS GROUP, INC.                           |
|---------------------|---------------------------------------------------------|
|                |
| By:                 |                                                    | s/ Richard A. Smith |   |
|                | Signature                                               |
|                |
|                | Richard A. Smith, Chairman and Chief Executive  Officer |
|                | (Print name and  title)                                 |
|                     |                                                         |  |  |  |  |

 

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TRUSTEE’S CERTIFICATE OFAUTHENTICATION

 

This is one of theSecurities referred to in the within-mentioned Indenture.

 
|      | The Bank of New York, |
|-----------|-----------------------|
|      | as Trustee,           |
|      |
| By:  |                  | s/ Mary Jane Schmalzel |   |
|      | Authorized  Signatory |
|      |                  |
| Dated:    | May 27, 1998          |   |
|           |                       |  |  |  |  |

 

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