Exhibit 10.12


 




 





$350,000,000


 


CREDIT AGREEMENT


 


dated as of


 


June 9, 2004


 


among


 


THE NEIMAN MARCUS GROUP, INC.,


 


THE LENDERS PARTY HERETO,


 


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


 


__________________________________________________________________


 


J.P. MORGAN SECURITIES INC.

Sole Book Runner


 



and


 


J.P. MORGAN SECURITIES INC.

and

BANC OF AMERICA SECURITIES LLC

Joint Lead Arrangers


 

















 


TABLE OF CONTENTS


 


 


	
  ARTICLE I Definitions

  	
   

  
	
  Section 1.01.

  	
  Definition

  	
   

  
	
  Section 1.02.

  	
  Accounting
  Terms and Determinations

  	
   

  
	
  Section 1.03.

  	
  Classes
  and Types of Borrowings

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II The Credits

  	
   

  
	
  Section 2.01.

  	
  Commitments
  to Lend

  	
   

  
	
  Section 2.02.

  	
  Notice
  of Committed Borrowing

  	
   

  
	
  Section 2.03.

  	
  Competitive
  Bid Borrowings

  	
   

  
	
  Section 2.04.

  	
  Notice
  to Lenders; Funding of Loans.

  	
   

  
	
  Section 2.05.

  	
  Registry;
  Notes

  	
   

  
	
  Section 2.06.

  	
  Maturity
  of Loans.

  	
   

  
	
  Section 2.07.

  	
  Interest
  Rates.

  	
   

  
	
  Section 2.08.

  	
  Method
  of Electing Interest Rates.

  	
   

  
	
  Section 2.09.

  	
  Fees.

  	
   

  
	
  Section 2.10.

  	
  Termination
  or Reduction of Commitments.

  	
   

  
	
  Section 2.11.

  	
  Optional
  Prepayments.

  	
   

  
	
  Section 2.12.

  	
  General
  Provisions as to Payments.

  	
   

  
	
  Section 2.13.

  	
  Funding
  Losses

  	
   

  
	
  Section 2.14.

  	
  Computation
  of Interest and Fees

  	
   

  
	
  Section 2.15.

  	
  Letters
  of Credit.

  	
   

  
	
  Section 2.16.

  	
  Stop
  Issuance Notice

  	
   

  
	
  Section 2.17.

  	
  Regulation
  D Compensation

  	
   

  
	
  Section 2.18.

  	
  Increased
  Commitments; Additional Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III Conditions

  	
   

  
	
  Section 3.01.

  	
  Effectiveness

  	
   

  
	
  Section 3.02.

  	
  Borrowings
  and Issuances of Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV Representations and Warranties

  	
   

  
	
  Section 4.01.

  	
  Corporate
  Existence and Power

  	
   

  
	
  Section 4.02.

  	
  Corporate
  Authorization

  	
   

  
	
  Section 4.03.

  	
  Binding
  Effect

  	
   

  
	
  Section 4.04.

  	
  Financial
  Information.

  	
   

  
	
  Section 4.05.

  	
  Litigation

  	
   

  
	
  Section 4.06.

  	
  Governmental
  and Other Approvals

  	
   

  
	
  Section 4.07.

  	
  Full
  Disclosure

  	
   

  
	
  Section 4.08.

  	
  Compliance
  with ERISA

  	
   

  
	
  Section 4.09.

  	
  Taxes

  	
   

  
	
  Section 4.10.

  	
  Environmental
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V Covenants

  	
   

  
	
  Section 5.01.

  	
  Furnishing
  of Financial Data and Certificates

  	
   

  
	
  Section 5.02.

  	
  Payment
  of Taxes

  	
   

  
	
  Section 5.03.

  	
  Maintenance
  of Corporate Existence; Compliance with Laws.

  	
   

  



 


i

















 


	
  Section 5.04.

  	
  Maintenance
  of Property and Leases

  	
   

  
	
  Section 5.05.

  	
  Insurance

  	
   

  
	
  Section 5.06.

  	
  Accounts
  and Reports

  	
   

  
	
  Section 5.07.

  	
  Inspection

  	
   

  
	
  Section 5.08.

  	
  Coverage
  of Consolidated Fixed Charges

  	
   

  
	
  Section 5.09.

  	
  Leverage
  Ratio

  	
   

  
	
  Section 5.10.

  	
  Restrictions
  on Liens

  	
   

  
	
  Section 5.11.

  	
  Restrictions
  on Sales, Consolidations and Mergers.

  	
   

  
	
  Section 5.12.

  	
  Transactions
  with Affiliates

  	
   

  
	
  Section 5.13.

  	
  Restriction
  on Debt of Subsidiaries

  	
   

  
	
  Section 5.14.

  	
  Use
  of Proceeds

  	
   

  
	
  Section 5.15.

  	
  Restricted
  Payments

  	
   

  
	
  Section 5.16.

  	
  Restrictive
  Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI Defaults

  	
   

  
	
  Section 6.01.

  	
  Events
  of Default

  	
   

  
	
  Section 6.02.

  	
  Notice
  of Default

  	
   

  
	
  Section 6.03.

  	
  Cash
  Cover

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII The Agents

  	
   

  
	
  Section 7.01.

  	
  Appointment
  and Authorization

  	
   

  
	
  Section 7.02.

  	
  Agents
  and Affiliates

  	
   

  
	
  Section 7.03.

  	
  Action
  by Administrative Agent

  	
   

  
	
  Section 7.04.

  	
  Consultation
  With Experts

  	
   

  
	
  Section 7.05.

  	
  Liability
  of Agents

  	
   

  
	
  Section 7.06.

  	
  Indemnification

  	
   

  
	
  Section 7.07.

  	
  Credit
  Decision

  	
   

  
	
  Section 7.08.

  	
  Successor
  Administrative Agent

  	
   

  
	
  Section 7.09.

  	
  Administrative
  Agent’s Fee

  	
   

  
	
  Section 7.10.

  	
  Syndication
  Agents and Documentation Agents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII Change in Circumstances

  	
   

  
	
  Section 8.01.

  	
  Basis
  for Determining Interest Rate Inadequate or Unfair

  	
   

  
	
  Section 8.02.

  	
  Illegality

  	
   

  
	
  Section 8.03.

  	
  Increased
  Cost and Reduced Return

  	
   

  
	
  Section 8.04.

  	
  Taxes

  	
   

  
	
  Section 8.05.

  	
  Base
  Rate Loans Substituted for Affected Fixed Rate

  	
   

  
	
  Section 8.06.

  	
  Substitution
  of Bank

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX Miscellaneous

  	
   

  
	
  Section 9.01.

  	
  Notices

  	
   

  
	
  Section 9.02.

  	
  No
  Waivers

  	
   

  
	
  Section 9.03.

  	
  Expenses;
  Indemnification

  	
   

  
	
  Section 9.04.

  	
  Sharing

  	
   

  
	
  Section 9.05.

  	
  Amendments
  and Waivers

  	
   

  
	
  Section 9.06.

  	
  Successors
  and Assigns.

  	
   

  
	
  Section 9.07.

  	
  Designated
  Lenders

  	
   

  
	
  Section 9.08.

  	
  No
  Reliance on Margin Stock

  	
   

  
	
  Section 9.09.

  	
  Confidentiality

  	
   

  



 


ii

















 


	
  Section 9.10.

  	
  Governing
  Law; Jurisdiction

  	
   

  
	
  Section 9.11.

  	
  Counterparts;
  Integration

  	
   

  
	
  Section 9.12.

  	
  WAIVER
  OF JURY TRIAL

  	
   

  
	
  Section 9.13.

  	
  USA
  Patriot Act Notice

  	
   

  



 


	
  COMMITMENT SCHEDULE

  
	
  PRICING
  SCHEDULE

  



 


	
  EXHIBIT A

  	
  -

  	
  NOTE

  
	
  EXHIBIT B

  	
  -

  	
  FORM OF NOTICE OF COMMITTED BORROWING

  
	
  EXHIBIT C

  	
  -

  	
  FORM OF COMPETITIVE BID QUOTE REQUEST

  
	
  EXHIBIT D

  	
  -

  	
  FORM OF INVITATION FOR COMPETITIVE BID
  QUOTES

  
	
  EXHIBIT E

  	
  -

  	
  FORM OF COMPETITIVE BID QUOTE

  
	
  EXHIBIT F

  	
  -

  	
  OPINION OF COUNSEL FOR THE BORROWER

  
	
  EXHIBIT G

  	
  -

  	
  OPINION OF BAKER BOTTS L.L.P., SPECIAL
  COUNSEL FOR THE ADMINISTRATIVE AGENT

  
	
  EXHIBIT H

  	
  -

  	
  ASSIGNMENT AND ASSUMPTION AGREEMENT

  
	
  EXHIBIT I

  	
  -

  	
  DESIGNATION
  AGREEMENT

  



 


iii

















 


AGREEMENT
dated as of June 9, 2004 among THE NEIMAN MARCUS GROUP, INC., the LENDERS party
hereto, 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.


 


The parties
hereto agree as follows:


 


ARTICLE I

DEFINITIONS


 


Section 1.01.          Definition.  The following terms, as used herein, have
the following meanings:


 


“Absolute Rate Auction” means a solicitation
of Competitive Bid Quotes setting forth Competitive Bid Absolute Rates pursuant
to Section 2.03.


 


“Additional Lender” has the meaning
specified in Section 2.18(b).


 


“Administrative Agent” means JPMorgan Chase
Bank, in its capacity as administrative agent for the Lenders hereunder, and
its successors in such capacity.


 


“Administrative Questionnaire” means, with
respect to each Lender, an administrative questionnaire in the form prepared by
the Administrative Agent, completed by such Lender and returned to the
Administrative Agent (with a copy to the Borrower).


 


“Affiliate” means, with respect to a
specified Person, another Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with such specified Person (other than, with respect to the Borrower, any of
its Subsidiaries and, with respect to any Subsidiary of the Borrower, the
Borrower or any other Subsidiary).  As
used herein, the term “control” means possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.  For purposes of this
Agreement no individual shall be deemed to be an Affiliate solely by reason of
the fact that such individual is a director or officer of the Borrower.


 


“Agents” means the Administrative Agent, the
Syndication Agents, and the Documentation Agents.


 


“Applicable Lending Office” means, with
respect to any Lender, (i) in the case of its Base Rate Loans, its Domestic
Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar
Lending Office and (iii) in the case of its Competitive Bid Loans, its
Competitive Bid Lending Office.


 


“Approved Fund” means any Fund that is
administered or managed by (i) a Lender, (ii) an affiliate of a Lender or (iii)
an entity or an affiliate of an entity that administers or manages a Lender.


 


4

















 


“Assignment and Assumption Agreement” has
the meaning specified in Section 9.06(b).


 


“Base Rate” means, for any day, a rate per
annum equal to the higher of (i) the Prime Rate for such day or (ii) the sum of
0.50% plus the Federal Funds Rate for such day.


 


“Base Rate Loan” means a Committed Loan that
bears interest at the Base Rate pursuant to the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election or the last sentence of Section
2.08(a) or Article 8.


 


“Base Rate Margin” has the meaning specified
in the Pricing Schedule.


 


“Benefit Arrangement” means at any time an
employee benefit plan within the meaning of Section 3(3) of ERISA which is not
a Plan or a Multiemployer Plan and which is maintained or otherwise contributed
to by any member of the ERISA Group.


 


“Borrower” means The Neiman Marcus Group,
Inc., a Delaware corporation, and its successors.


 


“Borrower’s 2003 10-K” means the Borrower’s
annual report on Form 10-K for the fiscal year ended August 2, 2003, as filed
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934.


 


“Borrowing” has the meaning specified in
Section 1.03.


 


“Capitalized Lease” means a lease under
which, in accordance with United States generally accepted accounting
principles, the liability of the lessee is required to be capitalized on its
balance sheet.


 


“Class” refers to the determination whether
a Loan is a Committed Loan or a Competitive Bid Loan.


 


“Closing Date” means the date on or after
the Effective Date on which all of the conditions specified in Section 3.01
shall have been satisfied.


 


“Commitment” means (i) with respect to each
Lender listed on the Commitment Schedule, the amount set forth opposite such
Lender’s name on the Commitment Schedule, (ii) with respect to any financial
institution which becomes a Lender pursuant to Section 2.18, the amount of the
Commitment thereby assumed by it and (iii) with respect to any assignee which
becomes a Lender pursuant to Section 9.06(b), the amount of the transferor
Lender’s Commitment assigned to it pursuant to Section 9.06(b), in each case as
such amount may be changed from time to time pursuant to Section 2.10, 2.18 or
9.06(b); provided that, if the
context so requires, the term “Commitment”
means the obligation of a Lender to extend credit up to such amount to the
Borrower hereunder.


 


“Commitment Schedule” means the Commitment
Schedule attached hereto.


 


5

















 


“Committed Loan” means a loan made by a
Lender pursuant to Section 2.01; provided
that, if any such loan or loans (or portions thereof) are combined or
subdivided pursuant to a Notice of Interest Rate Election, the term “Committed Loan” shall refer to the combined
principal amount resulting from such combination or to each of the separate
principal amounts resulting from such subdivision, as the case may be.


 


“Competitive Bid Absolute Rate” has the
meaning specified in Section 2.03(d)(ii)(D).


 


“Competitive Bid Absolute Rate Loan” means a
loan made or to be made by a Lender pursuant to an Absolute Rate Auction.


 


“Competitive Bid Lending Office” means, as
to each Lender, its Domestic Lending Office or such other office, branch or
affiliate of such Lender as it may hereafter designate as its Competitive Bid
Lending Office by notice to the Borrower and the Administrative Agent; provided
that any Lender may from time to time by notice to the Borrower and the
Administrative Agent designate separate Competitive Bid Lending Offices for its
Competitive Bid LIBOR Loans, on the one hand, and its Competitive Bid Absolute
Rate Loans, on the other hand, in which case all references herein to the
Competitive Bid Lending Office of such Lender shall be deemed to refer to
either or both of such offices, as the context may require.


 


“Competitive Bid LIBOR Loan” means a loan
made or to be made by a Lender pursuant to a LIBOR Auction (including any such
loan bearing interest at the Prime Rate pursuant to Section 8.01).


 


“Competitive Bid Loan” means a Competitive
Bid LIBOR Loan or a Competitive Bid Absolute Rate Loan.


 


“Competitive Bid Margin” has the meaning
specified in Section 2.03(d)(ii)(C).


 


“Competitive Bid Quote” means an offer by a
Lender to make a Competitive Bid Loan in accordance with Section 2.03.


 


“Confidential Information” means information
that the Borrower furnishes to any party hereto (including any Designated
Lender) in writing or that any such party obtains pursuant to its rights under
Section 5.01 or 5.07, but does not include any such information that (a) is or
becomes generally available to the public other than as a result of a breach by
any party hereto of its obligations hereunder, (b) was available to such party
on a nonconfidential basis prior to its disclosure to such party by the Borrower
or any of its affiliates or (c) is or becomes available to such party from a
source other than the Borrower that is not, to the knowledge of such party,
acting in violation of a confidentiality agreement with the Borrower.


 


 “Consolidated
Adjusted Interest Expense” means, for any period, the interest
expense of the Borrower and its Consolidated Subsidiaries less investment and
interest income of the Borrower and its Consolidated Subsidiaries for such
period, determined on a consolidated basis, subject to Section 1.02(b).


 


“Consolidated Adjusted Net Income” means for
any period, the aggregate of the net income (less losses) of the Borrower and
its Consolidated Subsidiaries for such period (after eliminating all
intercompany items and after provisions for minority interests, if any), all
determined in accordance with United States generally accepted accounting
principles, subject to Section 1.02(b); provided,
however, Consolidated Adjusted Net Income shall not include (a)
extraordinary gains or extraordinary losses, (b) the net income or losses of
any corporation or other enterprise accrued prior to the date it becomes a
Subsidiary, (c) the net income (or loss) arising from any discontinued
operation(s) of the Borrower or any Subsidiary as so classified in the
Borrower’s consolidated financial statements, (d) any amortization or write-off
of goodwill or other intangible items, or any non-cash charges, arising in
connection with a merger, consolidation or acquisition of stock or assets to
which the Borrower or a Subsidiary is a party or (e) any write-off of goodwill
arising in connection with Statement No. 142 issued by the Financial Accounting
Standards Board.


 


6

















 


“Consolidated EBITDAR” means, for any fiscal
period, Consolidated Adjusted Net Income for such period plus, to the extent deducted in
determining Consolidated Adjusted Net Income for such period, the aggregate
amount of (i) Consolidated Fixed Charges, (ii) taxes based on or measured by
income and (iii) depreciation, amortization and other similar non-cash charges.


 


“Consolidated Fixed Charges” means for any
period, the sum of Consolidated Adjusted Interest Expense and Consolidated
Rental Expense for such period.


 


“Consolidated Net Assets” means, at any date,
the consolidated assets of the Borrower and its Consolidated Subsidiaries less
the sum of (i) the consolidated current liabilities of the Borrower and its
Consolidated Subsidiaries and (ii) all other liabilities, other than
liabilities for Debt representing obligations for borrowed money of the
Borrower and its Consolidated Subsidiaries and liabilities for deferred taxes
of the Borrower and its Consolidated Subsidiaries, which would be required to
be shown as liabilities on a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries, all determined as of such date.


 


 “Consolidated
Net Worth” means at any date the consolidated stockholders equity of
the Borrower and its Consolidated Subsidiaries (plus, to the extent not
otherwise reflected therein, redeemable preferred stock of the Borrower), all
determined as of such date.


 


“Consolidated Rental Expense” means, for any
period, the Rental Expense of the Borrower and its Consolidated Subsidiaries
for such period, determined on a consolidated basis.


 


“Consolidated Subsidiary” means at any date
any Subsidiary or other entity the accounts of which would be consolidated with
those of the Borrower in its consolidated financial statements if such
statements were prepared as of such date.


 


“Continuing Directors” means (i) the members
of the Board of Directors of the Borrower on the date hereof and (ii) future
members of such Board of Directors who were nominated or appointed by a
majority of the Continuing Directors at the date of their nomination or
appointment.


 


“Credit Exposure” means, with respect to any
Lender at any time, (i) the amount of its Commitment (whether used or unused)
at such time or (ii) if the Commitments have terminated in their entirety, the
sum of the aggregate outstanding principal amount of its Loans at such time
plus the aggregate amount of its Letter of Credit Liabilities at such time.


 


7

















 


“Debt” means as applied to the Borrower and
its Subsidiaries, without duplication, (a) all obligations for borrowed money
or deferred purchase price of goods or services whether secured or unsecured,
absolute or contingent, other than trade accounts payable, expense accruals or
similar liabilities arising in the ordinary course of business, (b) all
obligations evidenced by bonds, notes, debentures or other similar instruments,
(c) all obligations secured by any Lien on property owned or acquired by the
Borrower or any of its Subsidiaries whether or not the obligations secured
thereby shall have been assumed, (d) that portion of all obligations arising
under Capitalized Leases that is required to be capitalized on the consolidated
balance sheet of the Borrower and its Subsidiaries and (e) all obligations of
the type described in clauses (a) through (d) above Guaranteed by the Borrower
or any of its Subsidiaries; provided that
a Securitization Transaction shall not give rise to Debt of the transferor for
purposes of this Agreement.


 


“Default” means any condition or event which
constitutes an Event of Default or which with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of Default.


 


“Deloitte & Touche” means Deloitte &
Touche LLP, independent certified accountants for the Borrower.


 


“Derivatives Obligations” of any Person
means all obligations of such Person in respect of any rate swap transaction,
basis swap, forward rate transaction, commodity swap, commodity option, equity
or equity index swap, equity or equity index option, bond option, interest rate
option, foreign exchange transaction, cap transaction, floor transaction,
collar transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including any
option with respect to any of the foregoing 
transactions) or any combination of the foregoing transactions.


 


“Designated Lender” means, with respect to
any Designating Lender, an Approved Fund designated by it pursuant to Section
9.07 as a Designated Lender for purposes of this Agreement.


 


“Designating Lender” means, with respect to
each Designated Lender, the Lender that designated such Designated Lender
pursuant to Section 9.07.


 


“Designation Agreement” has the meaning
specified in Section 9.07.


 


“Documentation Agents” means Wachovia Bank,
N.A., Wells Fargo Bank National Association, and BNP Paribas, in their capacity
as documentation agents in connection with the credit facility provided under
this Agreement.


 


“Domestic Business Day” means any day except
a Saturday, Sunday or other day on which commercial banks in New York, New
York, or Dallas, Texas are authorized or required by law to close.


 


8

















 


“Domestic Lending Office” means, as to each
Lender, its office located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Domestic Lending Office) or such other office as such Lender may hereafter
designate as its Domestic Lending Office by notice to the Borrower and the
Administrative Agent.


 


“Effective Date” means the date the
Commitments become effective in accordance with Section 3.01.


 


“Eligible Assignee” means (i) a Lender; (ii)
an affiliate of a Lender; (iii) an Approved Fund; and (iv) any other Person
(other than a natural Person) approved by the Administrative Agent, the Issuing
Banks and the Borrower (each such approval not to be unreasonably withheld or
delayed).


 


“Environmental Laws” means any and all
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements or other governmental restrictions relating to the
environment or to emissions, discharges or releases of pollutants,
contaminants, petroleum or petroleum products, chemicals or industrial, toxic
or hazardous substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use,  treatment, storage, disposal, transport or
handling of pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or wastes or the
clean-up or other remediation thereof.


 


“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended, or any successor statute.


 


“ERISA Group” means the Borrower, any
Subsidiary and all members of a controlled group of corporations and all trades
or businesses (whether or not incorporated) under common control which,
together with the Borrower or any Subsidiary are treated as a single employer
under Section 414 of the Internal Revenue Code.


 


“Euro-Dollar Business Day” means any
Domestic Business Day on which commercial banks are open for international
business (including dealings in dollar deposits) in London.


 


“Euro-Dollar Lending Office” means, as to
each Lender, its office, branch or affiliate located at its address set forth
in its Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Dollar Lending Office) or such other office, branch
or affiliate of such Lender as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Administrative Agent.


 


“Euro-Dollar Loan” means a Committed Loan that
bears interest at a Euro-Dollar Rate pursuant to the applicable Notice of
Committed Borrowing or Notice of Interest Rate Election.


 


“Euro-Dollar Margin” has the meaning
specified in the Pricing Schedule.


 


“Euro-Dollar Rate” means a rate of interest
determined pursuant to Section 2.07(b) on the basis of a London Interbank
Offered Rate.


 


9

















 


“Euro-Dollar Reserve Percentage” has the
meaning specified in Section 2.17.


 


“Events of Default” has the meaning specified
in Section 6.01.


 


“Exchange Act” means the Securities Exchange
Act of 1934, as amended.


 


“Existing Credit Agreement” means the
$300,000,000 Three-Year Credit Agreement dated as of August 26, 2002 among the
Borrower, the banks party thereto and J.P. Morgan Chase Bank, as administrative
agent, as amended.


 


“Federal Funds Rate” means, for any day, the
rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day; provided
that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day and
(ii) if no such rate is so published on such next succeeding Domestic Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to
the Administrative Agent on such day on such transactions as determined by the
Administrative Agent.


 


“Fixed Charge Coverage Ratio” means the
ratio of (i) Consolidated EBITDAR for each period of four consecutive fiscal
quarters, commencing with the four quarters ending January 31, 2004, to (ii)
Consolidated Fixed Charges for each such period.  Calculation of the Fixed Charge Coverage Ratio shall be subject
to Section 1.02(b).


 


“Fixed Rate Loans” means Euro-Dollar Loans
or Competitive Bid Loans (excluding Competitive Bid LIBOR Loans bearing
interest at the Prime Rate pursuant to Section 8.01) or any combination of the
foregoing.


 


“Fund” means any Person (other than a natural
Person) that is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the
ordinary course of its business.


 


“Group of Loans” means, at any time, a group
of Loans consisting of (i) all Committed Loans 
which are Base Rate Loans at such time or (ii) all Euro-Dollar Loans
having the same Interest Period at such time; provided
that, if a Committed Loan of any particular Lender is converted to or made as a
Base Rate Loan pursuant to Article 8, such Loan shall be included in the same
Group or Groups of Loans from time to time as it would have been in if it had
not been so converted or made.


 


“Guarantee” by any Person means any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person; provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of
business.  The term “Guarantee” used as a verb has a corresponding
meaning.


 


“Increased Commitments” has the meaning
specified in Section 2.18(a).


 


10

















 


“Indemnitee” has the meaning specified in
Section 9.03(b).


 


“Interest Period” means: (1)  with respect to each Euro-Dollar Loan, the
period commencing on the date of borrowing specified in the applicable Notice
of Borrowing or on the date specified in an applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as the Borrower
may elect in such notice; provided
that:


 


(a)           any
Interest Period which would otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Euro-Dollar Business
Day;


 


(b)           any
Interest Period which begins on the last Euro-Dollar Business Day in a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall, subject to clause (c)
below, end on the last Euro-Dollar Business Day in a calendar month; and


 


(c)           any
Interest Period which would otherwise end after the Termination Date shall end
on the Termination Date;


 


(2)           with respect to each
Competitive Bid LIBOR Loan, the period commencing on the date of borrowing
specified in the applicable Notice of Borrowing and ending such whole number of
months thereafter as the Borrower may elect in accordance with Section 2.03(b);
provided that


 


(a)           any
Interest Period which would otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Euro-Dollar Business
Day;


 


(b)           any
Interest Period which begins on the last Euro-Dollar Business Day in a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall, subject to clause (c)
below, end on the last Euro-Dollar Business Day in a calendar month; and


 


(c)           any
Interest Period which would otherwise end after the Termination Date shall end
on the Termination Date; and


 


(3)           with respect to each
Competitive Bid Absolute Rate Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing and ending such
number of days thereafter (but not less than 5 days) as the Borrower may elect
in accordance with Section 2.03; provided
that:


 


(a)           any
Interest Period which would otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding Euro-Dollar Business Day;
and


 


11

















 


(b)           any
Interest Period which would otherwise end after the Termination Date shall end
on the Termination Date.


 


“Internal Revenue Code” means the Internal
Revenue Code of 1986, as amended, or any successor statute.


 


“Investment” means all loans, advances,
extensions of credit, guarantees, purchases of stock (other than stock of the
Borrower) or other securities, contributions to capital or otherwise, whether
existing on the date of this Agreement or hereafter made.


 


“Issuing Bank” means JPMorgan Chase Bank and
any other Lender that may agree to issue Letters of Credit hereunder pursuant
to an instrument in form satisfactory to the Administrative Agent, in each case
as issuer of a Letter of Credit hereunder.


 


“Lender” means (i) each bank or other
institution listed on the Commitment Schedule, (ii) each financial institution
which becomes a Lender pursuant to Section 2.18, (iii) each assignee which
becomes a Lender pursuant to Section 9.06(b) and (iv) their respective
successors.


 


“Lender Parties” means the Lenders, the
Issuing Banks and the Agents.


 


“Letter of Credit” means a letter of credit
to be issued hereunder by an Issuing Bank.


 


“Letter of Credit Liabilities” means, for
any Lender and at any time, such Lender’s ratable participation in the sum of
(x) the aggregate amount then owing by the Borrower in respect of amounts drawn
under Letters of Credit and (y) the aggregate amount then available for drawing
under all Letters of Credit.


 


“Letter of Credit Termination Date” means
the tenth day prior to the Termination Date.


 


“Leverage Ratio” means, at any date, the
percentage equivalent of a fraction the numerator of which is Total Adjusted
Debt at such date and the denominator of which is Total Capitalization at such
date. Calculation of the Leverage Ratio shall be subject to Section 1.02(b).


 


“LIBOR Auction” means a solicitation of
Competitive Bid Quotes setting forth Competitive Bid Margins based on the
London Interbank Offered Rate pursuant to Section 2.03.


 


“Lien” means, with respect to any asset,
any  mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset.  For the 
purposes of this Agreement, the Borrower or any Subsidiary  shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.


 


“Loan” means a Committed Loan or a Competitive
Bid Loan and “Loans” means
Committed Loans or Competitive Bid Loans or any combination of the foregoing.


 


“London Interbank Offered Rate” has the
meaning specified in Section 2.07(b).


 


12

















 


“Material Debt” means Debt (other than the
Loans) of the Borrower and/or one or more of its Subsidiaries in an aggregate
principal amount exceeding $25,000,000. 
Calculation of Material Debt shall be subject to Section 1.02(b).


 


“Material Financial Obligation” means a
principal amount of Debt and/or payment or collateralization obligation in
respect of Derivatives Obligations of the Borrower and/or one or more of its
Subsidiaries, exceeding in the aggregate $25,000,000.  Calculation of a Material Financial Obligation shall be subject
to Section 1.02(b).


 


“Material Plan” means at any time a Plan or
Plans having aggregate Unfunded Liabilities in excess of $25,000,000.


 


“Multiemployer Plan” means, at any time, an
employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA
to which any member of the ERISA Group is then making or accruing an obligation
to make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a member
of the ERISA Group during such five year period.


 


“Notes” means promissory notes of the
Borrower, substantially in the form of Exhibit A hereto, evidencing the
Borrower’s obligation to repay the Loans, and “Note” means any one of such promissory notes issued hereunder.


 


“Notice of Borrowing” means a Notice of
Committed Borrowing (as defined in Section 2.02) or a Notice of Competitive Bid
Borrowing (as defined in Section 2.03(f)).


 


“Notice of Interest Rate Election” has the
meaning specified in Section 2.08(a).


 


“Notice of Issuance” has the meaning set
forth in Section 2.15(b).


 


“Other Taxes” has the meaning specified in
Section 8.04.


 


“Outstanding Committed Amount” means, with
respect to any Lender at any time, the sum of the aggregate outstanding
principal amount of its Committed Loans plus the aggregate amount of its Letter
of Credit Liabilities at such time, determined at such time after giving effect
to any prior assignments by or to such Lender pursuant to Section 9.06(b).


 


“Parent” means, with respect to any Lender,
any Person controlling such Lender.


 


“Participant” has the meaning specified in
Section 9.06(c).


 


“Payment Date” has the meaning specified in
Section 2.15(c).


 


“PBGC” means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its functions under
ERISA.


 


“Percentage” means, with respect to any
Lender at any time, the percentage which the amount of its Commitment at such
time represents of the aggregate amount of all the Commitments at such
time.  At any time after the Commitments
shall have terminated, the term


 


13

















 


“Percentage” shall refer
to a Lender’s Percentage immediately before such termination, adjusted to
reflect any subsequent assignments pursuant to Section 9.06(b).


 


“Person” means an individual, a corporation,
a limited liability company, a partnership, an association, a trust or any
other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.


 


“Plan” means, at any time, an employee
pension benefit plan (other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Internal Revenue Code and either (i) is maintained, or contributed to,
by any member of the ERISA Group for employees of any member of the ERISA Group
or (ii) has at any time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of the ERISA
Group for employees of any Person which was at such time a member of the ERISA
Group.


 


“Pricing Schedule” means the Pricing
Schedule attached hereto.


 


“Prime Rate” means the rate of interest
publicly announced by JPMorgan Chase Bank in New York City from time to time as
its Prime Rate.


 


“Quarterly Payment Dates” means each March
31, June 30, September 30 and December 31.


 


“Reference Bank” means the principal London
office (or any successor office) of JPMorgan Chase Bank.


 


“Register” has the meaning specified in
Section 2.05(a).


 


“Regulation U” means Regulation U of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.


 


“Reimbursement Obligation” has the meaning
specified in Section 2.15(c).


 


“Rental Expense” means the amount of
rentals, i.e., rentals paid or accrued by the Borrower or any Subsidiary under
any lease of real property excluding in any event (i) leases between the
Borrower and a Subsidiary or between a Subsidiary and another Subsidiary and
(ii) Capitalized Leases.


 


“Required Lenders” means, at any time,
Lenders having more than 50% in aggregate amount of the Credit Exposures at
such time.


 


“Restricted Subsidiary” means any Subsidiary
which is not an Unrestricted Subsidiary.


 


“Revolving Credit Period” means the period
from and including the Effective Date to but not including the Termination
Date.


 


“Sale-Leaseback Transaction” means any
arrangement whereby the Borrower or any Subsidiary, directly or indirectly
sells or transfers any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rents or
leases such property or other property that it intends to use for substantially
the same purpose or purposes as the property sold or transferred.


 


14

















 


“Securitization Transaction” means (i) a
securitization of credit card receivables as described in Note 3 to the
Borrower’s consolidated financial statements, reported on by Deloitte &
Touche and incorporated by reference in the Borrower’s 2003 10-K, or (ii) any
other financing transaction involving a transfer of accounts receivable by the
Borrower or any Subsidiary where recourse is effectively limited to such
accounts receivable, to a special purpose Subsidiary whose assets consist substantially
entirely of such accounts receivable, or both, whether or not accounted for as
a sale under United States generally accepted accounting principles.


 


“Significant Subsidiary” means at any time
(i) Bergdorf Goodman, Inc. and its respective successors, and (ii) any other
Subsidiary whose consolidated assets are equal to at least 7% of the
consolidated assets of the Borrower and its Subsidiaries at such time.


 


“Smith Family Group” means the group of
Persons party to the Stockholders Agreement dated as of September 1, 1999
(whether or not such agreement is terminated) and the progeny of each such
Person that is a natural Person.


 


“Stop Issuance Notice” has the meaning
specified in Section 2.16.


 


“Subsidiary” means any corporation or other
entity (i) of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
the Borrower (or, if such term is used with reference to any other Person, by
such Person) or (ii) a majority of the equity interest in which shall at the
time be owned directly or indirectly by the Borrower and which is a
Consolidated Subsidiary as of such time. 
Unless otherwise specified, “Subsidiary”
means a Subsidiary of the Borrower.


 


“Syndication Agent” means Bank of America,
N.A., in its capacity as syndication agent in connection with the credit
facility provided under this Agreement.


 


“Taxes” has the meaning specified in Section
8.04.


 


“Termination Date” means June 9, 2009 or, if
such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar
Business Day.


 


“Total Adjusted Debt” means, at any date, an
amount equal to the consolidated Debt of the Borrower and its Subsidiaries (excluding
(i) any such Debt, other than short-term indebtedness for borrowed money or the
current portion of long-term Debt, which is a current liability of the Borrower
or a Subsidiary and (ii) contingent obligations with respect to letters of
credit or other extensions of credit) at such date plus (i) an amount equal to
800% of the Rental Expense for the period of four consecutive fiscal quarters
most recently ended on or prior to such date and (ii) the amount called for by
Section 1.02(b).


 


“Total Capitalization” means, at any date,
the sum of Total Adjusted Debt plus Consolidated Net Worth, each determined as
of such date.


 


15

















 


“Total Outstanding Amount” means, at any
time, the sum of (i) the aggregate outstanding principal amount of the Loans
(including both Committed Loans and Competitive Bid Loans) determined at such
time after giving effect, if one or more Loans are being made at such time, to
any substantially concurrent application of the proceeds thereof to repay one
or more other Loans plus (ii) the aggregate amount of the Letter of Credit
Liabilities of all Lenders at such time.


 


“Type” refers to the determination whether a
Committed Loan is a Base Rate Loan or a Euro-Dollar Loan or whether a Competitive
Bid Loan is a Competitive Bid Absolute Rate Loan or a Competitive Bid LIBOR
Loan.


 


“Unfunded Liabilities” means, with respect
to any Plan at any time, the amount (if any) by which (i) the value of all
benefit liabilities under such Plan, determined on a plan termination basis
using the assumptions prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds (ii) the fair market value of all Plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions),
all determined as of the then most recent valuation date for such Plan, but
only to the extent that such excess represents a potential liability of a
member of the ERISA Group to the PBGC or any other Person under Title IV of
ERISA.


 


“United States” means the United States of
America, including the States and the District of Columbia, but excluding its
territories and possessions.


 


“Unrestricted Subsidiary” means a Subsidiary
so designated by written notice from the Borrower to the Administrative Agent;
provided that no Subsidiary may be so designated unless a third party which is
not a Subsidiary or an Affiliate of the Borrower owns at least 20% of the
equity interest in such Subsidiary at such time; provided further that (i) in and as at the end of any fiscal
year no Unrestricted Subsidiary may account for more than 5% of the
consolidated revenues, consolidated tangible assets or Consolidated EBITDAR of
the Borrower and its Consolidated Subsidiaries and (ii) in and as at the end of
any fiscal year all Unrestricted Subsidiaries may not collectively account for
more than 15% of the consolidated revenues, consolidated tangible assets or
Consolidated EBITDAR of the Borrower and its Consolidated Subsidiaries.


 


“Wholly-Owned Subsidiary” means any Subsidiary
all of the shares of capital stock or other ownership interests of which
(except directors’ qualifying shares) are at the time directly or indirectly
owned by the Borrower.


 


Section 1.02.          Accounting Terms and Determinations.  (a) 
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared, in accordance with United States generally accepted accounting
principles as in effect from time to time, applied on a basis consistent
(except for changes concurred in by the Borrower’s independent public
accountants) with the most recent audited consolidated financial statements of
the Borrower delivered to the Administrative Agent; provided that, if the Borrower notifies the Administrative
Agent that the Borrower wishes to amend any covenant in Article 5 to eliminate
the effect of any change in United States generally accepted accounting
principles on the operation of such covenant (or if the Administrative Agent
notifies the Borrower that the Required Lenders wish to amend Article 5 for
such purpose), then the Borrower’s compliance with such covenant shall be
applied on the basis of United States generally accepted accounting principles
in effect immediately before the relevant change in generally accepted
accounting principles became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to the Borrower and the
Required Lenders.


 


16

















 


(b)           As provided in the
definition of “Debt,” a
Securitization Transaction is not Debt for purposes of this Agreement.  Nevertheless, determinations of the Fixed
Charge Coverage Ratio, the Leverage Ratio, Material Debt and Material Financial
Obligations are to be made as if the Borrower and its Consolidated Subsidiaries
retained ownership of the transferred accounts receivable, incurred Debt in the
amount of the financing raised pursuant to such transactions and received the
related income and incurred the related interest expense, whether or not
accounted for as sales under United States generally accepted accounting
principles.


 


Section 1.03.          Classes and Types of Borrowings.  The term “Borrowing”
denotes the aggregation of Loans of the same Type and Class of one or more
Lenders to be made to the Borrower pursuant to Article 2 on a single date and
for a single initial Interest Period. 
Borrowings are classified for purposes of this Agreement by reference to
either or both the Class and Type of Loans comprising such Borrowing (e.g., a Euro-Dollar Borrowing is a
Borrowing comprised of Euro-Dollar Loans while a Committed Borrowing is a
Borrowing comprised of Committed Loans).


 


ARTICLE II

THE CREDITS


 


Section 2.01.          Commitments to Lend.  Each Lender severally agrees, on the terms
and conditions set forth in this Agreement, to make loans to the Borrower
pursuant to this Section from time to time during the Revolving Credit Period; provided that, immediately after each such
loan is made:


 


(i)            such
Lender’s Outstanding Committed Amount shall not exceed its Commitment; and


 


(ii)           the
Total Outstanding Amount shall not exceed the aggregate amount of the
Commitments.


 


Each Borrowing under this
Section shall be in an aggregate principal amount of $5,000,000 or any larger
integral multiple of $1,000,000 (except that any such Borrowing may be in the
aggregate amount available within the limitations in the foregoing proviso) and
shall be made from the several Lenders ratably in proportion to their
respective Commitments.  Within the
foregoing limits, the Borrower may borrow under this Section, prepay Loans to
the extent permitted by Section 2.11 and reborrow at any time during the
Revolving Credit Period under this Section.


 


Section 2.02.          Notice of Committed Borrowing.  The Borrower shall give the Administrative
Agent a written notice substantially in the form of Exhibit B (a “Notice of Committed Borrowing”) not later
than 12:00 Noon (New York City time) on (y) the date of each Base Rate
Borrowing and (z) the third Euro-Dollar Business Day before each Euro-Dollar
Borrowing, specifying:


 


17

















 


(a)           the date of such
Borrowing, which shall be a Domestic Business Day in the case of a Base Rate
Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing;


 


(b)           the aggregate amount of
such Borrowing;


 


(c)           whether the Loans
comprising such Borrowing are to bear interest initially at the Base Rate or a
Euro-Dollar Rate; and


 


(d)           in the case of a
Euro-Dollar Borrowing, the duration of the initial Interest Period applicable
thereto, subject to the provisions of the definition of Interest Period.


 


Section 2.03.          Competitive Bid Borrowings.


 


(a)           The Competitive Bid Option.  In addition to Committed Borrowings pursuant
to Section 2.01, the Borrower may, as set forth in this Section, request the
Lenders to make offers to make Competitive Bid Loans to the Borrower from time
to time during the Revolving Credit Period. 
The Lenders may, but shall have no obligation to, make such offers and
the Borrower may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section.


 


(b)           Competitive Bid Quote Request.  When the Borrower wishes to request offers
to make Competitive Bid Loans under this Section, it shall transmit to the
Administrative Agent by telex or facsimile a Competitive Bid Quote Request
substantially in the form of Exhibit C hereto (each, a “Competitive Bid Quote Request”), so as to
be received not later than 10:30 A.M. (New York City time) on (x) the fourth
Euro-Dollar Business Day before the date of Borrowing proposed therein, in the
case of a LIBOR Auction or (y) the Domestic Business Day immediately before the
date of Borrowing proposed therein, in the case of an Absolute Rate Auction
(or, in either case, such other time or date as the Borrower and the
Administrative Agent shall have mutually agreed and shall have notified to the
Lenders not later than the date of the Competitive Bid Quote Request for the
first LIBOR Auction or Absolute Rate Auction for which such change is to be
effective) specifying:


 


(i)            the
proposed date of Borrowing, which shall be a Euro-Dollar Business Day in the
case of a LIBOR Auction or a Domestic Business Day in the case of an Absolute
Rate Auction,


 


(ii)           the
aggregate amount of such Borrowing, which shall be $5,000,000 or a larger
integral multiple of $1,000,000,


 


(iii)          the
duration of the Interest Period applicable thereto, subject to the provisions
of the definition of Interest Period, and


 


(iv)          whether
the Competitive Bid Quotes requested are to set forth a Competitive Bid Margin
or a Competitive Bid Absolute Rate.


 


18

















 


The Borrower may request offers
to make Competitive Bid Loans for more than one Interest Period in a single
Competitive Bid Quote Request.  No
Competitive Bid Quote Request shall be given within five Euro-Dollar Business
Days (or such other number of days as the Borrower and the Administrative Agent
may agree) of any other Competitive Bid Quote Request.


 


(c)           Invitation for Competitive Bid Quotes.  Promptly after receiving a Competitive Bid
Quote Request, the Administrative Agent shall send to each of the Lenders an
Invitation for Competitive Bid Quotes substantially in the form of Exhibit D
hereto (each, an “Invitation for Competitive
Bid Quotes”), which shall constitute an invitation by the Borrower
to each Lender to submit Competitive Bid Quotes offering to make the Competitive
Bid Loans to which such Competitive Bid Quote Request relates in accordance
with this Section.


 


(d)           Submission and Contents of Competitive Bid Quotes.


 


(i)            Each
Lender to which an Invitation for Competitive Bid Quotes is sent may submit a
Competitive Bid Quote containing an offer or offers to make Competitive Bid
Loans in response to any Invitation for Competitive Bid Quotes.  Each Competitive Bid Quote must comply with
the requirements of this Section 2.03(d) and must be submitted to the
Administrative Agent by telex or facsimile at its address specified in or
pursuant to Section 9.01 not later than (x) 2:00 P.M. (New York City time) on
the fourth Euro-Dollar Business Day before the proposed date of Borrowing, in
the case of a LIBOR Auction or (y) 10:00 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrower and the Administrative
Agent shall have mutually agreed and shall have notified to the Lenders not
later than the date of the Competitive Bid Quote Request for the first LIBOR
Auction or Absolute Rate Auction for which such change is to be effective);
provided that Competitive Bid Quotes submitted by the Administrative Agent (or
any affiliate of the Administrative Agent) in the capacity of a Lender may be
submitted, and may only be submitted, if the Administrative Agent or such
affiliate notifies the Borrower of the terms of the offer or offers contained
therein not later than (x) one hour before the deadline for the other Lenders,
in the case of a LIBOR Auction or (y) 15 minutes before the deadline for the
other Lenders, in the case of an Absolute Rate Auction.  Subject to Articles 3 and 6, any Competitive
Bid Quote so made shall not be revocable except with the written consent of the
Administrative Agent given on the instructions of the Borrower.


 


(ii)           Each
Competitive Bid Quote shall be substantially in the form of Exhibit E hereto
and shall in any case specify:


 


(A)          the
proposed date of Borrowing;


 


(B)           the
principal amount of the Competitive Bid Loan for which each such offer is being
made, which principal amount (w) may be greater than or less than the
Commitment of the quoting Lender, (x) must be $5,000,000 or a larger integral
multiple of $1,000,000, (y) may not exceed the principal amount of Competitive
Bid Loans for which offers were requested and (z) may be subject to an
aggregate limitation as to the principal amount of Competitive Bid Loans for
which offers being made by such quoting Lender may be accepted;


 


19

















 


(C)           in
the case of a LIBOR Auction, the margin above or below the applicable London
Interbank Offered Rate (the “Competitive Bid
Margin”) offered for each such Competitive Bid Loan, expressed as a
percentage (specified to the nearest 1/10,000th of 1%) to be added to or
subtracted from such base rate;


 


(D)          in
the case of an Absolute Rate Auction, the rate of interest per annum (specified
to the nearest 1/10,000th of 1%) (the “Competitive
Bid Absolute Rate”) offered for each such Competitive Bid Loan; and


 


(E)           the
identity of the quoting Lender.  A
Competitive Bid Quote may set forth up to five separate offers by the quoting
Lender with respect to each Interest Period specified in the related Invitation
for Competitive Bid Quotes.


 


(iii)          Any
Competitive Bid Quote shall be disregarded if it:


 


(A)          is
not substantially in conformity with Exhibit E hereto or does not specify all
of the information required by subsection 2.03(d)(ii) above;


 


(B)           contains
qualifying, conditional or similar language (except as contemplated by
subsection (d)(ii)(B)(z));


 


(C)           proposes
terms other than or in addition to those set forth in the applicable Invitation
for Competitive Bid Quotes (except as contemplated by subsection
(d)(ii)(B)(z)); or


 


(D)          arrives
after the time set forth in subsection 2.03(d)(i).


 


(e)           Notice to Borrower.  The Administrative Agent shall promptly
notify the Borrower of the terms of (i) any Competitive Bid Quote submitted by
a Lender that is in accordance with Section 2.03(d) and (ii) any Competitive
Bid Quote that amends, modifies or is otherwise inconsistent with a previous
Competitive Bid Quote submitted by such Lender with respect to the same
Competitive Bid Quote Request.  Any such
subsequent Competitive Bid Quote shall be disregarded by the Administrative
Agent unless such subsequent Competitive Bid Quote is submitted solely to
correct a manifest error in such former Competitive Bid Quote.  The Administrative Agent’s notice to the
Borrower shall specify (A) the aggregate principal amount of Competitive Bid
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Quote Request, (B) the respective principal amounts
and Competitive Bid Margins or Competitive Bid Absolute Rates, as the case may
be, so offered and (C) if applicable, limitations on the aggregate principal
amount of Competitive Bid Loans for which offers in any single Competitive Bid
Quote may be accepted.


 


(f)            Acceptance and Notice by Borrower.  Not later than 11:00 A.M. (New York City
time) on (x) the third Euro-Dollar Business Day before the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Administrative Agent shall have
mutually agreed and shall have notified to the Lenders not later than the date
of the Competitive Bid Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective), the Borrower shall notify
the Administrative Agent of its acceptance or non-acceptance of the offers so
notified to it pursuant to Section 2.03(e). 
In the case of acceptance, such notice (a “Notice of Competitive Bid Borrowing”) shall specify the
aggregate principal amount of offers for each Interest Period that are
accepted.  The Borrower may accept any
Competitive Bid Quote in whole or in part; provided
that:


 


20

















 


(i)            the
aggregate principal amount of each Competitive Bid Borrowing may not exceed the
applicable amount set forth in the related Competitive Bid Quote Request;


 


(ii)           the
principal amount of each Competitive Bid Borrowing must be $5,000,000 or a
larger integral multiple of $1,000,000;


 


(iii)          acceptance
of offers may only be made on the basis of ascending Competitive Bid Margins or
Competitive Bid Absolute Rates, as the case may be;


 


(iv)          the
Borrower may not accept any offer that is described in subsection 2.03(d)(iii)
or that otherwise fails to comply with the requirements of this Agreement; and


 


(v)           immediately
after such Competitive Bid Borrowing is made, the Total Outstanding Amount
shall not exceed the aggregate amount of the Commitments.


 


(g)           Allocation by Administrative Agent.  If offers are made by two or more Lenders
with the same Competitive Bid Margins or Competitive Bid Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Administrative Agent among such Lenders as
nearly as possible (in integral multiples of $1,000,000, as the Administrative
Agent may deem appropriate) in proportion to the aggregate principal amounts of
such offers.  Determinations by the
Administrative Agent of the amounts of Competitive Bid Loans shall be
conclusive in the absence of manifest error.


 


Section 2.04.          Notice to Lenders; Funding of Loans.


 


(a)           Promptly after
receiving a Notice of Borrowing, the Administrative Agent shall notify each
Lender of the contents thereof and of such Lender’s share (if any) of such
Borrowing and such Notice of Borrowing shall not thereafter be revocable by the
Borrower.


 


(b)           Not later than 2:00
P.M. (New York City time) on the date of each Borrowing, each Lender
participating therein shall make available its share of such Borrowing, in
Federal or other funds immediately available in New York City, to the
Administrative Agent at its address specified in or pursuant to Section
9.01.  Unless the Administrative Agent
determines that any applicable condition specified in Article 3 has not been
satisfied, the Administrative Agent will make the funds so received from the
Lenders available to the Borrower at the Administrative Agents aforesaid
address.


 


21

















 


(c)           Unless the
Administrative Agent shall have received notice from a Lender before the date
of any Borrowing (or, in the case of a Base Rate Borrowing, prior to 2:00 P.M.
(New York City time) on the date of such Borrowing) that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available to the Administrative Agent on the date of such Borrowing in
accordance with Section 2.04(b) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount.  If and to the
extent that such Lender shall not have so made such share available to the
Administrative Agent, such Lender and, if such Lender shall not have done so
within five Domestic Business Days of demand therefor by the Administrative
Agent, the Borrower agrees to pay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (i) if such amount is repaid
by the Borrower, a rate per annum equal to the higher of the Federal Funds Rate
and the interest rate applicable to such Borrowing pursuant to Section 2.07 and
(ii) if such amount is repaid by such Lender, the Federal Funds Rate.  If such Lender shall repay to the
Administrative Agent such corresponding amount, the Borrower shall not be
required to repay such amount and the amount so repaid by such Lender shall
constitute such Lender’s Loan included in such Borrowing for purposes of this
Agreement.  Nothing in this subsection
(c) shall relieve any Lender of its obligation to make Loans in accordance with
the terms and conditions of this Agreement or relieve any Lender from
responsibility for default by it in such obligation.


 


Section 2.05.          Registry; Notes 
The Administrative Agent shall maintain a register (the “Register”) in which it will record the
Commitment of each Lender, each Loan made by each Lender and each repayment of
any Loan.  Any such recordation by the
Administrative Agent in the Register shall be conclusive, absent manifest
error.  Each Lender shall record in its
internal records the foregoing information as to its own Commitment and
Loans.  Failure to make any such
recordation, or any error in such recordation, shall not affect the Borrower’s
obligations hereunder in respect of the Loans.


 


(b)           Each Lender may, by
notice to the Borrower and the Administrative Agent, request (i) that its Loans
be evidenced by a single Note payable to the order of such Lender for the
account of its Applicable Lending Office in an amount equal to the aggregate
unpaid principal amount of such Loans or (ii) that its Loans of a particular
type be evidenced by a separate Note in an amount equal to the aggregate unpaid
principal amount of such Loans.  Each
such Note shall be in substantially the form of Exhibit A hereto with any
appropriate modifications to reflect the fact that it evidences solely Loans of
a particular type.  Each reference in
this Agreement to the “Note” of
such Lender shall be deemed to refer to and include any or all of such Notes,
as the context may require.


 


Section 2.06.          Maturity of Loans.


 


(a)           Each Committed Loan
shall mature, and the principal amount thereof shall be due and payable
(together with interest accrued thereon), on the Termination Date.


 


22

















 


(b)           Each Competitive Bid
Loan shall mature, and the principal amount thereof shall be due and payable
(together with interest accrued thereon), on the last day of the Interest
Period applicable thereto.


 


Section 2.07.          Interest Rates.


 


(a)           Each Base Rate Loan
shall bear interest on the outstanding principal amount thereof, for each day
from the date such Loan is made until it becomes due, at a rate per annum equal
to the sum of the Base Rate plus the Base Rate Margin for such day.  Such interest shall be payable quarterly in
arrears on each Quarterly Payment Date and on the Termination Date and, with
respect to the principal amount of any Base Rate Loan that is prepaid or
converted to a Euro-Dollar Loan, on the date of such prepayment or conversion.


 


(b)           Each Euro-Dollar Loan
shall bear interest on the outstanding principal amount thereof, for each day
during each Interest Period applicable thereto, at a rate per annum equal to
the sum of the Euro-Dollar Margin for such day plus the London Interbank
Offered Rate applicable to such Interest Period.  Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof and, with respect to the
principal amount of any Euro-Dollar Loan that is prepaid or converted to a Base
Rate Loan, on the date of such prepayment or conversion.  The “London
Interbank Offered Rate” applicable to any Interest Period means (a)
the offered rate for dollar deposits, for a period approximately equal to such
Interest Period and, if the amount is so quoted, in an amount approximately
equal to the average principal amount of the applicable Loans, quoted on the
second Euro-dollar Business Day prior to the first day of such Interest Period,
as such rate appears on the display designated as page “3750” on the Dow Jones
Market Service (or such other page as may replace page “3750” on the Dow Jones
Market Service or such other service as may be nominated by the British
Bankers’ Association as the information vendor for the purpose of displaying
British Bankers’ Association Interest Settlement Rates for U.S. Dollar
deposits) (“Page 3750”) as of
11:00 A.M. (London time) on such date, (b) if, as of 11:00 A.M. (London time)
on any such date such rate does not appear on Page 3750, the arithmetic mean
(adjusted, if necessary, to the nearest 1/16th of 1%), of the offered rates for
dollar deposits, for a period approximately equal to such Interest Period
quoted on the second Euro-Dollar Business Day prior to the first day of such
Interest Period, as such rates appear on the display designated as page “LIBO”
on the Reuters Monitor Money Rates Service (or such other page as may replace
the “LIBO” page on that service for the purpose of displaying London interbank
offered rates of major banks) (“Reuters
Screen LIBO Page”) as of 11:00 A.M. (London time) on such date, or
(c) if neither of the above rates is available (and in the case of clause (b),
if on any such date at least two such rates do not appear on the Reuters Screen
LIBO page), the average (adjusted, if necessary, to the next higher 1/16th of
1%) of the respective rates per annum at which deposits in dollars are offered
to the Reference Bank in the London interbank market at approximately 11:00
A.M. (London time) two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.


 


(c)           Subject to Section 8.01,
each Competitive Bid LIBOR Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the sum of the London Interbank Offered Rate for such
Interest Period (determined in accordance with Section 2.07(b) as if the
related Competitive Bid LIBOR Borrowing were a Euro-Dollar Borrowing) plus (or
minus) the Competitive Bid Margin quoted by the Lender making such Loan in
accordance with Section 2.03.  Each
Competitive Bid Absolute Rate Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the Competitive Bid Absolute Rate quoted by the Lender
making such Loan in accordance with Section 2.03.  Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.


 


23

















 


(d)           Any overdue principal
of and interest on any Loan shall bear interest, payable on demand, for each
day from and including the date payment thereof was due to but excluding the
date of actual payment, at a rate per annum equal to the sum of 2% plus the Base
Rate plus the Base Rate Margin for such day.


 


(e)           The Administrative
Agent shall determine each interest rate applicable to the Loans
hereunder.  The Administrative Agent
shall promptly notify the Borrower and the participating Lenders of each rate
of interest so determined, and its determination thereof shall be conclusive in
the absence of manifest error.


 


(f)            The Reference Bank
agrees to use its best efforts to furnish quotations to the Administrative
Agent as contemplated by this Section. 
If the Reference Bank does not furnish a timely quotation, the
provisions of Section 8.01 shall apply.


 


Section 2.08.          Method of Electing Interest Rates.


 


(a)           The Loans included in
each Committed Borrowing shall bear interest initially at the type of rate
specified by the Borrower in the applicable Notice of Committed Borrowing.  Thereafter, the Borrower may from time to
time elect to change or continue the type of interest rate borne by each Group
of Loans (subject to Section 2.08(d) and the provisions of Article 8), as
follows:


 


(i)            if
such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to
Euro-Dollar Loans as of any Euro-Dollar Business Day; and


 


(ii)           if
such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans
to Base Rate Loans as of any Domestic Business Day, or may elect to continue
such Loans as Euro-Dollar Loans, as of the end of any Interest Period
applicable thereto, for an additional Interest Period, subject to Section 2.13
if any such conversion is effective on any day other than the last day of an
Interest Period applicable to such Loans.


 


Each such election shall be
made by delivering a notice (a “Notice of
Interest Rate Election”) to the Administrative Agent not later than
12:00 Noon (New York City time) on the third Euro-Dollar Business Day before
the conversion or continuation selected in such notice is to be effective.  A Notice of Interest Rate Election may, if
it so specifies, apply to only a portion of the aggregate principal amount of
the relevant Group of Loans; provided
that (i) such portion is allocated ratably among the Loans comprising such
Group and (ii) the portion to which such Notice applies, and the remaining
portion to which it does not apply, are each at least $5,000,000 (unless such
portion is comprised of Base Rate Loans). 
If no such notice is timely received before the end of an Interest
Period for any Group of Euro-Dollar Loans, the Borrower shall be deemed to have
elected that such Group of Loans be converted to Base Rate Loans at the end of
such Interest Period.


 


24

















 


(b)           Each Notice of Interest
Rate Election shall specify:


 


(i)            the
Group of Loans (or portion thereof) to which such notice applies;


 


(ii)           the
date on which the conversion or continuation selected in such notice is to be
effective, which shall comply with the applicable clause of Section 2.08(a);


 


(iii)          if
the Loans comprising such Group are to be converted, the new Type of Loans and,
if the Loans resulting from such conversion are to be Euro-Dollar Loans, the
duration of the next succeeding Interest Period applicable thereto; and


 


(iv)          if
such Loans are to be continued as Euro-Dollar Loans for an additional Interest
Period, the duration of such additional Interest Period.


 


Each Interest Period specified
in a Notice of Interest Rate Election shall comply with the provisions of the
definition of Interest Period.


 


(c)           Promptly after
receiving a Notice of Interest Rate Election from the Borrower pursuant to
Section 2.08(a), the Administrative Agent shall notify each Lender of the
contents thereof and such notice shall not thereafter be revocable by the
Borrower.


 


(d)           The Borrower shall not
be entitled to elect to convert any Committed Loans to, or continue any
Committed Loans for an additional Interest Period as, Euro-Dollar Loans if (i)
the aggregate principal amount of any Group of Euro-Dollar Loans created or
continued as a result of such election would be less than $5,000,000 or (ii) a
Default shall have occurred and be continuing when the Borrower delivers notice
of such election to the Administrative Agent.


 


(e)           If any Committed Loan
is converted to a different Type of Loan, the Borrower shall pay, on the date
of such conversion, the interest accrued to such date on the principal amount
being converted.


 


(f)            A continuation or
conversion pursuant to this Section 2.08(a) is not a Borrowing subject to
Section 3.02.


 


Section 2.09.          Fees.


 


(a)           The Borrower shall pay
to the Administrative Agent, for the account of the Lenders ratably in proportion
to their Credit Exposures, a facility fee calculated for each day at the
Facility Fee Rate for such day (determined in accordance with the Pricing
Schedule) on the aggregate amount of the Credit Exposures on such day.  Such facility fee shall accrue for each day
from and including the Effective Date to but excluding the day on which the
Credit Exposures are reduced to zero.


 


25

















 


(b)           The Borrower shall pay
to the Administrative Agent (i) for the account of the Lenders ratably a letter
of credit fee accruing daily on the aggregate undrawn amount of all outstanding
Letters of Credit at a rate per annum equal to the Euro-Dollar Margin for such
day and (ii) for the account of each Issuing Bank a letter of credit fronting
fee accruing daily on the aggregate amount then available for drawing under all
Letters of Credit issued by such Issuing Bank at a rate per annum as mutually
agreed between the Borrower and such Issuing Bank.


 


(c)           Fees accrued for the
account of the Lenders under this Section shall be payable quarterly in arrears
on each Quarterly Payment Date and on the day on which the Commitments
terminate in their entirety (and, if later, on the day on which the Credit
Exposures are reduced to zero).


 


Section 2.10.          Termination or Reduction of Commitments.


 


(a)           The Borrower may, upon
at least three Domestic Business Days notice to the Administrative Agent, (i)
terminate the Commitments at any time, if no Loans or Letter of Credit
Liabilities are outstanding at such time, or (ii) ratably reduce from time to
time by an aggregate amount of $10,000,000 or any larger multiple of
$1,000,000, the aggregate amount of the Commitments in excess of the Total
Outstanding Amount.  Promptly after
receiving a notice pursuant to this subsection, the Administrative Agent shall
notify each Lender of the contents thereof.


 


(b)           Unless previously
terminated, the Commitments shall terminate in their entirety on the
Termination Date.


 


Section 2.11.          Optional Prepayments.


 


(a)           Subject in the case of
Fixed Rate Loans to Section 2.13, the Borrower may (i) upon at least one
Domestic Business Days notice to the Administrative Agent, prepay any Group of
Base Rate Loans (or any Competitive Bid Borrowing bearing interest at the Prime
Rate pursuant to Section 8.01) or (ii) upon at least three Euro-Dollar Business
Days notice to the Administrative Agent, prepay any Group of Euro-Dollar Loans,
in each case in whole at any time, or from time to time in part in amounts
aggregating $5,000,000 or any larger integral multiple of $1,000,000, by paying
the principal amount to be prepaid together with interest accrued thereon to
the date of prepayment.  Each such
optional prepayment shall be applied to prepay ratably the Loans of the several
Lenders included in such Group of Loans (or such Competitive Bid Borrowing).


 


(b)           Except as provided in
Section 2.11(a) or 2.17, the Borrower may not prepay all or any portion of the
principal amount of any Competitive Bid Loan before the maturity thereof
without the express written consent of the Lender making such Loan.


 


(c)           Promptly after
receiving a notice of prepayment pursuant to this Section, the Administrative
Agent shall notify each Lender of the contents thereof and of such Lender’s
ratable share (if any) of such prepayment, and such notice shall not thereafter
be revocable by the Borrower.


 


26

















 


Section 2.12.          General Provisions as to Payments.


 


(a)           The Borrower shall make
each payment of principal of, and interest on, the Loans, of Letter of Credit
Liabilities and interest thereon and of fees hereunder not later than 2:00 P.M.
(New York City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Administrative Agent at its
address specified in or pursuant to Section 9.01 and without reduction by
reason of any set-off or counterclaim. 
The Administrative Agent will promptly distribute to each Lender its
ratable share of each such payment received by the Administrative Agent for the
account of the Lenders.  Whenever any
payment of principal of, or interest on, the Base Rate Loans or of fees shall
be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day.  Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day.  Whenever any payment of principal of, or interest on, the
Competitive Bid Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day.  If the date
for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.


 


(b)           Unless the Borrower
notifies the Administrative Agent before the date on which any payment is due
to the Lenders hereunder that the Borrower will not make such payment in full,
the Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance on such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender.  If and to the extent that such payment shall
not have been so made by the Borrower, each Lender shall repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender together with interest thereon, for each day from the date such amount
is distributed to such Lender until the date such Lender repays such amount to
the Administrative Agent, at the Federal Funds Rate.


 


Section 2.13.          Funding Losses.  If the Borrower makes any payment of principal with respect to
any Fixed Rate Loan or any Fixed Rate Loan is converted to a different type of
Loan (whether such payment or conversion is pursuant to Article 2, 6 or 8 or
otherwise) on any day other than the last day of an Interest Period applicable
thereto, or if the Borrower fails to borrow, prepay, convert or continue any
Fixed Rate Loan after notice has been given to any Lender in accordance with
Section 2.04(a), 2.08(c) or 2.11(c), the Borrower shall reimburse each Lender
within 15 days after demand for any resulting loss or expense incurred by it
(or by an existing or prospective Participant in the related Loan), including
(without limitation) any loss incurred in obtaining, liquidating or employing
deposits from third parties, but excluding loss of margin for the period after
such payment or conversion or failure to borrow, prepay, convert or continue; provided that such Lender shall have
delivered to the Borrower a certificate as to the amount of such loss or
expense, which certificate shall be conclusive in the absence of manifest
error.  Such certificate shall be
accompanied by such information as the Borrower may reasonably request as to
the computation set forth therein.


 


27






















Section 2.14.          Computation of Interest and Fees.  Interest based on the Prime Rate hereunder
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year) and paid for the actual number of days elapsed (including the first day
but excluding the last day).  All other
interest and fees shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding
the last day).


 


Section 2.15.          Letters of Credit.


 


(a)           Commitment to Issue Letters of Credit.  Subject to the terms and conditions hereof,
and so long as no Stop Issuance Notice is in effect, each Issuing Bank agrees
to issue Letters of Credit from time to time before the Letter of Credit
Termination Date upon the request of the Borrower; provided that, immediately after each Letter of Credit is
issued (i) the Total Outstanding Amount shall not exceed the aggregate amount
of the Commitments and (ii) the aggregate amount of the Letter of Credit
Liabilities shall not exceed $50,000,000. 
Upon the date of issuance by an Issuing Bank of a Letter of Credit, the
Issuing Bank shall be deemed, without further action by any party hereto, to
have sold to each Lender, and each Lender shall be deemed, without further
action by any party hereto, to have purchased from the Issuing Bank, a
participation in such Letter of Credit and the related Letter of Credit
Liabilities in the proportion its respective Commitment bears to the aggregate
Commitments.


 


(b)           Method for Issuance; Terms; Extensions.


 


(i)            The
Borrower shall give the Issuing Bank notice at least three Domestic Business
Days (or such shorter notice as may be acceptable to the Issuing Bank in its
discretion) prior to the requested issuance of a Letter of Credit (or, in the
case of renewal or extension, prior to the Issuing Bank’s deadline for notice
of nonextension) specifying the date such Letter of Credit is to be issued, and
describing the terms of such Letter of Credit and the nature of the
transactions to be supported thereby (such notice, including any such notice
given in connection with the extension of a Letter of Credit, a “Notice of Issuance”).  Upon receipt of a Notice of Issuance, the
Issuing Bank shall promptly notify the Administrative Agent, and the
Administrative Agent shall promptly notify each Lender of the contents thereof
and of the amount of such Lender’s participation in such Letter of Credit.


 


(ii)           The
obligation of the Issuing Bank to issue each Letter of Credit shall, in
addition to the conditions precedent set forth in Section 3.02, be subject to
the conditions precedent that such Letter of Credit shall be in such form and
contain such terms as shall be reasonably satisfactory to the Issuing Bank and
that the Borrower shall have executed and delivered such other instruments and
agreements relating to such Letter of Credit as the Issuing Bank shall have
reasonably requested.  The Borrower
shall also pay to the Issuing Bank for its own account issuance, drawing,
amendment and extension charges in the amounts and at the times as agreed
between the Borrower and the Issuing Bank.


 


(iii)          The
extension or renewal of any Letter of Credit shall be deemed to be an issuance
of such Letter of Credit, and if any Letter of Credit contains a provision
pursuant to which it is deemed to be extended unless notice of termination is
given by the Issuing Bank, the Issuing Bank shall timely give such notice of
termination unless it has theretofore timely received a Notice of Issuance and
the other conditions to issuance of a Letter of Credit have also theretofore
been met with respect to such extension. 
No Letter of Credit shall have a term beyond the Letter of Credit
Termination Date; provided that a
Letter of Credit may contain a provision pursuant to which it is deemed to be
extended on an annual basis unless notice of termination is given by the
Issuing Bank; provided further
that no Letter of Credit shall have a term extending or be so extendible beyond
the Letter of Credit Termination Date.


 


28

















 


(c)           Payments; Reimbursement Obligations.


 


(i)            Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing
under such Letter of Credit, the Issuing Bank shall notify the Administrative
Agent and the Administrative Agent shall promptly notify the Borrower and each
other Lender as to the amount to be paid as a result of such demand or drawing
and the date such payment is to be made by the Issuing Bank (the “Payment Date”).  The Borrower shall be irrevocably and unconditionally obligated
to reimburse the Issuing Bank for any amounts paid by the Issuing Bank upon any
drawing under any Letter of Credit, without presentment, demand, protest or
other formalities of any kind.  Such
reimbursement shall be due on the Payment Date; provided that no such payment shall be due from the Borrower
any earlier than the date of receipt by it of notice of its obligation to make
such payment (or, if such notice is received by the Borrower after 9:00 A.M.
(New York City time) on any date, on the next succeeding Domestic Business
Day); provided further that if
and to the extent any such reimbursement is not made by the Borrower in
accordance with this clause (i) or clause (ii) on the Payment Date, then
(irrespective of when notice thereof is received by the Borrower), such
reimbursement obligation shall bear interest, payable on demand, for each day
from and including the Payment Date to but not including the date such
reimbursement obligation is paid in full at a rate per annum equal to the rate
applicable to Base Rate Loans for such day.


 


(ii)           All
such amounts paid by the Issuing Bank and remaining unpaid by the Borrower (a “Reimbursement Obligation”) shall, if and to
the extent that the amount of such Reimbursement Obligation would be permitted
as a Borrowing pursuant to Section 3.02, and unless the Borrower otherwise
instructs the Administrative Agent by 10:00 A.M. (New York City time) on the
date payment is due from the Borrower, convert automatically to Base Rate Loans
on the date such Reimbursement Obligation arises.  The Administrative Agent shall, on behalf of the Borrower (which
hereby irrevocably directs the Administrative Agent so to act on its behalf),
give notice no later than 10:30 A.M. (New York City time) on such date
requesting each Lender to make, and each Lender hereby agrees to make, a Base
Rate Loan, in an amount equal to such Lender’s 
Percentage of the Reimbursement Obligation with respect to which such
notice relates.  Each Lender shall make
such Loan available to the Administrative Agent at its address specified in or
pursuant to Section 9.01 in immediately available funds, not later than 12:00
Noon (New York City time), on the date specified in such notice.  The Administrative Agent shall pay the
proceeds of such Loans to the Issuing Bank, which shall immediately apply such
proceeds to repay the Reimbursement Obligation.


 


29

















 


(iii)          To
the extent the Reimbursement Obligation is not refunded by a Lender pursuant to
clause (ii) above, such Lender will pay to the Administrative Agent, for the
account of the Issuing Bank, immediately upon the Issuing Bank’s demand at any
time during the period commencing after such Reimbursement Obligation arises
until reimbursement therefor in full by the Borrower, an amount equal to
such  Lender’s Percentage of such
Reimbursement Obligation, together with interest on such amount for each day
from the date of the Issuing Bank’s demand for such payment (or, if such demand
is made after 1:00 P.M. (New York City time) on such date, from the next
succeeding Domestic Business Day) to the date of payment by such Lender of such
amount at a rate of interest per annum equal to the Federal Funds Rate for the
first three Domestic Business Days after the date of such demand and thereafter
at a rate per annum equal to the Base Rate for each additional day.  The Issuing Bank will pay to each Lender
ratably all amounts received from the Borrower for application in payment of
its Reimbursement Obligations in respect of any Letter of Credit, but only to
the extent such Lender has made payment to the Issuing Bank in respect of such
Letter of Credit pursuant hereto; provided
that in the event such payment received by the Issuing Bank is required to be
returned, such Lender will return to the Issuing Bank any portion thereof
previously distributed to it by the Issuing Bank.


 


(d)           Obligations Absolute.  The obligations of the Borrower and each
Lender under subsection (c) above shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, under all circumstances whatsoever, including without
limitation the following circumstances:


 


(i)            any
lack of validity or enforceability of this Agreement or any Letter of Credit or
any document related hereto or thereto;


 


(ii)           any
amendment or waiver of or any consent to departure from all or any of the
provisions of this Agreement or any Letter of Credit or any document related
hereto or thereto;


 


(iii)          the
use which may be made of the Letter of Credit by, or any acts or omission of, a
beneficiary of a Letter of Credit (or any Person for whom the beneficiary may
be acting);


 


(iv)          the
existence of any claim, set-off, defense or other rights that the Borrower may
have at any time against a beneficiary of a Letter of Credit (or any Person for
whom the beneficiary may be acting), any Lender (including the Issuing Bank) or
any other Person, whether in connection with this Agreement or the Letter of
Credit or any document related hereto or thereto or any unrelated transaction;


 


(v)           any
statement or any other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever;


 


30

















 


(vi)          payment
under a Letter of Credit against presentation to the Issuing Bank of documents
that do not comply with the terms of such Letter of Credit;  provided
that this clause (vi) shall not limit the rights of the Borrower under Section
2.15(e)(ii); or


 


(vii)         any
other act or omission to act or delay of any kind by any Lender (including the
Issuing Bank), the Administrative Agent or any other Person or any other event
or circumstance whatsoever that might, but for the provisions of this
subsection (vii), constitute a legal or equitable discharge of or defense to
the Borrowers or the Lender’s obligations hereunder.


 


(e)           Indemnification; Expenses.


 


(i)            Borrower
hereby indemnifies and holds harmless each Lender (including each Issuing Bank)
and the Administrative Agent from and against any and all claims, damages,
losses, liabilities, costs or expenses which it may reasonably incur in
connection with the execution and delivery or transfer of, or payment or
failure to make payment under, a Letter of Credit issued pursuant to this
Section 2.15;  provided that the Borrower shall not be
required to indemnify any Lender (including any Issuing Bank), or the
Administrative Agent, for any claims, damages, losses, liabilities, costs or
expenses, to the extent caused by the gross negligence or willful misconduct of
such Person or, with respect to any Issuing Bank, to the extent caused by the
Issuing Bank’s failure to pay under any Letter of Credit after the presentation
to it of documents strictly complying with the terms and conditions of the
Letter of Credit.


 


(ii)           None
of the Lenders (including an Issuing Bank) nor the Administrative Agent nor any
of their officers or directors or employees or agents shall be liable or
responsible, by reason of or in connection with the execution and delivery or
transfer of or payment or failure to pay under any Letter of Credit, including
without limitation any of the circumstances enumerated in subsection (d) above;
provided that, notwithstanding
Section 2.15(d), the Borrower shall have a claim for direct (but not
consequential) damage suffered by it, to the extent caused by (x) subject to
the following sentence, the Issuing Bank’s gross negligence or willful
misconduct in determining whether documents presented under any Letter of
Credit complied with the terms of such Letter of Credit or (y) the Issuing
Bank’s failure to pay under any Letter of Credit after the presentation to it
of documents strictly complying with the terms and conditions of the Letter of
Credit.  The parties agree that, with
respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Issuing Bank may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.


 


(iii)          Nothing
in this subsection (e) is intended to limit the obligations of the Borrower
under any other provision of this Agreement. 
To the extent the Borrower does not indemnify an Issuing Bank as
required by this subsection, the Lenders agree to do so ratably in accordance
with their Commitments.


 


31

















 


Section 2.16.          Stop Issuance Notice.  If the Required Lenders determine at any
time that the conditions set forth in Section 3.02 would not be satisfied in
respect of a Borrowing at such time, then the Required Lenders may request that
the Administrative Agent issue a “Stop
Issuance Notice”, and the Administrative Agent shall issue such
notice to each Issuing Bank.  Such Stop
Issuance Notice shall be withdrawn upon a determination by the Required Lenders
that the circumstances giving rise thereto no longer exist.  No Letter of Credit shall be issued while a
Stop Issuance Notice is in effect.  The
Required Lenders may request issuance of a Stop Issuance Notice only if there
is a reasonable basis therefor, and shall consider reasonably and in good faith
a request from the Borrower for withdrawal of the same on the basis that the
conditions in Section 3.02 are satisfied; provided
that the Administrative Agent and the Issuing Banks may and shall conclusively
rely on any Stop Issuance Notice while it remains in effect.


 


Section 2.17.          Regulation D Compensation.  Each Lender may require the Borrower to pay,
contemporaneously with each payment of interest on the Euro-Dollar Loans,
additional interest on the related Euro-Dollar Loan of such Lender at a rate
per annum determined by such Lender up to but not exceeding the excess of
(i)(A)  the applicable London Interbank
Offered Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over
(B) the applicable London Interbank Offered Rate.  Any Lender wishing to require payment of such additional interest
(x) shall so notify the Borrower and the Administrative Agent, in which case
such additional interest on the Euro-Dollar Loans of such Lender shall be
payable to such Lender at the place indicated in such notice with respect to
each Interest Period commencing at least three Euro-Dollar Business Days after
the giving of such notice and (y) shall notify the Borrower at least five
Euro-Dollar Business Days prior to each date on which interest is payable on
the Euro-Dollar Loans of the amount then due it under this Section 2.17.


 


“Euro-Dollar Reserve Percentage” means for
any day that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement for a member
bank of the Federal Reserve System in New York City with deposits exceeding
five billion dollars in respect of “Eurocurrency
liabilities” (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Euro-Dollar
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any Lender to United
States residents).


 


Section 2.18.          Increased Commitments; Additional Lenders.


 


(a)           Subsequent to the
Effective Date (but not more than twice in any calendar year), the Borrower
may, from time to time, upon at least 30 days notice to the Administrative
Agent (which shall promptly provide a copy of such notice to the Lenders),
propose to increase the aggregate amount of the Commitments by an amount which
(i) is a multiple of $10,000,000 and (ii) when combined with the aggregate
amount by which the Commitments have theretofore been increased pursuant to
this Section 2.18, does not exceed $100,000,000 (the amount of any such
increase, the “Increased Commitments”);
provided that no Default shall
have occurred and be continuing. Each Lender party to this Agreement at such
time shall have the right (but no obligation), for a period of 15 days
following receipt of such notice, to elect by notice to the Borrower and the
Administrative Agent to increase its Commitment by a principal amount which
bears the same ratio to the Increased Commitments as its then Commitment bears
to the aggregate Commitments then existing. 
If a Lender does not respond to such notice within such period, such
Lender shall be deemed to have elected not to increase its Commitment pursuant
to this Section 2.18 at such time.


 


32

















 


(b)           If any Lender party to
this Agreement shall not elect to increase its Commitment pursuant to
subsection (a) of this Section, the Borrower may, within 30 days of the
Lender’s response, designate one or more of the existing Lenders or other
financial institutions acceptable to the Administrative Agent (such acceptance
not to be unreasonably withheld or delayed), the Issuing Banks and the Borrower
which at the time agree to (i) in the case of any such Person that is an
existing Lender, increase its Commitment and (ii) in the case of any other such
Person (an “Additional Lender”),
become a party to this Agreement.  The
sum of the increases in the Commitments of the existing Lenders pursuant to
this subsection (b) plus the Commitments of the Additional Lenders shall not in
the aggregate exceed the unsubscribed amount of the Increased Commitments.


 


(c)           An increase in the
aggregate amount of the Commitments pursuant to this Section 2.18 shall become
effective upon the receipt by the Administrative Agent of an agreement in form
and substance satisfactory to the Administrative Agent signed by the Borrower,
by each Additional Lender and by each other Lender whose Commitment is to be
increased, setting forth the new Commitments of such Lenders and setting forth
the agreement of each Additional Lender to become a party to this Agreement and
to be bound by all the terms and provisions hereof, together with such evidence
of appropriate corporate authorization on the part of the Borrower with respect
to the Increased Commitments and such opinions of counsel for the Borrower with
respect to the Increased Commitments as the Administrative Agent may reasonably
request.


 


(d)           Upon any increase in
the aggregate amount of the Commitments pursuant to this Section 2.18 that is
not pro rata among all Lenders, (i) the respective Letter of Credit Liabilities
of the Lenders shall be redetermined as of the effective date of such increase
and (ii) within five Domestic Business Days, in the case of any Group of Base
Rate Loans then outstanding, and at the end of the then current Interest Period
with respect thereto, in the case of any Group of Euro-Dollar Loans then
outstanding, the Borrower shall prepay such Group in its entirety and, to the
extent the Borrower elects to do so and subject to the conditions specified in
Article 3, the Borrower shall reborrow Committed Loans from the Lenders in
proportion to their respective Commitments after giving effect to such
increase, until such time as all outstanding Committed Loans are held by the
Lenders in such proportion.


 


ARTICLE III

CONDITIONS


 


Section 3.01.          Effectiveness.  The Commitments shall become effective only when all the
following conditions have been satisfied:


 


(a)           the Administrative
Agent shall have received, from each party listed on the signature pages
hereof, either a counterpart hereof signed by such party or facsimile or other
written confirmation satisfactory to the Administrative Agent confirming that
such party has signed a counterpart hereof;


 


33

















 


(b)           the Administrative
Agent shall have received an opinion of the General Counsel of the Borrower,
substantially in the form of Exhibit F hereto, and covering such additional
matters relating to the transactions contemplated hereby as the Required
Lenders may reasonably request;


 


(c)           the Administrative
Agent shall have received an opinion of Baker Botts L.L.P., special counsel for
the Administrative Agent, substantially in the form of Exhibit G hereto, and
covering such additional matters relating to the transactions contemplated hereby
as the Required Lenders may reasonably request;


 


(d)           the Borrower shall have
paid to the Administrative Agent for the account of each Lender a fee in the
amount heretofore mutually agreed;


 


(e)           the Administrative
Agent shall have received all documents the Administrative Agent may reasonably
request relating to the existence of the Borrower, the corporate authority for
and the validity of this Agreement and the Notes, and any other matters
relevant hereto, all in form and substance satisfactory to the Administrative
Agent; and


 


(f)            the Administrative
Agent shall have received evidence satisfactory to it that the commitments
under the Existing Credit Agreement shall have terminated and that all
principal of any loans outstanding under, and all accrued interest and fees
under, the Existing Credit Agreement shall have been paid in full;


 


provided that the Commitments shall not become
effective unless all of the foregoing conditions are satisfied not later than
June 11, 2004.  Promptly after the
Effective Date occurs, the Administrative Agent shall notify the Borrower and
the Lenders thereof, and such notice shall be conclusive and binding on all
parties hereto.


 


Section 3.02.          Borrowings and Issuances of Letters of Credit.  The obligation of any Lender to make a Loan
on the occasion of any Borrowing, and the obligation of an Issuing Bank to
issue (or renew or extend the term of) any Letter of Credit, is subject to the
satisfaction of the following conditions:


 


(a)           receipt by the
Administrative Agent of a Notice of Borrowing as required by Section 2.02 or
2.03, or receipt by the Issuing Bank of a Notice of Issuance as required by
Section 2.15(b), as the case may be;


 


(b)           the fact that,
immediately after such Borrowing or issuance, no Default shall exist; and


 


(c)           the fact that the
representations and warranties of the Borrower contained in this Agreement
shall be true in all material respects on and as of the date of such Borrowing
or issuance.


 


Each Borrowing and each
issuance or extension of a Letter of Credit hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such Borrowing or
issuance as to the facts specified in the foregoing clauses 3.02(b) and
3.02(c).


 


34

















 


ARTICLE IV

REPRESENTATIONS AND WARRANTIES


 


The Borrower represents and
warrants that:


 


Section 4.01.          Corporate Existence and Power.  The Borrower and each Significant Subsidiary
is a corporation duly organized, validly existing and in good standing under
the laws of the state of its incorporation, has all power and authority to
carry on its business as now being conducted and to own its properties, and is
duly qualified and in good standing as a foreign corporation in each other
jurisdiction in which the failure to qualify would materially and adversely
affect the conduct of its business or the enforceability of its contractual
rights.


 


Section 4.02.          Corporate Authorization.  The execution, delivery and performance by
the Borrower of this Agreement and the Notes are within the Borrower’s
corporate power, have been duly authorized by all necessary corporate action
and will not contravene, or constitute a default under, any provision of
applicable law or regulation or of the Restated Certificate of Incorporation or
By-Laws of the Borrower, or of any judgment, order, decree, agreement or
instrument binding on the Borrower or result in the creation of any Lien upon
any of its property or assets.


 


Section 4.03.          Binding Effect.  This Agreement constitutes, and the Notes when duly executed on
behalf of the Borrower and delivered in accordance with this Agreement will
constitute, the valid and binding obligations of the Borrower, enforceable in
accordance with their respective terms.


 


Section 4.04.          Financial Information.


 


(a)           The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of August 2,
2003 and the related consolidated statements of operations and cash flows for
the fiscal year then ended, reported on by Deloitte & Touche and set forth
in the Borrower’s 2003 Annual Report to Shareholders and incorporated by
reference in the Borrower’s 2003 10-K, a copy of which has been delivered to
each of the Lenders, fairly present, in conformity with United States generally
accepted accounting principles, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.


 


(b)           The unaudited
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of January 31, 2004 and the related unaudited consolidated statements of
operations and cash flows for the 26 weeks then ended, set forth in the
Borrowers quarterly report for the fiscal quarter ended January 31, 2004 as
filed with the Securities and Exchange Commission on Form 10-Q, a copy of which
has been delivered to each of the Lenders, fairly present, in conformity with
United States generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in subsection (a) of this
Section, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such 26-week period (subject to normal year-end
adjustments).


 


35

















 


(c)           Since August 2, 2003
there has been no material adverse change in the business, financial position
or results of operations of the Borrower and its Consolidated Subsidiaries,
considered as a whole.


 


Section 4.05.          Litigation.  There are no actions, suits or proceedings pending against or, to
the knowledge of the Borrower, threatened against, the Borrower or any
Significant Subsidiary in any court or before or by any governmental
department, agency or instrumentality, in which there is a reasonable
possibility of an adverse decision which would materially and adversely affect
the financial condition or business of the Borrower and its Subsidiaries, taken
as a whole.


 


Section 4.06.          Governmental and Other Approvals.  No approval, consent or authorization of or
filing or registration with any governmental authority or body is necessary for
the execution, delivery or performance by the Borrower of this Agreement or the
Notes or for the performance by the Borrower of any of the terms or conditions
hereof or thereof.


 


Section 4.07.          Full Disclosure.  All financial statements and other documents furnished by the
Borrower to the Lenders in connection with this Agreement do not and will not contain
any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements contained therein not
misleading.  The Borrower has disclosed
to the Lenders in writing any and all facts which materially and adversely
affect the business, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries or the Borrower’s ability to perform its
obligations under this Agreement.


 


Section 4.08.          Compliance with ERISA.  Each member of the ERISA Group has fulfilled
its obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Internal
Revenue Code with respect to each Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting
of a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.


 


Section 4.09.          Taxes. 
The Borrower and its Subsidiaries have filed all United States Federal
income tax returns, and the Borrower and its Significant Subsidiaries have
filed all other material tax returns, which are required to be filed by them
and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Significant Subsidiary except where
the payment of any such taxes is being contested in good faith by appropriate
proceedings. The United States Federal income tax returns of the Borrower and
its Subsidiaries for the fiscal years through July 29, 2000 are not under
examination by the United States Internal Revenue Service.  The statute of limitations period for
assessment of such returns has closed and no extensions of the limitations
period have been requested or granted. 
The charges, accruals and reserves on the books of the Borrower and its
Consolidated Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower, adequate.


 


36

















 


Section 4.10.          Environmental Matters.  The Borrower has reasonably concluded that
the costs of compliance with Environmental Laws are unlikely to have a material
adverse effect on the business, financial condition or results of operations of
the Borrower and its Consolidated Subsidiaries, considered as a whole.


 


ARTICLE V

COVENANTS


 


The Borrower
agrees that, so long as any Lender has any Credit Exposure hereunder:


 


Section 5.01.          Furnishing of Financial Data and Certificates.  The Borrower will deliver to each of the
Lenders:


 


(a)           As soon as practicable,
and in any event within 45 days after the close of each of the first three
quarters of each fiscal year of the Borrower, (i) the condensed consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the end
of such quarter, (ii) the condensed consolidated statement of operations of the
Borrower and its Consolidated Subsidiaries for such quarter and for the portion
of such fiscal year to and including such quarter and (iii) the condensed
consolidated statements of cash flows of the Borrower and its Consolidated
Subsidiaries for the portion of such fiscal year to and including such quarter,
each of the foregoing to set forth in comparative form the corresponding
figures of the previous year and to be in reasonable detail and certified by a
financial officer of the Borrower, subject to year-end audit adjustments;
provided that delivery by the Borrower within the time period specified above
of its Quarterly Reports on Form 10-Q shall be deemed compliance with this
provision;


 


(b)           As soon as practicable,
and in any event within 90 days after the close of each fiscal year of the
Borrower, (i) the consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as at the end of such fiscal year, (ii) the
consolidated statement of operations of the Borrower and its Consolidated
Subsidiaries for such fiscal year and (iii) the consolidated statements of cash
flows of the Borrower and its Consolidated Subsidiaries for such fiscal year,
each of the foregoing to set forth in comparative form the corresponding
figures of the previous year and to be in reasonable detail and audited and
certified by Deloitte & Touche or other certified public accountants of
nationally recognized standing reasonably satisfactory to the Lenders; provided
that delivery by the Borrower within the time period specified above of its
Annual Reports on Form 10-K (together with its annual report to shareholders,
if incorporated by reference therein) shall be deemed compliance with this
provision;


 


(c)           Promptly after sending
or filing, copies of all financial statements, reports, notices and proxy
statements as it shall send to its shareholders, and of all periodic reports
filed by the Borrower with any securities exchange or with the Securities and
Exchange Commission or any governmental authority succeeding to any of its
functions;


 


(d)           Within five Domestic
Business Days after any executive officer of the Borrower becomes aware of any
Default, if such Default is then continuing, a certificate of a financial
officer of the Borrower setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto; and


 


37

















 


(e)           Such other information
(which is readily obtainable by the Borrower without incurring any undue
expense) regarding the financial condition of the Borrower as any Lender may
reasonably request.


 


Together with each delivery of
financial statements required by clauses (a) and (b) above, the Borrower will
deliver to the Lenders a certificate of a financial officer stating that to the
best of his knowledge there exists no Default or, if such officer is aware of
the existence of any Default, specifying the nature thereof, the period of
existence thereof and what action the Borrower proposes to take with respect
thereto.  The certificate delivered in
conjunction with each delivery of annual and quarterly financial statements
shall in addition demonstrate in reasonable detail compliance during the preceding
fiscal period with Sections 5.08, 5.09 and 5.10(k).


 


Each certificate of independent
certified public accountants delivered with the financial statements required
by clause (b) above shall be accompanied by a written statement of such
accountants that, in conducting the examination necessary to the giving of such
certificate, they have obtained no knowledge of the existence during the fiscal
period under examination of any condition, event or act which constitutes a
Default (insofar as such a condition, event or act relates to accounting matters),
or if in the opinion of such accountants there shall exist any Default, such
statement shall specify the nature thereof.


 


Information required to be
delivered pursuant to clauses (a), (b) and (c) above shall be deemed to have
been delivered on the date on which the Borrower provides notice to the Lenders
that such information has been posted on the Borrower’s website on the Internet
at www.neimanmarcus.com, at sec.gov/edaux/searches.htm or at another website
identified in such notice and accessible by the Lenders without charge; provided that the Borrower shall deliver
paper copies of the information referred to in clauses (a), (b) and (c) above
to any Lender which requests such delivery.


 


Section 5.02.          Payment of Taxes.  The Borrower will, and will cause each
Subsidiary to, promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments and governmental charges or
levies imposed upon the income, profits, property or business of the Borrower
or any Subsidiary; provided, however,
that any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith and if the Borrower or a
Subsidiary shall have set aside on its books adequate reserves with respect
thereto in accordance with United States generally accepted accounting
principles.


 


Section 5.03.          Maintenance of Corporate Existence; Compliance with
Laws.


 


(a)           The Borrower will
preserve and maintain its corporate existence.


 


(b)           The Borrower will, and
will cause each Subsidiary to, conduct its affairs and carry on its business
and operations in such manner as to comply with any and all applicable laws
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder), except (i) where the necessity of compliance therewith
is being contested in good faith or (ii) where the failure of compliance
therewith could not reasonably be expected to have, individually or in the
aggregate, a material adverse change in the business, assets,  financial position or results of operations
of the Borrower and its Consolidated Subsidiaries, considered as a whole.


 


 


38

















 


Section 5.04.          Maintenance of Property and Leases.  The Borrower will, and will cause each
Subsidiary to, keep its properties, whether owned or leased, in satisfactory
repair, working order and condition, except where the failure to keep such
properties in such condition could not reasonably be expected to have, individually
or in the aggregate, a material adverse change in the business, assets,  financial position or results of operations
of the Borrower and its Consolidated Subsidiaries, considered as a whole.


 


Section 5.05.          Insurance.  The Borrower will, and will cause each Subsidiary to, maintain
with financially sound and reputable insurers insurance against liability to
persons and damage to property to the extent and in the manner customary for
companies of like size in similar businesses, it being understood that the
Borrower may self-insure against exposures which, in the judgment of its
management, are reasonable in relation to its financial position.   The Borrower will deliver to the Lenders
from time to time upon request of any Lender through the Administrative Agent
full information as to the insurance so carried.


 


Section 5.06.          Accounts and Reports.  The Borrower will, and will cause each
Subsidiary to, keep true records and books of account in which full, true and
correct entries will be made of all dealings or transactions in relation to its
businesses and affairs, in accordance with United States generally accepted
accounting principles consistently applied.


 


Section 5.07.          Inspection.  Each Lender or its designee shall have the right, at its expense,
on reasonable notice (given to a senior financial officer of the Borrower) and
at reasonable times to visit and inspect the properties of the Borrower and its
Subsidiaries and to discuss the financial affairs of the Borrower and its
Subsidiaries with the Borrower’s senior officers and will be furnished from the
books of the Borrower and its Subsidiaries such financial information as it may
reasonably request and upon such reasonable conditions relating to
confidentiality of the material and information so supplied as the Borrower
might impose.  Each Lender shall respect
the confidential nature of the material and information so supplied and shall
take reasonable measures to preserve such confidentiality.   It is understood that a Lender may be
required to disclose such confidential material and information or portions
thereof (1) at the request of a bank regulatory agency or in connection with an
examination of the Lender by bank examiners, (2) pursuant to subpoena or other
court process, (3) at the express direction of any other authorized government
agency, (4) to its independent auditors or (5) otherwise as required by law.


 


Section 5.08.          Coverage of Consolidated Fixed Charges.  The Fixed Charge Coverage Ratio will not at
the end of any fiscal quarter be less than 2.75 to 1.


 


Section 5.09.          Leverage Ratio.  The Leverage Ratio will at no time exceed 60%.


 


Section 5.10.          Restrictions on Liens.  The Borrower will not, nor will it permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien upon any
of its property or assets now owned or hereafter acquired, except:


 


(a)           Liens existing on the
date hereof securing Debt outstanding on the date hereof;


 


39

















 


(b)           Liens incidental to the
conduct of its business or the ownership of its properties and assets which
were not incurred in connection with the borrowing of money or the obtaining of
advances or credit or the incurrence of Derivatives Obligations and which do
not materially detract from the value of its property or assets or materially
impair the use thereof in the operation of its business;


 


(c)           any Lien on any asset
securing Debt incurred or assumed for the purpose of financing all or any part
of the cost of acquiring or constructing such asset; provided that such Lien attaches to such asset concurrently
with or within 180 days after the acquisition or completion of construction
thereof;


 


(d)           Liens incurred in
connection with Guarantees of bonds, notes or other similar obligations of a
state, city, town or other governmental agency or entity which obligations are
issued in order to finance property used or to be used by the Borrower or any
Subsidiary, and Liens incurred in connection with the acquisition of, or
improvements to, real estate; provided,
however, that no such Lien shall extend to or cover any property
other than the property so acquired or improved;


 


(e)           any Lien existing on
any assets of any corporation or other entity at the time it becomes a
Subsidiary and not created in contemplation of such corporation becoming a
Subsidiary, or existing on any assets acquired by the Borrower or any
Subsidiary through purchase, merger, consolidation, or otherwise and not
created in contemplation of such purchase, merger, consolidation or other
transaction;


 


(f)            any Lien resulting
from any order of attachment, distraint or other legal process arising out of
judicial proceedings so long as the execution or other enforcement thereof is
effectively stayed;


 


(g)           Liens on shares of
capital stock or property of a Subsidiary securing obligations owing by such
Subsidiary to the Borrower or to another Subsidiary;


 


(h)           Liens arising out of
the refinancing, extension, renewal or refunding of any Debt secured by any
Lien permitted by this Section 5.10; provided
that such Debt is not increased and is not secured by any additional assets;


 


(i)            Liens to banks or
other institutions arising in connection with the issuance of letters of credit
or bankers acceptances in connection with the shipment or storage of goods in
the ordinary course of business;


 


(j)            Liens on cash and cash
equivalents securing Derivatives Obligations; provided
that the aggregate amount of cash and cash equivalents subject to such Liens
may at no time exceed $50,000,000; and


 


(k)           Liens not otherwise
permitted by any of the foregoing clauses of this Section 5.10 (i) covering
assets other than inventory of the Borrower or a Restricted Subsidiary and (ii)
securing Debt in an aggregate principal amount at any time outstanding not to
exceed 20% of Consolidated Net Assets.


 


40

















 


Section 5.11.          Restrictions on Sales, Consolidations and Mergers.


 


(a)           The Borrower will not
sell, lease or in any way dispose of all, or substantially all, of its property
or assets to any other Person, nor will the Borrower consolidate or merge with
or into any other Person; provided
that this Section 5.11 shall not prevent any merger involving the Borrower in
which the Borrower is the surviving corporation if, at the time of, and after
giving effect to any such merger, no Default shall have occurred and be
continuing.


 


(b)           Neither the Borrower
nor any Subsidiary will sell, lease or otherwise dispose of any of its property
or assets, except (i) in the ordinary course of its business, (ii) to the
Borrower or any Subsidiary, (iii) in connection with a Securitization
Transaction or a Sale-Leaseback Transaction or (iv) other dispositions of
property or assets, provided that
the aggregate book value of the property or assets so disposed of pursuant to
this clause (v) in any fiscal year shall not exceed 20% of the consolidated
assets of the Borrower and its Consolidated Subsidiaries as at the last day of
the preceding fiscal year.


 


(c)           The aggregate
outstanding principal amount of Debt deemed incurred in respect of
Securitization Transactions pursuant to Section 1.02(b) shall at no time exceed
$500,000,000.


 


Section 5.12.          Transactions with Affiliates.  The Borrower will not, and will not permit
any Subsidiary to, directly or indirectly, pay any funds to or for the account
of, make any Investment in, lease, sell, transfer or otherwise dispose of any
assets, tangible or intangible, to, or participate in, or effect any
transaction in connection with any joint enterprise or other joint arrangement
with, any Affiliate; provided, however,
that the foregoing provisions of this Section shall not prohibit (i) the
Borrower or any Subsidiary from declaring or paying any lawful dividend or
distribution so long as after giving effect thereto, no Default shall have
occurred and be continuing or (ii) the Borrower or any Subsidiary from engaging
in any commercial transaction with an Affiliate so long as such transaction is
on terms and conditions at least as favorable to the Borrower or such
Subsidiary as the terms and conditions which would apply in a similar
transaction with a Person that is not an Affiliate; provided further that a transaction permitted by this
Section may nonetheless give rise to an Event of Default under another Section
of this Agreement.


 


Section 5.13.          Restriction on Debt of Subsidiaries.  The Borrower will not permit any of its
Subsidiaries to incur or at any time be liable with respect to any Debt, except
(a) Debt owing to the Borrower or any Wholly-Owned Subsidiary, (b) Debt which
is secured by a Lien permitted by Section 5.10, (c) Debt of any corporation at
the time such corporation becomes a Subsidiary and not created in contemplation
of such event, (d) Debt of Subsidiaries not otherwise permitted by any of the
foregoing clauses in an aggregate principal amount at any time outstanding not
to exceed $50,000,000, (e) Debt of Subsidiaries outstanding on the date of this
Agreement and (f) Debt arising out of any refinancing, extension, renewal or
replacement of any Debt permitted by clauses (b), (c) and (e) above that does
not increase the outstanding principal amount thereof.


 


Section 5.14.          Use of Proceeds.  The proceeds of the Loans made under this Agreement will be used
by the Borrower for general corporate purposes.  None of such proceeds will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
any “margin stock” within the meaning of Regulation U.


 


41

















 


Section 5.15.          Restricted Payments.  Neither the Borrower nor any Restricted
Subsidiary will, directly or indirectly, purchase or otherwise acquire any
outstanding shares of common stock of the Borrower; provided, however, that the
Borrower and the Restricted Subsidiaries may purchase or otherwise acquire
outstanding common stock of the Borrower if, both before and after such
purchase or acquisition, no Default or Event of Default has occurred, is
continuing, or would result therefrom.


 


Section 5.16.          Restrictive Agreements.  Neither the Borrower nor any Restricted
Subsidiary will, directly or indirectly, enter into or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition on (a) the ability of the Borrower or any Restricted Subsidiary to
create or permit to exist any Lien on any of its inventory or (b) the ability
of any Restricted Subsidiary to pay dividends or other distributions with
respect to any shares of its capital stock or to make or repay loans or
advances to the Borrower or any other Restricted Subsidiary or to Guarantee
Debt of the Borrower or any other Restricted Subsidiary; provided that (1) the foregoing shall not
apply to restrictions and conditions imposed by law or by this Agreement, (2)
the foregoing shall not apply to restrictions and conditions existing on the
date hereof, or any extension or renewal of any such restriction or condition,
but shall apply to any amendment or modification expanding the scope of such
restriction or condition, (3) the foregoing shall not apply to customary restrictions
and conditions contained in agreements relating to the sale of a Subsidiary
pending such sale, provided that
such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, (4) clause (a) of this Section shall
not apply to restrictions or conditions imposed by any agreement relating to
secured Debt permitted by this Agreement if such restrictions or conditions
apply only to the property securing such Debt and (5) clause (a) of this
Section shall not apply to customary provisions in leases restricting the
assignment thereof.


 


ARTICLE VI

DEFAULTS


 


Section 6.01.          Events of Default.  If one or more of the following events (“Events of Default”) shall have occurred and
be continuing:


 


(a)           the Borrower shall fail
to pay when due any principal of any Loan or any Reimbursement Obligation, or
shall fail to pay within three days of the due date thereof any interest or
fees payable hereunder;


 


(b)           the Borrower shall fail
to observe or perform any covenant contained in Section 5.01(d) or Sections
5.08 to 5.16, inclusive;


 


(c)           the Borrower shall fail
to observe or perform any covenant or agreement contained in this Agreement
(other than those covered by clause (a) or (b) above) for 30 days after notice
thereof has been given to the Borrower by the Administrative Agent at the
request of any Lender;


 


(d)           any material
representation, warranty, certification or statement made by the Borrower in
this Agreement or in any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been incorrect in any
material respect when made (or deemed made), and if the same shall be
susceptible of cure, such incorrectness shall not have been cured to the
reasonable satisfaction of the Required Lenders within 30 days after notice
thereof has been given to the Borrower by the Administrative Agent at the
request of any Lender;


 


42

















 


(e)           the Borrower or any
Subsidiary shall fail to make payment of any Material Financial Obligation when
due or within any applicable grace period;


 


(f)            any event or condition
shall occur which results in the acceleration of the maturity of any Material
Debt or enables (or, with the giving of notice or lapse of time or both, would
enable) the holder of such Debt or any Person acting on such holders behalf to
accelerate the maturity thereof;


 


(g)           the Borrower or any
Significant Subsidiary shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the foregoing;


 


(h)           an involuntary case or
other proceeding shall be commenced against the Borrower or any Significant
Subsidiary seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for relief shall
be entered against the Borrower or any Significant Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;


 


(i)            any member of the
ERISA Group shall fail to pay when due an amount or amounts (other than amounts
being contested in good faith through appropriate proceedings) aggregating in
excess of $25,000,000 which it shall have become liable to pay under Title IV
of ERISA; or notice of intent to terminate a Material Plan in a distress
termination under Section 4041(c) of ERISA shall be filed under Title IV of
ERISA by any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed
to administer any Material Plan; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any Material
Plan must be terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current payment obligation in excess of
$25,000,000;


 


43

















 


(j)            a judgment or order
for the payment of money in excess of $25,000,000 shall be rendered against the
Borrower or any Significant Subsidiary and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days; or


 


(k)           (i) any person or group
of persons (within the meaning of Section 13 or 14 of the Exchange Act) other
than a member of the Smith Family Group shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of more voting
stock or total equity capital of the Borrower than that beneficially owned by
the Smith Family Group, if such person or group of persons is also the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of at least 30% of either the voting stock or total equity
capital of the Borrower or (ii) more than half of the members of the Board of
Directors of the Borrower shall be persons who are not Continuing Directors;


 


then, and in every such event,
the Administrative Agent shall (i) if requested by the Required Lenders, by
notice to the Borrower terminate the Commitments and they shall thereupon
terminate, and (ii) if requested by Lenders holding more than 50% in aggregate
principal amount of the Loans, by notice to the Borrower declare the Loans
(together with accrued interest thereon) to be, and the Loans shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower; provided that in the case of any of the
Events of Default specified in clause (g) or (h) above with respect to the
Borrower, without any notice to the Borrower or any other act by the
Administrative Agent or the Lenders, the Commitments shall thereupon terminate
and the Loans (together with accrued interest thereon) shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.


 


Section 6.02.          Notice of Default.  The Administrative Agent shall give notice
to the Borrower under Section 6.01(c) or (d) promptly upon being requested to
do so by any Lender and shall thereupon notify all the Lenders thereof.


 


Section 6.03.          Cash Cover.  The Borrower agrees, in addition to the provisions of Section
6.01 hereof, that upon the occurrence and during the continuance of any Event
of Default, it shall, if requested by the Administrative Agent upon the
instruction of Lenders having more than 50% of the Letter of Credit
Liabilities, pay to the Administrative Agent an amount in immediately available
funds (which funds shall be held as collateral pursuant to arrangements
satisfactory to the Administrative Agent) equal to the aggregate amount
available for drawing under all Letters of Credit outstanding at such time; provided that, upon the occurrence of any
Event of Default specified in Section 6.01(g) or 6.01(h) with respect to the
Borrower, the Borrower shall pay such amount forthwith without any notice or
demand or any other act by the Administrative Agent or the Lenders.


 


ARTICLE VII

THE AGENTS


 


Section 7.01.          Appointment and Authorization.  Each Lender irrevocably appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with all such powers as are
reasonably incidental thereto.


 


44

















 


Section 7.02.          Agents and Affiliates.  Each Agent shall have the same rights and
powers under this Agreement as any other Lender and may exercise or refrain
from exercising the same as though it were not one of the Agents.  Each Agent and its affiliates may accept deposits
from, lend money to, and generally engage in any kind of business with the
Borrower or any Subsidiary or affiliate of the Borrower as if it were not one
of the Agents.


 


Section 7.03.          Action by Administrative Agent.  The obligations of the Administrative Agent
hereunder are only those expressly set forth herein.  Without limiting the generality of the foregoing, the
Administrative Agent shall not be required to take any action with respect to
any Default, except as expressly provided
in Article 6.


 


Section 7.04.          Consultation With Experts.  Each Agent may consult with legal counsel
(who may be counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.


 


Section 7.05.          Liability of Agents.  None of the Agents, their affiliates and
their respective directors, officers, agents and employees shall be liable for
any action taken or not taken by it in connection herewith (i) with the consent
or at the request of the Required Lenders (or such different number of Lenders
as any provision hereof expressly requires for such consent or request) or (ii)
in the absence of its own gross negligence or willful misconduct; provided that the provisions of this
sentence are for the sole benefit of the Agents, their affiliates and their
respective directors, officers, agents and employees and shall not release any
Lender from liability it would otherwise have to the Borrower.  None of the Agents, their affiliates and
their respective directors, officers, agents and employees shall be responsible
for or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with this Agreement or any
borrowing hereunder; (ii) the performance or observance of any of the covenants
or agreements of the Borrower; (iii) the satisfaction of any condition
specified in Article 3 except, in the case of the Administrative Agent, receipt
of items required to be delivered to it; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith.  No
Agent shall incur any liability by acting in reliance upon any notice, consent,
certificate, statement or other writing (which may be a bank wire, telex,
facsimile or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.  Without
limiting the generality of the foregoing, the use of the term “agent” in this
Agreement with reference to any Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is
used merely as a matter of market custom and is intended to create or reflect
only an administrative relationship between independent contracting parties.


 


Section 7.06.          Indemnification.  The Lenders shall, ratably in proportion to their Credit
Exposures, indemnify each Agent and Issuing Bank, their respective affiliates
and their respective directors, officers, agents and employees (to the extent
not reimbursed by the Borrower) against any cost, expense (including counsel
fees and disbursements), claim, demand, action, loss or liability (except such
as result from such indemnitees’ gross negligence or willful misconduct) that
such indemnitees may suffer or incur in connection with this Agreement or any
Letter of Credit or any action taken or omitted by such indemnitees hereunder
or thereunder.


 


45

















 


Section 7.07.          Credit Decision.  Each Lender acknowledges that it has, independently and without
reliance on any other Lender Party, 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 on any other
Lender Party, 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 any action under this Agreement.


 


Section 7.08.          Successor Administrative Agent.  The Administrative Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower; provided that
(i) any such resignation by the Administrative Agent shall also constitute its
resignation as an Issuing Bank and (ii) one or more financial institutions
reasonably acceptable to the Borrower has accepted their appointment as a
successor Issuing Bank with respect to Letters of Credit requested by the
Borrower to be issued on or after the effective date of such resignation.  Upon any such resignation, the Borrower
shall have the right to appoint a successor Administrative Agent from among the
Lenders, subject to the approval of the Required Lenders, which shall not be
unreasonably withheld or delayed.  If no
successor Administrative Agent shall have been so appointed by the Borrower and
approved by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent gives notice of
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent and Issuing Bank, which shall
be a commercial bank organized or licensed under the laws of the United States
or of any State thereof and having a combined capital and surplus of at least
$500,000,000; provided however that such successor Administrative Agent and/or
Issuing Bank may be removed by Borrower effective upon appointment of a
successor Administrative Agent and/or Issuing Bank by Borrower, subject to the
approval of the Required Lenders, which shall not be unreasonably withheld or
delayed.  Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder.  After
any retiring Administrative Agent resigns as Administrative Agent hereunder,
the provisions of this Article shall inure to its benefit as to actions taken
or omitted to be taken by it while it was Administrative Agent.


 


Section 7.09.          Administrative Agent’s Fee.  The Borrower shall pay to the Administrative
Agent for its own account fees in the amounts and at the times previously
agreed upon by the Borrower and the Administrative Agent.


 


Section 7.10.          Syndication Agents and Documentation Agents.  The Syndication Agents and the Documentation
Agents, in their capacity as such, shall not have any duties or obligations of
any kind under this Agreement.


 


46

















 


ARTICLE VIII

CHANGE IN CIRCUMSTANCES


 


Section 8.01.          Basis for Determining Interest Rate Inadequate or
Unfair.  If on or prior to
the first day of any Interest Period for any Euro-Dollar Loan or Competitive
Bid LIBOR Loan:


 


(a)           the Administrative Agent
is advised by the Reference Bank that deposits in dollars (in the applicable
amounts) are not being offered to the Reference Bank in the London interbank
market for such Interest Period, or


 


(b)           in the case of
Euro-Dollar Loans, Lenders having 50% or more of the aggregate principal amount
of the affected Loans advise the Administrative Agent that the London Interbank
Offered Rate as determined by the Administrative Agent will not adequately and
fairly reflect the cost to such Lenders of funding their Euro-Dollar Loans for
such Interest Period, the Administrative Agent shall forthwith give notice
thereof to the Borrower and the Lenders, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the obligations of the Lenders to make
Euro-Dollar Loans or to continue or convert outstanding Loans as or into
Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan
shall be converted into a Base Rate Loan on the last day of the then current
Interest Period applicable thereto. 
Unless the Borrower notifies the Administrative Agent at least one
Domestic Business Day before the date of any Fixed Rate Borrowing for which a
Notice of Borrowing has previously been given that it elects not to borrow on
such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such
Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Fixed
Rate Borrowing is a Competitive Bid LIBOR Borrowing, the Competitive Bid LIBOR
Loans comprising such Borrowing shall bear interest for each day from and
including the first day to but excluding the last day of the Interest Period
applicable thereto at the Base Rate for such day.


 


Section 8.02.          Illegality.  If, on or after the date of this Agreement, the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Lender (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Lender
shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Lenders and the Borrower, whereupon
until such Lender notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Lender to make Euro-Dollar Loans or to convert outstanding Loans into
Euro-Dollar Loans, shall be suspended. 
Before giving any notice to the Administrative Agent pursuant to this
Section, such Lender shall designate a different Euro-Dollar Lending Office if
such designation will avoid the need for giving such notice and will not, in
the judgment of such Lender, be otherwise disadvantageous to such Lender.  If such notice is given, each Euro-Dollar
Loan of such Lender then outstanding shall be converted to a Base Rate Loan
either (i) on the last day of the then current Interest Period applicable to
such Euro-Dollar Loan if such Lender may lawfully continue to maintain and fund
such Loan to such day or (ii) immediately if such Lender shall determine that
it may not lawfully continue to maintain and fund such Loan to such day.


 


47

















 


Section 8.03.          Increased Cost and Reduced Return.


 


(a)           If on or after (x) the
date hereof, in the case of any Committed Loan or any Letter of Credit or any
obligation to make Committed Loans or to issue or participate in Letters of
Credit or (y) the date of the related Competitive Bid Quote, in the case of any
Competitive Bid Loan, the adoption of any applicable law, rule or regulation,
or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office) with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
with respect to any Euro-Dollar Loan any such requirement with respect to which
such Lender is entitled to compensation for the relevant Interest Period under
Section 2.17), special deposit, insurance assessment or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
any Lender (or its Applicable Lending Office) or shall impose on any Lender (or
its Applicable Lending Office) or on the London interbank market any other
condition affecting its Fixed Rate Loans, its Notes, its participation in the
Letters of Credit or its obligation to make Fixed Rate Loans or to issue or
participate in Letters of Credit and the result of any of the foregoing is to
increase the cost to such Lender (or its Applicable Lending Office) of making
or maintaining any Fixed Rate Loan or of issuing, maintaining or participating
in any Letter of Credit, or to reduce the amount of any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount deemed by such
Lender to be material, then, within 30 days after demand by such Lender (with a
copy to the Administrative Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduction.


 


(b)           If any Lender shall
have determined that, after the date hereof, the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change in any such
law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Lender (or its Parent)
as a consequence of such Lender’s obligations hereunder to a level below that
which such Lender (or its Parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 30 days after demand by such Lender (with a copy
to the Administrative Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender (or its Parent) for
such reduction.


 


(c)           Each Lender will
promptly notify the Borrower and the Administrative Agent of any event of which
it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a different
Applicable Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender.  A certificate of any Lender claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.  In determining such amount, such Lender may
use any reasonable averaging and attribution methods.  Each such certificate shall be accompanied by such information as
the Borrower may reasonably request as to the computation set forth therein.  No payment made to any Lender under this
Section shall duplicate any other payments made to such Lender under any other
provision of this Agreement.


 


48

















 


Section 8.04.          Taxes.


 


(a)           For the purposes of
this Section 8.04, the following terms have the following meanings:


 


“Taxes” means any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings with
respect to any payment by the Borrower pursuant to this Agreement or under any
Note, and all liabilities with respect thereto, excluding (i) in the case of
each Lender and the Administrative Agent, taxes imposed on its net income, and
franchise or similar taxes imposed on it, by a jurisdiction under the laws of
which such Lender or the Administrative Agent (as the case may be) is organized
or in which its principal executive office is located or, in the case of each
Lender, in which its Applicable Lending Office is located and (ii) in the case
of each Lender, any United States withholding tax imposed with respect to any
payment by the Borrower pursuant to this Agreement or under any Note, but only
up to the rate (if any) at which United States withholding tax would apply to
such payments to such Lender at the time such Lender first becomes a party to
this Agreement.


 


“Other Taxes” means any present or future
stamp or documentary taxes and any other excise or property taxes, or similar
charges or levies, which arise from any payment made pursuant to this Agreement
or under any Note or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note.


 


(b)           Any and all payments by
the Borrower to or for the account of any Lender or the Administrative Agent
hereunder or under any Note shall be made without deduction for any Taxes or
Other Taxes; provided that, if
the Borrower shall be required by law to deduct any Taxes or Other Taxes from
any such payments, (i) the sum payable shall be increased as necessary so that
after making all required deductions for any Taxes or Other Taxes (including
deductions applicable to additional sums payable under this Section) such
Lender or the Administrative Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.


 


(c)           The Borrower agrees to
indemnify each Lender and the Administrative Agent for the full amount of Taxes
or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed
or asserted by any jurisdiction on amounts payable under this Section) paid by
such Lender or the Administrative Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto.  This indemnification shall be
paid within 30 days after such Lender or the Administrative Agent (as the case
may be) makes demand therefor.


 


49

















 


(d)           Each Lender organized
under the laws of a jurisdiction outside the United States shall provide the
Borrower and the Administrative Agent with Internal Revenue Service Form
W-8BEN, W-8ECI, or other type of W-8, as appropriate, or any successor form
prescribed by the Internal Revenue Service: (i) on or prior to the date of its
execution and delivery of this Agreement in the case of each Lender listed on
the signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, (ii) from time to time on reasonable
request, and (iii) at any time that a change of circumstances occurs that makes
any information on the form so provided
incorrect, certifying that such Lender is entitled to benefits under an income
tax treaty to which the United States is a party which exempts such Lender from
United States withholding tax or reduces to zero the rate of withholding tax on
payments under this Agreement or under any Note or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States. 
Further, each such Lender that is not an exempt recipient listed in
Treasury Regulation 1.6049-4(c)(1) shall provide the Borrower and the
Administrative Agent with Internal Revenue Service Form W-8 or W-9, as
appropriate, or other successor form prescribed by the Internal Revenue
Service, certifying that it is exempt from United States back-up withholding.


 


(e)           For any period with
respect to which a Lender has failed to provide the Borrower or the
Administrative Agent with the appropriate forms pursuant to Section 8.04(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section 8.04(d)
or (c) with respect to Taxes imposed by the United States; provided that if a
Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.


 


(f)            If the Borrower is
required to pay additional amounts to or for the account of any Lender pursuant
to this Section, then such Lender will change the jurisdiction of its
Applicable Lending Office if, in the judgment of such Lender, such change (i)
will eliminate or reduce any such additional payment which may thereafter
accrue and (ii) is not otherwise disadvantageous to such Lender.


 


Section 8.05.          Base Rate Loans Substituted for Affected Fixed Rate.  If (i) the obligation of any Lender to make,
or convert outstanding Loans to, Euro-Dollar Loans has been suspended pursuant
to Section 8.02 or (ii) any Lender has demanded compensation under Section 8.03
or 8.04 with respect to its Euro-Dollar Loans and the Borrower shall, by at
least five Euro-Dollar Business Day’s prior notice to such Lender through the
Administrative Agent, have elected that the provisions of this Section shall
apply to such Lender, then, unless and until such Lender notifies the Borrower
that the circumstances giving rise to such suspension or demand for
compensation no longer exist, all Loans which would otherwise be made by such
Lender as (or continued as or converted into) Euro-Dollar Loans shall instead
be Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other
Lenders).  If such Lender notifies the Borrower
that the circumstances giving rise to such notice no longer apply, the
principal amount of each such Base Rate Loan shall be converted into a
Euro-Dollar Loan on the first day of the next succeeding Interest Period
applicable to the related Euro-Dollar Loans of the other Lenders.


 


50

















 


Section 8.06.          Substitution of Bank.  If (i) the obligation of any Lender to make,
or to convert or continue outstanding Loans as or into, Euro-Dollar Loans has
been suspended pursuant to Section 8.02 or (ii) any Lender has demanded
compensation under Section 8.03 or 8.04, the Borrower shall have the right,
with the assistance of the Administrative Agent, to designate a substitute bank
or banks (which may be one or more of the Lenders) mutually satisfactory to the
Borrower and the Administrative Agent (which consent shall not be unreasonably
withheld or delayed) to purchase (and, if such right is exercised, such Lender
shall sell and assign) for cash, pursuant to an Assignment and Assumption
Agreement  substantially in the form of
Exhibit H hereto, the outstanding Loans (including any Competitive Bid Loans)
and Letter of Credit Liabilities of such Lender and assume the Commitment of
such Lender, without recourse to or warranty by, or expense to, such Lender,
for a purchase price equal to the principal amount of all of such Lender’s
outstanding Loans and Letter of Credit Liabilities plus any accrued but unpaid
interest or fees thereon and the accrued but unpaid fees in respect of such
Lender’s Commitment hereunder plus such amount, if any, as would be payable
pursuant to Section 2.13 if the outstanding Loans of such Lender were prepaid
in their entirety on the date of consummation of such assignment.


 


ARTICLE IX

MISCELLANEOUS


 


Section 9.01.          Notices.


 


(a)           All notices, requests
and other communications to any party hereunder shall be in writing (including
bank wire, telex, facsimile or similar writing) and shall be given to such
party: (i) in the case of the Borrower or the Administrative Agent, at its
address, facsimile number or telex number set forth on the signature pages
hereof, (ii) in the case of any Lender, at its address, facsimile number or
telex number set forth in its Administrative Questionnaire or (iii) in the case
of any party, at such other address, facsimile number or telex number as such
party may hereafter specify for the purpose by notice to the Administrative
Agent and the Borrower.  Each such
notice, request or other communication shall be effective (iv) if given by
telex, when transmitted to the telex number referred to in this Section and the
appropriate answerback is received, (v) if given by facsimile, when transmitted
to the facsimile number referred to in this Section and confirmation of receipt
is received, (vi) if given by mail or by any other means, when delivered at the
address referred to in this Section; provided that notices to the
Administrative Agent under Article 2 or Article 8 shall not be effective until
received.


 


(b)           Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant to
Article 2 unless otherwise agreed by the Administrative Agent and the applicable
Lender.  The Administrative Agent or the
Borrower 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.


 


51

















 


Section 9.02.          No Waivers.  No failure or delay by any Lender Party in exercising any right,
power or privilege hereunder or under any Note shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.


 


Section 9.03.          Expenses; Indemnification.


 


(a)           The Borrower shall pay
(i) all reasonable out-of-pocket expenses of the Agents, including reasonable
fees and disbursements of special counsel for the Agents, in connection with
the preparation of this Agreement, any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all reasonable out-of-pocket expenses incurred by each
Lender Party, including (without duplication) the reasonable fees and
disbursements of outside counsel and the reasonable allocated cost of inside
counsel, in connection with such Event of Default and any collection,
bankruptcy, insolvency, reorganization or other enforcement proceedings
resulting therefrom; provided that each Lender Party shall use reasonable
efforts to avoid inappropriate duplication of expense in connection with any
matter for which the Borrower is responsible under this Section 9.03(a).


 


(b)           The Borrower agrees to
indemnify each Lender Party, their respective affiliates and the respective
directors, officers, agents and employees of the foregoing (each an “Indemnitee”) and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement or any actual or
proposed use of proceeds of Loans hereunder; provided that no Indemnitee shall
have the right to be indemnified hereunder for its own gross negligence or
willful misconduct as determined by a court of competent jurisdiction; provided further that each Lender Party
shall use reasonable efforts to avoid inappropriate duplication of expense in
connection with any matter for which the Borrower is responsible under this
Section 9.03(b).


 


Section 9.04.          Sharing. 
Each Lender agrees that if it shall, by exercising any right of set-off
or counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest then due with respect to the Loans and Letter
of Credit Liabilities held by it which is greater than the proportion received
by any other Lender in respect of the aggregate amount of principal and
interest then due with respect to the Loans and Letter of Credit Liabilities
held by such other Lender, the Lender receiving such proportionately greater
payment shall purchase such participations in the Loans held by the other
Lenders, and such other adjustments shall be made, as may be required so that all
such payments of principal and interest with respect to the Loans and Letter of
Credit Liabilities held by the Lenders shall be shared by the Lenders pro rata;
provided that nothing in this Section shall impair the right of any Lender to
exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness hereunder.


 


52

















 


Section 9.05.          Amendments and Waivers.  Any provision of this Agreement or the Notes
may be amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Lenders (and, if the
rights or duties of any Issuing Bank or Agent are affected thereby, by it); provided that no such amendment or waiver
shall:


 


(a)           (i) increase or
decrease the Commitment of any Lender (except for a ratable decrease in the
Commitments of all the Lenders) or subject any Lender to any additional
obligation without the written consent of such Lender, (ii) reduce the
principal of or interest on any Loan or the amount to be reimbursed in respect
of any Letter of Credit or any interest thereon or any fees hereunder, without
the written consent of each Lender affected thereby, (iii) postpone the date
fixed for any payment of principal of or interest on any Loan or for
reimbursement in respect of any Letter of Credit or any fees hereunder or for
the termination of any Commitment, or (except as expressly provided in Section
2.15) the expiry date of any Letter of Credit, without the written consent of
each Lender affected thereby, (iv) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans, or the number of Lenders
which shall be required for the Lenders or any of them to take any action under
this Section or any other provision of this Agreement, including this Section
9.05(a), without the written consent of each Lender, or (v) change the
provisions of Section 9.04, without the written consent of each Lender; or


 


(b)           unless signed by a
Designated Lender or its Designating Lender, (i) subject such Designated Lender
to any additional obligation, (ii) affect its rights hereunder (unless the
rights of all the Lenders hereunder are similarly affected) or (iii) change
this Section 9.05(b).


 


For avoidance of doubt, the
operation of Section 2.10 or 2.18 in accordance with its terms is not an
amendment subject to this Section 9.05.


 


Section 9.06.          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 the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder (except as provided in Section 5.07) 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).


 


53

















 


(b)           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
and the Loans and Letter of Credit Liabilities at the time owing to it); provided that (i) the aggregate amount of
the Commitment (which for this purpose includes Loans outstanding thereunder)
subject to each such assignment (determined as of the date the Assignment and
Assumption Agreement with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000, except that this clause (i) shall
not apply to an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it; (ii) each of the
Administrative Agent and (so long as no Event of Default exists) the Borrower
shall consent to such assignment (each such consent not to be unreasonably
withheld or delayed), except that no such consent of the Borrower shall be
required for an assignment to an existing Lender or an affiliate of an existing
Lender or an Approved Fund with respect to an existing Lender; (iii) 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 with
respect to the Loans, Letter of Credit Liabilities or the Commitment assigned,
except that this clause (iii) shall not apply to rights in respect of
outstanding Competitive Bid Loans; and (iv) the parties to each assignment
shall execute and deliver to the Administrative Agent and the Borrower an
agreement, substantially in the form of Exhibit H hereto (an “Assignment and Assumption Agreement”),
together with a processing and recordation fee of $3,500, and the Eligible
Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire. 
Subject to acceptance and recording thereof by the Administrative Agent
pursuant to paragraph (c) of this Section, from and after the effective date
specified in each Assignment and Assumption Agreement, the Eligible Assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption Agreement, 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
Agreement, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption Agreement 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 8.03, 8.04 and 9.03).  Any
assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this paragraph 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 (d) of this Section.  For avoidance of doubt, no assignment by a
Lender which is also an Issuing Bank of all or any portion of its Commitment,
its Letter of Credit Liabilities or its Loans pursuant to this paragraph (b)
shall affect its rights and obligations in its capacity as an Issuing Bank.


 


(c)           Any Lender may, without
the consent of, or notice to, the Borrower or the Administrative Agent, sell
participations to one or more banks or other entities (a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans and/or Letter of Credit Liabilities
owing to it); provided that (i)
such Lender’s obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative
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.  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 clause (i), (ii) or (iii) of Section 9.05(a) that affects
such Participant.  Subject to paragraph
(d) of this Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Section 2.17 and Article 8 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 9.04 as though it were a Lender, provided such Participant
agrees to be subject to Section 9.04 as though it were a Lender.


 


54

















 


(d)           An Eligible Assignee or
Participant shall not be entitled to receive any greater payment under Section
8.03 or 8.04 than the applicable Lender would have been entitled to receive
with respect to the rights assigned or the participation sold to such
Participant, unless the assignment to such Eligible Assignee or sale of the
participation to such Participant is made with the Borrowers prior written
consent.  A Participant organized under
the laws of a jurisdiction outside the United States shall not be entitled to
the benefits of Section 8.03 or 8.04 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 8.03 or 8.04 as though it were
a Lender.


 


(e)           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; 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.


 


Section 9.07.          Designated Lenders.  Subject to the provisions of this Section,
any Lender may at any time designate an Approved Fund to provide all or a
portion of the Loans to be made by such Lender pursuant to this Agreement; provided that such designation shall not
be effective unless the Borrower and the Administrative Agent consent thereto
(which consents shall not be unreasonably withheld).  When a Lender and its Approved Fund shall have signed an
agreement substantially in the form of Exhibit I hereto (a “Designation Agreement”) and the Borrower
and the Administrative Agent shall have signed their respective consents
thereto, such Approved Fund shall become a Designated Lender for purposes of
this Agreement.  The Designating Lender shall
thereafter have the right to permit such Designated Lender to provide all or a
portion of the Loans to be made by such Designating Lender pursuant to Section
2.01 or 2.03, and the making of such Loans or portion thereof shall satisfy the
obligation of the Designating Lender to the same extent, and as if, such Loans
or portion thereof were made by the Designating Lender.  As to any Loans or portion thereof made by
it, each Designated Lender shall have all the rights that a Lender making such
Loans or portion thereof would have had under this Agreement and otherwise; provided that (x) its voting rights under
this Agreement shall be exercised solely by its Designating Lender, (y) its
Designating Lender shall remain solely responsible to the other parties hereto
for the performance of such Designated Lenders obligations under this
Agreement, including its obligations in respect of the Loans or portion thereof
made by it and (z) such Designated Lender shall be subject (A) to the
limitations of Section 9.06(d) to the same extent as a Participant and (B) to
the provisions of Section 9.09.  No
additional Note shall be required to evidence the Loans or portion thereof made
by a Designated Lender; and the Designating Lender shall be deemed to hold its
Note as agent for its Designated Lender to the extent of the Loans or portion
thereof funded by such Designated Lender. 
Each Designating Lender shall act as administrative agent for its
Designated Lender and give and receive notices and other communications on its
behalf.  Any payments for the account of
any Designated Lender shall be paid to its Designating Lender as administrative
agent for such Designated Lender and neither the Borrower nor the
Administrative Agent shall be responsible for any Designating Lenders application
of such payments.  In addition, any
Designated Lender may, with notice to (but without the prior written consent
of) the Borrower and the Administrative Agent, assign all or portions of its
interest in any Loans to its Designating Lender.


 


 


55

















 


Section 9.08.          No Reliance on Margin Stock.  Each Lender represents to the Administrative
Agent and each of the other Lenders that it in good faith is not relying upon
any “margin stock” (as defined in
Regulation U) as collateral in the extension or maintenance of the credit
provided for in this Agreement.


 


Section 9.09.          Confidentiality.  Each Lender (including any Designated Lender) and Agent shall
exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of
any Confidential Information received pursuant to this Agreement except that
disclosure of such Confidential Information may be made (i) to the agents,
employees, subsidiaries or affiliates of such Person in connection with its
present or prospective business relations with the Borrower arising out of this
Agreement; provided that such
Person will cause such agents, employees, subsidiaries or affiliates to comply
with the provisions of this Section 9.09 with respect to such Confidential
Information, (ii) to prospective transferees or purchasers of any interest in
the Loans (including any Participant); provided
that they have agreed to be bound by the provision of this Section 9.09, (iii)
as required by law, regulations, rule, request or order, subpoena, judicial
order or similar order and in connection with any litigation; provided that each Lender and the Agent
agrees to provide the Borrower with prompt notice of any such requirement to
the extent permitted by such requirement so as to permit the Borrower to seek a
protective order or other appropriate remedy and (iv) as may be required in
connection with the examination, audit or similar investigation of such Person.


 


Section 9.10.          Governing Law; Jurisdiction.  This Agreement and each Note shall be
governed by and construed in accordance with the laws of the State of New
York.  The Borrower hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. The Borrower
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum.


 


Section 9.11.          Counterparts; Integration.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.  This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.


 


Section 9.12.          WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


56

















 


Section 9.13.          USA Patriot Act Notice.  Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrower that pursuant to the requirements
of the USA Patriot Act (Title III of Pub. I. 107-56 (signed into law October
26, 2001)) (the “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 or the Administrative Agent, as
applicable, to identify the Borrower in accordance with the Act.


 


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.


 


 


	
   

  	
  THE NEIMAN
  MARCUS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Stacie R. Shirley

  	
   

  
	
   

  	
  Vice
  President-Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK,

  as Administrative Agent and as Issuing

  Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  D. Scott Harvey

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  SYNDICATION AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK OF
  AMERICAN, N.A.,Syndication

  Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Amy Honey

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  DOCUMENT AGENTS:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA
  BANK N.A., as a

  Documentation Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Martha M. Winters 

  	
   

  
	
   

  	
  Director

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO
  BANK NATIONAL

  ASSOCIATION, as a Documentation Agent

  and as a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Preston
  Massey

  	
   

  
	
   

  	
  Vice
  President

  



 


57

















 


	
   

  	
  BNP PARIBAS,
  as a Documentation Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Aurora Abella 

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig
  Pierce

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  OTHER LENDERS:

  
	
   

  	
   

  
	
   

  	
  THE BANK OF
  NEW YORK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Lucille C. Madden

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  COMMERCEBANK,
  N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Francisco Rivero 

  	
   

  
	
   

  	
  Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Lance Shermin Ramesh

  	
   

  
	
   

  	
  Assistant
  Vice President

  
	
   

  	
   

  
	
   

  	
  FIRST
  COMMERCIAL BANK, NEW

  YORK AGENCY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Bruce M. J. Ju 

  	
   

  
	
   

  	
  Vice
  President and General Manager

  
	
   

  	
   

  
	
   

  	
  FIRST HAWAII
  BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Jeffrey N.
  Higashi 

  	
   

  
	
   

  	
  Assistant
  Vice President  

  
	
   

  	
   

  
	
   

  	
  FIRST
  NATIONAL BANK OF OMAHA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Jeff Sims

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  MALAYAN
  BANKING BERHAD

  
	
   

  	
  By:

  	
  /s/  Wan Fadzmi Othman

  	
   

  
	
   

  	
  General
  Manager

  



 


58

















 


	
   

  	
  MELLON BANK,
  N.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  Cate

  	
   

  
	
   

  	
  First Vice
  President

  
	
   

  	
   

  
	
   

  	
  THE NORTHERN
  TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Paul H. Theiss 

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  SOUTHWEST
  BANK OF TEXAS, N.A.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  Melinda N. Jackson

  	
   

  
	
   

  	
  Senior Vice
  President 

  
	
   

  	
   

  
	
   

  	
  UFJ BANK
  LIMITED, NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  John T. Feeney

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  UNION BANK
  OF CALIFORNIA, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Theresa L. Rocha

  	
   

  
	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  John Holland

  	
   

  
	
   

  	
  Senior Vice
  President

  



 


59

















 


COMMITMENT
SCHEDULE


 


	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JPMorgan Chase Bank

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Bank Of New York

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BNP PARIBAS

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commercebank, N.A.

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First Commercial Bank, New York Agency

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First National Bank of Omaha

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First Hawaiian Bank

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Malayan Banking Berhad

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Mellon Bank, N.A.

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Northern Trust Company

  	
   

  	
  $

  	
  11,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Southwest Bank Of Texas, N.A.

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  UFJ Bank Limited, New York Branch

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Union Bank of California, N.A.

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.S. Bank National Association

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank N.A.

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo Bank National Association

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  350,000,000

  	
   

  



 


60

















 


PRICING
SCHEDULE


 


Each of “Facility Fee Rate”, “Euro-Dollar Margin” and “Base Rate Margin” means, for any day, the
rate (in basis points per annum) set forth below in the row and column
corresponding to the Status and Utilization that apply on such day:


 


	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  	
  Level V

  	
   

  	
  Level VI

  	
   

  
	
  Facility Fee Rate

  	
   

  	
  10

  	
   

  	
  12.5

  	
   

  	
  15

  	
   

  	
  20

  	
   

  	
  25

  	
   

  	
  37.5

  	
   

  
	
  Euro-Dollar Margin

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Utilization <33%

  	
   

  	
  40

  	
   

  	
  50

  	
   

  	
  60

  	
   

  	
  80

  	
   

  	
  100

  	
   

  	
  137.5

  	
   

  
	
  Utilization > 33%

  	
   

  	
  52.5

  	
   

  	
  62.5

  	
   

  	
  72.5

  	
   

  	
  92.5

  	
   

  	
  112.5

  	
   

  	
  150

  	
   

  
	
  Base Rate Margin

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Utilization <33%

  	
   

  	
  0.00 

  	
   

  	
  0.00 

  	
   

  	
  0.00 

  	
   

  	
  0.00 

  	
   

  	
  0.00 

  	
   

  	
  37.5

  	
   

  
	
  Utilization >33%

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  12.5

  	
   

  	
  50

  	
   

  



 


For purposes of this Schedule,
the following terms have the following meanings:


 


“Level I Status” exists at any date if, at
such date, the higher of the two Ratings meets the following level:


 


A- or higher
by S&P or A3 or higher by Moodys.


 


“Level II Status” exists at any date if, at
such date, (i) Level I Status does not exist and (ii) the higher of the two
Ratings meets the following level:


 


BBB+ by
S&P or Baa1 by Moodys.


 


“Level III Status” exists at any date if, at
such date, (i) neither Level I Status nor Level II Status exists and (ii) the
higher of the two Ratings meets the following level:


 


BBB by S&P
or Baa2 by Moodys.


 


“Level IV Status” exists at any date if, at
such date, (i) none of Level I Status, Level II Status and Level III Status
exists and (ii) the higher of the two Ratings meets the following level:


 


BBB- by
S&P or Baa3 by Moodys.


 


“Level V Status” exists at any date if, at
such date, (i) none of Level I Status, Level II Status, Level III Status and
Level IV Status exists and (ii) the higher of the two Ratings meets the
following level:


 


BB+ by S&P
or Ba1 by Moodys.


 


“Level VI Status” exists at any date if, at
such date, no other Status exists.


 

















 


“Moodys” means Moodys Investors Service.


 


“S&P” means Standard & Poor’s, a
division of The McGraw-Hill Companies, Inc.


 


“Rating Agencies” means Moodys and S&P.


 


“Ratings” means the credit ratings assigned
to the senior unsecured long-term debt securities of the Borrower without
third-party credit enhancement by the Rating Agencies.  If there is no rating assigned to debt
securities, the corporate credit rating will be used.  Any rating assigned to any other debt security of the Borrower
shall be disregarded.  The rating in
effect at any date is that in effect at the close of business on such
date.  In the case of split ratings from
S&P or Moodys, the rating to be used to determine which Pricing Level
applies is the higher of the two (e.g.,
BBB+/Baa2 results in Level II Status); provided
that if the split is more than one full rating category, the rating category
immediately above the lower of the two rating categories will be used (e.g., BBB+/Baa3 results in Level III
Status, as does A-/Baa3).


 


“Status” refers to the determination of
which of Level I Status, Level II Status, Level III Status, Level IV Status,
Level V Status or Level VI Status exists at any date.


 


“Utilization” means, at any date, the
percentage equivalent of a fraction, (i) the numerator of which is the sum of
the aggregate outstanding principal amount of the Loans and the aggregate
Letter of Credit Liabilities at such date (after giving effect to any
borrowing, issuance or payment on such date) and the denominator of which is
the aggregate amount of the Commitments at such date (after giving effect to
any reduction on such date).  If for any
reason any Lender has any Credit Exposure after termination of the Commitments,
Utilization shall be deemed to be 100%.


 

















 


EXHIBIT A


 


NOTE


 


New York, New York


 


                          
    ,        


 


For value
received, THE NEIMAN MARCUS GROUP, INC., a Delaware corporation (the “Borrower”), promises to pay to the order of
                                                  
(the “Lender”), for the account of
its Applicable Lending Office, the unpaid principal amount of each Loan made by
the Lender to the Borrower pursuant to the Credit Agreement (defined below) on
the maturity date provided for in the Credit Agreement.  The Borrower promises to pay interest on the
unpaid principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. 
All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of JPMorgan Chase Bank, 270 Park Avenue, New York, New York.


 


The date,
amount and maturity of each Loan made by the Lender and all repayments of the
principal thereof shall be recorded by the Lender and, if the Lender so elects
in connection with any transfer or enforcement hereof, appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding may be endorsed by the Lender on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided that the failure of the Lender to
make (or any error in making) any such recordation or endorsement shall not
affect the Borrower’s obligations hereunder or under the Credit Agreement.


 


This note is
one of the Notes referred to in the Credit Agreement dated as of June 9, 2004
among The Neiman Marcus Group, Inc., the Lenders party thereto, Bank of
America, N.A., as Syndication Agent, and JPMorgan Chase Bank, as Administrative
Agent (as the same may be amended, supplemented, restated, modified, renewed,
extended or increased from time to time, the “Credit
Agreement”).  Terms defined
in the Credit Agreement are used herein with the same  meanings.  Reference is
made to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.


 


	
   

  	
  THE NEIMAN
  MARCUS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


LOANS AND PAYMENTS OF PRINCIPAL


 


	
  Date

  	
   

  	
  Amount of
  Loan

  	
   

  	
  Amount of
  Principal

  Repaid

  	
   

  	
  Notation
  Made By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT B


 


FORM OF NOTICE OF COMMITTED BORROWING


 


[Date]


 


To:          JPMorgan Chase Bank, as
Administrative Agent


 


From:      The Neiman Marcus Group,
Inc. (the “Borrower”)


 


Re:                               Credit
Agreement (as amended from time to time, the “Credit
Agreement”) dated as of June 9, 2004 among the Borrower, the
Lender’s party thereto and the Agents party thereto.


 


We hereby
irrevocably give notice pursuant to Section 2.02 of the Credit Agreement of the
Committed Borrowing specified below:


 


1.  The [Domestic Business Day][Euro-Dollar
Business Day] of the proposed Borrowing is [date].


 


2.  The aggregate amount of the proposed
Borrowing is [specify amount].


 


3.  The Loans comprising such Borrowing are to
bear interest initially at [the Base Rate][a Euro-Dollar Rate].


 


[4.  The duration of the initial Interest Period
applicable thereto is [specify duration].]


 


Terms used
herein have the meanings assigned to them in the Credit Agreement.


 


	
   

  	
  THE NEIMAN
  MARCUS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  



 

















 


EXHIBIT C


 


FORM OF COMPETITIVE BID QUOTE REQUEST


 


[Date]


 


To:                              JPMorgan
Chase Bank

(the “Administrative Agent”)


 


From:      The Neiman Marcus Group,
Inc. (the “Borrower”)


 


Re:                               Credit
Agreement (the “Credit Agreement”)
dated as of June 9, 2004 among the Borrower, the Lender’s party thereto and the
Agents party thereto.


 


We hereby give
notice pursuant to Section 2.03 of the Credit Agreement that we request
Competitive Bid Quotes for the following proposed Competitive Bid Borrowing(s):


 


Date of Borrowing: 
                  


 


	
  Principal
  Amount(1)

  	
   

  	
  Interest
  Period(2)

  
	
  $

  	
   

  	
   

  	
   

  
				



 


Such
Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate].
[The applicable base rate is the London Interbank Offered Rate.]


 


Terms used
herein have the meanings assigned to them in the Credit Agreement.


 












(1) Amount must be $5,000,000 or a larger multiple of
$1,000,000.


(2) Not less than one month (LIBOR Auction) or not
less than 5 days (Absolute Rate Auction), subject to the provisions of the 


definition of Interest Period.


 

















 


	
   

  	
  THE NEIMAN
  MARCUS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					



 

















 


EXHIBIT D


 


FORM OF INVITATION FOR COMPETITIVE BID QUOTES


 


To:          [Name of Lender]


 


Re:                               Invitation
for Competitive Bid Quotes to The Neiman Marcus Group, Inc. (the “Borrower”)


 


Pursuant to
Section 2.03 of the Credit Agreement dated as of  June 9, 2004 among the Borrower, the Lender’s party thereto and
the Agents party thereto, we are pleased on behalf of the Borrower to invite
you to submit Competitive Bid Quotes to the Borrower for the following proposed
Competitive Bid Borrowing(s):


 


Date of Borrowing: 
                         


 


	
  Principal
  Amount(3)

  	
   

  	
  Interest
  Period(4)

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  
					



 


Such
Competitive Bid Quotes should offer a Competitive Bid [Margin] [Absolute Rate].
[The applicable base rate is the London Interbank Offered Rate.]


 


Please respond
to this invitation by no later than [2:00 P.M.] [9:30 A.M.] (New York City
time) on [date].


 


	
   

  	
  JPMORGAN
  CHASE BANK,

  
	
   

  	
  as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  



 












(3) Amount must be $5,000,000 or a larger multiple of
$1,000,000.


(4) Not less than one month
(LIBOR Auction) or not less than 5 days (Absolute Rate Auction), subject to the
provisions of the definition of Interest Period.


 

















 


EXHIBIT E


 


FORM OF COMPETITIVE BID QUOTE


 


To:          JPMorgan Chase Bank, as
Administrative Agent


 


Re:          Competitive Bid Quote to
The Neiman Marcus Group, Inc. (the “Borrower”)


 


In response to
your invitation on behalf of the Borrower dated
             ,
    , we hereby make the following Competitive Bid Quote on
the following terms:


 


1.             Quoting Lender: 
                                


2.             Person to contact at
Quoting Lender:


                              


3.             Date of Borrowing:
                     


4.                                       We
hereby offer to make Competitive Bid Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:


 


	
  Principal
  Amount(5)

  	
   

  	
  Interest
  Period(6)

  	
   

  	
  Competitive
  Bid [Margin](7)

  	
   

  	
  [Absolute
  Rate](8)

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


[provided that the aggregate principal amount of Competitive
Bid Loans for which the above offers may be accepted shall not exceed
$            .]


 


We understand
and agree that the offer(s) set forth above, subject to the satisfaction of the
applicable conditions set forth in the Credit Agreement dated as of June 9,
2004 among the Borrower, the Lender’s party thereto and the Agents party
thereto, irrevocably obligate(s) us to make the Competitive Bid Loan(s) for
which such offer(s) are accepted, in whole or in part.


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  LENDER]

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  
						



 












(5) Principal amount bid for each Interest Period may
not exceed principal amount requested. 
Specify aggregate limitation if the sum of the individual offers exceeds
the amount the Lender is willing to lend. 
Each bid must be made for $5,000,000 or a larger multiple of $1,000,000.


(6) Not less than one month or not less than 5 days,
as specified in the related Invitation. 
No more than five bids are permitted for each Interest Period or the
Competitive Bid Quote shall be disregarded.


(7) Margin over or under the London Interbank Offered
Rate determined for the applicable Interest Period.  Specify percentage (to the nearest 1/10,000 of 1%) and specify
whether "PLUS" or "MINUS".


(8) Specify rate of interest
per annum (to the nearest 1/10,000 of 1%).


 

















 


EXHIBIT F


 


OPINION OF COUNSEL FOR THE BORROWER


 


[Effective Date]


 


To the Lenders and the Agents


Referred to
Below


c/o JPMorgan Chase Bank,


as
Administrative Agent


270 Park
Avenue


New York, New
York 10017


 


Ladies and Gentlemen:


 


In my capacity
as Senior Vice President and General Counsel of The Neiman Marcus Group, Inc.
(the “Borrower”), I, together with
                     ,
have acted as counsel to the Borrower in connection with the preparation,
execution and delivery of the Credit Agreement dated as of June 9, 2004 among
the Borrower, the Lender’s party thereto, Bank of America, N.A., as Syndication
Agent, and JPMorgan Chase Bank, as Administrative Agent (the “Credit Agreement”).  Capitalized terms used in this opinion which
are not defined herein shall have the same meaning as in the Credit Agreement.


 


I have
examined the originals, or copies certified to my satisfaction, of the Credit
Agreement, the Notes, the charter documents and the By-Laws of the Borrower and
the Significant Subsidiaries, records of the Borrower’s corporate proceedings,
all Debt instruments and other material agreements and instruments to which the
Borrower or a Significant Subsidiary is a party and of which I have knowledge,
certificates of public officials and such other documents, agreements,
certificates and records as I have deemed necessary to examine as a basis for
the opinions hereinafter expressed.


 


I am an
attorney admitted to practice in the State of Texas.  I am not, and do not purport to be, an expert in or qualified to
express opinions concerning the laws of any jurisdiction other than Texas, the
United States of America and the corporate laws of the State of Delaware to the
extent necessary to express the opinions hereinafter set forth.  For the purposes of this opinion, I have
assumed without investigation that the laws of the State of New York are the
same as those of the State of Texas.


 


Based upon the
foregoing, and having regard for such legal considerations as I have deemed
relevant, I am of the opinion that:


 


1.  The Borrower and each Significant Subsidiary
(i) is a corporation duly organized, validly existing and in good standing
under the laws of its respective state of incorporation, (ii) has all requisite
corporate power and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted and
as presently contemplated and (iii) is in good standing as a foreign
corporation and is duly qualified to conduct business in each jurisdiction in
which its property or business as presently conducted or contemplated makes
such qualification necessary, except in those jurisdictions in which the
failure to be so qualified would not have a material adverse effect upon the
business or financial condition of the Borrower or such Significant Subsidiary
and would not (after qualification) preclude the Borrower or such Significant
Subsidiary from enforcing claims against any party in the courts of such
jurisdictions.


 

















 


2.  The execution, delivery and performance by
the Borrower of the Credit Agreement and the Notes are within the Borrower’s
corporate powers, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental body,
agency or official, except for the filing of the Credit Agreement with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, and the Credit Agreement and the Notes do not contravene, or
constitute a default under, any provision of applicable law or of the Restated
Certificate of Incorporation or By-Laws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any Significant Subsidiary.


 


3.  The Credit Agreement has been duly and
validly executed and delivered by authorized officers of the Borrower.  The Credit Agreement constitutes, and each
Note, if and when issued in accordance with the Credit Agreement, will
constitute a valid and binding obligation of the Borrower, in each case
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting generally the enforcement of creditors rights and
except to the extent that the availability of the remedy of specific
enforcement or injunctive relief is subject to the discretion of the court
before which any proceeding therefor may be brought.


 


4.  Various suits and claims arising in the
ordinary course of business, some of which involve substantial amounts, are
pending against the Borrower and its Subsidiaries.  While the ultimate effect of such litigation cannot be
ascertained at this time, in my opinion, there are no actions, suits,
proceedings or investigations pending, or to my knowledge threatened, against
the Borrower or any Subsidiary in which there is a reasonable possibility of an
adverse decision which would materially adversely affect the business, assets
or financial condition of the Borrower and its Subsidiaries, taken as a whole.


 


Very truly
yours,


 

















 


EXHIBIT G


 


OPINION OF BAKER BOTTS L.L.P.,

SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT


 


[Effective Date]


 


To the Lenders and Agents


Referred to
Below


c/o  JPMorgan Chase Bank,


as
Administrative Agent


270 Park
Avenue


21st Floor


New York, NY
10017


 


Dear Sirs:


 


We have
participated in the preparation of the Credit Agreement dated as of June 9,
2004 (the “Credit Agreement”)
among The Neiman Marcus Group, Inc., a Delaware corporation (the “Borrower”), the Lender’s party thereto,
Bank of America, N.A., as Syndication Agent, and JPMorgan Chase Bank, as
Administrative Agent (the “Administrative
Agent”), and have acted as special counsel for the Administrative
Agent for the purpose of rendering this opinion pursuant to Section 3.01(c) of
the Credit Agreement.  Terms defined in
the Credit Agreement are used herein as therein defined.


 


We have
examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.


 


Upon the basis
of the foregoing, we are of the opinion that the Credit Agreement constitutes a
valid and binding agreement of the Borrower [and each Note of the Borrower
delivered today constitutes a valid and binding obligation of the Borrower, in
each case] enforceable in accordance with its terms except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors rights
generally and by general principles of equity.


 


We are members
of the Bar of the State of New York and the foregoing opinion is limited to the
laws of the State of New York, the federal laws of the United States and the
General Corporation Law of the State of Delaware.  In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York)
in which any Lender is located which limits the rate of interest that such
Lender may charge or collect.


 


This opinion
is rendered solely to you in connection with the above matter.  This opinion may not be relied upon by you
for any other purpose or relied upon by any other Person without our prior
written consent.


 


Very truly
yours,


 

















 


EXHIBIT H


 


ASSIGNMENT AND ASSUMPTION AGREEMENT


 


AGREEMENT
dated as of            ,
     among [NAME OF ASSIGNOR] (the “Assignor”) and [NAME OF ASSIGNEE] (the “Assignee”).


 


WHEREAS, this
Assignment and Assumption Agreement (the “Agreement”)
relates to the Credit Agreement dated as of June 9, 2004 (as amended from time
to time, the “Credit Agreement”)
among The Neiman Marcus Group, Inc., the Lender’s party thereto, Bank of
America, N.A., as Syndication Agent, and JPMorgan Chase Bank, as Administrative
Agent;


 


WHEREAS, as
provided under the Credit Agreement, the Assignor has a Commitment to make
Loans to the Borrower in an aggregate principal amount at any time outstanding
not to exceed
$            ;


 


WHEREAS,
[Committed] Loans made to the Borrower by the Assignor under the Credit
Agreement in the aggregate principal amount of
$           are outstanding
at the date hereof;


 


WHEREAS, the
Assignor has Letter of Credit Liabilities in an aggregate amount of
$            under the
Credit Agreement at the date hereof; and


 


WHEREAS, the
Assignor proposes to assign to the Assignee all of the rights of the Assignor
under the Credit Agreement in respect of a portion of its Commitment thereunder
in an amount equal to
$           (the “Assigned Amount”), together with a
corresponding portion of each of its outstanding [Committed] Loans and Letter
of Credit Liabilities, and the Assignee proposes to accept such assignment and
assume the corresponding obligations of the Assignor under the Credit
Agreement;


 


NOW,
THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:


 


Section 1.               Definitions.  All capitalized terms not otherwise defined herein have the
respective meanings set forth in the Credit Agreement.


 


Section 2.               Assignment.  The Assignor hereby assigns and sells to the Assignee all of the
rights of the Assignor under the Credit Agreement to the extent of the Assigned
Amount and a corresponding portion of each of its outstanding [Committed]
Loans, and the Assignee hereby accepts such assignment from the Assignor and
assumes all of the obligations of the Assignor under the Credit Agreement to
the extent of the Assigned Amount.  Upon
the execution and delivery hereof by the Assignor and the Assignee [and the
execution of the consent attached hereto by the Borrower and the Administrative
Agent](9) and the payment of the amounts specified in Section 3 required to be
paid on the date hereof, (i) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Lender under the
Credit Agreement with a Commitment in an amount equal to the Assigned Amount
and acquire the rights of the Assignor with respect to a corresponding portion
of each of its outstanding  [Committed]
Loans and Letter of Credit Liabilities and (ii) the Commitment of the Assignor
shall, as of the date hereof, be reduced by the Assigned Amount, and the Assignor
shall be released from its obligations under the Credit Agreement to the extent
such obligations have been assumed by the Assignee.  The assignment provided for herein shall be without recourse to
the Assignor.


 


 












(9) Delete if consent is not
required.


 

















 


Section 3.               Payments. 
As consideration for the assignment and sale contemplated in Section 2
hereof, the Assignee shall pay to the Assignor on the date hereof in Federal
funds the amount heretofore agreed between them.(10) Fees accrued before the
date hereof with respect to amounts assigned to the Assignee hereunder are for
the account of the Assignor and such fees accruing on and after the date hereof
with respect to such amounts are for the account of the Assignee.  Each of the Assignor and the Assignee agrees
that if it receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party’s interest therein and
promptly pay the same to such other party.


 


Section 4.               [Consent of the Borrower and the Administrative Agent.  This Agreement is conditioned upon the
consent of the Borrower and the Administrative Agent pursuant to Section
9.06(b) of the Credit Agreement.(11)]


 


Section 5.               Administrative Questionnaire.  Attached is an Administrative Questionnaire
duly completed by the Assignee.


 


Section 6.               No Reliance on Assignor.  The Assignor represents and warrants that it is the
legal and beneficial owner of the interest being assigned hereby and that such
interest is free and clear of any other adverse claim created by it.  The Assignor makes no representation or
warranty (other than that mentioned immediately above) in connection with, and shall
have no responsibility with respect to, the solvency, financial condition or
statements of the Borrower, or the validity and enforceability of the
Borrower’s obligations under the Credit Agreement or any Note.  The Assignee acknowledges that it has, independently
and without reliance on the Assignor, and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and financial
condition of the Borrower.


 


Section
7.  Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.


 


Section
8.  Counterparts.  This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.


 












(10) Amount should combine principal together with
accrued interest and breakage compensation, if any, to be paid by the Assignee,
net of any portion of any upfront fee to be paid by the Assignor to the
Assignee.  It may be preferable in an
appropriate case to specify these amounts generically or by formula rather than
as a fixed sum.


(11) Delete if consent is not
required.


 

















 


IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed and
delivered by their duly authorized officers as of the date first above written.


 


The undersigned consent to the
foregoing assignment.