**EXHIBIT 4.5**

 

[FORM OF FACE OF INITIAL NOTE]

[Global Notes Legend]

 

UNLESSTHIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORYTRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THECOMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANYCERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCHOTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANYPAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTEDBY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THEREGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERSOF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TONOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE ANDTRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE INACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THEREVERSE HEREOF.

 

[[FORREGULATION S GLOBAL NOTE ONLY] UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT ORCOMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITEDSTATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADEOTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]

 

[Restricted Notes Legend for Notes offered otherwisethan in Reliance on Regulation S]

 

THISNOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROMREGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIESACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED INTHE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BERELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THESECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

 

THEHOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THISNOTE MAY BE OFFERED, RESOLD, PLEDGED OR

 

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OTHERWISETRANSFERRED, ONLY (I) TO THE COMPANY, (II) WITHIN THE UNITED STATESTO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONALBUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTIONMEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITEDSTATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THESECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THESECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR(V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIESACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANYAPPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THEHOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OFTHIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

 

[Restricted Notes Legend for Notes Offered in Reliance on Regulation S]

 

THISNOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLYEXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933,AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITEDSTATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANTTO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIESACT AND ALL APPLICABLE STATE SECURITIES LAWS.  TERMS USED ABOVE HAVE THEMEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

 

[Temporary Regulation S Global Note Legend]

 

EXCEPTAS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARYREGULATION S GLOBAL NOTE WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THEPERMANENT REGULATION S GLOBAL NOTE OR ANY OTHER NOTE REPRESENTING ANINTEREST IN THE NOTES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGENDCONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAYDISTRIBUTION COMPLIANCE PERIOD” (WITHIN THE MEANING OF RULE 903(b)(2) OFREGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION INFORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTSARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCHINTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THESECURITIES ACT.  DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD,BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE MAY ONLYBE SOLD, PLEDGED OR TRANSFERRED (I) TO THE COMPANY, (II) OUTSIDE THEUNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S

 

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UNDERTHE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATIONSTATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) INACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITEDSTATES.  HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBALNOTE WILL NOTIFY ANY PURCHASER OF THIS NOTE OF THE RESALE RESTRICTIONS REFERREDTO ABOVE, IF THEN APPLICABLE.

 

AFTERTHE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD BENEFICIAL INTERESTS INTHIS TEMPORARY REGULATION S GLOBAL NOTE MAY BE EXCHANGED FORINTERESTS IN A RULE 144A GLOBAL NOTE ONLY IF (1) SUCH EXCHANGE OCCURSIN CONNECTION WITH A TRANSFER OF THE NOTES IN COMPLIANCE WITH RULE 144AAND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL NOTE FIRST DELIVERS TOTHE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THISCERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL NOTE IS BEINGTRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE AQUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) TO APERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIEDINSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, AND(C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THEUNITED STATES AND OTHER JURISDICTIONS.

 

BENEFICIALINTERESTS IN A RULE 144A GLOBAL NOTE MAY BE TRANSFERRED TO A PERSON WHOTAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL NOTE,WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCEPERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTENCERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THATSUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OFREGULATION S OR RULE 144 (IF AVAILABLE).

 

[Certificated Notes Legend]

 

INCONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE NOTE REGISTRAR ANDTRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLYREQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

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| No.                               |   |   | $                             |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

9%/93⁄4% Senior Notes Due 2015

 

TheNeiman Marcus Group, Inc., a Delaware corporation, promises to pay to                  ,or registered assigns, the principal sum of                    Dollars on October 15, 2015.

 

InterestPayment Dates: January 15, April 15, July 15 and October 15.

 

RecordDates:  January 1, April 1, July 1 and October 1.

 

Additionalprovisions of this Note are set forth on the other side of this Note.

 

Dated:

 

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| ** **                                                                                                                      | **THE NEIMAN MARCUS GROUP, INC.** |
|---------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|
|                                                                                                                            | By                                     |   |
|                                                                                                                            |                                   |   |
|                                                                                                                            |                                   |   Name: |
|                                                                                                                            |                                   |   Title: |
|                                                                                                                            |                                   |
|                                                                                                                            |                                   |
| TRUSTEE’S CERTIFICATE OF  AUTHENTICATION                                                                                   |                                   |
|                                                                                                                            |                                   |
| **WELLS FARGO BANK, NATIONAL  ASSOCIATION**, as Trustee

certifies that this is one of the Notes  referred to in the Indenture. |                                   |
|                                                                                                                            |                                   |
| By                                                                                                                              |                                   |   |
|                                                                                                                            |                                   |   |   |
|                                                                                                                            |   Authorized  Signatory      |   |
|                                                                                                                                 |                                        |  |  |  |

 

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[FORM OF REVERSE SIDE OF INITIAL NOTE]

9%/93⁄4% Senior Note Due 2015

 

Capitalizedterms used herein but not defined herein shall have the meanings given to suchterms in the Indenture.

 

1.                                       Principal andInterest.

 

TheNeiman Marcus Group, Inc. (the “Company”) shall pay the principal of thisNote on October 15, 2015.

 

TheCompany promises to pay interest and Additional Interest, if any, on theprincipal amount of this Note on each Interest Payment Date, as set forthbelow, at the rate set forth below (subject to adjustment as provided below).

 

TheCompany shall pay interest with respect to the first Interest Period entirelyin cash. For any Interest Period thereafter through the Interest Period endingOctober 14, 2010, the Company may, at its option, elect to pay interest onthe Notes:

 

(a)                                  entirely incash (“*Cash Interest*”) or

 

(b)                                 entirely byincreasing the principal amount of the Outstanding Notes or by issuing PIKNotes (“*PIK Interest*”).

 

TheCompany must elect the form of interest payment with respect to each InterestPeriod by delivering a notice to the Trustee at or prior to the beginning ofsuch Interest Period. The Trustee shall promptly deliver a corresponding noticeto the Holders. In the absence of such an election, interest on the Notes shallbe payable entirely in cash. From and after the Interest Period commencingOctober 15, 2010, the Company shall make all interest payments on theNotes entirely in cash.

 

CashInterest on the Notes shall accrue at the rate of 9% per annum and be payablein cash. PIK Interest on the Notes shall accrue at the rate of 93⁄4% per annum.

 

Interest,and Additional Interest, if any, shall be payable quarterly (to the Holders ofthe Notes at the close of business on January 1, April 1, July 1or October 1 immediately preceding the Interest Payment Date) on eachInterest Payment Date, commencing January 15, 2006.

 

TheHolder of this Note is entitled to the benefits of the Exchange andRegistration Rights Agreement, dated October 6, 2005, among the Company,Holdings, the Subsidiary Guarantors and the Initial Purchasers named therein(the “Registration Rights Agreement”), including with respect to Additional Interest.

 

Intereston this Note shall accrue from the most recent date to which interest has beenpaid or, if no interest has been paid, from October 6, 2005; *provided*that, if there is no existingDefault in the payment of interest and if this Note is authenticated between aRegular Record Date referred to on the face hereof and the next

 

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succeedingInterest Payment Date, interest shall accrue from such next succeeding InterestPayment Date.  Interest shall be computed on the basis of a 360-day yearof twelve 30-day months.

 

TheCompany shall pay interest and Additional Interest if any, on overdue principaland premium, if any, and interest on overdue installments of interest, to theextent lawful, at a rate per annum equal to the rate of interest applicable tothe Notes.

 

2.                                       Method ofPayment.

 

TheCompany shall pay interest (except defaulted interest) on the principal amountof the Notes on each January 15, April 15, July 15 andOctober 15 to the Persons who are Holders (as reflected in the NoteRegister at the close of business on January 1, April 1, July 1and October 1 immediately preceding the Interest Payment Date), in eachcase, even if the Note is transferred or exchanged after such Regular RecordDate, except as provided in Section 306(b) with respect to DefaultedInterest; *provided* that, withrespect to the payment of principal, the Company shall make payment to theHolder that surrenders this Note to any Paying Agent on or afterOctober 15, 2015.

 

PIKInterest shall be payable by increasing the principal amount of this globalNote by an amount equal to the amount of PIK Interest for the applicableInterest Period (rounded up to the nearest $1,000).  Following an increasein the principal amount of the outstanding global Notes as a result of a PIKPayment, this global Note shall bear interest on such increased principalamount from and after the date of such PIK Payment, and shall be governed by,and subject to the terms, provisions and conditions of, the Indenture and shallhave the same rights and benefits as the Notes issued on the Issue Date.

 

TheCompany shall pay principal (premium, if any) and Cash Interest in money of theUnited States that at the time of payment is legal tender for payment of publicand private debts.  However, the Company may pay principal (premium, ifany) and Cash Interest by its check payable in such money.  The Companymay pay Cash Interest on the Notes either (a) by mailing a check for suchinterest to a Holder’s registered address (as reflected in the Note Register)or (b) by wire transfer to an account located in the United Statesmaintained by the payee.  If a payment date is a date other than aBusiness Day at a place of payment, payment may be made at that place on the nextsucceeding day that is a Business Day and no interest shall accrue for theintervening period.

 

3.                                       Paying Agentand Note Registrar.

 

Initially,Wells Fargo Bank, National Association (the “Trustee”) shall act as PayingAgent and Note Registrar.  The Company may change any Paying Agent or NoteRegistrar upon written notice thereto and without notice to the Holders. The Company, any Subsidiary or any Affiliate of any of them may act as PayingAgent, Note Registrar or co-registrar.

 

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4.                                       Indenture.

 

TheCompany issued the Notes under a Senior Indenture dated as of October 6,2005 (the “Indenture”), among the Company, Holdings, the Subsidiary Guarantorsand the Trustee.  The terms of the Notes include those stated in theIndenture and those made part of the Indenture by reference to the TrustIndenture Act.  The Notes are subject to all such terms, and Holders arereferred to the Indenture and the Trust Indenture Act for a statement of allsuch terms.  To the extent permitted by applicable law, in the event ofany inconsistency between the terms of this Note and the terms of theIndenture, the terms of the Indenture shall control.

 

TheNotes are unsecured senior obligations of the Company.  The Indenture doesnot limit the aggregate principal amount of the Notes.  Subject to theconditions set forth in the Indenture, the Company may issue Additional Notes.

 

5.                                       Redemption.

 

Atany time prior to October 15, 2010, the Company may redeem all or a partof the Notes, upon not less than 30 nor more than 60 days’ prior notice at aredemption price equal to 100% of the principal amount of Notes redeemed plusthe Applicable Premium as of, and accrued and unpaid interest and AdditionalInterest, if any, to the Redemption Date, subject to the rights of Holders onthe relevant record date to receive interest due on the relevant InterestPayment Date.

 

Onand after October 15, 2010, the Company may redeem the Notes, in whole orin part, upon not less than 30 nor more than 60 days’ prior notice to eachHolder at the Redemption Prices (expressed as percentages of principal amount)set forth below, plus accrued and unpaid interest thereon and AdditionalInterest, if any, to the applicable Redemption Date, subject to the right of Holderson the relevant record date to receive interest due on the relevant InterestPayment Date, if redeemed during the twelve-month period beginning onOctober 15 of each of the years indicated below:

 
| **Year**            | ** ** | **Percentage** | ** ** |
|---------------------|------------|----------------|------------|
| 2010                |       | 104.500        | %          |
| 2011                |       | 103.000        | %          |
| 2012                |       | 101.500        | %          |
| 2013 and thereafter |       | 100.000        | %          |

 

Inaddition, until October 15, 2008, the Company may, at its option, redeemup to 35% of the aggregate principal amount of Notes issued under the Indentureat a redemption price equal to 109.000%% of the aggregate principal amountthereof, plus accrued and unpaid interest thereon and Additional Interest, ifany, to the applicable Redemption Date, subject to the right of Holders on therelevant record date to receive interest due on the relevant Interest PaymentDate, with the net cash proceeds of one or more Equity Offerings of the Companyor any direct or indirect parent of the Company to the extent such net cashproceeds are contributed to the Company; *provided*that at least 50% of the sum of the aggregate principal amount ofNotes originally issued under the

 

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Indentureremains Outstanding immediately after the occurrence of each such redemption; *provided, further,*that each suchredemption occurs within 90 days of the date of closing of each suchEquity Offering.

 

6.                                       Repurchase upona Change of Control and Asset Sales.

 

Uponthe occurrence of (a) a Change of Control, the Holders shall have theright to require that the Company purchase such Holder’s outstanding Notes, inwhole or in part, at a purchase price of 101% of the principal amount thereof,plus accrued and unpaid interest and Additional Interest, if any, to the dateof purchase and (b) Asset Sales, the Company may be obligated to makeoffers to purchase Notes and Senior Indebtedness of the Company with a portionof the Net Proceeds of such Asset Sales at a redemption price of 100% of theprincipal amount thereof plus accrued and unpaid interest and AdditionalInterest, if any, to the date of purchase.

 

7.                                       Denominations;Transfer; Exchange.

 

TheNotes are in registered form without coupons in denominations of $2,000principal amount and integral multiples of $1,000.  A Holder may transferor exchange Notes in accordance with the Indenture.  The Note Registrarand the Trustee may require a Holder, among other things, to furnishappropriate endorsements and transfer documents and the Company may require aHolder to pay any taxes and fees required by law or permitted by theIndenture.  The Note Registrar need not register the transfer or exchangeof a Note or portion of a Note selected for redemption (except, in the case ofa Note to be redeemed in part, the portion of the Note not to be redeemed) orany Note or portion of a Note for a period of 15 days before a selection ofNotes to be redeemed or 15 days before an interest payment date.

 

8.                                       Persons DeemedOwners.

 

Aregistered Holder may be treated as the owner of a Note for all purposes.

 

9.                                       UnclaimedMoney.

 

Subjectto any laws relating to abandoned property, if money for the payment ofprincipal (premium, if any) or interest remains unclaimed for two years, theTrustee and the Paying Agent shall pay the money back to the Company at itsrequest or (if then held by the Company) shall be discharged from suchtrust.  After that, Holders entitled to the money must look to the Companyfor payment and all liability of the Trustee and such Paying Agent with respectto such money, and all liability of the Company as trustee thereof, shallcease.

 

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10.                                 Discharge andDefeasance Prior to Redemption or Maturity.

 

Subjectto satisfaction of conditions set forth in the Indenture, the Company at anytime may terminate some or all of its obligations under the Notes and the Indentureif the Company irrevocably deposits with the Trustee cash or GovernmentSecurities or a combination thereof sufficient for the payment of the thenoutstanding principal of and interest on the Notes to Redemption or StatedMaturity, as the case may be.

 

11.                                 Amendment;Supplement; Waiver.

 

Subjectto certain exceptions, the Indenture or the Notes may be amended orsupplemented with the consent of the Holders of at least a majority inaggregate principal amount of the Outstanding Notes, including consentsobtained in connection with a purchase of, or tender offer or exchange offerfor, the Notes, and any existing Default or compliance with any provision ofthe Indenture or the Notes may be waived with the consent of the Holders of amajority in aggregate principal amount of the Outstanding Notes.  Withoutnotice to or the consent of any Holder, the parties thereto may amend orsupplement the Indenture or the Notes to, among other things, cure anyambiguity, omission, mistake, defect or inconsistency and make any change thatdoes not adversely affect the legal rights of any Holder.

 

12.                                 RestrictiveCovenants.

 

TheIndenture contains certain covenants, including covenants with respect to thefollowing matters: (i) Restricted Payments; (ii) incurrence of Indebtednessand issuance of Disqualified Stock and Preferred Stock; (iii) Liens;(iv) transactions with Affiliates; (v) dividend and other paymentrestrictions affecting Restricted Subsidiaries; (vi) guarantees ofIndebtedness by Restricted Subsidiaries; (vii) changes to the terms ofcertain Subordinated Indebtedness; (viii) merger, consolidation or sale ofall or substantially all assets; (ix) purchase of Notes upon a Change inControl; (x) sale and lease-back transactions; and (xi) dispositionof proceeds of Asset Sales.  Within 120 days (or the successor time periodthen in effect under the rules and regulations of the Exchange Act) afterthe end of each fiscal year, the Company must report to the Trustee oncompliance with such limitations.

 

13.                                 SuccessorPersons.

 

Whena successor Person or other entity assumes all the obligations of itspredecessor under the Notes and the Indenture, the predecessor Person shall bereleased from those obligations, subject to certain exceptions.

 

14.                                 Remedies forEvents of Default.

 

Ifan Event of Default, as defined in the Indenture, occurs and is continuing, theTrustee or the Holders of at least 30% in principal amount of the OutstandingNotes may declare all Outstanding Notes to be immediately due andpayable.  If an Event of Default arising from certain events of bankruptcyor insolvency

 

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withrespect to the Company or any Significant Subsidiary occurs and is continuing,the Notes automatically become immediately due and payable.  Subject tothe provisions of the Indenture relating to the duties of the Trustee, in casean Event of Default occurs and is continuing, the Trustee shall be under noobligation to exercise any rights or powers under the Indenture at the requestor direction of any of the Holders unless such Holders have offered to theTrustee reasonable indemnity or security against any loss, liability orexpense.  Subject to certain restrictions, the Holders of a majority inprincipal amount of the Outstanding Notes are given the right to direct thetime, method and place of conducting any proceeding for any remedy available tothe Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts withlaw or the Indenture or that the Trustee determines is unduly prejudicial tothe rights of any other Holder of a Note or that would involve the Trustee inpersonal liability.

 

15.                                 Guarantees.

 

TheCompany’s obligations under the Notes are fully, irrevocably andunconditionally guaranteed on an unsecured senior basis, to the extent setforth in the Indenture, by Holdings and each of the Subsidiary Guarantors.

 

16.                                 TrusteeDealings with Company.

 

TheTrustee under the Indenture, in its individual or any other capacity, maybecome the owner or pledgee of Notes and may make loans to, accept depositsfrom, perform services for, and otherwise deal with, the Company and itsAffiliates as if it were not the Trustee.

 

17.                                 Authentication.

 

ThisNote shall not be valid until the Trustee signs the certificate ofauthentication on the other side of this Note.

 

18.                                 Abbreviations.

 

Customaryabbreviations may be used in the name of a Holder or an assignee, such as: TENCOM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).

 

19.                                 Abbreviations.

 

Pursuantto a recommendation promulgated by the Committee on Uniform SecurityIdentification Procedures, the Company has caused CUSIP numbers to be printedon the Notes and has directed the Trustee to use CUSIP numbers in notices ofredemption as a convenience to Holders.  No representation is made as tothe accuracy of such numbers either as printed on the Notes or as contained inany notice of redemption and reliance may be placed only on the otheridentification numbers placed thereon.

 

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20.                                 Holders’Compliance with the Registration Rights Agreement.

 

EachHolder of a Note, by acceptance hereof, acknowledges and agrees to theprovisions of the Registration Rights Agreement, including the obligations ofthe Holders with respect to a registration and the indemnification of theCompany to the extent provided therein.

 

21.                                 Governing Law.

 

**THIS SECURITY AND INDENTURE SHALL BE GOVERNED BY, ANDCONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.**

 

TheCompany shall furnish to any Holder upon written request and without charge acopy of the Indenture.  Requests may be made to The Neiman Marcus Group, Inc.,1618 Main Street, Dallas, Texas 75201, Attention: General Counsel.

 

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