Document:

EXHIBIT
10.35

THE NEIMAN
MARCUS GROUP, INC.

KEY EMPLOYEE
DEFERRED COMPENSATION PLAN

(Effective
January 1, 2006)

 

TABLE OF CONTENTS

 

	
  ARTICLE 1. INTRODUCTION

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Purpose of Plan

  	
   

  	
  1

  
	
  1.2

  	
  Status of Plan

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  “Account”

  	
   

  	
  1

  
	
  2.2

  	
  “Affiliate”

  	
   

  	
  1

  
	
  2.3

  	
  “Base Pay”

  	
   

  	
  1

  
	
  2.4

  	
  “Bonus”

  	
   

  	
  2

  
	
  2.5

  	
  “Change in Control”

  	
   

  	
  2

  
	
  2.6

  	
  “Code”

  	
   

  	
  4

  
	
  2.7

  	
  “Committee”

  	
   

  	
  4

  
	
  2.8

  	
  “Company”

  	
   

  	
  4

  
	
  2.9

  	
  “Compensation”

  	
   

  	
  4

  
	
  2.10

  	
  “Discretionary Credit”

  	
   

  	
  4

  
	
  2.11

  	
  “Effective Date”

  	
   

  	
  4

  
	
  2.12

  	
  “Elective Deferral”

  	
   

  	
  4

  
	
  2.13

  	
  “Eligible Employee”

  	
   

  	
  5

  
	
  2.14

  	
  “Employer”

  	
   

  	
  5

  
	
  2.15

  	
  “ERISA”

  	
   

  	
  5

  
	
  2.16

  	
  “Matching Deferral”

  	
   

  	
  5

  
	
  2.17

  	
  “Maximum Savings Plan Deferral”

  	
   

  	
  6

  
	
  2.18

  	
  “Maximum Savings Plan Match”

  	
   

  	
  6

  
	
  2.19

  	
  “Participant”

  	
   

  	
  6

  
	
  2.20

  	
  “Plan”

  	
   

  	
  6

  
	
  2.21

  	
  “Plan Year”

  	
   

  	
  6

  
	
  2.22

  	
  “Retirement”

  	
   

  	
  6

  
	
  2.23

  	
  “Savings Plan”

  	
   

  	
  6

  
	
  2.24

  	
  “Year of Service”

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3. PARTICIPATION

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Commencement of Participation

  	
   

  	
  7

  
	
  3.2

  	
  Continued Participation

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4. DEFERRALS AND CREDITS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Elective Deferrals.

  	
   

  	
  7

  
	
  4.2

  	
  Matching Deferrals

  	
   

  	
  9

  
	
  4.3

  	
  Discretionary Credits

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5. ACCOUNTS; INTEREST

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Accounts

  	
   

  	
  10

  
	
  5.2

  	
  Interest

  	
   

  	
  11

  
	
  5.3

  	
  Payments

  	
   

  	
  11

  

 

 i
 

 

 

	
  ARTICLE 6. PAYMENTS

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Election of Time and Form of Payment

  	
   

  	
  11

  
	
  6.2

  	
  Retirement and Other Termination of Employment

  	
   

  	
  13

  
	
  6.3

  	
  Death

  	
   

  	
  14

  
	
  6.4

  	
  Change in Control

  	
   

  	
  14

  
	
  6.5

  	
  Hardship Distributions

  	
   

  	
  15

  
	
  6.6

  	
  Changes in Time and Form of Payment

  	
   

  	
  16

  
	
  6.7

  	
  Withholding

  	
   

  	
  16

  
	
  6.8

  	
  Specified Employees

  	
   

  	
  17

  
	
  6.9

  	
  409A Income Inclusion

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7. COMMITTEE

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Plan Administration and Interpretation

  	
   

  	
  17

  
	
  7.2

  	
  Powers, Duties, Procedures, Etc.

  	
   

  	
  18

  
	
  7.3

  	
  Information

  	
   

  	
  19

  
	
  7.4

  	
  Indemnification of Committee

  	
   

  	
  19

  
	
  7.5

  	
  Claims Procedure

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8. AMENDMENT AND TERMINATION

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Amendments

  	
   

  	
  20

  
	
  8.2

  	
  Termination of Plan

  	
   

  	
  20

  
	
  8.3

  	
  Existing Rights

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9. MISCELLANEOUS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  No Funding; Source of Payments

  	
   

  	
  21

  
	
  9.2

  	
  Nonassignability; Domestic Relations Order

  	
   

  	
  21

  
	
  9.3

  	
  Limitation of Participants’ Rights

  	
   

  	
  22

  
	
  9.4

  	
  Participants Bound

  	
   

  	
  22

  
	
  9.5

  	
  Receipt and Release

  	
   

  	
  22

  
	
  9.6

  	
  Governing Law

  	
   

  	
  23

  
	
  9.7

  	
  No Guarantee of Tax Consequences

  	
   

  	
  23

  
	
  9.8

  	
  Adoption by Other Employers

  	
   

  	
  23

  
	
  9.9

  	
  Headings and Subheadings

  	
   

  	
  24

  

 

 ii

 

THE
NEIMAN MARCUS GROUP, INC.

KEY EMPLOYEE DEFERRED COMPENSATION PLAN

(Effective
January 1, 2006)

ARTICLE 1.  INTRODUCTION

1.1           Purpose
of Plan.  The Employers have
adopted this Key Employee Deferred Compensation Plan as a nonqualified deferred
compensation arrangement to provide a means by which certain eligible employees
may defer Compensation.

1.2           Status
of Plan.  The Plan is intended to
be “a plan which is unfunded and is maintained by an employer primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees” within the meaning of Sections 201(2) and
301(a)(3) of ERISA and is intended to comply with the requirements of Code
section 409A, and shall be interpreted and administered in a manner consistent
with those intentions.

ARTICLE 2.  DEFINITIONS

Wherever
used herein, the following terms have the meanings set forth below, unless a
different meaning is clearly required by the context:

2.1           “Account”
means, for each Participant, the account established for his or her benefit
under Section 5.1. 

2.2           “Affiliate”
means any corporation or organization that together with an Employer is treated
as a single employer under Section 414(b) or (c) of the Code.

2.3           “Base
Pay” means the base salary payable by an Employer to an employee, including
amounts that would have been payable to the employee as base salary but for an
election under Section 125 of the Code, a deferral election under the
Savings Plan, or a deferral election under this Plan.

 

2.4           “Bonus”
means an annual cash bonus payable by an Employer to an employee, including any
portion of such a bonus that would have been payable to the employee but for an
election under Section 125 of the Code, a deferral election under the Savings
Plan, or a deferral election under this Plan. 
However, the term “Bonus” shall not include any amount arising from, or
paid under or in connection with a long-term incentive program, or a stock
appreciation right, stock option, restricted stock or stock unit, or other
equity-based incentive award, plan or arrangement.  Notwithstanding the preceding, no amount
shall be treated as a “Bonus” unless it satisfies the criteria for
performance-based compensation within the meaning of Code section 409A. 

2.5           A “Change in
Control” shall be deemed to have taken place for
purposes of the Plan upon the occurrence of any of the following events after
the Effective Date: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company on a consolidated basis to any Person or group of
related persons for purposes of Section 13(d) of the Securities Exchange Act of
1934 (a “Group”), together with any CIC Affiliates thereof other than to a
Majority Stockholder; (ii) the approval by the holders of the outstanding
voting power of the Company of any plan or proposal for the liquidation or
dissolution of the Company; (iii) (A) any Person or Group (other than the
Majority Stockholder) shall become the beneficial owner (within the meaning of
Section 13(d) of the Exchange Act), directly or indirectly, of Common Stock
representing more than 40% of the aggregate outstanding voting power of the
Company and such Person or Group actually has the power to vote such Common
Stock in any such election and (B) the Majority Stockholder beneficially owns
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934),
directly or indirectly, in the aggregate a lesser percentage of the voting
power of the Company

 2
 

 

than such other Person or
Group; (iv) the replacement of a majority of the Board of Directors of the
Company over a two-year period from the directors who constituted the Board of
Directors of the Company at the beginning of such period, and such replacement
shall not have been approved by a vote of at least a majority of the Board of
Directors of the Company then still in office who either were members of such
Board of Directors at the beginning of such period or whose election as a
member of such Board of Directors was previously so approved or who were
nominated by, or designees of, a Majority Stockholder; or (v) consummation of a
merger or consolidation of the Company with another entity in which holders of
the Common Stock of the Company immediately prior to the consummation of the
transaction hold, directly or indirectly, immediately following the
consummation of the transaction, less than 50% of the common equity interest in
the surviving corporation in such transaction and the Majority Stockholder does
not hold a sufficient amount of voting power (or similar securities) to elect a
majority of the surviving entity’s board of directors.  

For
purposes of this Section 2.5, the following terms shall have the following
meanings:

(a)           “CIC Affiliate”
shall mean, with respect to any entity, any other corporation,
organization, association, partnership, sole proprietorship or other type of
entity, whether incorporated or unincorporated, directly or indirectly
controlling or controlled by or under direct or indirect common control with
such entity.

(b)           “Common Stock” shall mean the common
stock of the Company, $0.01 par value per share.

(c)           “Majority Stockholder” shall mean ,
collectively or individually as the context requires, Newton Holding, LLC, TPG Newton III, LLC,
TPG Partners IV, L.P., TPG Newton Co-Invest I, LLC, Warburg Pincus
Private Equity VIII, L.P., Warburg

 3
 

 

Pincus
Netherlands Private Equity VIII C.V. I, Warburg Pincus Germany Private Equity
VIII K.G , Warburg Pincus Private Equity IX, L.P and/or their respective CIC
Affiliates.  

(d)           “Person” shall mean an individual,
partnership, corporation, limited liability company, unincorporated
organization, trust or joint venture, or a governmental agency or political subdivision thereof. 

2.6           “Code”
means the Internal Revenue Code of 1986, as amended from time to time.  Reference to any section or subsection of the
Code includes reference to any comparable or succeeding provisions of any
legislation which amends, supplements or replaces such section or subsection.

2.7           “Committee”
means The Neiman Marcus Group, Inc. Employee Benefits Committee or any
successor committee appointed by the Board of Directors of The Neiman Marcus
Group, Inc. or its delegate.

2.8           “Company”
means The Neiman Marcus Group, Inc., a Delaware corporation, and any successor,
including a successor to all or substantially all of the Company’s assets or
business which assumes the obligations of the Company.

2.9           “Compensation”
means Base Pay and any Bonus payable by an Employer to an employee. 

2.10         “Discretionary
Credit” means an amount credited to the Account of a Participant by an
Employer pursuant to Section 4.3.

2.11         “Effective
Date” means January 1, 2006.

2.12         “Elective
Deferral” means the portion of Compensation which is deferred by a Participant
under Section 4.1.

 4
 

 

2.13         “Eligible
Employee” means each employee of an Employer who, on the Effective Date or
the first day of any month thereafter,

(a)           has
completed at least one Year of Service, or such shorter period of service as
may be specified by the Chief Executive Officer of The Neiman Marcus Group,
Inc. in such officer’s sole discretion; 

(b)           had
in effect on August 1 of the preceding calendar year (or, if later, on the
employee’s date of hire) an annual rate of Base Pay of at least $300,000; and

(c)           has
been designated by the Committee as eligible to participate in the Plan.

An
Eligible Employee shall remain an Eligible Employee notwithstanding any
reduction in his or her annual rate of Base Pay below the applicable minimum
under (b) above; provided, however, that the Committee in its discretion may
withdraw an employee’s designation under (d) above as an Eligible Employee at
any time and for any reason effective with respect to any subsequent Plan Year.

2.14         “Employer”
means the Company and any Affiliate that adopts the Plan with the consent of
the Company as provided in Section 9.8.

2.15         “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.  Reference to any section or
subsection of ERISA includes reference to any comparable or succeeding
provisions of any legislation which amends, supplements or replaces such
section or subsection.

2.16         “Matching
Deferral” means a deferral made for the benefit of a Participant under
Section 4.2. 

 5
 

 

2.17         “Maximum
Savings Plan Deferral” means a Participant’s maximum permissible elective
deferral under the Savings Plan, regardless of whether the Participant actually
made a deferral election under the Savings Plan.

2.18         “Maximum
Savings Plan Match” means a Participant’s maximum permissible matching
contribution under the Savings Plan, assuming maximum elective deferrals under
the Savings Plan, regardless of whether the Participant actually made a
deferral election under the Savings Plan.

2.19         “Participant”
means any individual who participates in the Plan in accordance with Article 3.

2.20         “Plan”
means The Neiman Marcus Group, Inc. Key Employee Deferred Compensation Plan,
effective as of January 1, 2006, as set forth herein and all subsequent
amendments hereto.

2.21         “Plan
Year” means the calendar year.

2.22         “Retirement”
means termination of employment on or after the date the Participant has either
(i) attained age 65 and reached the fifth anniversary of the date he or she
first performed an hour of service (as defined in Section 2.24 below), or (ii)
attained age 55 and reached the fifteenth anniversary of the date he or she
first performed an hour of service (as defined in Section 2.24 below).

2.23         
“Savings Plan” means The Neiman Marcus Group, Inc.
Employee Savings Plan, as amended from time to time.

2.24         “Year
of Service” means completion of the twelve consecutive month period
beginning on the date the employee first performs an hour of service upon
initial employment with an Employer or an Affiliate during which the employee
is continuously employed by an

 6
 

 

Employer or an Affiliate or,
with respect to an employee who terminates employment prior to completing a
Year of Service, completion of the twelve consecutive month period beginning on
the date the employee first performs an hour of service upon reemployment with
an Employer or an Affiliate during which the employee is continuously employed
by an Employer or an Affiliate.  For
purposes of this Plan, an “hour of service” shall mean each hour for which an
employee is paid or entitled to payment for the performance of duties for an
Employer or an Affiliate.

ARTICLE 3.  PARTICIPATION

3.1           Commencement
of Participation.  Any Eligible
Employee shall become a Participant on the effective date of an election to
defer Compensation in accordance with Section 4.1 or, if earlier, on the date
an Employer makes a Discretionary Credit to his or her Account.

3.2           Continued
Participation.  An individual who
has become a Participant in the Plan shall continue to be a Participant so long
as any amount remains credited to his or her Account.

ARTICLE 4.  DEFERRALS AND CREDITS

4.1           Elective
Deferrals.

(a)           Base
Pay.  An individual who is or will be
an Eligible Employee as of any January 1 may elect to defer a designated whole
percentage, not to exceed 15 percent, of all Base Pay that is payable to the
individual for services to be performed on or after that date by filing an
election with the Committee prior to that January 1.  Any such election shall be irrevocable as of
such January 1 (or such earlier date as the Committee may prescribe).  In addition, an individual who first becomes
an Eligible Employee after January 1, 2006 may elect before the date he or she
first becomes an Eligible Employee, or within 30 days thereafter, to defer a
designated whole percentage, not to exceed 15

 7
 

 

percent, of all Base Pay that is payable to
the individual for services to be performed after such election (or, if later,
after the date he or she becomes an Eligible Employee).  Any such election shall be irrevocable as of
the date that is 30 days after the date the employee first became an Eligible
Employee and shall be effective with respect to the first payroll period
beginning after the date the election is delivered to the Committee.  Notwithstanding the preceding provisions of
this paragraph, a Participant may revoke or otherwise modify an existing
election, or make a new deferral election, effective as of any January 1
subsequent to the date of such revocation, modified election, or new election,
but only with respect to Base Pay earned thereafter.  Such revocation, modification or new election
must be delivered to the Committee no later than the December 31 immediately
preceding the effective date of the election (or such earlier date as the
Committee may prescribe).  The same
deferral percentage shall apply to each payment of Base Pay covered by the
election.

(b)           Bonuses.  An individual who is an Eligible Employee may
elect to defer a designated whole percentage, not to exceed 15 percent, of any
Bonus payable to the individual for Employer fiscal years ending after the date
of the election, by filing an irrevocable election with the Committee at least
six months prior to the end of any such fiscal year.  Notwithstanding the preceding provisions of
this paragraph, a Participant may revoke or otherwise modify an existing
election, or make a new deferral election, effective with respect to a Bonus to
be paid for any fiscal year ending more than six months subsequent to the date
of such revocation, modified election, or new election. 

(c)           The
provisions of paragraphs (a) and (b) to the contrary notwithstanding, in the
event that an employee receives a hardship distribution from the Savings Plan
at a

 8
 

 

time at which the Savings Plan requires the
suspension of all elective contributions and deferrals under all plans
maintained by an Employer upon the receipt of such a hardship withdrawal, then
(i) any election to defer Base Pay pursuant to this Plan in effect at the time
of such hardship distribution from the Savings Plan shall be revoked at the
time the employee receives such distribution and such employee shall not be
eligible to make a new election to defer Base Pay for any period beginning
prior to the January 1 following the date that is six months after the date such
hardship distribution was made, and (ii) any election to defer a Bonus pursuant
to this Plan for a fiscal year ending less than six months after the date of
the receipt of the hardship distribution from the Savings Plan shall be revoked
at the time the employee receives such hardship distribution from the Savings
Plan and such employee shall not be eligible to make a new election to defer a
Bonus for any fiscal year ending less than six months after the date such
hardship distribution was made. 

(d)           Each
election under this Section 4.1 shall be made in writing on a form approved or
prescribed by the Committee.  The amount
of each payment that is deferred hereunder shall be credited to the
Participant’s Account as of the date such amount would otherwise have been paid
to the Participant.

4.2           Matching
Deferrals.  As of the last day of
each payroll period during which a credit is made to a Participant’s Account
with respect to such Participant’s election to defer Base Pay or Bonus pursuant
to Section 4.1, such Participant’s Employer shall credit to the Participant’s
Account a Matching Deferral equal to: 

(a)           100%
of the sum of (i) the Participant’s Elective Deferrals for such payroll period
and (ii) the Participant’s Maximum Savings Plan Deferrals for such payroll
period,

 9
 

 

to the extent that such sum does not exceed
the first two percent (2%) of his or her Compensation for such payroll period, plus

(b)           25%
of the sum of (i) the Participant’s Elective Deferrals for such payroll period
and (ii) the Participant’s Maximum Savings Plan Deferrals for such payroll
period, to the extent that such sum does not exceed the next four percent (4%)
of his or her Compensation for such payroll period, minus

(c)           the
Participant’s Maximum Savings Plan Match for such payroll period.

4.3           Discretionary
Credits.  In addition to the
deferrals made pursuant to Section 4.1 and 4.2, with the approval of the Board
of Directors of the Company, at any time during a Plan Year an Employer may
make a Discretionary Credit to the Account of any Eligible Employee in the
employ of such Employer.  Any such
Discretionary Credit shall be made solely in the discretion of the Employer
making such credit and shall be credited to the Eligible Employee’s Account as
of such date and in such amount as such Employer shall determine, subject to
the approval of the Board of Directors of the Company.

ARTICLE 5.  ACCOUNTS; INTEREST

5.1           Accounts.  An Employer shall establish and maintain on
its books an Account for each Participant employed by such Employer.  Each such Account shall be designated by the
name of the Participant for whom it is established.  An Employer shall continue to maintain a
Participant’s Account as long as a positive balance remains credited to such
Account.  A Participant’s Account shall
be credited with the amounts of Elective Deferrals, Matching Deferrals, and
Discretionary Credits, if any, as provided in the Plan and any adjustments
hereunder.  Within 45 days after the end
of each calendar quarter, the Committee shall provide the Participant with a
statement of his or her Account.

 10

 

5.2           Interest.  As of the last day of each calendar month,
the Committee shall credit each Participant’s Account with interest on the
balance of such Account as of the last day of the preceding calendar month less
any distributions or withdrawals made during such calendar month, plus interest
on any amounts credited to such Account during such calendar month from the
date such amounts were credited.  In
addition, payments under Article 6 shall include interest on the amount of such
payment from the end of the preceding calendar month (except that with respect
to the portion of the payment attributable to an amount credited to the Account
after the end of the preceding calendar month, such portion of the payment
shall include interest only from the later date as of which the amount was
credited to the Account).  The interest
to be credited pursuant to this Section shall be at an annual rate equal to the
average prime interest rate published in the Eastern Edition of The Wall
Street Journal on the last business day of the preceding calendar quarter
(or, if two or more such rates are published, the average of such rates),
increased by two percentage points.

5.3           Payments.  Each Participant’s Account shall be reduced
by the amount of any payment made to or on behalf of the Participant under the
Plan as of the date such payment is made.

ARTICLE 6. 
PAYMENTS

6.1           Election of Time and Form of
Payment .

(a)           Each individual who is or will be an
Eligible Employee as of January 1, 2006 and who makes an election pursuant to Section
4.1(a) to commence making Elective Deferrals to the Plan effective as of
January 1, 2006 shall, on or before January 1, 2006 (or such earlier date as
the Committee prescribe), elect the time and form of payment from among the
options set forth in this Section for the amounts credited to his

 11
 

 

or her Account.  Each other individual who is or will be an
Eligible Employee as of or after January 1, 2006 who does not elect to commence
making Elective Deferrals to the Plan effective as of January 1, 2006 but who
makes an initial election subsequent to January 1, 2006 to commence making
Elective Deferrals to the Plan pursuant to Section 4.1(a) or (b) at a time when
he or she had not yet become a Participant shall, on or before the deadline
applicable to such initial election to begin making Elective Deferrals to the
Plan, elect the time and form of payment from among the options set forth in
this Section for the amounts credited to his or her Account.  Each other individual who is an Eligible
Employee but who has not made an election to make Elective Deferrals to the
Plan who first becomes a Participant in the Plan on the date an Employer makes
a Discretionary Credit to an Account for such Participant shall, prior to the
date that is thirty (30) days after the date such Eligible Employee first
becomes a Participant, elect the time and form of payment from among the
options set forth in this Section for the amount credited to his or her
Account.

(b)           The options available for the
commencement of payment from a Participant’s Account are:

(i)            the
first calendar quarter following the calendar quarter in which the Participant
ceases to be employed by an Employer or any Affiliate of an Employer; or

(ii)           the
first calendar quarter of the calendar year immediately following the calendar
year in which the Participant ceases to be employed by an Employer or any
Affiliate of an Employer.

 12
 

 

(c)           The options available for the form of
payment from a Participant’s Account are:

(i)            a
single lump sum payment; or

(ii)           annual
installments to be paid in the same calendar quarter each year over a period
elected by the Participant up to ten (10) years, the amount of each installment
to equal the balance of his or her Account immediately prior to the installment
divided by the number of installments remaining to be paid.

(d)           The foregoing elections shall be made
on a form approved or prescribed by the Committee.  Each such election shall be irrevocable as of
the deadline for making such election as provided above, except as otherwise
provided in Section 6.6.  In the event a
Participant fails to make a valid election by the time provided in this
Section, the Participant shall be deemed to have elected options (b)(i) and
(c)(i) above.

(e)           Notwithstanding the preceding
provisions of this Section, if the total amount credited to a Participant’s
Account as of the date the Participant ceases to be employed by an Employer or
any Affiliate of an Employer is less than $10,000, distribution of the entire
Account shall be made in the form of a single lump sum payment to be made no
later than the later of December 31 of the calendar year in which the
Participant ceased being employed by an Employer or any Affiliate of an
Employer, or the 15th day of the third month following the date on
which the Participant ceased being employed by an Employer or any Affiliate of
an Employer.

6.2           Retirement and Other Termination
of Employment.  Upon termination of a
Participant’s employment with the Employers and all Affiliates on account of
the Participant’s Retirement, the Participant’s Account shall be paid to the
Participant at the time and in the form

 13
 

 

elected pursuant to Section
6.1.  Upon termination of a Participant’s
employment with the Employers and all Affiliates for any reason other than
death or Retirement, the Participant’s Account shall be paid to the Participant
in a single lump sum payment during the calendar quarter immediately following
the calendar quarter in which such termination of employment occurs.

6.3           Death.  If a Participant dies prior to the complete
distribution of his or her Account, the balance of the Account shall be paid in
a single lump sum payment in the first calendar quarter following the calendar
quarter in which the Participant died to the Participant’s designated
beneficiary or beneficiaries.  Any
designation of beneficiary shall be made by the Participant in writing on a
form approved or prescribed by the Committee, shall be effective upon receipt
by the Committee, and may be changed by the Participant at any time.  If there is no such designation or no
designated beneficiary survives the Participant, payment shall be made to the
Participant’s surviving spouse or, if none, to his or her issue per  stirpes,
in a single lump sum payment.  If no
spouse or issue survives the Participant, payment shall be made in a single
lump sum to the Participant’s estate.

6.4           Change in Control.  In the event of a Change in Control on or
after January 1, 2006, all amounts credited to a Participant’s Account shall be
distributed in a single lump sum payment at the time of such Change in Control
or within five business days thereafter. 
Notwithstanding the preceding, a Change in Control shall not be deemed
to have occurred with respect to the Account of a Participant for purposes of
this Section unless such Change in Control is a permitted distribution event
with respect to such Participant pursuant to Code Section 409A(a)(2)(A)(v).

 14
 

 

6.5           Hardship Distributions.  If a Participant encounters an unforeseeable
emergency, as determined by the Committee, the Committee shall direct the
Employer maintaining such Participant’s Account to pay to such Participant and
deduct from such Account such portion of the vested amount then credited to
such Account (including, if appropriate, the entire amount) as the Committee
shall determine to be necessary to alleviate the severe financial hardship of
such Participant caused by such unforeseeable emergency (which may include
amounts necessary to pay any Federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution).  For this purpose, an “unforeseeable emergency”
shall be a severe financial hardship of the Participant resulting from an
illness or accident of the Participant, the Participant’s spouse or the
Participant’s dependent (as defined in Code section 152(a)), loss of the
Participant’s property due to casualty (including the need to rebuild a home
following damage to a home not otherwise covered by insurance), or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. 
The circumstances that will constitute an unforeseeable emergency will
depend upon the facts of each case, but in any case, payment may not be made to
the extent that such hardship is or may be relieved (i) through reimbursement
or compensation by insurance or otherwise or (ii) by liquidation of the
Participant’s assets, to the extent liquidation of such assets would not itself
cause severe financial hardship  No
distribution shall be made to a Participant pursuant to this Section unless
such Participant requests such a distribution in writing and provides to the
Committee such information and documentation with respect to his or her
unforeseeable emergency as may be requested by the Committee.  This Section shall be interpreted in a manner
consistent with the distribution requirements of Section 409A of the Code.

 15
 

 

6.6           Changes in Time and Form of
Payment.  A Participant may change
his or her elections under Section 6.1 regarding the time at which his or her
Account will be paid or begin to be paid, or the form of such payment, or both,
after commencing participation in the Plan provided that (i) no such change
shall be effective until 12 months after the date such modified election is
made, (ii) no change related to a payment that is to be made at a fixed time or
pursuant to a fixed schedule may be made less than twelve months prior to the
date the payment is scheduled to be paid or, in the case of installment
payments elected pursuant to Section 6.1(ii) (which shall be treated for
purposes of this Plan as a “single payment”), twelve months prior to the date
the first amount was scheduled to be paid, and (iii) except with respect to
payments to be made on account of death or an unforeseeable emergency, the
payment made pursuant to any such subsequent election is deferred for a period
of not less than five years from the date such payment would otherwise have
been paid or, in the case of installment payments elected pursuant to Section
6.1(ii) (which shall be treated for purposes of this Plan as a “single payment”),
five years from the date the first amount was scheduled to be paid.

6.7           Withholding.  There shall be deducted from all amounts paid
under this Plan any taxes and other amounts required to be withheld by any
Federal, state, local or other government. 
The Participant and/or his or her beneficiary (including his or her
estate) shall bear all taxes on amounts paid under this Plan to the extent that
no taxes are withheld, irrespective of whether withholding is required.  The Participant will be required to pay to
his or her Employer the amount of any federal, state or local taxes required by
law to be withheld in connection with the Plan in the event that such Participant
is not being paid by an Employer or amounts being paid by an Employer to such
Participant are insufficient to satisfy any such withholding obligation.

 16

 

6.8           Specified Employees.  Any provision of the Plan to the contrary
notwithstanding, if a Participant is a “specified employee” within the meaning
of Section 409A(a)(2)(B)(i) of the Code as of the date of the Participant’s
termination of employment with the Employer and all Affiliates, no distribution
shall be made or commence with respect to such Participant pursuant to this
Section sooner than six months from the date of such Participant’s termination
of employment (or, if earlier, the date of the Participant’s death).  In such case, all payments that were
scheduled to be made within such six-month period shall be accumulated (with
interest as provided in Section 5.2) and paid in a single lump sum in the
calendar quarter following the calendar quarter in which such six-month period
ends.

6.9           409A Income Inclusion.  Any provision of the Plan to the contrary
notwithstanding, although the Plan is designed to comply in form and operation
with the requirements of Code Section 409A, in the event a Participant is required
to include in income an amount attributable to the Plan prior to the payment of
any such amount pursuant to this Plan on account of a violation of Code Section
409A, the amount so required to be included in income shall be paid to the
Participant as soon as practicable.

ARTICLE 7. 
COMMITTEE

7.1           Plan Administration and
Interpretation.  The Committee shall
oversee the administration of the Plan. 
The Committee shall have complete control and authority to determine the
rights and benefits and all claims, demands and actions arising out of the
provisions of the Plan of any Participant, beneficiary, deceased Participant,
or other person having or claiming to have any interest under the Plan.  The Committee shall have the exclusive and
discretionary power to interpret the Plan and to decide all matters under the
Plan.  Such interpretation and decision
shall be final, conclusive and binding on all Participants and any

 17
 

 

person claiming under or
through any Participant, in the absence of clear and convincing evidence that
the Committee acted arbitrarily and capriciously.  Any individual serving on the Committee who
is a Participant will not vote or act on any matter relating solely to himself
or herself.  When making a determination
or calculation, the Committee shall be entitled to rely on information
furnished by a Participant, a beneficiary, or an Employer.  The Committee shall be deemed to be the Plan
administrator with responsibility for complying with any reporting and
disclosure requirements of ERISA.

7.2           Powers, Duties, Procedures, Etc.  The Committee may adopt such rules and
regulations as it deems necessary, desirable or appropriate in administering
the Plan so long as they are not inconsistent with the terms of the Plan.  Any act which this Plan authorizes or
requires the Committee to do may be done by a majority of the members of the
Committee acting hereunder; and the action of such majority of the members of
the Committee, expressed from time to time by a vote at a meeting or in writing
without a meeting, shall constitute the action of the Committee and shall have
the same effect for all purposes as if assented to by all of the members of the
Committee at the time in a regular or special meeting.  A dissenting Committee member who, within a
reasonable time after he or she has knowledge of any action or failure to act
by the majority, registers his or her dissent in writing delivered to the other
Committee members and the Company shall not be responsible for any action or
failure to act.  The Committee may elect
one of its members as chairman and it may appoint a secretary who may, but need
not be, a Committee member.  In addition,
the Committee may appoint other agents and representatives, who may but need
not be in the employ of the Employer, to keep its records and assist it in
doing other acts or things to be done or performed by the Committee.  Any such person, corporation or firm so
designated by the Committee may, when so authorized

 18
 

 

by the Committee, sign in the
name of the Committee all applications and other documents required hereunder.
All usual and reasonable expenses of the Committee including, without limiting
the generality thereof, the reasonable cost of record keeping, accountants’
fees, consultants’ fees, counsel fees, and administrative costs shall be paid
by the Employers.

7.3           Information.  To enable the Committee to perform its
functions, the Employers shall supply full and timely information to the
Committee on all matters relating to the compensation of Participants, their
employment, retirement, death, termination of employment, and such other
pertinent facts as the Committee may require.

7.4           Indemnification of Committee.  The Employers agree to indemnify and to
defend to the fullest extent permitted by law any officer or employee who
serves as a member of the Committee (including any such individual who formerly
served as a member of the Committee) against all liabilities, damages, costs
and expenses (including attorneys’ fees and amounts paid in settlement of any
claims approved by the Company) occasioned by any act or omission to act in
connection with the Plan, if such act or omission is in good faith.

7.5           Claims Procedure.  If any person (hereinafter called the “Claimant”)
feels that he or she is being denied a benefit to which he or she is entitled
under this Plan, such Claimant may file a written claim for said benefit with
the Committee.  Within sixty days
following the receipt of such claim the Committee shall determine and notify
the Claimant as to whether he or she is entitled to such benefit.  Such notification shall be in writing and, if
denying the claim for benefit, shall set forth the specific reason or reasons
for the denial, make specific reference to the pertinent provisions of this
Plan, describe any additional information necessary for the Claimant to perfect
the claim and explain why the information is necessary, advise the Claimant
that he or she may, within sixty days following the receipt of such notice, in
writing request to appear

 19
 

 

before the Committee or its designated
representative for a hearing to review such denial, and state that the Claimant
has the right to bring a civil action under Section 502(a) of the Employee
Retirement Income Security Act of 1974, as amended, (“ERISA”) following a
denial of the claim on review.  Any
hearing shall be scheduled at the mutual convenience of the Committee or its
designated representative and the Claimant, and at any such hearing the
Claimant and/or his or her duly authorized representative may examine any
relevant documents and present evidence and arguments to support the granting
of the benefit being claimed.  The final
decision of the Committee with respect to the claim being reviewed shall be
made within sixty days following the hearing thereon, and Committee shall in
writing notify the Claimant of said final decision, again specifying the
reasons therefor and the pertinent provisions of this Plan upon which said
final decision is based.  The written
notice will also include a statement that the Claimant is entitled to receive,
upon request and free of charge, reasonable access to, and copies of, all
documents and other information relevant to the claim and a statement that the
Claimant has a right to bring a civil action under Section 502(a) of ERISA.  The final decision of the Committee shall be
conclusive and binding upon all parties having or claiming to have an interest
in the matter being reviewed.

ARTICLE 8. 
AMENDMENT AND TERMINATION

8.1           Amendments.  The Company shall have the right to amend
this Plan from time to time, subject to Section 8.3, by an instrument in
writing which has been executed by its duly authorized officer.

8.2           Termination of Plan.  This Plan is strictly a voluntary undertaking
on the part of the Employers and shall not be deemed to constitute a contract
between the Employers and any employee or a consideration for, or an inducement
or condition of employment for, the

 20
 

 

performance of services by any
employee.  The Company reserves the right
to terminate this Plan at any time effective with respect to any subsequent
Plan Year, subject to Section 8.3, by an instrument in writing which has been
executed by its duly authorized officer. 
In the event the Plan is terminated, no further contributions or credits
shall be made after the effective date of the Plan’s termination other than
interest credits made pursuant to Section 5.2 and payments shall be made in
accordance with the payment provisions of Article 6; provided, however, that
the Board of Directors of the Company may in its discretion terminate the Plan
effective as of a date prior to the first day of a subsequent Plan Year and
provide for accelerated payments of all amounts credited to Accounts upon such
a termination of the Plan to the extent such termination and acceleration of
payments satisfies the requirements of Code section 409A.

8.3           Existing Rights.  No amendment or termination of the Plan shall
adversely affect the rights of any Participant with respect to amounts credited
to his or her Account prior to the date of such amendment or termination.

ARTICLE 9. 
MISCELLANEOUS

9.1           No Funding; Source of Payments.  Nothing in this Plan will be construed to
create a trust or to obligate an Employer or any other person to segregate a
fund, purchase an insurance contract, or in any other way currently to fund the
future payment of any benefits hereunder, nor will anything herein be construed
to give any employee or any other person rights to any specific assets of an
Employer or of any other person.  Benefit
payments to be made with respect to a Participant’s Accounts shall be paid in
cash from the general assets of the Employer, and shall be the obligation
solely of the Employer maintaining such Accounts.

9.2           Nonassignability; Domestic
Relations Order.  None of the
benefits, payments, proceeds or claims of any Participant or beneficiary shall
be subject to any claim of any creditor

 21
 

 

of the Participant or
beneficiary and, in particular, the same shall not be subject to attachment or
garnishment or other legal process by any creditor of the Participant or
beneficiary, nor shall any Participant or beneficiary have any right to
alienate, anticipate, commute, pledge, encumber or assign any of the benefits
or payments or proceeds which he may expect to receive, contingently or
otherwise, under this Plan.  Notwithstanding
the preceding, the Committee shall direct that all or any portion of the amount
credited to a Participant’s Account be paid to an individual other than the
Participant to the extent necessary to comply with an order that the Committee
has determined to be a “domestic relations order” as defined in Code Section
414(p)(1)(B).  Further, and any provision
of the Plan to the contrary notwithstanding, the payment of amounts credited to
a Participant’s Account to an individual other than the Participant shall be
accelerated as may be necessary to fulfill an order that the Committee has
determined to be a “domestic relations order” as defined in Code Section
414(p)(1)(B).

9.3           Limitation of Participants’ Rights.  Participation in this Plan shall not give any
Eligible Employee the right to be retained in the employ of an Employer or an
Affiliate or any right or interest in the Plan other than as herein
provided.  The Employers and their
Affiliates reserve the right to dismiss any Eligible Employee without any
liability for any claim against the Employer or Affiliate, except to the extent
of benefit payments provided herein.

9.4           Participants Bound.  Any action with respect to this Plan taken by
the Committee or the Company or any action authorized by or taken at the
direction of the Committee or the Company shall be conclusive upon all
Participants and any other persons who claim entitlement to benefits under the
Plan.

9.5           Receipt and Release.  Any payment to any Participant or beneficiary
in accordance with the provisions of this Plan shall, to the extent thereof, be
in full satisfaction of

 22
 

 

all claims against the
Employers and the Committee under this Plan, and the Committee may require such
Participant or beneficiary, as a condition precedent to such payment, to
execute a receipt and release to such effect. 
If any Participant or beneficiary is determined by the Committee to be
incompetent by reason of physical or mental disability (including minority) to
give a valid receipt and release, the Committee may cause the payment or
payments becoming due to such person to be made to another person for his or
her benefit without responsibility on the part of the Committee or the Employer
to follow the application of such funds.

9.6           Governing Law.  This Plan shall be construed, administered,
and governed in all respects under and by the internal laws (and not the
principles relating to conflicts of laws) of the State of Texas, except where
superseded by federal law.  If any provision
shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully
effective.

9.7           No Guarantee of Tax Consequences.  No person connected with the Plan in any
capacity, including, but not limited to, the Employers and any Affiliate and
their respective directors, officers, agents and employees, makes any
representation, commitment or guarantee that any tax treatment, including, but
not limited to, federal, state and local income, estate and gift tax treatment,
will be applicable with respect to any amounts deferred or payable under the
Plan or that such tax treatment will apply to or be available to a Participant
on account of participation in the Plan.

9.8           Adoption by Other Employers.  With the consent of the Board of Directors of
the Company, this Plan may be adopted by any Affiliate, such adoption to be
effective as of the date specified by such Affiliate at the time of adoption.

 23
 

 

9.9           Headings and Subheadings.  Headings and subheadings in this Plan are
inserted for convenience only and are not to be considered in the construction
of the provisions hereof.

IN
WITNESS WHEREOF, The Neiman Marcus Group, Inc. has caused this Plan to be
executed by its duly authorized officer this 16th day of December, 2005.

	
  

  	
   

  	
  THE NEIMAN MARCUS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marita O’Dea

  
	
   

  	
   

  	
  Senior Vice President

  

 

 24EXHIBIT
4.1

THIS SECURITY IS AN UNSECURED SENIOR DEBT
OBLIGATION OF ZIONS BANCORPORATION.  THIS
SECURITY IS NOT A DEPOSIT OR SAVINGS ACCOUNT AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN
WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH
DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE.

UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ZIONS BANCORPORATION, OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

 

 

ZIONS BANCORPORATION

Floating Rate Senior Notes due 2008

	
  No. 1

  	
   

  	
  $145,000,000

  
	
  CUSIP No. 989701 AS6

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

ZIONS BANCORPORATION, a
corporation duly organized and existing under the laws of the State of Utah
(herein called the “Company,” which term includes any successor Person under
the Indenture hereinafter referred to), for value received, hereby promises to
pay to Cede & Co., or registered assigns, the principal sum of One Hundred
Forty-Five Million Dollars ($145,000,000) on September 15, 2008, and to pay
interest thereon from September 28, 2006 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, quarterly on
March 15, June 15, September 15 and December 15 in each year (each such date,
an “Interest Payment Date”), commencing December 15, 2006.  Interest will accrue at the Floating Interest Rate (as
defined below), until the principal hereof is paid or made
available for payment.  Any premium and
any such installment of interest that is overdue at any time shall also bear
interest (to the extent that the payment of such interest shall be legally
enforceable), at the rate per annum at which the principal then bears interest,
from the date any such overdue amount first becomes due until it is paid or
made available for payment. Notwithstanding the foregoing, interest on any
principal, premium or installment of interest that is overdue shall be payable
on demand.  The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the March 1, June
1, September 1 or December 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.

The Floating Interest Rate shall be, for each Interest
Period (as defined below), a per annum rate in effect for each day of such
Interest Period equal to LIBOR (as defined below) plus 12 basis points, as
determined by the Calculation Agent (as defined below).  The Floating Interest Rate for each Interest
Period will be set quarterly on the first day of each Interest Period
commencing September 28, 2006 (each such date, an “Interest Reset Date”).  The amount of interest for each day that this
Security is outstanding (the “Daily Interest Amount”) shall be calculated by
dividing the interest rate in effect for that day by 360 and multiplying the
result by the outstanding principal amount of this Security.  The amount of interest to be paid on this
Security for each Interest Period shall be calculated by adding the Daily
Interest Amount for each day in such Interest Period.

In the event that an Interest Payment Date is not a
Business Day, interest will be paid on the next day that is a Business Day,
with the same force and effect as if made on the Interest Payment Date, and
without any interest or other payment with respect to the delay.  If the date of Stated Maturity for the
principal falls on a day that is not a Business Day, the payment of the
principal amount of this Security will be made on the next succeeding Business
Day and no interest will accrue for the period from and after such date of
Stated Maturity.  “Business Day,” with
respect to this Security, is a Monday, Tuesday, Wednesday, Thursday or Friday
that is not a day on which banking institutions in Salt Lake City, Utah,

 

 

Houston,
Texas or New York City generally are authorized or required by law or executive
order to close, that is also a London Business Day (as defined below).

“Calculation Agent” means any Person authorized by the Company to
calculate the relevant rate of interest to be paid on this Security on behalf
of the Company.  The calculation agent is
initially the Zions Direct, Inc. until such time as the Company appoints a
successor calculation agent.

“London Business Day” is any day in which dealings in the United States
dollars are transacted or, with respect to any future date, are expected to be
transacted in the London interbank market.

“LIBOR,” with respect to any Interest Period, shall be the rate
(expressed as a percentage per annum) for deposits in United States dollars for
a three-month period beginning on the second London Business Day after the
Determination Date (as defined below) that appears on Telerate Page 3750 (as
defined below) as of 11:00 a.m., London time, on the Determination Date.  If Telerate Page 3750 does not include this
rate or is unavailable on the Determination Date, the Calculation Agent will
request the principal London office of each of four major banks in the London
interbank market, as selected by the Calculation Agent, to provide that bank’s
offered quotation (expressed as a percentage per annum) as of approximately
11:00 a.m., London time, on the Determination Date to prime banks in the
London interbank market for deposits in a Representative Amount (as defined
below) in United States dollars for a three-month period beginning on the first
day of the applicable Interest Period. 
If at least two offered quotations are so provided, LIBOR for the
Interest Period will be the arithmetic mean of those quotations.  If fewer than two quotations are so provided,
the Calculation Agent will request each of three major banks in New York City,
as selected by the Calculation Agent, to provide that bank’s rate (expressed as
a percentage per annum), as of approximately 11:00 a.m., New York City
time, on the Determination Date for loans in a Representative Amount in United
States dollars to leading European banks for a three-month period beginning on
the first day of the applicable Interest Period.  If at least two rates are so provided, LIBOR
for the interest period will be the arithmetic mean of those rates.  If fewer than two rates are so provided, then
LIBOR for the Interest Period will be LIBOR in effect with respect to the
immediately preceding Interest Period.

“Determination Date” with respect to an Interest Period shall be the
second London Business Day preceding the first day of the Interest Period.  For the first interest period, the
determination date was Tuesday, September 26, 2006.

“Interest Period” shall mean each period commencing on and including
the fifteenth day of each of March, June, September and December and ending on
and including the fourteenth day of each of the following March, June,
September and December, and, in the case of the last such period, ending on but
not including the Principal Payment Date. 
The first interest period shall commence on and include September 28,
2006 and end on and include December 14, 2006.

“Representative Amount” shall mean a principal amount that is
representative for a single transaction in the relevant market at the relevant
time.

“Telerate Page 3750” means the display designated as “Page 3750” on the
Moneyline Telerate Service (or such other page as may replace Page 3750 on that
service).

All percentages resulting from any of the above calculations shall be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upwards (e.g.,
9.876545% (or .09876545) being rounded to 9.87655 (or .0987655)) and all dollar
amounts used in or resulting from such calculations shall be rounded to the
nearest cent (with one-half cent being rounded upwards).

 

 

The Floating Interest Rate shall in no event be higher than the maximum
rate permitted by the law of the State of New York or, if higher, the law of
the United States of America.

Upon the request
of the Holder of this Security, the Calculation Agent shall provide the
interest rate then in effect with respect to this Security.  All calculations of the Calculation Agent, in
the absence of manifest error, shall be conclusive for all purposes and binding
on the Company and the Holder of this Security. 
So long as the Floating Interest Rate is required to be determined with
respect to this Security, there shall at all times be a Calculation Agent.  In the event that any then acting Calculation
Agent shall be unable or unwilling to act, or that such Calculation Agent shall
fail duly to establish the Floating Interest Rate for any Interest Reset
Period, or that the Company proposes to remove such Calculation Agent, the
Company shall appoint, with the written consent of the Trustee, which consent
shall not be unreasonably withheld, another Person which is a bank, trust
company, investment banking firm or other financial institution to act as the
Calculation Agent.

Payment of the
principal of (and premium, if any) and any such interest on this Security will
be made at the office or agency of the Company maintained for that purpose in
Salt Lake City, Utah, or Houston, Texas in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.

Reference is
hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.

Unless the certificate
of authentication hereon has been executed by the Trustee referred to on the
reverse hereof by manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed under its corporate seal.

 

	
  Dated: 
  September 28, 2006

  	
   

  
	
   

  	
   

  
	
  

  	
  ZIONS BANCORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

This is one of the
Securities of the series designated therein referred to in the within-mentioned
Indenture.

 

	
  Dated: 
  September 28, 2006

  	
   

  
	
   

  	
   

  
	
  

  	
  ZIONS FIRST NATIONAL BANK

  
	
   

  	
  As Authenticating Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Authorized
  Officer

  

 

 

 

[Global Note]

 

 

(Reverse of Security)

This Security is one of a duly authorized issue of
securities of the Company (herein called the “Securities”), issued and to be
issued in one or more series under a Senior Debt Indenture, dated as of September 10, 2002 (herein called the “Indenture,”
which term shall have the meaning assigned to it in such instrument), between
the Company and J.P. Morgan Trust Company, National Association, as Trustee
(herein called the “Trustee,” which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof.

The Securities of this series may not be redeemed
prior to the Stated Maturity.

There is no sinking fund for the Securities of this
series.

The Indenture contains provisions for defeasance at
any time of the entire indebtedness of this Security or certain
restrictive covenants and Events of Default with respect to this Security, in
each case upon compliance with certain conditions set forth in the Indenture.

If an Event of Default with respect to Securities of
this series shall occur and be continuing, the principal of the Securities of
this series may be declared due and payable in the manner and with the effect
provided in the Indenture.

The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of 66 2/3% in principal amount of the Securities at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.

As provided in and subject to the provisions of the
Indenture, the Holder of this Security shall not have the right to institute
any proceeding with respect to the Indenture or for the appointment of a
receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a continuing Event of
Default with respect to the Securities of this series, the Holders of not less
than 25% in principal amount of the Securities of this series at the time
Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.

 

 

No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate,
and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the
principal of and any premium and interest on this Security are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.

The Securities of this series are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.

No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

Prior to due presentment of this Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security is registered
as the owner hereof for all purposes, whether or not this Security be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.

This Security shall be governed by and construed in
accordance with the laws of the State of New York, but without regard to
principles of conflict of laws.

All terms used in this Security which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.

 

 

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations.

	
  TEN COM - as tenants in common

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TEN ENT - as tenants by the entireties

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JT TEN - as joint tenants with the right of
  survivorship and not as tenants in common

  

 

	
  UNIF GIFT MIN ACT

  	
   

  	
  Custodian

  	
   

  	
  -

  	
  under Uniform Gifts to Minors Act

  
	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
                     (State)

  

 

Additional abbreviations may also be used though not in the above list.

 

 

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE
________________________________________

____________________________________________________________________________

____________________________________________________________________________

(Please Print or Typewrite Name and Address Including Postal Zip Code
of Assignee)

the attached Security and all rights thereunder, and hereby irrevocably
constitutes and appoints 

____________________________________________________________________________

to transfer said Security on the books of the Company, with full power
of substitution in the premises.

 

	
  Dated:____________

  	
   

  	
   

  
	
   

  	
   

  	
  NOTICE: The signature to this assignment must be
  guaranteed and correspond with the name of the Holder as written upon the
  face of the attached Security in every particular, without alteration or
  enlargement or any change whatsoever.

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