Document:

gpxm8k20101208ex10-1.htm

Golden Phoenix Minerals, Inc.

1675 East Prater Way, Suite 102

Reno, NV 89434

December 2, 2010

Crestview Capital Master, LLC

95 Revere Drive, Suite A

Northbrook, IL 60062

	  	
Re:

	
Amended and Restated Debt Restructuring Warrants dated as of

	  	  	
February 6, 2009, entered into on October 29, 2009

To whom it may concern:

This letter amends that certain Letter Agreement dated September 24, 2010 by Golden Phoenix Minerals, Inc. (“Golden Phoenix”) in favor of Crestview Capital Master, LLC (“Crestview”) (the “Letter Agreement”) pursuant to that certain Bridge Note and Debt Restructuring Agreement (“Restructuring Agreement”) entered into by the parties dated as of January 30, 2009.  Crestview is the holder of that certain Amended and Restated Debt Restructuring Warrant dated February 6, 2009 to purchase 23,000,000 shares of common stock of Golden Phoenix at a purchase price of $0.03 per share (the “Warrants”).  Paragraphs (1) through (4) of the Letter Agreement are hereby amended to read as follows:

	
  

	
1.

	
Crestview hereby grants Golden Phoenix the option to purchase 15,000,000 of the Warrants at a purchase price of $0.0285 per Warrant share (the “Option”).  Golden Phoenix may exercise its Option to purchase those Warrants as set forth herein any time on or before December 15, 2010 (the “Option Period”).  All other Warrants not repurchased by Golden Phoenix according to the terms of the Option shall remain in full force and effect according to their terms.

	
  

	
2.

	
The parties acknowledge that per the terms of the Letter Agreement, Golden Phoenix previously paid Crestview the aggregate sum of fifty thousand dollars ($50,000) (the “Deposit”) based on the closing price of Golden Phoenix’s common stock exceeding $0.06 as quoted by the OTC Bulletin Board, and such Deposit is to be applied to the ultimate exercise of the Option and repurchase of up to 15,000,000 of the Warrants; notwithstanding the foregoing, if Golden Phoenix does not exercise the Option, such $50,000 deposit will be forfeited.

	
  

	
3.

	
It is understood and agreed that except as may be modified to reflect the terms of any sale of the Warrants pursuant to the Option, the Warrants shall remain in full force and effect, as provided therein.  The parties agree to execute any further documents as may be necessary to effectuate the transactions contemplated herein.

	
  

	
4.

	
Each party represents to the other that this letter agreement and the instruments to be executed by each pursuant hereto have been duly authorized by all requisite corporate action and is or will be binding and enforceable in accordance with its terms.

  

1

  

Kindly confirm your agreement to the foregoing by signing a copy hereof at the place provided below and return that copy to the undersigned.

	
 

	
Very truly yours,

	  	  
	  	
Golden Phoenix Minerals, Inc.

	  	  
	  	  
	  	  
	  	
By: /s/ Thomas Klein                              

	  	
     Name:  Thomas Klein                         

	  	
     Title: Chief Executive Officer            

ACCEPTED AND AGREED:

By:  Crestview Capital Partners, L.P.

            (sole manager)

By: /s/ Daniel Warsh                         

Name: Daniel Warsh                           

Title: Manager                                     

 

 

2Exhibit 4.3

 

NEWTON ACQUISITION MERGER SUB, INC.

 

to be merged with and into

 

THE NEIMAN MARCUS GROUP, INC.

 

NEWTON ACQUISITION, INC., as a guarantor

 

the SUBSIDIARY GUARANTORS named in Schedule I hereto

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 

 

SENIOR INDENTURE

 

Dated as of October 6, 2005

 

 

$700,000,000

 

9%/93⁄4% Senior Notes Due 2015

 

 

Reconciliation and tie between Trust Indenture Act

of 1939 and Indenture, dated as of October 6, 2005*

 

	
  Trust Indenture Act Section

  	
   

  	
   

  	
   

  	
  Indenture Section

  
	
  §
  310 (a)(1)

  	
   

  	
   

  	
   

  	
  608

  
	
  (a)(2)

  	
   

  	
   

  	
   

  	
  608

  
	
  (a)(3)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  (a)(4)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
   

  	
   

  	
  608,
  609

  
	
  (c)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  §
  311 (a)

  	
   

  	
   

  	
   

  	
  605

  
	
  (b)

  	
   

  	
   

  	
   

  	
  605

  
	
  (c)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  §
  312 (a)

  	
   

  	
   

  	
   

  	
  701

  
	
  (b)

  	
   

  	
   

  	
   

  	
  702

  
	
  (c)

  	
   

  	
   

  	
   

  	
  702

  
	
  §
  313 (a)

  	
   

  	
   

  	
   

  	
  703

  
	
  (a)(4)

  	
   

  	
   

  	
   

  	
  1008

  
	
  (b)(1)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  (b)(2)

  	
   

  	
   

  	
   

  	
  703

  
	
  (c)(1)

  	
   

  	
   

  	
   

  	
  102

  
	
  (c)(2)

  	
   

  	
   

  	
   

  	
  102

  
	
  (d)

  	
   

  	
   

  	
   

  	
  703

  
	
  (e)

  	
   

  	
   

  	
   

  	
  102

  
	
  §
  314 (a)

  	
   

  	
   

  	
   

  	
  1009

  
	
  (b)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  (c)(1)

  	
   

  	
   

  	
   

  	
  102

  
	
  (c)(2)

  	
   

  	
   

  	
   

  	
  102

  
	
  (c)(3)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  (d)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  (e)

  	
   

  	
   

  	
   

  	
  102

  
	
  (f)

  	
   

  	
   

  	
   

  	
  1017

  
	
  §
  315 (a)

  	
   

  	
   

  	
   

  	
  601

  
	
  (b)

  	
   

  	
   

  	
   

  	
  602

  
	
  (c)

  	
   

  	
   

  	
   

  	
  601

  
	
  (d)

  	
   

  	
   

  	
   

  	
  601

  
	
  (e)

  	
   

  	
   

  	
   

  	
  514

  
	
  §
  316 (a) (last sentence)

  	
   

  	
   

  	
   

  	
  101(“Outstanding”)

  
	
  (a)(1)(A)

  	
   

  	
   

  	
   

  	
  502,
  512

  
	
  (a)(1)(B)

  	
   

  	
   

  	
   

  	
  513

  
	
  (a)(2)

  	
   

  	
   

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
   

  	
   

  	
  508

  
	
  (c)

  	
   

  	
   

  	
   

  	
  104(d)

  
	
  §
  317 (a)(1)

  	
   

  	
   

  	
   

  	
  503

  
	
  (a)(2)

  	
   

  	
   

  	
   

  	
  504

  
	
  (b)

  	
   

  	
   

  	
   

  	
  1003

  
	
  §
  318 (a)

  	
   

  	
   

  	
   

  	
  111

  
	
   

  	
   

  	
  N.A. means Not Applicable.

  	
   

  	
   

  

 

*              This reconciliation and tie shall
not, for any purpose, be deemed to be a part of this Indenture.

 

 

Table of Contents*

 

	
  ARTICLE ONE

  	
   

  
	
   

  	
   

  
	
  DEFINITIONS AND OTHER PROVISIONS OF GENERAL
  APPLICATION

  	
   

  
	
   

  	
   

  
	
  SECTION 101.
  Rules of Construction and Incorporation by Reference of Trust Indenture
  Act

  	
   

  
	
  SECTION 102.
  Definitions

  	
   

  
	
  SECTION 103.
  Compliance Certificates and Opinions

  	
   

  
	
  SECTION 104.
  Form of Documents Delivered to Trustee

  	
   

  
	
  SECTION 105.
  Acts of Holders

  	
   

  
	
  SECTION 106.
  Notices, Etc., to Trustee, Company, any Guarantor and Agent

  	
   

  
	
  SECTION 107.
  Notice to Holders; Waiver

  	
   

  
	
  SECTION 108.
  Effect of Headings and Table of Contents

  	
   

  
	
  SECTION 109.
  Successors and Assigns

  	
   

  
	
  SECTION 110.
  Separability Clause

  	
   

  
	
  SECTION 111.
  Benefits of Indenture

  	
   

  
	
  SECTION 112.
  Governing Law

  	
   

  
	
  SECTION 113.
  Legal Holidays

  	
   

  
	
  SECTION 114.
  No Personal Liability of Directors, Officers, Employees and Stockholders

  	
   

  
	
  SECTION 115.
  Trust Indenture Act Controls

  	
   

  
	
  SECTION 116.
  Counterparts

  	
   

  
	
   

  	
   

  
	
  ARTICLE TWO

  	
   

  
	
   

  	
   

  
	
  NOTE FORMS

  	
   

  
	
   

  	
   

  
	
  SECTION 201.
  Form and Dating

  	
   

  
	
  SECTION 202.
  Execution, Authentication, Delivery and Dating

  	
   

  
	
   

  	
   

  
	
  ARTICLE THREE

  	
   

  
	
   

  	
   

  
	
  THE NOTES

  	
   

  
	
   

  	
   

  
	
  SECTION 301.
  Title and Terms

  	
   

  
	
  SECTION 302.
  Denominations

  	
   

  
	
  SECTION 303.
  Temporary Notes

  	
   

  
	
  SECTION 304.
  Note Registrar; Paying Agent; Registration of Transfer and Exchange

  	
   

  

 

*              This
table of contents shall not, for any purpose, be deemed to be a part of this
Indenture.

 

i

 

	
  SECTION 305.
  Mutilated, Destroyed, Lost and Stolen Notes

  	
   

  
	
  SECTION 306.
  Payment of Interest; Interest Rights Preserved

  	
   

  
	
  SECTION 307.
  Persons Deemed Owners

  	
   

  
	
  SECTION 308.
  Cancellation

  	
   

  
	
  SECTION 309.
  Computation of Interest

  	
   

  
	
  SECTION 310.
  Transfer and Exchange

  	
   

  
	
  SECTION 311.
  CUSIP Numbers

  	
   

  
	
  SECTION 312.
  Issuance of Additional Notes

  	
   

  
	
   

  	
   

  
	
  ARTICLE FOUR

  	
   

  
	
   

  	
   

  
	
  SATISFACTION AND DISCHARGE

  	
   

  
	
   

  	
   

  
	
  SECTION 401.
  Satisfaction and Discharge of Indenture

  	
   

  
	
  SECTION 402.
  Application of Trust Money

  	
   

  
	
   

  	
   

  
	
  ARTICLE FIVE

  	
   

  
	
   

  	
   

  
	
  REMEDIES

  	
   

  
	
   

  	
   

  
	
  SECTION 501.
  Events of Default

  	
   

  
	
  SECTION 502.
  Acceleration of Maturity; Rescission and Annulment

  	
   

  
	
  SECTION 503.
  Collection of Indebtedness and Suits for Enforcement by Trustee

  	
   

  
	
  SECTION 504.
  Trustee May File Proofs of Claim

  	
   

  
	
  SECTION 505.
  Trustee May Enforce Claims Without Possession of Notes

  	
   

  
	
  SECTION 506.
  Application of Money Collected

  	
   

  
	
  SECTION 507.
  Limitation on Suits

  	
   

  
	
  SECTION 508.
  Unconditional Right of Holders to Receive Principal, Premium and Interest

  	
   

  
	
  SECTION 509.
  Restoration of Rights and Remedies

  	
   

  
	
  SECTION 510.
  Rights and Remedies Cumulative

  	
   

  
	
  SECTION 511.
  Delay or Omission Not Waiver

  	
   

  
	
  SECTION 512.
  Control by Holders

  	
   

  
	
  SECTION 513.
  Waiver of Default

  	
   

  
	
  SECTION 514.
  Waiver of Stay or Extension Laws

  	
   

  
	
   

  	
   

  
	
  ARTICLE SIX

  	
   

  
	
   

  	
   

  
	
  THE TRUSTEE

  	
   

  
	
   

  	
   

  
	
  SECTION 601.
  Duties of the Trustee

  	
   

  
	
  SECTION 602.
  Notice of Defaults

  	
   

  
	
  SECTION 603.
  Certain Rights of Trustee

  	
   

  
	
  SECTION 604.
  Trustee Not Responsible for Recitals or Issuance of Notes

  	
   

  
	
  SECTION 605.
  May Hold Notes

  	
   

  
	
  SECTION 606.
  Money Held in Trust

  	
   

  
	
  SECTION 607.
  Compensation and Reimbursement

  	
   

  

 

ii

 

	
  SECTION 608.
  Corporate Trustee Required; Eligibility

  	
   

  
	
  SECTION 609.
  Resignation and Removal; Appointment of Successor

  	
   

  
	
  SECTION 610.
  Acceptance of Appointment by Successor

  	
   

  
	
  SECTION 611.
  Merger, Conversion, Consolidation or Succession to Business

  	
   

  
	
  SECTION 612.
  Appointment of Authenticating Agent

  	
   

  
	
   

  	
   

  
	
  ARTICLE SEVEN

  	
   

  
	
   

  	
   

  
	
  HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY

  	
   

  
	
   

  	
   

  
	
  SECTION 701.
  Holder Lists

  	
   

  
	
  SECTION 702.
  Disclosure of Names and Addresses of Holders

  	
   

  
	
  SECTION 703.
  Reports by Trustee

  	
   

  
	
   

  	
   

  
	
  ARTICLE EIGHT

  	
   

  
	
   

  	
   

  
	
  MERGER, CONSOLIDATION OR SALE OF ALL OR
  SUBSTANTIALLY ALL ASSETS

  	
   

  
	
   

  	
   

  
	
  SECTION 801.
  Company May Consolidate, Etc., Only on Certain Terms

  	
   

  
	
  SECTION 802.
  Subsidiary Guarantors May Consolidate, Etc., Only on Certain Terms

  	
   

  
	
  SECTION 803.
  Holdings May Consolidate, Etc., Only on Certain Terms

  	
   

  
	
  SECTION 804.
  Successor Substituted

  	
   

  
	
  SECTION 805.
  The Merger Permitted

  	
   

  
	
  SECTION 806.
  Assets of Subsidiary Apply to Company and Holdings

  	
   

  
	
   

  	
   

  
	
  ARTICLE NINE

  	
   

  
	
   

  	
   

  
	
  AMENDMENT, SUPPLEMENT AND WAIVER

  	
   

  
	
   

  	
   

  
	
  SECTION 901.
  Amendments or Supplements Without Consent of Holders

  	
   

  
	
  SECTION 902.
  Amendments or Supplements With Consent of Holders

  	
   

  
	
  SECTION 903.
  Execution of Amendments, Supplements or Waivers

  	
   

  
	
  SECTION 904.
  Effect of Amendments, Supplements or Waivers

  	
   

  
	
  SECTION 905.
  Compliance with Trust Indenture Act

  	
   

  
	
  SECTION 906.
  Reference in Notes to Supplemental Indentures

  	
   

  
	
  SECTION 907.
  Notice of Supplemental Indentures

  	
   

  
	
   

  	
   

  
	
  ARTICLE TEN

  	
   

  
	
   

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  SECTION 1001.
  Payment of Principal, Premium, if any, and Interest

  	
   

  
	
  SECTION 1002.
  Maintenance of Office or Agency

  	
   

  
	
  SECTION 1003.
  Paying Agent to Hold Money in Trust

  	
   

  
	
  SECTION 1004.
  Corporate Existence

  	
   

  
	
  SECTION 1005.
  Payment of Taxes and Other Claims

  	
   

  
	
  SECTION 1006.
  Reserved

  	
   

  

 

iii

 

	
  SECTION 1007.
  Reserved

  	
   

  
	
  SECTION 1008.
  Statement by Officers as to Default

  	
   

  
	
  SECTION 1009.
  Reports and Other Information

  	
   

  
	
  SECTION 1010.
  Limitation on Restricted Payments

  	
   

  
	
  SECTION 1011.
  Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock
  and Preferred Stock

  	
   

  
	
  SECTION 1012.
  Liens

  	
   

  
	
  SECTION 1013.
  Limitations on Transactions with Affiliates

  	
   

  
	
  SECTION 1014.
  Limitations on Dividend and Other Payment Restrictions Affecting Restricted
  Subsidiaries

  	
   

  
	
  SECTION 1015.
  Limitation on Guarantees of Indebtedness by Restricted Subsidiaries

  	
   

  
	
  SECTION 1016.
  Limitation on Sale and Lease-Back Transactions

  	
   

  
	
  SECTION 1017.
  Change of Control

  	
   

  
	
  SECTION 1018.
  Asset Sales

  	
   

  
	
  SECTION 1019.
  Additional Interest Notice

  	
   

  
	
  SECTION 1020.
  No Amendment to Subordination Provision

  	
   

  
	
  SECTION 1021.
  Designation of “Designated Senior Indebtedness”

  	
   

  
	
   

  	
   

  
	
  ARTICLE ELEVEN

  	
   

  
	
   

  	
   

  
	
  REDEMPTION OF NOTES

  	
   

  
	
   

  	
   

  
	
  SECTION 1101.
  Right of Redemption

  	
   

  
	
  SECTION 1102.
  Applicability of Article

  	
   

  
	
  SECTION 1103.
  Election to Redeem; Notice to Trustee

  	
   

  
	
  SECTION 1104.
  Selection by Trustee of Notes to Be Redeemed

  	
   

  
	
  SECTION 1105.
  Notice of Redemption

  	
   

  
	
  SECTION 1106.
  Effect of Notice of Redemption

  	
   

  
	
  SECTION 1107.
  Deposit of Redemption Price

  	
   

  
	
  SECTION 1108.
  Notes Payable on Redemption Date

  	
   

  
	
  SECTION 1109.
  Notes Redeemed in Part

  	
   

  
	
   

  	
   

  
	
  ARTICLE TWELVE

  	
   

  
	
   

  	
   

  
	
  GUARANTEES

  	
   

  
	
   

  	
   

  
	
  SECTION 1201.
  Guarantees

  	
   

  
	
  SECTION 1202.
  Severability

  	
   

  
	
  SECTION 1203.
  Reserved

  	
   

  
	
  SECTION 1204.
  Limitation of Guarantors’ Liability

  	
   

  
	
  SECTION 1205.
  Contribution

  	
   

  
	
  SECTION 1206.
  Subrogation

  	
   

  
	
  SECTION 1207.
  Reinstatement

  	
   

  
	
  SECTION 1208.
  Release of a Guarantor

  	
   

  
	
  SECTION 1209.
  Benefits Acknowledged

  	
   

  

 

iv

 

	
  ARTICLE THIRTEEN

  	
   

  
	
   

  	
   

  
	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  	
   

  
	
   

  	
   

  
	
  SECTION 1301.
  Company’s Option to Effect Legal Defeasance or Covenant Defeasance

  	
   

  
	
  SECTION 1302.
  Legal Defeasance and Discharge

  	
   

  
	
  SECTION 1303.
  Covenant Defeasance

  	
   

  
	
  SECTION 1304.
  Conditions to Legal Defeasance or Covenant Defeasance

  	
   

  
	
  SECTION 1305.
  Deposited Money and Government Securities to Be Held in Trust; Other
  Miscellaneous Provisions

  	
   

  
	
  SECTION 1306.
  Reinstatement

  	
   

  
	
  SECTION 1307.
  Repayment to Company

  	
   

  
	
   

  	
   

  
	
  APPENDIX &
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Rule 144A
  / Regulation S Appendix

  	
   

  
	
  EXHIBIT 1
  to Rule 144A / Regulation S Appendix — Form of Initial Note

  	
   

  
	
  EXHIBIT 2
  to Rule 144A / Regulation S Appendix — Form of Transferee

  	
   

  
	
  Letter
  of Representation

  	
   

  
	
  EXHIBIT 3
  to Rule 144A/Regulation S Appendix — Form of Non-U.S. Beneficial
  Ownership Certification by Euroclear or Clearstream Luxembuorg

  	
   

  
	
  EXHIBIT A
  — Form of Exchange Security or Private Exchange Security

  	
   

  
	
  EXHIBIT B
  — Form of Supplemental Indenture

  	
   

  

 

v

 

SENIOR
INDENTURE dated as of October 6, 2005 (this “Indenture”), among NEWTON ACQUISITION MERGER SUB, INC.,
a Delaware corporation that shall be merged with and into THE NEIMAN MARCUS
GROUP, INC., a Delaware corporation, with The Neiman Marcus Group, Inc.
continuing as the surviving corporation (the “Company”),
NEWTON ACQUISITION INC., a Delaware corporation (“Holdings”), and certain of The Neiman Marcus Group, Inc.’s
direct and indirect Domestic Subsidiaries (as defined below), each named in
Schedule I hereto (each, a “Subsidiary
Guarantor” and collectively, the “Subsidiary
Guarantors”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
(the “Trustee”).

 

RECITALS

 

The
Company has duly authorized the creation of an issue of (i) 9%/93⁄4% Senior
Notes Due 2015 issued on the date hereof (the “Initial
Notes”) and (ii) if and when issued as required by the Exchange
and Registration Rights Agreement dated the date hereof, among the Company,
Holdings, the Subsidiary Guarantors and the Purchasers (as defined therein)
(the “Registration Rights Agreement”),
9%/93⁄4% Senior Exchange Notes Due 2015 issued in an Exchange Offer in exchange
for any Initial Notes and any increase in the aggregate amount of the Initial
Notes as a result of a PIK Payment (as defined below) (the “Exchange Notes”, and collectively with the
Initial Notes, the “Notes”), of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company, Holdings and the Subsidiary Guarantors have duly
authorized the execution and delivery of this Indenture.  On or after the
date hereof, Newton Acquisition Merger Sub, Inc. shall be merged with and
into The Neiman Marcus Group, Inc., with The Neiman Marcus Group, Inc.
continuing as the surviving corporation and assuming all of the obligations of
Newton Acquisition Merger Sub, Inc. under this Indenture.

 

Holdings
and the Subsidiary Guarantors have each duly authorized their Guarantee of the
Initial Notes and, if and when issued, the Exchange Notes, and to provide
therefor Holdings and the Subsidiary Guarantors have each duly authorized the
execution and delivery of this Indenture.

 

All
things necessary have been done to make the Notes, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid and legally binding obligations of the Company and to make this Indenture
a valid and legally binding agreement of the Company, in accordance with their
and its terms.

 

All
things necessary have been done to make the Guarantees, upon execution and delivery
of this Indenture, the valid obligations of each Guarantor and to make this
Indenture a valid and legally binding agreement of each Guarantor, in
accordance with their and its terms.

 

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

For
and in consideration of the premises and the purchase of the Notes by the
Holders thereof, it is mutually covenanted and agreed, for the equal and
ratable benefit of all Holders, as follows:

 

2

 

ARTICLE ONE

 

DEFINITIONS
AND OTHER PROVISIONS

OF GENERAL APPLICATION

 

SECTION 101. 
Rules of Construction and Incorporation by Reference of Trust Indenture
Act.  For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:

 

(1)  the terms defined in this Article have the meanings
assigned to them in this Article, and words in the singular include the plural
and words in the plural include the singular;

 

(2)  all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP (as herein defined);

 

(3)  the words “herein”, “hereof” and “hereunder” and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;

 

(4)  all references to Articles, Sections, Exhibits and
Appendices shall be construed to refer to Articles and Sections of, and
Exhibits and Appendices to, this Indenture;

 

(5)  “or” is not exclusive;

 

(6)  “including” means including without limitation;

 

(7)  all references to the date the Notes were originally
issued shall refer to the Issue Date; and

 

(8)  all references, in any context, to any interest or other
amount payable on or with respect to the Notes shall be deemed to include any
Additional Interest (as herein defined) pursuant to the Registration Rights
Agreement.

 

This Indenture is subject to the mandatory
provisions of the TIA (as herein defined) which are incorporated by reference
in and made a part of this Indenture.  The following TIA terms have the
following meanings:

 

(1)           “Commission” means
the SEC;

 

(2)           “indenture
securities” means the Notes and the Guarantees;

 

(3)           “indenture security
holder” means a Holder;

 

(4)           “indenture to be
qualified” means this Indenture;

 

(5)           “indenture trustee”
or “institutional trustee” means the Trustee; and

 

3

 

(6)           “obligor” on the
indenture securities means the Company, each Guarantor and any other obligor on
the indenture securities.

 

All
other TIA terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by SEC rule have the meanings
assigned to them by such definitions.

 

SECTION 102. 
Definitions.

 

“Acquired Indebtedness” means, with respect
to any specified Person,

 

(1)           Indebtedness of any
other Person existing at the time such other Person is merged with or into or
became a Restricted Subsidiary of such specified Person, including Indebtedness
incurred in connection with, or in contemplation of, such other Person merging
with or into, or becoming a Restricted Subsidiary of such specified Person, and

 

(2)           Indebtedness secured
by a Lien encumbering any asset acquired by such specified Person.

 

“Act”, when used with respect to any
Holder, has the meaning specified in Section 105 of this Indenture.

 

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

 

“Additional Interest Notice” has the
meaning specified in Section 1019 of this Indenture.

 

“Additional Notes” means any Notes issued
by the Company pursuant to Section 312.

 

“Adjusted Net Assets” has the meaning
specified in Section 1205 of this Indenture.

 

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

 

“Affiliate Transaction” has the meaning
specified in Section 1013 of this Indenture.

 

“Applicable Premium” means, with respect to
any Note on any Redemption Date, the greater of:

 

4

 

(1)           1.0% of the
principal amount of the Note; or

 

(2)           the excess, if any,
of:

 

(a)           the present value at
such Redemption Date of (i) the redemption price of the Note at October 15,
2010 (such redemption price being set forth in the table appearing in
Section 1101(b), plus
(ii) all required interest payments (calculated based on the interest rate
payable for Cash Interest on the Notes) due on the Note through October 15,
2010 (excluding accrued but unpaid interest to the Redemption Date), computed
using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over

 

(b)           the principal amount
of the Note.

 

“Asset Sale” means

 

(1)           the sale,
conveyance, transfer or other disposition, whether in a single transaction or a
series of related transactions, of property or assets (including by way of a
Sale and Lease-Back Transaction) of the Company or any Restricted Subsidiary
(each referred to in this definition as a “disposition”); and

 

(2)           the issuance or sale
of Equity Interests of any Restricted Subsidiary, whether in a single transaction
or a series of related transactions,

 

in
each case, other than:

 

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

 

(b)           the disposition of
all or substantially all of the assets of the Company in a manner permitted
pursuant to the provisions described under Section 801 of this Indenture
or any disposition that constitutes a Change of Control pursuant to this
Indenture;

 

(c)           the making of any
Permitted Investment or the making of any Restricted Payment that is not
prohibited by Section 1010 of this Indenture;

 

(d)           any disposition of
assets or issuance or sale of Equity Interests of any Restricted Subsidiary in
any transaction or series of transactions with an aggregate fair market value
of less than $25.0 million;

 

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

 

5

 

(f)            to the extent
allowable under Section 1031 of the Internal Revenue Code of 1986, any
exchange of like property (excluding any boot thereon) for use in a Similar
Business;

 

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

 

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

 

(i)            foreclosures on
assets;

 

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

 

(k)           the unwinding of any
Hedging Obligations.

 

“Asset Sale Offer” has the meaning
specified in Section 1018 of this Indenture.

 

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

 

“Bankruptcy Law” means Title 11, United
States Bankruptcy Code of 1978, as amended, or any similar United States
federal or state or foreign law relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief of debtors or
any amendment to, succession to or change in any such law.

 

“Board of Directors” means:

 

(1)           with respect to a
corporation, the board of directors of the corporation;

 

(2)           with respect to a
partnership, the board of directors of the general partner of the partnership;
and

 

(3)           with respect to any
other Person, the board or committee of such Person serving a similar function.

 

6

 

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

 

“Business Day” means each day that is not a
Legal Holiday.

 

“Capital
Stock” means

 

(1)           in the case of a
corporation, corporate stock,

 

(2)           in the case of an
association or business entity, any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock,

 

(3)           in the case of a
partnership or limited liability company, partnership or membership interests
(whether general or limited), and

 

(4)           any other interest
or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.

 

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

 

“Cash Equivalents” means

 

(1)           United States of
America dollars,

 

(2)           (a)           Canadian
dollars,

 

(b)          Japanese yen,

 

(c)          pounds sterling,

 

(d)          euro or

 

(e)          in the case of any
Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held
by it from time to time in the ordinary course of business,

 

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

 

7

 

(4)           certificates of
deposit, time deposits and eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers’ acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus in excess of $250.0 million,

 

(5)           repurchase
obligations for underlying securities of the types described in clauses
(3) and (4) entered into with any financial institution meeting the
qualifications specified in clause (4) above,

 

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

 

(7)           investment funds
investing at least 95% of their assets in securities of the types described in
clauses (1) through (6) above,

 

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

 

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

 

Notwithstanding
the foregoing, Cash Equivalents shall include amounts denominated in currencies
other than those set forth in clauses (1) and (2) above; provided that such amounts are converted
into one or more of the currencies set forth in clauses (1) and
(2) above as promptly as practicable and in any event within ten Business
Days following the receipt of such amounts.

 

“Cash Interest” shall have the meaning set
forth in Section 301 of this Indenture.

 

“Change of Control” means the occurrence of
any of the following:

 

(1)           the sale, lease or
transfer, in one or a series of related transactions, of all or substantially
all of the assets of the Company and its Subsidiaries, taken as a whole, to any
Person other than a Permitted Holder; or

 

(2)           the Company becomes
aware of (by way of a report or any other filing pursuant to Section 13(d) of
the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by
any Person or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision),
including any group acting for the purpose of acquiring, holding or disposing
of securities (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act, or any successor provision), other than the Permitted Holders, in
a

 

8

 

single
transaction or in a series of related transactions, by way of merger,
consolidation or other business combination or purchase of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision) of 50% or more of the total voting power of the Voting Stock of the
Company or any of its direct or indirect parent companies.

 

“Change of Control Offer” has the meaning
specified in Section 1017 of this Indenture.

 

“Change of Control Payment” has the meaning
specified in Section 1017 of this Indenture.

 

“Change of Control Payment Date” has the
meaning specified in Section 1017 of this Indenture.

 

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

 

“Common Stock” means, with respect to any
Person, any and all shares, interest, participations and other equivalents
(however designated, whether voting or non-voting) of such Person’s common
equity interests, whether now outstanding or issued after the date of this
Indenture, and includes all series or classes of such common equity interests.

 

“Company” means the Person named as the “Company”
in the first paragraph of this Indenture, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture, and
thereafter, “Company” shall mean such successor Person; provided that when used in the context of
determining the fair market value of an asset or liability under this
Indenture, “Company” shall, unless otherwise expressly stated, be deemed to mean
the Board of Directors of the Company when the fair market value of such asset
or liability is equal to or in excess of $100.0 million.

 

“Company Request” or “Company Order” means a written request or
order signed in the name of the Company by two Officers or one Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company, and
delivered to the Trustee.

 

“consolidated” or “Consolidated” means,
with respect to any Person, such Person consolidated with its Restricted
Subsidiaries, and excludes from such consolidation any Unrestricted Subsidiary
as if such unrestricted subsidiary were not an Affiliate of such Person.

 

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

 

9

 

“Consolidated Interest Expense” means, with
respect to any Person for any period, the sum, without duplication, of:

 

(a)           consolidated
interest expense of such Person and its Restricted Subsidiaries for such
period, to the extent such expense was deducted in computing Consolidated Net
Income (including (a) amortization of original issue discount resulting
from the issuance of Indebtedness at less than par, (b) all commissions,
discounts and other fees and charges owed with respect to letters of credit or
bankers’ acceptances, (c) noncash interest payments (but excluding any
noncash interest expense attributable to the movement in the mark-to-market
valuation of Hedging Obligations or other derivative instruments pursuant to
GAAP), (d)  the interest component of Capitalized Lease Obligations and
(e) net payments, if any, pursuant to interest rate Hedging Obligations
with respect to Indebtedness, and excluding (i) any expense resulting from
the discounting of the Existing 2028 Debentures as a result of the application
of purchase accounting in connection with the Transactions,
(ii) Additional Interest, (iii) amortization of deferred financing
fees, debt issuance costs, commissions, fees and expenses, (iv) any
expensing of bridge, commitment and other financing fees, (v) commissions,
discounts, yield and other fees and charges (including any interest expense)
related to any Receivables Facility and (vi) any redemption premiums paid
in connection with the redemption of the Existing 2008 Notes), plus

 

(b)           consolidated
capitalized interest of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued, less

 

(c)           interest income for
such period.

 

For
purposes of this definition, interest on a Capitalized Lease Obligation shall
be deemed to accrue at an interest rate reasonably determined by such Person to
be the rate of interest implicit in such Capitalized Lease Obligation in
accordance with GAAP.

 

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

 

“Consolidated Net Income” means, with
respect to any Person for any period, the aggregate of the Net Income of such
Person and its Restricted Subsidiaries for

 

10

 

such
period, on a consolidated basis, and otherwise determined in accordance with
GAAP; provided that, without
duplication,

 

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

 

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

 

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

 

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

 

(5)           the Net Income for
such period of any Person that is not a Subsidiary, or is an Unrestricted
Subsidiary, or that is accounted for by the equity method of accounting, shall
be excluded; provided that
Consolidated Net Income of the Company shall be increased by the amount of
dividends or distributions or other payments that are actually paid in cash (or
to the extent converted into cash) to the referent Person or a Restricted
Subsidiary thereof in respect of such period (subject in the case of dividends,
distributions or other payments made to a Restricted Subsidiary to the
limitations contained in clause (6) below),

 

(6)           solely for the
purpose of determining the amount available for Restricted Payments under
clause (C)(1) of Section 1010(a) of this Indenture, the Net
Income for such period of any Restricted Subsidiary (other than any Subsidiary
Guarantor) shall be excluded if the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of its Net Income is not at
the date of determination wholly permitted without any prior governmental
approval (which has not been obtained) or, directly or indirectly, by the
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule, or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, unless such restriction with respect
to the payment of dividends or similar distributions has been legally waived; provided that Consolidated Net Income of
the Company shall be increased by the amount of dividends or other
distributions or other payments actually paid in cash (or to the extent converted
into cash) to the Company or a Restricted Subsidiary thereof in respect of such
period, to the extent not already included therein,

 

11

 

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

 

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

 

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

 

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

 

Notwithstanding
the foregoing, for the purpose of Section 1010(a) of this Indenture
only (other than clause (C)(4) thereof), there shall be excluded from
Consolidated Net Income any income arising from any sale or other disposition
of Restricted Investments made by the Company and the Restricted Subsidiaries,
any repurchases and redemptions of Restricted Investments from the Company and
the Restricted Subsidiaries, any repayments of loans and advances that
constitute Restricted Investments by the Company or any Restricted Subsidiary,
any sale of the stock of an Unrestricted Subsidiary or any distribution or
dividend from an Unrestricted Subsidiary, in each case only to the extent such
amounts increase the amount of Restricted Payments permitted under
Section 1010(a) of this Indenture pursuant to clause (C)(4) thereof;
provided, however, that any
income arising from any sale or other disposition of Equity Interests in Kate
Spade or any Extraordinary Distribution shall be excluded from Consolidated Net
Income for the purpose of Section 1010 of this Indenture only.

 

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

 

“Consolidated Total Indebtedness” means, as
at any date of determination, an amount equal to the sum of (1) the
aggregate amount of all outstanding Indebtedness of the Company and the
Restricted Subsidiaries on a consolidated basis consisting of

 

12

 

Indebtedness
for borrowed money, Obligations in respect of Capitalized Lease Obligations,
Attributable Debt in respect of Sale and Lease-Back Transactions and debt
obligations evidenced by bonds, notes, debentures or similar instruments or
letters of credit or bankers’ acceptances (and excluding (x) any undrawn
letters of credit issued in the ordinary course of business and (y) all
obligations relating to Receivables Facilities) and (2) the aggregate
amount of all outstanding Disqualified Stock of the Company and all
Disqualified Stock and Preferred Stock of the Restricted Subsidiaries
(excluding items eliminated in consolidation), with the amount of such
Disqualified Stock and Preferred Stock equal to the greater of their respective
voluntary or involuntary liquidation preferences and Maximum Fixed Repurchase
Prices, in each case determined on a consolidated basis in accordance with
GAAP.

 

For
purposes hereof, the “Maximum Fixed
Repurchase Price” of any Disqualified Stock or Preferred Stock that
does not have a fixed repurchase price shall be calculated in accordance with
the terms of such Disqualified Stock or Preferred Stock as if such Disqualified
Stock or Preferred Stock were purchased on any date on which Consolidated Total
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Stock or Preferred Stock, such fair market value shall be
determined reasonably and in good faith by the Company.

 

“Contingent Obligations” means, with
respect to any Person, any obligation of such Person guaranteeing any leases,
dividends or other obligations that do not constitute Indebtedness (the “primary obligations”) of any other Person
(the “primary obligor”) in any
manner, whether directly or indirectly, including any obligation of such
Person, whether or not contingent,

 

(1)           to purchase any such
primary obligation or any property constituting direct or indirect security
therefor,

 

(2)           to advance or supply
funds

 

(A)          for the purchase or
payment of any such primary obligation or

 

(B)           to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or

 

(3)           to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation against loss in respect thereof.

 

“Corporate Trust Office” means the
principal corporate trust office of the Trustee, at which at any particular
time its corporate trust business shall be administered, which office at the
date of execution of this Indenture is located at 213 Court Street, Suite 703,
Middletown, CT 06457, except that with respect to presentation of the Notes for
payment or for registration of transfer or exchange, such term shall mean the
office or

 

13

 

agency
of the Trustee at which, at any particular time, its corporate agency business
shall be conducted.

 

“Covenant Defeasance” has the meaning
specified in Section 1303 of this Indenture.

 

“Credit Card Sale” means the sale from The
Neiman Marcus Group, Inc. to HSBC Bank Nevada, N.A., of The Neiman Marcus
Group, Inc.’s private label credit card accounts and related receivables
and other assets, pursuant to a Purchase, Sale and Servicing Transfer
Agreement, dated as of June 8, 2005, among HSBC Bank Nevada, N.A., HSBC
Finance Corporation, The Neiman Marcus Group, Inc. and Bergdorf
Goodman, Inc. (it being understood that such sale was consummated on
July 7, 2005).

 

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

 

“Defaulted Interest” has the meaning
specified in Section 306(b) of this Indenture.

 

“Depository” means The Depository Trust
Company, its nominees and their respective successors.

 

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

 

“Designated Preferred Stock” means
Preferred Stock of the Company or any parent company thereof (in each case
other than Disqualified Stock) that is issued for cash (other than to a
Restricted Subsidiary) and is so designated as Designated Preferred Stock
pursuant to an Officers’ Certificate executed by an executive vice president
and the principal financial officer of the Company or the applicable parent
company thereof, as the case may be, on the issuance date thereof, the cash
proceeds of which are excluded from the calculation set forth in clause (C) of
Section 1010(a) of this Indenture.

 

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

 

14

 

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

 

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

 

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

 

(1)           increased by
(without duplication):

 

(a)           provision for taxes
based on income or profits, plus
franchise or similar taxes, of such Person for such period deducted in
computing Consolidated Net Income, plus

 

(b)           consolidated Fixed
Charges of such Person for such period to the extent the same was deducted in
calculating Consolidated Net Income, plus

 

(c)           Consolidated
Depreciation and Amortization Expense of such Person for such period to the
extent such depreciation and amortization were deducted in computing
Consolidated Net Income, plus

 

(d)           any expenses or
charges related to any Equity Offering, Permitted Investment, acquisition,
disposition, recapitalization or the incurrence of Indebtedness permitted to be
incurred by this Indenture including a refinancing thereof (whether or not
successful) and any amendment or modification to the terms of any such
transactions, including such fees, expenses or charges related to the
Transactions and the Credit Card Sale (including any one-time costs associated
with entering into any program agreements or servicing agreements directly
related to the Credit Card Sale, but not any payments required or contemplated
by such agreements, other than payments in respect of transition services
provided thereunder prior to the first anniversary of the Credit Card Sale), in
each case, deducted in computing Consolidated Net Income, plus

 

(e)           the amount of any
restructuring charge or reserve deducted in such period in computing
Consolidated Net Income, including any one-time costs incurred in connection
with (x) acquisitions after the Issue Date or (y) the closing of any
stores or distribution centers after the Issue Date, plus

 

(f)            any write offs,
write downs or other noncash charges reducing Consolidated Net Income for such
period, excluding any such charge that represents an accrual or reserve for a
cash expenditure for a future period, plus

 

15

 

(g)           the amount of any
minority interest expense deducted in calculating Consolidated Net Income, plus

 

(h)           the amount of
management, monitoring, consulting and advisory fees and related expenses paid
(or any accruals related to such fees or related expenses) during such period
to the Sponsors to the extent permitted under Section 1013 of this
Indenture, plus

 

(i)            the amount of net
cost savings projected by the Company in good faith to be realized as a result
of specified actions taken during such period (calculated on a pro forma basis as though such cost
savings had been realized on the first day of such period), net of the amount
of actual benefits realized during such period from such actions; provided that (x) such cost savings
are reasonably identifiable and factually supportable, (y) such actions
are taken within 36 months after the Issue Date and (z) the aggregate
amount of cost savings added pursuant to this clause (i) shall not
exceed $50.0 million for any four consecutive quarter period (which
adjustments may be incremental to pro forma
adjustments made pursuant to the second paragraph of the definition of “Fixed
Charge Coverage Ratio”), plus

 

(j)            any costs or
expenses incurred by the Company or a Restricted Subsidiary pursuant to any
management equity plan or stock option plan or any other management or employee
benefit plan or agreement or any stock subscription or stockholders agreement,
to the extent that such costs or expenses are funded with cash proceeds
contributed to the capital of the Company or net cash proceeds of issuance of
Equity Interests of the Company (other than Disqualified Stock that is
Preferred Stock) in each case, solely to the extent that such cash proceeds are
excluded from the calculation set forth in clause (C) of
Section 1010(a) of this Indenture;

 

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

 

(3)           increased or
decreased, as applicable, by (without duplication):

 

(a)           any net gain or loss
resulting in such period from Hedging Obligations and the application of
Statement of Financial Accounting Standards #133;

 

(b)           any net gain or loss
resulting in such period from currency translation gains or losses related to
currency remeasurements of Indebtedness; and

 

16

 

(c)           the amount of gain
or loss resulting in such period from a sale of receivables and related assets
to a Receivables Subsidiary in connection with a Receivables Facility.

 

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

 

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

 

“Equity Offering” means any public or
private sale of Common Stock or Preferred Stock of the Company or any of its
direct or indirect parent companies (excluding Disqualified Stock), other than

 

(a)           public offerings
with respect to the Company’s or any direct or indirect parent company’s Common
Stock registered on Form S-4 or Form S-8;

 

(b)           any such public or
private sale that constitutes an Excluded Contribution; and

 

(c)           an issuance to any
Subsidiary of the Company.

 

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

 

“Event of Default” has the meaning
specified in Section 501 of this Indenture.

 

“Excess Proceeds” has the meaning specified
in Section 1018 of this Indenture.

 

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

 

“Exchange Notes” has the meaning specified
in the first recital of this Indenture.  Unless the context otherwise
requires, all references to the Exchange Notes shall include 9%/93⁄4% Senior
Exchange Notes Due 2015 issued in exchange for any PIK Notes, any increase in
the aggregate principal amount of the Notes as a result of a PIK Payment and
any Additional Notes.

 

“Exchange Offer” means the Exchange Offer
as defined in the Registration Rights Agreement.

 

“Exchange Offer Registration Statement”
means the Exchange Offer Registration Statement as defined in the Registration
Rights Agreement.

 

17

 

“Excluded Contribution” means net cash
proceeds, marketable securities or Qualified Proceeds received by the Company
from

 

(a)           contributions to its
common equity capital, and

 

(b)           the sale (other than
to a Subsidiary of the Company or to any management equity plan or stock option
plan or any other management or employee benefit plan or agreement of the
Company) of Capital Stock (other than Disqualified Stock and Designated
Preferred Stock) of the Company,

 

in
each case designated as Excluded Contributions pursuant to an Officers’
Certificate executed by an executive vice president and the principal financial
officer of the Company on the date such capital contributions are made or the
date such Equity Interests are sold, as the case may be, which are excluded
from the calculation set forth in clause (C) of Section 1010(a) of
this Indenture.

 

“Existing Indebtedness” means Indebtedness
of the Company or the Restricted Subsidiaries in existence on the Issue Date,
plus interest accruing thereon.

 

“Existing Indenture” means the Indenture
dated as of May 27, 1998, by and between The Neiman Marcus Group, Inc.
and The Bank of New York, as trustee, pursuant to which the Existing
2008 Notes and the Existing 2028 Debentures have been issued, as the
same may be amended from time to time.

 

“Existing 2008 Notes” means the
$125,000,000 aggregate principal amount of 6.65% senior notes due 2008 issued
by The Neiman Marcus Group, Inc. pursuant to the Existing Indenture.

 

“Existing 2028 Debentures” means the
$125,000,000 aggregate principal amount of 7.125% senior debentures due 2028
issued by The Neiman Marcus Group, Inc. pursuant to the Existing
Indenture.

 

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

 

“Fixed Charge Coverage Ratio” means, with
respect to any Person for any period, the ratio of EBITDA of such Person for
such period to the Fixed Charges of such Person for such period. In the event
that the Company or any Restricted Subsidiary incurs, assumes, guarantees,
redeems, retires or extinguishes any Indebtedness (other than Indebtedness
incurred under any revolving credit facility that has been permanently repaid
and has not been replaced) or issues or redeems Disqualified Stock or Preferred
Stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to or simultaneously with the
event for

 

18

 

which
the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation
Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee, redemption, retirement or extinguishing of Indebtedness,
or such issuance or redemption of Disqualified Stock or Preferred Stock, as if
the same had occurred at the beginning of the applicable four-quarter period
(the “reference period”).

 

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

 

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

 

“Fixed Charges” means, with respect to any
Person for any period, the sum of

 

(a)           Consolidated
Interest Expense of such Person for such period,

 

19

 

(b)           all cash dividend
payments (excluding items eliminated in consolidation) on any series of
Preferred Stock during such period, and

 

(c)           all cash dividend
payments (excluding items eliminated in consolidation) on any series of
Disqualified Stock made during such period.

 

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

 

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

 

“Funding Guarantor” has the meaning
specified in Section 1205 of this Indenture.

 

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

 

“Government Securities” means securities
that are

 

(a)           direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or

 

(b)           obligations of a
Person controlled or supervised by and acting as an agency or instrumentality
of the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America,

 

which,
in either case, are not callable or redeemable at the option of the issuers
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such Government Securities or a specific payment of principal of
or interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest
on the Government Securities evidenced by such depository receipt.

 

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

 

20

 

“Guarantee” means the guarantee by any
Guarantor of the Company’s Obligations under this Indenture and the Notes.

 

“Guarantor” means any of the Subsidiary
Guarantors and Holdings.

 

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

 

“Holder” means the Person in whose name a
Note is registered on the books of the Note Registrar.

 

“Holdings” means Newton Acquisition, Inc.
and its successors.

 

“incur” has the meaning specified in
Section 1011 of this Indenture.

 

“incurrence” has the meaning specified in
Section 1011 of this Indenture.

 

“Indebtedness” means, with respect to any
Person,

 

(a)           any indebtedness
(including principal and premium) of such Person, whether or not contingent

 

(1)           in respect of borrowed money,

 

(2)           evidenced by bonds, notes, debentures
or similar instruments or letters of credit or bankers’ acceptances (or,
without double counting, reimbursement agreements in respect thereof),

 

(3)           representing the balance deferred and
unpaid of the purchase price of any property (including Capitalized Lease
Obligations), except any such balance that constitutes a trade payable or
similar obligation to a trade creditor, in each case accrued in the ordinary
course of business, or

 

(4)           representing any Hedging Obligations,

 

if
and to the extent that any of the foregoing Indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet (excluding the footnotes thereto) of such Person prepared in accordance
with GAAP,

 

(b)           to the extent not
otherwise included, any obligation by such Person to be liable for, or to pay,
as obligor, guarantor or otherwise, on the obligations of the type referred to
in clause (a) of another Person (whether or not such items would
appear upon the balance sheet of such obligor or guarantor), other than by

 

21

 

endorsement
of negotiable instruments for collection in the ordinary course of business,

 

(c)           to the extent not
otherwise included, the obligations of the type referred to in clause (a) of
another Person secured by a Lien on any asset owned by such Person, whether or
not such obligations are assumed by such Person and whether or not such
obligations would appear upon the balance sheet of such Person; provided that the amount of such
Indebtedness shall be the lesser of the fair market value of such asset at the
date of determination and the amount of Indebtedness so secured, and

 

(d)           Attributable Debt in
respect of Sale and Lease-Back Transactions;

 

provided, however, that notwithstanding the
foregoing, Indebtedness shall be deemed not to include (A) Contingent
Obligations incurred in the ordinary course of business and
(B) Obligations under, or in respect of, Receivables Facilities.

 

“Indenture” means this instrument as
originally executed and as it may from time to time be supplemented or amended
by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof, including, for all purposes of this Indenture and
any such supplemental indenture, the provisions of the Trust Indenture Act that
are deemed to be part of and govern this instrument and any such supplemental
indenture, respectively.

 

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

 

“Initial Notes” has the meaning stated in
the first recital of this Indenture.

 

“Initial Purchasers” means (1) with
respect to the Initial Notes issued on the Issue Date,  Credit Suisse First Boston LLC, Deutsche
Bank Securities Inc., Banc of America Securities LLC, and Goldman,
Sachs & Co., and (2) with respect to each issuance of
Additional Notes, the Persons purchasing such Additional Notes under the
related Purchase Agreement.

 

“Interest Payment Date” means the Stated
Maturity of an installment of interest on the Notes.

 

“Interest Period” means each period
commencing on and including an Interest Payment Date (or, if there has not yet
been an Interest Payment Date, October 6, 2005) and ending on and
including the day immediately preceding the next succeeding Interest Payment
Date.

 

“Investment Grade Securities” means:

 

22

 

(1)           securities issued or
directly and fully guaranteed or insured by the government of the United States
of America or any agency or instrumentality thereof (other than Cash
Equivalents),

 

(2)           debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher
by Moody’s or the equivalent of such rating by such rating organization, or, if
no rating of S&P or Moody’s then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any
debt securities or instruments constituting loans or advances among the Company
and its Subsidiaries,

 

(3)           investments in any
fund that invests exclusively in investments of the type described in clauses
(1) and (2), which fund may also hold immaterial amounts of cash pending
investment or distribution and

 

(4)           corresponding
instruments in countries other than the United States of America customarily
utilized for high quality investments.

 

“Investments” means, with respect to any
Person, all investments by such Person in other Persons (including Affiliates)
in the form of loans (including guarantees), advances or capital contributions
(including by means of any transfer of cash or other property to others or any
payment for property or services for the account or use of others, but
excluding accounts receivable, trade credit, advances to customers, commission,
travel and similar advances to officers and employees, in each case made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities issued by any other
Person and investments that are required by GAAP to be classified on the
balance sheet (excluding the footnotes) of such Person in the same manner as
the other investments included in this definition to the extent such
transactions involve the transfer of cash or other property. For purposes of
the definition of “Unrestricted Subsidiary” and Section 1010 of this
Indenture,

 

(1)           “Investments” shall
include the portion (proportionate to the Company’s equity interest in such
Subsidiary) of the fair market value of the net assets of a Subsidiary of the
Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to

 

(x)            the Company’s “Investment”
in such Subsidiary at the time of such redesignation, less

 

(y)           the portion
(proportionate to the Company’s equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of such
redesignation; and

 

23

 

(2)           any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Company.

 

“Issue Date” means October 6, 2005.

 

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

 

“Legal Defeasance” has the meaning
specified in Section 1302 of this Indenture.

 

“Legal Holiday” means a Saturday, a Sunday
or a day on which banking institutions are not required to be open in the State
of New York.

 

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

 

“Letter of Transmittal” means the letter of
transmittal to be prepared by the Company and sent to all Holders for use by
such Holders in connection with the Exchange Offer.

 

“Management Services Agreement” means the
Management Services Agreement as in effect on the Issue Date by and between The
Neiman Marcus Group, Inc. and the Sponsors.

 

“Maturity”, when used with respect to any
Note, means the date on which the principal of such Note or an installment of
principal becomes due and payable as therein or herein provided, whether at the
Stated Maturity or by declaration of acceleration, notice of redemption or
otherwise.

 

“Merger” means the merger of Newton
Acquisition Merger Sub, Inc. with and into The Neiman Marcus Group, Inc.
pursuant to the Merger Agreement.

 

“Merger Agreement” means the agreement and
Plan of Merger among Holdings, Newton Acquisition Merger Sub, Inc. and The
Neiman Marcus Group, Inc., dated as of May 1, 2005.

 

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

 

24

 

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

 

“Net Proceeds” means the aggregate cash
proceeds received by the Company or any Restricted Subsidiary in respect of any
Asset Sale, including any cash received upon the sale or other disposition of
any Designated Noncash Consideration received in any Asset Sale, net of the
direct costs relating to such Asset Sale and the sale or disposition of such
Designated Noncash Consideration, including legal, accounting and investment
banking fees, and brokerage and sales commissions, any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of principal,
premium, if any, and interest on Indebtedness required (other than by
clause (1) of Section 1018(b) of this Indenture) to be paid
as a result of such transaction and any deduction of appropriate amounts to be
provided by the Company as a reserve in accordance with GAAP against any
liabilities associated with the asset disposed of in such transaction and
retained by the Company after such sale or other disposition thereof, including
pension and other post-employment benefit liabilities and liabilities related
to environmental matters or against any indemnification obligations associated
with such transaction.

 

“New Indentures” means the Senior Subordinated
Indenture and this Indenture.

 

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

 

“Non-U.S. Person” means a Person who is not
a U.S. Person.

 

“Note Register” and “Note Registrar” have the respective
meanings specified in Section 304.

 

“Notes” has the meaning stated in the first
recital of this Indenture and more particularly means any Notes authenticated
and delivered under this Indenture.  The Initial Notes, any PIK Notes and
any Additional Notes (including, in each case, any increase in the principal
amount thereof as a result of a PIK Payment) shall be treated as a single class
for all purposes of this Indenture, including waivers, amendments, redemptions
and offers to purchase, and unless the context otherwise requires, all references
to the Notes shall include the Initial Notes, any PIK Notes, any Additional
Notes and the Exchange Notes issued in exchange for the Initial Notes, any PIK
Notes, and any Additional Notes (including, in each case, any increase in the
principal amount thereof as a result of a PIK Payment).  All references to
“principal amount” of the Notes include any increase in principal amount of the
outstanding Notes as a result of a PIK Payment.

 

“Obligations” means any principal
(including reimbursement obligations with respect to letters of credit whether
or not drawn), interest (including, to the extent legally permitted, all
interest accrued thereon after the commencement of any insolvency

 

25

 

or
liquidation proceeding at the rate, including any applicable post-default rate,
specified in the applicable agreement), premium (if any), guarantees of
payment, fees, indemnifications, reimbursements, expenses, damages and other
liabilities payable under the documentation governing any Indebtedness; provided that Obligations with respect to
the Notes shall not include fees or indemnification in favor of the Trustee and
any other third parties other than the Holders.

 

“Offering Circular” means the Offering
Circular dated September 28, 2005 relating to the Notes.

 

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

 

“Officers’
Certificate” means a certificate signed on behalf of the Company by
two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements set forth in
this Indenture.

 

“Opinion of Counsel” means a written
opinion from legal counsel. The counsel may be an employee of or counsel to the
Company.

 

“Outstanding”, when used with respect to
Notes, means, as of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture, except:

 

(1)           Notes theretofore
cancelled by the Trustee or delivered to the Trustee for cancellation;

 

(2)           Notes, or portions
thereof, for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such Notes; provided that, if such Notes are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;

 

(3)           Notes, except to the
extent provided in Sections 1302 and 1303, with respect to which the
Company has effected Legal Defeasance or Covenant Defeasance as provided in Article Thirteen;
and

 

(4)           Notes which have
been paid pursuant to Section 305 or in exchange for or in lieu of which
other Notes have been authenticated and delivered pursuant to this Indenture,
other than any such Notes in respect of which there shall have been presented
to the Trustee proof satisfactory to it that such Notes are held by a Protected
Purchaser in whose hands the Notes are valid obligations of the Company;

 

26

 

provided, however, that in determining
whether the Holders of the requisite principal amount of Outstanding Notes have
given any request, demand, authorization, direction, consent, notice or waiver
hereunder, and for the purpose of making the calculations required by TIA
Section 313, Notes owned by the Company or any other obligor upon the
Notes or any Affiliate of the Company or such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in making such calculation or in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes which a Responsible Officer of the Trustee actually knows to be so owned
shall be so disregarded.

 

“pay the Notes” has the meaning specified
in Section 1403 of this Indenture.

 

“Paying Agent” means any Person (including
the Company acting as Paying Agent) authorized by the Company to pay the
principal of (and premium, if any) or interest on any Notes on behalf of the
Company.

 

“Permitted Asset Swap” means the concurrent
purchase and sale or exchange of Related Business Assets or a combination of
Related Business Assets and cash or Cash Equivalents between the Company or any
of its Restricted Subsidiaries and another Person that is not the Company or
any of its Restricted Subsidiaries; provided
that any cash or Cash Equivalents received must be applied in accordance with
Section 1018 of this Indenture.

 

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

 

“Permitted Investments” means:

 

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

 

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

 

(c)           (i) any Investment by the
Company or any Restricted Subsidiary of the Company in a Person that is engaged
in a Similar Business if as a result of such Investment

 

27

 

(1)           such Person becomes a Restricted
Subsidiary of the Company or

 

(2)           such Person, in one transaction or a
series of related transactions, is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company and

 

(ii)           any Investment held by such Person;

 

(d)           any Investment in
securities or other assets not constituting cash, Cash Equivalents or
Investment Grade Securities and received in connection with an Asset Sale made
pursuant to the provisions of Section 1018 of this Indenture or any other
disposition of assets not constituting an Asset Sale;

 

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

 

(f)            loans and advances
to, and guarantees of Indebtedness of, employees not in excess of
$10.0 million outstanding at any one time, in the aggregate;

 

(g)           any Investment
acquired by the Company or any Restricted Subsidiary

 

(1)           in
exchange for any other Investment or accounts receivable held by the Company or
any such Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the Person in which
such other Investment is made or which is the obligor with respect to such
accounts receivable or

 

(2)           as
a result of a foreclosure by the Company or any Restricted Subsidiary with
respect to any secured Investment or other transfer of title with respect to
any secured Investment in default;

 

(h)           Hedging Obligations
permitted under clause (12) of Section 1011(b) of this
Indenture;

 

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

 

(j)            Investments the
payment for which consists of Equity Interests of the Company, or any of its
direct or indirect parent companies (exclusive of

 

28

 

Disqualified
Stock); provided that such Equity
Interests shall not increase the amount available for Restricted Payments under
clause (C) of Section 1010(a) of this Indenture;

 

(k)           guarantees of
Indebtedness permitted under Section 1011 of this Indenture and
performance guarantees in the ordinary course of business;

 

(l)            any transaction to
the extent it constitutes an investment that is permitted and made in
accordance with the provisions of Section 1013(b) of this Indenture
(except transactions described in clauses (2), (6) and (11) therein);

 

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

 

(n)           Investments in a
Similar Business having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (n) that are at that
time outstanding (without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of cash or
marketable securities), not to exceed the greater of
(x) $100.0 million and (y) 1.5% of Total Assets at the time of
such Investment (with the fair market value of each Investment being measured
at the time made and without giving effect to subsequent changes in value);

 

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

 

(p)           additional
Investments having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (p) that are at that
time outstanding (without giving effect to the sale of an Unrestricted
Subsidiary to the extent the proceeds of such sale do not consist of cash or
marketable securities), not to exceed $150.0 million (with the fair market
value of each Investment being measured at the time made and without giving effect
to subsequent changes in value).

 

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

 

(1)           Liens to secure
Indebtedness incurred under clauses (1) or (2) of
Section 1011(b) of this Indenture, the Existing 2008 Notes and
the Existing 2028 Debentures (and, in each case, any related Obligations);

 

(2)           pledges or deposits
by such Person under workmen’s compensation laws, unemployment insurance laws
or similar legislation, or good faith deposits to secure bids, tenders,
contracts (other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory obligations of
such Person or deposits of cash or U.S.

 

29

 

government
bonds to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the payment of
rent, in each case incurred in the ordinary course of business;

 

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

 

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

 

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

 

(6)           minor survey
exceptions, minor encumbrances, easements or reservations of, or rights of
others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real properties or Liens incidental to the conduct of the
business of such Person or to the ownership of its properties, in each case,
which were not incurred in connection with Indebtedness and which do not in the
aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person;

 

(7)           Liens existing on
the Issue Date;

 

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

 

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

 

30

 

(10)         Liens securing
Indebtedness or other obligations of a Restricted Subsidiary owing to the
Company or another Restricted Subsidiary permitted to be incurred in accordance
with Section 1011 of this Indenture;

 

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

 

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

 

(13)         Liens arising from
financing statement filings under the Uniform Commercial Code or similar state
laws regarding operating leases entered into by the Company and its Restricted
Subsidiaries in the ordinary course of business;

 

(14)         Liens in favor of the
Company or any Subsidiary Guarantor;

 

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

 

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

 

(17)         Liens to secure any
refinancing, refunding, extension, renewal or replacement (or successive
refinancing, refunding, extensions, renewals or replacements) as a whole, or in
part, of any Indebtedness secured by any Lien referred to in the foregoing
clauses (1), (7), (8) and (9) and the following clauses (18) and
(27); provided that (x) such
new Lien shall be limited to all or part of the same property that secured the
original Lien (plus improvements on such property), and (y) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (1), (7), (8),
(9) and the following clauses (18) and (27) at the time the original
Lien became a Permitted Lien under this Indenture, and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement;

 

(18)         Liens securing
Indebtedness permitted to be incurred pursuant to clauses (6), (19), (20),
(22)(i) and (23) of Section 1011(b) of this Indenture; provided that (A) Liens securing
Indebtedness permitted to be incurred pursuant to clause (19) thereof are
solely on acquired property or the assets of the acquired entity, as the case
may be and (B) Liens securing Indebtedness permitted to be incurred pursuant
to clause (20) thereof extend only to the assets of Foreign Subsidiaries;

 

31

 

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

 

(20)         Liens securing
judgments for the payment of money not constituting an Event of Default under
clause (5) under Section 501 of this Indenture, so long as such
Liens are adequately bonded and any appropriate legal proceedings that may have
been duly initiated for the review of such judgment have not been finally
terminated or the period within which such proceedings may be initiated has not
expired;

 

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

 

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

 

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

 

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

 

(25)         Liens deemed to exist
in connection with Investments in repurchase agreements permitted under
Section 1011 of this Indenture; provided
that such Liens do not extend to any assets other than those assets that are
the subject of such repurchase agreement;

 

(26)         other Liens securing
obligations incurred in the ordinary course of business which obligations do
not exceed $50.0 million at any one time outstanding;

 

(27)         Liens securing
Hedging Obligations, so long as the related Indebtedness is, and is permitted
to be under this Indenture, secured by a Lien on the same property securing
such Hedging Obligations; and

 

32

 

(28)         Liens incurred to
secure Obligations in respect of any Indebtedness permitted to be incurred
pursuant to Section 1011 of this Indenture; provided that, at the time of incurrence and after giving pro forma effect thereto, the
Consolidated Secured Debt Ratio would be no greater than 4.0:1.0.

 

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

 

“PIK Interest” has the meaning specified in
Section 301 of this Indenture.

 

“PIK Notes”  has the meaning specified
in Section 206 of this Indenture.

 

“PIK Payment”  has the meaning
specified in Section 206 of this Indenture.

 

“Predecessor Note” of any particular Note
means every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purposes of this definition,
any Note authenticated and delivered under Section 305 in exchange for a
mutilated Note or in lieu of a lost, destroyed or stolen Note shall be deemed
to evidence the same debt as the mutilated, lost, destroyed or stolen Note.

 

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

 

“Protected Purchaser” has the meaning
specified in Section 305 of this Indenture.

 

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

 

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

 

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

 

33

 

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

 

“Redemption Date”, when used with respect
to any Note to be redeemed, in whole or in part, means the date fixed for such
redemption by or pursuant to this Indenture.

 

“Redemption Price”, when used with respect
to any Note to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.

 

“Refinancing Indebtedness” has the meaning
specified in Section 1011 of this Indenture.

 

“Refunding Capital Stock” has the meaning
specified in Section 1010 of this Indenture.

 

“Registration Rights Agreement” means the
Registration Rights Agreement dated as of the Issue Date, among the Company,
Holdings, the Subsidiary Guarantors and the Initial Purchasers and, with
respect to any Additional Notes, one or more registration rights agreements
among the Company, Holdings, the Subsidiary Guarantors and the other parties
thereto, as such agreement(s) may be amended, modified or supplemented
from time to time, relating to rights given by the Company to the purchasers of
Additional Notes to register such Additional Notes under the Securities Act.

 

“Regular Record Date” has the meaning
specified in Section 301 of this Indenture.

 

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

 

“Representative” means, with respect to a
person, any trustee, agent or representative (if any) for an issue of Senior
Indebtedness of such Person.

 

“Responsible Officer”, when used with
respect to the Trustee, means any vice president, any assistant treasurer, any
trust officer or assistant trust officer, or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above-designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject and who
shall have direct responsibility for the administration of this Indenture.

 

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

 

34

 

“Restricted Payments” has the meaning
specified in Section 1010 of this Indenture.

 

“Restricted Subsidiary” means, at any time,
any direct or indirect Subsidiary of the Company (including any Foreign
Subsidiary) that is not then an Unrestricted Subsidiary; provided that upon the occurrence of an
Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such
Subsidiary shall be included in the definition of “Restricted Subsidiary”

 

“Retired Capital Stock” has the meaning
specified in Section 1010 of this Indenture.

 

“Revolving Credit Facility” means the
credit facility provided under the Senior Secured Asset-Based Revolving Credit
Agreement, to be entered into as of the Issue Date, among the Company,
Holdings, the lenders party thereto in their capacity as lenders thereunder and
Deutsche Bank Trust Company Americas, as Administrative Agent, including any
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications,
extensions, replacements, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial paper facilities
with banks or other institutional lenders or investors that extend, replace,
refund, refinance, renew or defease any part of the loans, notes, other credit
facilities or commitments thereunder, including any such replacement, refunding
or refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof (provided
that such increase in borrowings is permitted under Section 1011 of this
Indenture).

 

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

 

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

 

“SEC” means the Securities and Exchange
Commission.

 

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

 

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

 

“Senior Credit Facilities” means the
Revolving Credit Facility and the Term Loan Facility.

 

“Senior Indebtedness” means with respect to
any Person:

 

35

 

(1)           all Indebtedness of
such Person, whether outstanding on the Issue Date or thereafter incurred; and

 

(2)           all other
Obligations of such Person (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to such Person
whether or not post-filing interest is allowed in such proceeding) in respect
of Indebtedness described in clause (1) above

 

unless,
in the case of clauses (1) and (2), the instrument creating or evidencing
the same or pursuant to which the same is outstanding expressly provides that
such Indebtedness or other Obligations are subordinate in right of payment to
the Notes or the Guarantee of such Person, as the case may be; provided that Senior Indebtedness shall
not include:

 

(1)           any obligation of
such Person to the Company or any Subsidiary or to any joint venture in which
the Company or any Restricted Subsidiary has an interest;

 

(2)           any liability for
Federal, state, local or other taxes owed or owing by such Person;

 

(3)           any accounts payable
or other liability to trade creditors in the ordinary course of business
(including guarantees thereof as instruments evidencing such liabilities);

 

(4)           any Indebtedness or
other Obligation of such Person that is subordinate or junior in any respect to
any other Indebtedness or other Obligation of such Person; or

 

(5)           that portion of any
Indebtedness that at the time of Incurrence is Incurred in violation of this
Indenture.

 

“Senior Subordinated Indenture” means the
Senior Subordinated Indenture dated as of the Issue Date, among the Company, as
issuer, certain of its Subsidiaries and Holdings, as guarantors and Wells Fargo
Bank, National Association, as trustee, pursuant to which the Senior
Subordinated Notes are issued.

 

“Senior Subordinated Notes” means the
$500,000,000 aggregate principal amount of 103/8% Senior Subordinated Notes due 2015 issued by the Company under the
Senior Subordinated Indenture on the Issue Date.

 

“Shelf Registration Statement” means the
shelf registration statement as defined in the Registration Rights Agreement.

 

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

 

36

 

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

 

“Special Record Date” for the payment of
any Defaulted Interest means a date fixed by the Trustee pursuant to
Section 306.

 

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

 

“Stated Maturity”, when used with respect
to any Note or any installment of principal thereof or interest thereon, means
the date specified in such Note as the fixed date on which the principal of
such Note or such installment of principal or interest is due and payable.

 

“Subordinated Indebtedness” means:

 

(a)           with respect to the
Company, any Indebtedness of the Company that is by its terms subordinated in
right of payment to the Notes, and

 

(b)           with respect to any
Guarantor, any Indebtedness of such Guarantor that is by its terms subordinated
in right of payment to the Guarantee of such Guarantor.

 

“Subsidiary” means, with respect to any
Person,

 

(1)           any corporation,
association, or other business entity (other than a partnership, joint venture,
limited liability company or similar entity) of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time of determination owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof and

 

(2)           any partnership,
joint venture, limited liability company or similar entity of which

 

(x)            more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise, and

 

(y)           such
Person or any Restricted Subsidiary of such Person is a controlling general
partner or otherwise controls such entity.

 

37

 

“Subsidiary Guarantee” means the guarantee
by any Subsidiary Guarantor of the Company’s Obligations under this Indenture
and the Notes.

 

“Subsidiary Guarantor” means each
Restricted Subsidiary of the Company that executes this Indenture as a
guarantor on the Issue Date and each other Restricted Subsidiary of the Company
that thereafter guarantees the Notes pursuant to the terms of this Indenture.

 

“Successor Company” has the meaning
specified in Section 801 of this Indenture.

 

“Successor Person” has the meaning
specified in Section 802 of this Indenture.

 

“Term Loan Facility” means the credit
facility provided under the Senior Secured Term Loan Agreement, to be entered
into as of the Issue Date, among the Company, Holdings, the lenders party
thereto in their capacity as lenders and Credit Suisse, as Administrative
Agent, including any guarantees, collateral documents, instruments and
agreements executed in connection therewith, and any amendments, supplements,
modifications, extensions, replacements, renewals, restatements, refundings or
refinancings thereof and any indentures or credit facilities or commercial
paper facilities with banks or other institutional lenders or investors that
extend, replace, refund, refinance, renew or defease any part of the loans,
notes, other credit facilities or commitments thereunder, including any such
replacement, refunding or refinancing facility or indenture that increases the
amount borrowable thereunder or alters the maturity thereof (provided that such increase in borrowings
is permitted under Section 1011 of this Indenture).

 

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

 

“Transactions” means the Merger, including
the payment of the merger consideration in connection therewith, the investment
by the Sponsors, members of management and the Co-Investors, the issuance of
the New Notes and the execution of, and borrowings on the Issue Date under, the
Senior Credit Facilities as in effect on the Issue Date, the pledge and
security arrangements in connection with the foregoing, the refinancing of
certain Indebtedness in connection with the foregoing (including the redemption
of the Existing 2008 Notes) and the related transactions described in the
Offering Circular, in particular as described under the section thereof
entitled “The Transactions”.

 

“Treasury Rate” means, as of any Redemption
Date, the yield to maturity as of such Redemption Date of United States
Treasury securities with a constant maturity (as compiled and published in the
most recent Federal Reserve Statistical Release H.15 (519) that has become
publicly available at least two Business Days prior to the Redemption Date (or,
if such Statistical Release is no longer published, any publicly

 

38

 

available
source of similar market data)) most nearly equal to the period from the
Redemption Date to October 15, 2010; provided,
however, that if the period from the Redemption Date to October 15,
2010, is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.

 

“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939
as in force at the date as of which this Indenture was executed, except as
provided in Section 905.

 

“Trustee” means Wells Fargo Bank, National
Association until a successor replaces it and, thereafter, means the successor.

 

“Uniform Commercial Code” means the New
York Uniform Commercial Code as in effect from time to time.

 

“Unrestricted Subsidiary” means:

 

(1)           any Subsidiary of
the Company that at the time of determination is an Unrestricted Subsidiary (as
designated by the Company, as provided below) and

 

(2)           any Subsidiary of an
Unrestricted Subsidiary.

 

The
Company may designate any Subsidiary of the Company (including any existing
Subsidiary and any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Equity Interests or Indebtedness of, or owns or holds any Lien on, any
property of, the Company or any Subsidiary of the Company (other than any
Subsidiary of the Subsidiary to be so designated); provided that

 

(a)           any Unrestricted
Subsidiary must be an entity of which shares of the capital stock or other
equity interests (including partnership interests) entitled to cast at least a
majority of the votes that may be cast by all shares or equity interests having
ordinary voting power for the election of directors or other governing body are
owned, directly or indirectly, by the Company,

 

(b)           such designation
complies with Section 1010 of this Indenture and

 

(c)           each of

 

(1)           the Subsidiary to be so designated
and

 

(2)           its Subsidiaries

 

has
not at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with
respect to

 

39

 

any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any Restricted Subsidiary.

 

The
Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that,
immediately after giving effect to such designation no Default shall have
occurred and be continuing and either

 

(1)           the Company could
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test described in Section 1011(a) of this Indenture or

 

(2)           the Fixed Charge
Coverage Ratio for the Company and its Restricted Subsidiaries would be greater
than such ratio for the Company and its Restricted Subsidiaries immediately
prior to such designation, in each case on a
pro forma basis taking into account such designation.

 

Any
such designation by the Company shall be notified by the Company to the Trustee
by promptly filing with the Trustee a copy of any applicable Board Resolution
giving effect to such designation and an Officers’ Certificate certifying that
such designation complied with the foregoing provisions.

 

“U.S. Person” means a U.S. Person as
defined in Rule 902(k) promulgated under the Securities Act.

 

“Vice President”, when used with respect to
the Company or the Trustee, means any vice president, whether or not designated
by a number or a word or words added before or after the title “vice president”.

 

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

 

“Weighted Average Life to Maturity” means,
when applied to any Indebtedness, Disqualified Stock or Preferred Stock, as the
case may be, at any date, the quotient obtained by dividing

 

(1)           the sum of the
products of the number of years from the date of determination to the date of
each successive scheduled principal payment of such Indebtedness or redemption
or similar payment with respect to such Disqualified Stock or Preferred Stock
multiplied by the amount of such payment, by

 

(2)           the sum of all such
payments.

 

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

 

40

 

SECTION 103. 
Compliance Certificates and Opinions.  Upon any application or
request by the Company to the Trustee to take or refrain from taking any action
under this Indenture, the Company shall furnish to the Trustee an Officers’
Certificate stating that all conditions precedent, if any, provided for in this
Indenture (including any covenant compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with and, other
than in connection with the authentication of the Initial Notes, an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.

 

Every
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than pursuant to Section 1008(a) of
this Indenture or Section 314(a)(4) of the TIA) shall include:

 

(1)           a statement
that each individual signing such certificate or opinion has read such covenant
or condition and the definitions herein relating thereto;

 

(2)           a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based;

 

(3)           a statement
that, in the opinion of each such individual, he or she has made such
examination or investigation as is necessary to enable him or her to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and

 

(4)           a statement as
to whether, in the opinion of each such individual, such condition or covenant
has been complied with.

 

SECTION 104. 
Form of Documents Delivered to Trustee.  In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.

 

Any
certificate or opinion of an officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or opinion may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with

 

41

 

respect
to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.

 

Where
any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.

 

SECTION 105. 
Acts of Holders.  Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company.  Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the “Act” of the
Holders signing such instrument or instruments.  Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 601) conclusive
in favor of the Trustee and the Company, if made in the manner provided in this
Section.

 

The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof.  Where such execution is by a signer acting in a capacity other
than his or her individual capacity, such certificate or affidavit shall also
constitute sufficient proof of authority.  The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner that the Trustee
deems sufficient.

 

The principal amount and serial numbers of Notes
held by any Person, and the date of holding the same, shall be proved by the
Note Register.

 

If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent, waiver or other
Act, the Company may, at its option, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company shall have no
obligation to do so.  Notwithstanding TIA Section 316(c), such record
date shall be a date not earlier than the date 30 days prior to the first
solicitation of Holders generally in connection therewith and not later than
the date such solicitation is completed.  If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or
other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the

 

42

 

Outstanding
Notes shall be computed as of such record date; provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
eleven months after the record date.  Any request, demand, authorization,
direction, notice, consent, waiver or other Act of the Holder of any Note shall
bind every future Holder of the same Note and the Holder of every Note issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee, the Company or any Guarantor in reliance thereon, whether or not
notation of such action is made upon such Note.

 

Without limiting the foregoing, a Holder entitled to
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of the principal amount of such Note or by one or
more duly appointed agents, each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.  Any
notice given or action taken by a Holder or its agents with regard to different
parts of such principal amount pursuant to this paragraph shall have the same
effect as if given or taken by separate Holders of each such different part.

 

Without limiting the generality of the foregoing, a
Holder, including the Depository that is the Holder of a Global Note, may make,
give or take, by a proxy or proxies duly appointed in writing, any request,
demand, authorization, direction, notice, consent, waiver or other action
provided in this Indenture to be made, given or taken by Holders, and the
Depository that is the Holder of a Global Note may provide its proxy or proxies
to the beneficial owners of interests in any such Global Note through such
depositary’s standing instructions and customary practices.

 

The Company may fix a record date for the purpose of
determining the Persons who are beneficial owners of interests in any Global
Note held by the Depository entitled under the procedures of such depositary to
make, give or take, by a proxy or proxies duly appointed in writing, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided in this Indenture to be made, given or taken by Holders.

 

SECTION 106. 
Notices, Etc., to Trustee, Company, any Guarantor and Agent. 
Any request, demand, authorization, direction, notice, consent, waiver or Act
of Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,

 

(1)           the Trustee by
any Holder or by the Company or any Guarantor shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing (which may be
via facsimile) to or with the Trustee at Wells Fargo Bank, National
Association, 213 Court Street, Suite 703, Middletown, CT 06457,
Attn:  Joseph P. O’Donnell, or

 

(2)           the Company or
any Guarantor by the Trustee or by any Holder shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if made, given,
furnished or delivered in writing and mailed, first-class

 

43

 

postage prepaid, or delivered by recognized
overnight courier, to the Company or such Guarantor addressed to it at The
Neiman Marcus Group, Inc., 1618 Main Street, Dallas, TX 75201,
Attention: General Counsel, or at any other address previously furnished in
writing to the Trustee by the Company or such Guarantor.

 

SECTION 107. 
Notice to Holders; Waiver.  Where this Indenture provides for
notice of any event to Holders by the Company or the Trustee, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder affected by
such event, at his address as it appears in the Note Register, within the time
prescribed for the giving of such notice.  In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders.  Notices given
by publication shall be deemed given on the first date on which publication is
made and notices given by first-class mail, postage prepaid, shall be deemed
given five calendar days after mailing.

 

In
case by reason of the suspension of or irregularities in regular mail service
or by reason of any other cause, it shall be impracticable to mail notice of
any event to Holders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice for every purpose hereunder.

 

Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. 
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

 

SECTION 108. 
Effect of Headings and Table of Contents.  The Article and Section headings
herein, the Table of Contents and the reconciliation and tie between the TIA
and this Indenture are for convenience of reference only, are not intended to
be considered a part hereof and shall in no way affect the construction of, or
modify or restrict, any of the terms or provisions hereof.

 

SECTION 109. 
Successors and Assigns.  All agreements of the Company in this
Indenture and the Notes shall bind its successors.  All agreements of the
Trustee in this Indenture shall bind its successors.  All agreements of
each Guarantor in this Indenture shall bind its successors, except as otherwise
provided in Section 1208 hereof.

 

SECTION 110. 
Separability Clause.  In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

 

SECTION 111. 
Benefits of Indenture.  Nothing in this Indenture or in the Notes,
express or implied, shall give to any Person, other than the parties hereto,
any

 

44

 

Paying
Agent, any Note Registrar and their successors hereunder and the Holders any
benefit or any legal or equitable right, remedy or claim under this Indenture.

 

SECTION 112. 
Governing Law.  This Indenture, the Notes and any Guarantee shall
be governed by and construed in accordance with the laws of the State of
New York.  This Indenture is subject to the provisions of the Trust
Indenture Act that are required to be part of this Indenture and shall, to the
extent applicable, be governed by such provisions.

 

SECTION 113. 
Legal Holidays.  In any case where any Interest Payment Date,
Redemption Date or Stated Maturity or Maturity of any Note shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or of
the Notes) payment of principal (or premium, if any) or interest need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date, Redemption Date,
or at the Stated Maturity or Maturity; provided
that no interest shall accrue for purposes of such payment for the period from
and after such Interest Payment Date, Redemption Date, Stated Maturity or
Maturity, as the case may be.

 

SECTION 114. 
No Personal Liability of Directors, Officers, Employees and Stockholders. 
No director, officer, employee, incorporator or stockholder of the Company or
any Subsidiary Guarantor (other than in the case of stockholders of any
Subsidiary Guarantor, the Company or another Subsidiary Guarantor or in the
case of stockholders of the Company, Holdings) or any of their parent companies
shall have any liability for any obligations of the Company, Holdings or the
Subsidiary Guarantors under the Notes, the Guarantees and this Indenture or for
any claim based on, in respect of, or by reason of such obligations or their
creation to the extent permitted by applicable law.  Each Holder by
accepting a Note and the related Guarantee waives and releases all such
liability to the extent permitted by applicable law.  The waiver and
release are part of the consideration for issuance of the Notes and the
Guarantees.

 

SECTION 115. 
Trust Indenture Act Controls.  Upon qualification of this Indenture
under the TIA, if any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the provision required by the TIA shall control.  If
any provision of this Indenture modifies or excludes any provision of the TIA
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or excluded, as the case may be.

 

SECTION 116. 
Counterparts.  This Indenture may be executed in any number of
counterparts, each of which shall be original; but such counterparts shall
together constitute but one and the same instrument.  One signed copy is
enough to prove this Indenture.

 

45

 

ARTICLE TWO

 

NOTE FORMS

 

SECTION 201. 
Form and Dating.  Provisions relating to the Initial Notes,
any PIK Notes, the Private Exchange Notes and the Exchange Notes are set forth
in the Rule 144A / Regulation S Appendix attached hereto (the “Appendix”) which is hereby incorporated
in, and expressly made part of, this Indenture.  The Initial Notes and the
Trustee’s certificate of authentication shall be substantially in the form of Exhibit 1
to the Appendix which is hereby incorporated in, and expressly made a part of,
this Indenture.  The Exchange Notes, the Private Exchange Notes, any PIK
Notes issued with respect to Private Exchange Notes and the Trustee’s
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this
Indenture.  The Notes may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject, if
any, or usage (provided that any
such notation, legend or endorsement is in a form reasonably acceptable to the
Company).  Each Note shall be dated the date of its authentication. 
The terms of the Note set forth in the Appendix and Exhibit A are
part of the terms of this Indenture.

 

SECTION 202. 
Execution, Authentication, Delivery and Dating.  The Notes shall be
executed on behalf of the Company by any Officer.  The signature of an
Officer on the Notes may be manual or facsimile signature of the present or any
future such authorized officer and may be imprinted or otherwise reproduced on
the Notes.

 

Notes
bearing the manual or facsimile signature of an individual who was at any time
a proper officer of the Company shall bind the Company, notwithstanding that
such individual ceased to hold such office prior to the authentication and
delivery of such Notes or did not hold such office at the date of such Notes.

 

At
any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes executed by the Company to the Trustee
for authentication, together with a Company Order for the authentication and
delivery of such Notes, and the Trustee in accordance with such Company Order
shall authenticate and deliver such Notes.

 

On
the Issue Date, the Company shall deliver the Initial Notes in the aggregate
principal amount of $700,000,000 executed by the Company to the Trustee for
authentication, together with a Company Order directing the Trustee to
authenticate the Notes and certifying that all conditions precedent to the
issuance of Notes contained herein have been fully complied with, and the
Trustee in accordance with such Company Order shall authenticate and deliver
such Initial Notes.  At any time and from time to time after the Issue
Date, the Company may deliver Additional Notes executed by the Company to the
Trustee for authentication, together with a Company Order for the
authentication and delivery of such Additional Notes, directing the Trustee to
authenticate the Additional Notes and certifying that the issuance of such
Additional Notes is in compliance with Article Ten hereof and that all
other conditions precedent to

 

46

 

the
issuance of Notes contained herein have been fully complied with, and the
Trustee in accordance with such Company Order shall authenticate and deliver
such Additional Notes.  In addition, in connection with the payment of PIK
Interest, the Company is entitled to, without the consent of the Holders, increase
the outstanding principal amount of the Notes or issue additional Notes (the “PIK Notes”) under this Indenture on the
same terms and conditions as the Notes offered hereby (in each case, the “PIK Payment”).

 

Upon
receipt of a Company Order, the Trustee shall authenticate for original issue
Exchange Notes in an aggregate principal amount not to exceed $700,000,000 plus
any increase in the aggregate principal amount of the Notes as a result of a
PIK Payment plus the aggregate principal amount of any PIK Notes or any
Additional Notes issued; provided
that such Exchange Notes shall be issuable only upon the valid surrender for
cancellation of Initial Notes, any PIK Notes and any Additional Notes of a like
aggregate principal amount in accordance with an Exchange Offer pursuant to the
Registration Rights Agreement and a Company Order for the authentication and
delivery of such Exchange Notes and certifying that all conditions precedent to
the issuance of such Exchange Notes are complied with.  In each case, the
Trustee shall receive a Company Order and an Opinion of Counsel of the Company
that it may reasonably require in connection with such authentication of
Notes.  Such Company Order shall specify the amount of Notes to be
authenticated and the date on which the original issue of Notes is to be
authenticated.

 

Each
Note shall be dated the date of its authentication.

 

No
Note shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for in Exhibit 1 to the
Appendix, duly executed by the Trustee by manual signature of an authorized
officer, and such certificate upon any Note shall be conclusive evidence, and
the only evidence, that such Note has been duly authenticated and delivered
hereunder and is entitled to the benefits of this Indenture.

 

In
case the Company or any Guarantor, pursuant to Article Eight of this
Indenture, shall be consolidated or merged with or into any other Person or
shall convey, transfer, lease or otherwise dispose of its properties and assets
substantially as an entirety to any Person, and the successor Person resulting
from such consolidation, or surviving such merger, or into which the Company or
such Guarantor shall have been merged, or the Person which shall have received
a conveyance, transfer, lease or other disposition as aforesaid, shall have
executed a supplemental indenture hereto with the Trustee pursuant to Article Eight
of this Indenture, any of the Notes authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Notes executed in the name of the successor Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like
tenor as the Notes surrendered for such exchange and of like principal amount;
and the Trustee, upon Company Request of the successor Person, shall authenticate
and deliver Notes as specified in such request for the purpose of such
exchange.  If Notes shall at any time be authenticated and

 

47

 

delivered
in any new name of a successor Person pursuant to this Section in exchange
or substitution for or upon registration of transfer of any Notes, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Notes at the time outstanding for Notes
authenticated and delivered in such new name.

 

48

 

ARTICLE THREE

 

THE NOTES

 

SECTION 301. 
Title and Terms.  The aggregate principal amount of Notes which may
be authenticated and issued under this Indenture is not limited; provided, however that any Additional
Notes issued under this Indenture rank pari
passu with the Initial Notes, are issued in accordance with Sections
202 and 1011 hereof, form a single class with the Initial Notes and shall have
the same terms as to status, redemption or otherwise as the Initial
Notes.  Any Additional Notes shall be issued pursuant to a supplemental
indenture to this Indenture.

 

The
Notes shall be known and designated as the “9%/93⁄4% Senior Notes Due 2015” of
the Company.  The Stated Maturity of the Notes shall be October 15,
2015, and the Notes shall bear interest at the rate set forth below from
October 6, 2005, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, payable on January 15, 2006
and quarterly thereafter on January 15, April 15, July 15 and
October 15 in each year and at said Stated Maturity, until the principal
thereof is paid or duly provided for and to the Person in whose name the Note
(or any predecessor Note) is registered at the close of business on the
January 1, April 1, July 1 and October 1 immediately
preceding such Interest Payment Date (each, a “Regular
Record Date”).

 

The
Company shall pay interest with respect to the Interest Period that commences
on the Issue Date entirely in cash.  For any Interest Period thereafter
through the Interest Period ending October 14, 2010, the Company may, at
its option, elect to pay interest on the Notes:

 

(a)           entirely in
cash (“Cash Interest”) or

 

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

 

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

 

Cash
Interest on the Notes shall accrue at the rate of 9% per annum and be payable
in cash. PIK Interest on the Notes shall accrue at the rate of 93⁄4% per annum
and be payable (x) with respect to Notes represented by one or more global
notes registered in the name of, or held by, the Depository or its nominee on
the relevant record date, by increasing the principal amount of the outstanding
global Notes by an amount equal to the amount of PIK

 

49

 

Interest
for the applicable Interest Period (rounded up to the nearest $1,000) and (y) with
respect to Notes represented by certificated notes, by issuing PIK Notes in
certificated form in an aggregate principal amount equal to the amount of PIK
Interest for the applicable Interest Period (rounded up to the nearest whole
dollar) and the Trustee shall, upon receipt of a Company Order, authenticate
and deliver such PIK Notes in certificated form for original issuance to the
Holders on the relevant record date, as shown by the records of the Note
Register. Following an increase in the principal amount of the outstanding
global Notes as a result of a PIK Payment, the global Notes shall bear interest
on such increased principal amount from and after the date of such PIK Payment.
Any PIK Notes issued in certificated form shall be dated as of the applicable
Interest Payment Date and shall bear interest from and after such date. All
Notes issued pursuant to a PIK Payment shall mature on October 15, 2015
and shall be governed by, and subject to the terms, provisions and conditions
of, this Indenture and shall have the same rights and benefits as the Notes
issued on the Issue Date. Any certificated PIK Notes shall be issued with the
description “PIK” on the face of such PIK Note.

 

The
principal of (and premium, if any), Cash Interest and Additional Interest
payable in cash, if any, on the Notes shall be payable at the office or agency
of the Company maintained for such purpose in the City of Dallas, State of
Texas or, at the option of the Company, payment of Cash Interest may be made by
check mailed to the Holders of the Notes at their respective addresses set
forth in the Note Register of Holders; provided
that all payments of principal, premium, if any, and Cash Interest and
Additional Interest payable in cash, if any, with respect to Notes represented
by one or more permanent global notes registered in the name of or held by the
Depository or its nominee shall be made by wire transfer of immediately
available funds to the accounts specified by the Holder or Holders thereof.

 

Holders
shall have the right to require the Company to purchase their Notes, in whole
or in part, in the event of a Change of Control pursuant to Section 1017. 
The Notes shall be subject to repurchase pursuant to an Offer to Purchase as
provided in Section 1018.

 

The
Notes shall be redeemable as provided in Article Eleven of this Indenture
and Paragraph 5 of the Notes.

 

The
due and punctual payment of principal of, premium, if any, and interest on the
Notes payable by the Company is irrevocably unconditionally guaranteed, to the
extent set forth herein, by each of the Guarantors.

 

SECTION 302. 
Denominations.  The Notes shall be issuable only in registered form
without coupons and only in denominations of $2,000 and any integral multiple
of $1,000 in excess thereof, subject to the issuance of certificated PIK Notes
as indicated above.

 

SECTION 303. 
Temporary Notes.  Pending the preparation of definitive Notes, the
Company may execute, and upon receipt of a Company Order the Trustee shall
authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers

 

50

 

executing
such Notes may determine, as conclusively evidenced by their execution of such
Notes.

 

If
temporary Notes are issued, the Company shall cause definitive Notes to be
prepared without unreasonable delay.  After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 1002, without charge to
the Holder.  Upon surrender for cancellation of any one or more temporary
Notes, the Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like principal amount of definitive Notes of authorized
denominations.  Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Notes.

 

SECTION 304. 
Note Registrar; Paying Agent; Registration of Transfer and Exchange. 
The Company shall cause to be kept at the Corporate Trust Office of the Trustee
a register (the register maintained in such office and in any other office or
agency designated pursuant to Section 1002 being herein sometimes referred
to as the “Note Register”) in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Notes and of transfers of Notes. 
The Note Register shall be in written form or any other form capable of being
converted into written form within a reasonable time.  At all reasonable
times, the Note Register shall be open to inspection by the Trustee.  The
Trustee is hereby initially appointed as note registrar (the “Note Registrar”) for the purpose of
registering Notes and transfers of Notes as herein provided.  The Trustee
is hereby initially appointed to act as the Paying Agent and to act as
Custodian with respect to the Global Notes.

 

Upon
surrender for registration of transfer of any Note at the office or agency of
the Company designated pursuant to Section 1002, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations of a like aggregate principal amount.

 

At
the option of the Holder, Notes may be exchanged for other Notes of any
authorized denomination and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency.  Whenever
any Notes are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive; provided
that no exchange of Notes for Exchange Notes shall occur until an Exchange
Offer Registration Statement shall have been declared effective by the SEC, the
Trustee shall have received an Officers’ Certificate confirming that the
Exchange Offer Registration Statement has been declared effective by the SEC
and the Initial Notes to be exchanged for the Exchange Notes shall be cancelled
by the Trustee.

 

All
Notes issued upon any registration of transfer or exchange of Notes shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Notes surrendered upon such
registration of transfer or exchange.

 

51

 

Every
Note presented or surrendered for registration of transfer or for exchange
shall (if so required by the Company or the Note Registrar) be duly endorsed,
or be accompanied by written instruments of transfer, in form satisfactory to
the Company and the Note Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.

 

No
service charge shall be made for any registration of transfer or exchange or
redemption of Notes, but the Company may require payment of a sum sufficient to
cover any taxes, fees or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Sections 202, 303, 906, 1017, 1018, or 1108 not
involving any transfer.

 

SECTION 305. 
Mutilated, Destroyed, Lost and Stolen Notes.  If (1) any
mutilated Note is surrendered to the Trustee, or (2) the Company and the
Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, and there is delivered to the Company and the Trustee such
security or indemnity as may be required to protect the Company, the Trustee,
any agent and any authenticating agent from any loss that any of them may
suffer if a Note is replaced, then, in the absence of notice to the Company or
the Trustee that such Note has been acquired by a Protected Purchaser (as
defined in Section 8-303 of the Uniform Commercial Code) (a “Protected Purchaser”), the Company shall
execute and upon Company Order the Trustee shall authenticate and deliver, in
exchange for any such mutilated Note or in lieu of any such destroyed, lost or
stolen Note, a new Note of like tenor and principal amount, bearing a number
not contemporaneously outstanding.

 

In
case any such mutilated, destroyed, lost or stolen Note has become or is about
to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.

 

Upon
the issuance of any new Note under this Section, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) in replacing a Note.

 

Every
new Note issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company and each Guarantor, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.

 

The
provisions of this Section are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes.

 

SECTION 306. 
Payment of Interest; Interest Rights Preserved.  (a)  Interest
on any Note which is payable, and is punctually paid or duly provided for, on
any

 

52

 

Interest
Payment Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company maintained
for such purpose pursuant to Section 1002; provided, however, that, subject to Section 301 hereof,
each installment of Cash Interest may at the Company’s option be paid by
(1) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 307, to the
address of such Person as it appears in the Note Register or (2) transfer
to an account located in the United States maintained by the payee.

 

(b)           Any interest on
any Note which is payable, but is not punctually paid or duly provided for, on
any Interest Payment Date shall forthwith cease to be payable to the Holder on
the Regular Record Date by virtue of having been such Holder, and such
defaulted interest and (to the extent lawful) interest on such defaulted
interest at the rate borne by the Notes (such defaulted interest and interest
thereon herein collectively called “Defaulted
Interest”) may be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:

 

(1)           The Company may
elect to make payment of any Defaulted Interest to the Persons in whose names
the Notes (or their respective Predecessor Notes) are registered at the close
of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner.  The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed to
be paid on each Note and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this
clause provided.  Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment.  The Trustee shall promptly notify the Company of such
Special Record Date, and in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be given in the manner provided for in
Section 107, not less than 10 days prior to such Special Record
Date.  Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so given, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
clause (2).

 

(2)           The Company may
make payment of any Defaulted Interest in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Notes may be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of

 

53

 

the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.

 

(c)           Subject to the
foregoing provisions of this Section, each Note delivered under this Indenture
upon registration of transfer of or in exchange for or in lieu of any other
Note shall carry the rights to interest accrued and unpaid, and to accrue,
which were carried by such other Note.

 

SECTION 307. 
Persons Deemed Owners.  Prior to the due presentment of a Note for
registration of transfer, the Company, any Guarantor, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name such Note is
registered as the owner of such Note for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Sections 304 and 306)
interest on such Note and for all other purposes whatsoever, whether or not
such Note be overdue, and none of the Company, the Trustee or any agent of the
Company or the Trustee shall be affected by notice to the contrary.

 

SECTION 308. 
Cancellation.  All Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled
by it.  The Company may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and may deliver to the
Trustee (or to any other Person for delivery to the Trustee) for cancellation
any Notes previously authenticated hereunder which the Company has not issued
and sold, and all Notes so delivered shall be promptly cancelled by the
Trustee.  If the Company shall so acquire any of the Notes, however, such
acquisition shall not operate as a redemption or satisfaction of the indebtedness
represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation.  No Notes shall be authenticated in lieu of or
in exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture.  All cancelled Notes held by the
Trustee shall be disposed of by the Trustee in accordance with its customary
procedures (subject to the record retention requirements of the Exchange
Act).  Certification of the destruction of all cancelled Notes shall be
delivered to the Company by the Trustee.

 

SECTION 309. 
Computation of Interest.  Interest on the Notes shall be computed
on the basis of a 360-day year of twelve 30-day months.

 

SECTION 310. 
Transfer and Exchange.  The Notes shall be issued in registered
form and shall be transferable only upon the surrender of a Note for
registration of transfer.  When a Note is presented to the Note Registrar
or a co-registrar with a request to register a transfer, the Note Registrar
shall register the transfer as requested if the requirements of this Indenture
and Section 8-401(a) of the Uniform Commercial Code are met. 
When Notes are presented to the Note Registrar or a co-registrar with a request
to exchange them for an equal principal amount of Notes of other denominations,
the Note Registrar shall make the exchange as requested if the same
requirements are met.

 

54

 

SECTION 311. 
CUSIP Numbers.  The Company in issuing the Notes may use “CUSIP”
numbers, ISINs and “Common Code” numbers (in each case, if then generally
in use) in addition to serial numbers, and, if so, the Trustee shall use such “CUSIP”
numbers, ISINs and “Common Code” numbers in addition to serial numbers in
notices of redemption, repurchase or other notices to Holders as a convenience
to Holders; provided that any
such notice may state that no representation is made as to the correctness of
such “CUSIP” numbers, ISINs and “Common Code” numbers either as printed on
the Notes or as contained in any notice of a redemption or repurchase and that
reliance may be placed only on the serial or other identification numbers
printed on the Notes, and any such redemption or repurchase shall not be
affected by any defect in or omission of such numbers.  The Company shall
promptly notify the Trustee in writing of any change in the “CUSIP” numbers, ISINs
and “Common Code” numbers applicable to the Notes.

 

SECTION 312. 
Issuance of Additional Notes.  The Company may, subject to Section 1011
of this Indenture, issue additional Notes having identical terms and conditions
to the Initial Notes issued on the Issue Date, other than with respect to the
date of issuance and issue price (the “Additional
Notes”); provided, however,
that no Additional Notes may be issued at a price that would cause such
Additional Notes to have “original issue discount” within the meaning of Section 1273
of the Code. The Initial Notes issued on the Issue Date and any Additional
Notes subsequently issued, along with any PIK Notes and any increase in the
principal amount of Outstanding Notes as a result of a PIK Payment, shall be
treated as a single class for all purposes under this Indenture.  Exchange
Notes issued in exchange for Initial Notes issued on the Issue Date and
Exchange Notes issued for any Additional Notes subsequently issued, along with
any PIK Notes and any increase in the principal amount of Outstanding Notes as
a result of a PIK Payment, shall be treated as a single class for all purposes
under this Indenture.

 

55

 

ARTICLE FOUR

 

SATISFACTION
AND DISCHARGE

 

SECTION 401. 
Satisfaction and Discharge of Indenture.  This Indenture shall upon
Company Request and at the Company’s expense cease to be of further effect
(except as set forth in the last paragraph of this Section and as to
surviving rights of registration of transfer or exchange of Notes expressly
provided for herein or pursuant hereto) and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture when:

 

(1)           either,

 

(A)  all Notes
theretofore authenticated and delivered (other than (i) Notes which have
been destroyed, lost or stolen and which have been replaced or paid as provided
in Section 305 and (ii) Notes for whose payment money has theretofore
been deposited in trust with the Trustee or any Paying Agent or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been delivered to the
Trustee for cancellation; or

 

(B)  all such Notes not
theretofore delivered to the Trustee for cancellation,

 

(i)      have become due
and payable by reason of the making of a notice of redemption pursuant to Section 1105
or otherwise, or

 

(ii)     shall become
due and payable at their Stated Maturity within one year, or

 

(iii)    are to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company,

 

and
the Company or any Guarantor, in the case of (i), (ii) or (iii) of
this clause (B), has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust solely for the benefit of the Holders, cash in
U.S. dollars, non-callable Government Securities, or a combination thereof, in
such amounts as shall be sufficient without consideration of any reinvestment
of interest to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation for principal, premium,
if any, and accrued interest to the date of maturity or redemption, as the case
may be;

 

56

 

(2)           no Default
(other than that resulting from borrowing funds to be applied to make such
deposit and the granting of Liens in connection therewith) with respect to this
Indenture or the Notes issued hereunder shall have occurred and be continuing
on the date of such deposit or shall occur as a result of such deposit and such
deposit shall not result in a breach or violation of, or constitute a default
under, the Senior Credit Facilities, the Senior Subordinated Indenture, the
Existing Indenture, the Senior Subordinated Notes, the Existing 2028 Debentures
or any other material agreement or instrument (other than this Indenture) to
which the Company, Holdings or any Subsidiary Guarantor is a party or by which
the Company, Holdings or any Subsidiary Guarantor is bound;

 

(3)           the Company has
paid or caused to be paid all sums payable by it under this Indenture;

 

(4)           the Company has
delivered irrevocable instructions to the Trustee under this Indenture to apply
the deposited money toward the payment of such Notes at Maturity or the
Redemption Date, as the case may be; and

 

(5)           the Company has
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
each stating that all conditions precedent herein to the satisfaction and
discharge of this Indenture have been complied with.

 

Notwithstanding
the satisfaction and discharge of this Indenture, if money or Government
Securities shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 402 and the last paragraph of
Section 1003 shall survive such satisfaction and discharge.  In
addition, nothing in this Section 401 shall be deemed to discharge the
obligations of the Company to the Trustee under Section 607 and the
obligations of the Company to any Authenticating Agent under Section 612
that, by their terms, survive the satisfaction and discharge of this Indenture.

 

SECTION 402. 
Application of Trust Money.  Subject to the provisions of the last
paragraph of Section 1003, all money or Government Securities deposited
with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium and
Additional Interest, if any) and interest for whose payment such money or
Government Securities has been deposited with the Trustee, but such money or
Government Securities need not be segregated from other funds except to the
extent required by law.

 

If
the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 401 by reason of any legal
proceeding

 

57

 

or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company’s
and any Guarantor’s obligations under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section 401
until such time as the Trustee or Paying Agent is permitted to apply all such
money or Government Securities in accordance with Section 401; provided that if the Company has made any
payment of principal of, premium, if any, or interest on any Notes because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or Government
Securities held by the Trustee or Paying Agent.

 

58

 

ARTICLE FIVE

 

REMEDIES

 

SECTION 501. 
Events of Default.  “Event of
Default”, wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):

 

(1)           default in
payment when due and payable, upon redemption, acceleration or otherwise, of
principal of, or premium, if any, on the Notes issued under this Indenture;

 

(2)           default for
30 days or more in the payment when due of interest on or with respect to
the Notes issued under this Indenture;

 

(3)           failure by the
Company, Holdings or any Subsidiary Guarantor for 60 days after receipt of
written notice given by the Trustee or the Holders of at least 30% in principal
amount of the then Outstanding Notes issued under this Indenture to comply with
any of its other agreements contained in this Indenture or the Notes;

 

(4)           default under
any mortgage, indenture or instrument under which there is issued or by which
there is secured or evidenced any Indebtedness for money borrowed by the
Company or any Restricted Subsidiary or the payment of which is guaranteed by
the Company or any Restricted Subsidiary, other than Indebtedness owed to the
Company or a Restricted Subsidiary, whether such Indebtedness or guarantee now
exists or is created after the issuance of the Notes, if both

 

(A)  such default
either

 

(i)      results from
the failure to pay any principal of such Indebtedness at its stated final
maturity (after giving effect to any applicable grace periods) or

 

(ii)     relates to an
obligation other than the obligation to pay principal of any such Indebtedness
at its stated final maturity and results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its stated
maturity and

 

(B)          the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness in default for failure to pay principal at stated final
maturity (after giving effect to any applicable grace periods), or the maturity
of which has been so accelerated, aggregate $50.0 million or more at any
one time outstanding;

 

59

 

(5)           failure by the
Company or any Significant Subsidiary (or any group of Subsidiaries that
together would constitute a Significant Subsidiary) to pay final judgments
aggregating in excess of $50.0 million, which final judgments remain
unpaid, undischarged and unstayed for a period of more than 60 days after
such judgment becomes final, and in the event such judgment is covered by
insurance, an enforcement proceeding has been commenced by any creditor upon
such judgment or decree which is not promptly stayed;

 

(6)           any of the
following events with respect to the Company or any Significant Subsidiary:

 

(A)  the Company or any
Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law

 

(i)      commences a
voluntary case;

 

(ii)     consents to the
entry of an order for relief against it in an involuntary case;

 

(iii)    consents to the
appointment of a custodian of it or for any substantial part of its property;

 

(iv)    takes any
comparable action under any foreign laws relating to insolvency; or

 

(B)  a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(i)      is for relief
against the Company or any Significant Subsidiary in an involuntary case;

 

(ii)     appoints a
custodian of the Company or any Significant Subsidiary or for any substantial
part of its property; or

 

(iii)    orders the
winding up or liquidation of the Company or any Significant Subsidiary;

 

and
the order or decree remains unstayed and in effect for 60 days;

 

provided, that for the purposes of
this clause (6), a Significant Subsidiary shall include any group of
Subsidiaries that together would constitute a Significant Subsidiary; or

 

(7)           the Guarantee
of any Significant Subsidiary (or any group of Subsidiaries that together would
constitute a Significant Subsidiary) shall for any reason cease to be in full
force and effect or be declared null and void or any responsible officer of any
Subsidiary Guarantor that is a Significant Subsidiary (or the responsible
officers of any group of Subsidiaries that together would

 

60

 

constitute a Significant Subsidiary), as the case
may be, denies that it has any further liability under its Guarantee or gives
notice to such effect, other than by reason of the termination of this
Indenture or the release of any such Subsidiary Guarantee in accordance with
this Indenture.

 

SECTION 502. 
Acceleration of Maturity; Rescission and Annulment. 
(a)  If any Event of Default (other than an Event of Default
specified in Section 501(6)) occurs and is continuing under this
Indenture, the Trustee or the Holders of at least 30% in principal amount of
the Outstanding Notes issued under this Indenture may declare the principal,
premium, if any, interest and any other monetary Obligations on all the
Outstanding Notes issued under this Indenture to be due and payable immediately
by a notice in writing to the Company (and to the Trustee if given by the
Holders).

 

(b)           Upon the
effectiveness of such declaration, such principal of and premium, if any, and
interest shall be due and payable immediately.  Notwithstanding the
foregoing, if an Event of Default specified in Section 501(6) occurs
and is continuing, then the principal amount of all Outstanding Notes shall
ipso facto become and be immediately due and payable without any notice,
declaration or other act on the part of the Trustee or any Holder.

 

(c)           At any time
after a declaration of acceleration has been made and before a judgment or
decree for payment of the money due has been obtained by the Trustee as
hereinafter provided in this Article, the Holders of a majority in aggregate
principal amount of the Outstanding Notes, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:

 

(1)           the Company has
paid or deposited with the Trustee a sum sufficient to pay:

 

(A)  all overdue
interest on all Outstanding Notes,

 

(B)  all unpaid
principal of (and premium, if any, on) any Outstanding Notes which has become
due otherwise than by such declaration of acceleration, and interest on such
unpaid principal at the rate borne by the Notes,

 

(C)  to the extent that
payment of such interest is lawful, interest on overdue interest at the rate
borne by the Notes, and

 

(D)  all sums paid or
advanced by the Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel; and

 

(2)           Events of
Default, other than the non-payment of amounts of principal of (or premium, if
any, on) or interest on Notes which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 513.

 

61

 

No
such rescission shall affect any subsequent default or impair any right
consequent thereon.

 

(d)           Notwithstanding
the preceding paragraph, in the event of any Event of Default specified in
Section 501(4) above, such Event of Default and all consequences
thereof (excluding any resulting payment default) shall be annulled, waived and
rescinded, automatically and without any action by the Trustee or the Holders,
if within 20 days after such Event of Default arose,

 

(1)           the
Indebtedness or guarantee that is the basis for such Event of Default has been
discharged, or

 

(2)           the holders
thereof have rescinded or waived the acceleration, notice or action (as the
case may be) giving rise to such Event of Default, or

 

(3)           if the default
that is the basis for such Event of Default has been cured.

 

SECTION 503. 
Collection of Indebtedness and Suits for Enforcement by Trustee. 
If an Event of Default specified in Section 501(1) or (2) occurs
and is continuing, the Trustee, in its own name as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums due
hereunder pursuant to this Article 5 and unpaid, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.  The Trustee may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company, any Guarantor or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company, any Guarantor or any other obligor upon
the Notes, wherever situated.

 

If
an Event of Default occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders under
this Indenture and the Guarantees by the judicial proceedings discussed above
as the Trustee shall deem necessary to protect and enforce any such rights,
including seeking recourse against any Guarantor.

 

SECTION 504. 
Trustee May File Proofs of Claim.  In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Company or
any other obligor including any Guarantor, upon the Notes or the property of
the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment
of overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,

 

62

 

(1)           to file and
prove a claim for the whole amount of principal (and premium, if any) and
interest owing and unpaid in respect of the Notes and to file such other papers
or documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and

 

(2)           to collect,
receive and distribute any moneys or other property payable or deliverable on
any such claims and to distribute the same;

 

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar
official in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 607.

 

Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

 

SECTION 505. 
Trustee May Enforce Claims Without Possession of Notes.  All
rights of action and claims under this Indenture or the Notes may be prosecuted
and enforced by the Trustee without the possession of any of the Notes or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name and as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
in respect of which such judgment has been recovered.

 

SECTION 506. 
Application of Money Collected.  Any money or property collected by
the Trustee pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal (or premium, if any) or
interest, upon presentation of the Notes and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

 

FIRST:  To the payment of all amounts due the
Trustee under Section 607;

 

SECOND:  To the payment of the amounts then due and
unpaid for principal of (and premium, if any) and interest on the Notes in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due and payable on such Notes for principal (and premium, if any) and interest,
respectively; and

 

63

 

THIRD:  The balance, if any, to the Company or as a
court of competent jurisdiction may direct in writing; provided that all sums due and owing to
the Holders and the Trustee have been paid in full as required by this
Indenture.

 

The
Trustee may fix a record date and payment date for any payment to Holders of
Notes pursuant to this Section 506.

 

SECTION 507. 
Limitation on Suits.  Subject to Section 508, no Holder of any
Notes shall have any right to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:

 

(1)           such Holder has
previously given the Trustee notice that an Event of Default is continuing;

 

(2)           Holders of at
least 30% in principal amount of the Outstanding Notes have requested the
Trustee to pursue the remedy;

 

(3)           such Holders
have offered the Trustee reasonable security or indemnity reasonably
satisfactory to it against any loss, liability or expense;

 

(4)           the Trustee has
not complied with such request within 60 days after the receipt thereof
and the offer of security or indemnity; and

 

(5)           Holders of a
majority in principal amount of the Outstanding Notes have not given the
Trustee a direction inconsistent with such request within such 60-day period,

 

it
being understood and intended that no one or more Holders shall have any right
in any manner whatever by virtue of, or by availing of, any provision of this
Indenture or the Guarantees to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture or the
Guarantees, except in the manner herein provided and for the equal and ratable
benefit of all the Holders (it being further understood that the Trustee does
not have an affirmative duty to ascertain whether or not such actions or
forbearances are unduly prejudicial to such Holders).

 

SECTION 508. 
Unconditional Right of Holders to Receive Principal, Premium and Interest. 
Notwithstanding any other provision in this Indenture, the Holder of any Note
shall have the right, which is absolute and unconditional, to receive payment,
as provided herein (including, if applicable, Article Eleven) and in such
Note of the principal of (and premium, if any) and (subject to
Section 306) interest on such Note on the respective Stated Maturities
expressed in such Note (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment on or after such
respective dates, and such rights shall not be impaired without the consent of
such Holder.

 

64

 

SECTION 509. 
Restoration of Rights and Remedies.  If the Trustee or any Holder
has instituted any proceeding to enforce any right or remedy under this
Indenture or the Guarantees and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, any Guarantor, any other obligor of the Notes, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.

 

SECTION 510. 
Rights and Remedies Cumulative.  Except as otherwise provided with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Notes in the last paragraph of Section 305, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.  The assertion or employment of any right or remedy hereunder,
or otherwise, shall not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

SECTION 511. 
Delay or Omission Not Waiver.  No delay or omission of the Trustee
or of any Holder of any Note to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver
of any such Event of Default or an acquiescence therein.  Every right and
remedy given by this Article or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders, as the case may be.

 

SECTION 512. 
Control by Holders.  The Holders of not less than a majority in
principal amount of the Outstanding Notes shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, provided that:

 

(1)           such direction
shall not be in conflict with any rule of law or with this Indenture,

 

(2)           subject to Section 315
of the Trust Indenture Act, the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction, and

 

(3)           the Trustee
need not take any action which might involve it in personal liability or be
unduly prejudicial to the Holders not consenting.

 

SECTION 513. 
Waiver of Default.  Subject to Sections 508 and 902, the Holders of
not less than a majority in principal amount of the Outstanding Notes may on
behalf of the Holders of all such Notes waive any Default hereunder and its
consequences, except a continuing Default or Event of Default (1) in
respect of the

 

65

 

payment
of interest on, premium, if any, or the principal of any such Note held by a
non-consenting Holder, or (2) in respect of a covenant or provision hereof
which under Article Nine cannot be modified or amended without the consent
of the Holder of each Outstanding Note affected.

 

Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture, but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.

 

SECTION 514. 
Waiver of Stay or Extension Laws.  Each of the Company, the
Guarantors and any other obligor on the Notes covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force that
would prohibit or forgive the Company or a Guarantor from paying any portion of
the principal of, and premium, if any, and interest on the Notes.

 

66

 

ARTICLE SIX

 

THE TRUSTEE

 

SECTION 601. 
Duties of the Trustee.  (a)  Except during the continuance of
an Event of Default,

 

(1)           the Trustee
undertakes to perform such duties and only such duties as are specifically set forth
in this Indenture, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and

 

(2)           in the absence
of bad faith or willful misconduct on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of any such
certificates or opinions specifically required by any provision hereof to be
provided to it, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture,
but not to verify the contents thereof.

 

(b)           If an Event of
Default has occurred and is continuing of which a Responsible Officer of the
Trustee has actual knowledge or of which written notice of such Event of
Default shall have been given to the Trustee by the Company, any other obligor
of the Notes or by any Holder, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent Person would exercise or use under the
circumstances in the conduct of such Person’s own affairs.

 

(c)           No provision of
this Indenture shall be construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that

 

(1)           this paragraph (c) shall
not be construed to limit the effect of paragraph (a) of this Section;

 

(2)           the Trustee
shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;

 

(3)           the Trustee
shall not be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the Holders of a majority
in aggregate principal amount of the Outstanding Notes relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture; and

 

(4)           no provision of
this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance

 

67

 

of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.

 

(d)           Whether or not
therein expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.

 

SECTION 602. 
Notice of Defaults.  If a Default or Event of Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall transmit, in
the manner and to the extent provided in TIA Section 313(c), notice of
such Default or Event of Default within 90 days after it occurs unless such
Default or Event of Default shall have been cured or waived.  Except in
the case of a Default or Event of Default in the payment of the principal of
(or premium, if any, on) or interest on any Note, the Trustee shall be
protected in withholding such notice if it determines that the withholding of
such notice is in the interest of the Holders.  In addition, the Trustee
shall have no obligation to accelerate the Notes if in the best judgment of the
Trustee acceleration is not in the best interest of the Holders of such Notes.

 

SECTION 603. 
Certain Rights of Trustee.  Subject to the provisions of TIA
Sections 315(a) through 315(d):

 

(1)           the Trustee may
conclusively rely and shall be fully protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document (whether in original
or facsimile form) believed by it to be genuine and to have been signed or
presented by the proper party or parties;

 

(2)           any request or
direction of the Company mentioned herein shall be sufficiently evidenced by a
Company Request or Company Order and any resolution of the Board of Directors
may be sufficiently evidenced by a Board Resolution;

 

(3)           whenever in the
administration of this Indenture the Trustee shall deem it desirable that a
matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an Officers’
Certificate and an Opinion of Counsel;

 

(4)           the Trustee may
consult with counsel of its own selection and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the advice or opinion of such counsel;

 

(5)           the Trustee
shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of

 

68

 

the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
satisfactory to it against the costs, expenses, losses and liabilities which
might be incurred by it in compliance with such request or direction;

 

(6)           the Trustee
shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further inquiry
or investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney at the expense of
the Company and shall incur no liability of any kind by reason of such inquiry
or investigation;

 

(7)           the Trustee may
execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys and the Trustee shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;

 

(8)           the Trustee
shall not be liable for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Indenture; provided,
however, that the Trustee’s conduct does not constitute wilful
misconduct or negligence;

 

(9)           the rights,
privileges, protections, immunities and benefits given to the Trustee,
including its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and each
agent, custodian and other Person employed to act hereunder; and

 

(10)         in no event
shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit) irrespective of whether the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

 

SECTION 604. 
Trustee Not Responsible for Recitals or Issuance of Notes.  The
recitals contained herein and in the Notes, except for the Trustee’s
certificates of authentication, shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness. 
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and
perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein.  The Trustee
shall not be accountable for the use or application by the Company of Notes or
the proceeds thereof.

 

69

 

SECTION 605. 
May Hold Notes.  The Trustee, any Paying Agent, any Note
Registrar or any other agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and,
subject to TIA Sections 310(b) and 311, may otherwise deal with the
Company with the same rights it would have if it were not the Trustee, Paying
Agent, Note Registrar or such other agent; provided,
however, that, if it acquires any conflicting interest, it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue or resign.

 

SECTION 606. 
Money Held in Trust.  Money held by the Trustee in trust hereunder
need not be segregated from other funds except to the extent required by
law.  The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed in writing with the
Company.

 

SECTION 607. 
Compensation and Reimbursement.  The Company and the
Guarantors, jointly and severally, agree:

 

(1)           to pay to the
Trustee from time to time such compensation as shall be agreed in writing
between the Company and the Trustee for all services rendered by it hereunder
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

 

(2)           except as
otherwise expressly provided herein, to reimburse the Trustee upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as shall be determined
to have been caused by its own negligence or willful misconduct; and

 

(3)           to indemnify
the Trustee and any predecessor Trustee for, and to hold it harmless against,
any and all loss, liability, claim, damage or expense, including taxes (other
than the taxes based on the income of the Trustee) incurred without negligence
or willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses of
defending itself against any claim regardless of whether the claim is asserted
by the Company, a Guarantor, a Holder or any other Person or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.

 

The
obligations of the Company under this Section to compensate the Trustee,
to pay or reimburse the Trustee for expenses, disbursements and advances and to
indemnify and hold harmless the Trustee shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture and resignation or removal of the Trustee.  As security for the
performance of such obligations of the Company, the Trustee shall have a claim
prior to the Notes upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the payment of principal of (and
premium, if any) or interest on particular Notes.

 

70

 

When
the Trustee incurs expenses or renders services in connection with an Event of
Default specified in Section 501(8), the expenses (including the
reasonable charges and expenses of its counsel) of and the compensation for
such services are intended to constitute expenses of administration under any
applicable Bankruptcy Law.

 

The
provisions of this Section shall survive the termination of this Indenture
and resignation or removal of the Trustee.

 

SECTION 608. 
Corporate Trustee Required; Eligibility.  There shall be at all
times a Trustee hereunder which shall be eligible to act as Trustee under TIA
Section 310(a)(1) and shall have a combined capital and surplus of at
least $50,000,000.  If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of Federal, State,
territorial or District of Columbia supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.  If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

 

SECTION 609. 
Resignation and Removal; Appointment of Successor.  (a)  No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 610.

 

(b)           The Trustee may
resign at any time by giving written notice thereof to the Company.  Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument executed by authority of the Board of Directors,
a copy of which shall be delivered to the resigning Trustee and a copy to the
successor Trustee.  If the instrument of acceptance by a successor Trustee
required by Section 610 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee.

 

(c)           The Trustee may
be removed at any time by Act of the Holders of not less than a majority in
principal amount of the Outstanding Notes, delivered to the Trustee and to the
Company.  If the instrument of acceptance by a successor Trustee required
by Section 610 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition, at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor Trustee.

 

(d)           The Trustee
shall comply with TIA Section 310(b); provided,
however, that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if
the requirements for such exclusion set forth in TIA Section 310(b)(1) are
met.

 

71

 

(e)           If the Trustee
shall resign, be removed or become incapable of acting, or if a vacancy shall
occur in the office of Trustee for any cause, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee.  If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Notes delivered to the Company
and the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed by the Company.  If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.

 

(f)            The Company
shall give notice of each resignation and each removal of the Trustee and each
appointment of a successor Trustee to the Holders in the manner provided for in
Section 107.  Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.

 

SECTION 610. 
Acceptance of Appointment by Successor.  (a)  Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder.  Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.

 

(b)           No successor
Trustee shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article.

 

SECTION 611. 
Merger, Conversion, Consolidation or Succession to Business.  Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder; provided that such corporation shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.  In case any Notes shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver

 

72

 

the
Notes so authenticated with the same effect as if such successor Trustee had
itself authenticated such Notes.  In case at that time any of the Notes
shall not have been authenticated, any successor Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor Trustee.  In all such cases such certificates shall have the
full force and effect which this Indenture provides for the certificate of authentication
of the Trustee shall have; provided, however,
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Notes in the name of any predecessor Trustee shall
apply only to its successor or successors by merger, conversion or
consolidation.

 

SECTION 612. 
Appointment of Authenticating Agent.  At any time when any of the
Notes remain Outstanding, the Trustee may appoint an Authenticating Agent or
Agents with respect to the Notes which shall be authorized to act on behalf of
the Trustee to authenticate Notes and the Trustee shall give written notice of
such appointment to all Holders of Notes with respect to which such
Authenticating Agent shall serve, in the manner provided for in Section 107. 
Notes so authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder.  Any such appointment shall be evidenced by an
instrument in writing signed by a Responsible Officer of the Trustee, and a
copy of such instrument shall be promptly furnished to the Company. 
Wherever reference is made in this Indenture to the authentication and delivery
of Notes by the Trustee or the Trustee’s certificate of authentication, such reference
shall be deemed to include authentication and delivery on behalf of the Trustee
by an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent.  Each Authenticating
Agent shall be acceptable to the Company and shall at all times be a
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or examination by Federal
or state authority.  If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.  If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect specified in this Section.

 

Any
corporation into which an Authenticating Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any corporation succeeding to all or substantially all the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent; provided
that such corporation shall be otherwise eligible under this Section, without
the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.

 

73

 

An
Authenticating Agent may resign at any time by giving written notice thereof to
the Trustee and to the Company.  The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company.  Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice of
such appointment to all Holders of Notes, in the manner provided for in Section 107. 
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent. 
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.

 

The
Company agrees to pay to each Authenticating Agent from time to time such
compensation for its services under this Section as shall be agreed in
writing between the Company and such Authenticating Agent.

 

If
an appointment is made pursuant to this Section, the Notes may have endorsed
thereon, in addition to the Trustee’s certificate of authentication, an
alternate certificate of authentication in the following form:

 

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

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  as Authenticating Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  as Authorized Officer

  

 

74

 

ARTICLE SEVEN

 

HOLDERS
LISTS AND REPORTS BY TRUSTEE AND COMPANY

 

SECTION 701. 
Holder Lists.  The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with Trust Indenture Act Section 312(a). 
If the Trustee is not the Note Registrar, the Company shall furnish to the
Trustee at least two Business Days before each Interest Payment Date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company shall otherwise comply with
Trust Indenture Act Section 312(a).

 

SECTION 702. 
Disclosure of Names and Addresses of Holders.  Every Holder, by
receiving and holding Notes, agrees with the Company and the Trustee that none
of the Company or the Trustee or any agent of either of them shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders in accordance with TIA Section 312,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under TIA Section 312(b).

 

SECTION 703. 
Reports by Trustee.  Within 60 days after May 15 of each year
commencing with the first May 15 after the Issue Date, and for so long as
Notes remain outstanding, the Trustee shall mail to the Holders (with a copy to
the Company at the address specified in Section 106), in the manner and to
the extent provided in TIA Section 313(c), a brief report dated as of such
May 15 that complies with TIA Section 313(a).  The Trustee also
shall comply with TIA Section 313(b).  The Trustee shall also
transmit by mail all reports as required by the TIA Section 313(c).

 

75

 

ARTICLE EIGHT

 

MERGER,
CONSOLIDATION OR SALE

OF ALL OR SUBSTANTIALLY ALL ASSETS

 

SECTION 801. 
Company May Consolidate, Etc., Only on Certain Terms. 
(a)  The Company may not consolidate or merge with or into or wind up into
(whether or not the Company is the surviving entity), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to any Person
unless:

 

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

 

(2)                                  the Successor
Company, if other than the Company, expressly assumes all the obligations of
the Company under this Indenture and the Notes pursuant to supplemental
indentures or other documents or instruments in form reasonably satisfactory to
the Trustee;

 

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

 

(4)                                  immediately
after giving pro forma effect to
such transaction, as if such transaction had occurred at the beginning of the
applicable four-quarter period,

 

(A)  the Successor
Company would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 1011(a) of
this Indenture or

 

(B)  the Fixed Charge
Coverage Ratio for the Successor Company and the Restricted Subsidiaries on a
consolidated basis would be greater than such ratio for the Company and the
Restricted Subsidiaries immediately prior to such transaction;

 

(5)                                  each Guarantor,
unless it is the other party to the transactions described above, in which case
Section 802(A)(2) or Section 803(2), as applicable, shall apply,
shall have by supplemental indenture confirmed that its Guarantee shall apply
to such Person’s obligations under this Indenture and the Notes; and

 

(6)                                  the Company
shall have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with this Indenture.

 

(b)                                 Notwithstanding clauses
(a)(3) and (a)(4) above,

 

76

 

(1)                                  any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and

 

(2)                                  the Company may
merge with an Affiliate of the Company incorporated solely for the purpose of
reincorporating the Company in another State of the United States so long as
the amount of Indebtedness of the Company and the Restricted Subsidiaries is
not increased thereby.

 

SECTION 802. 
Subsidiary Guarantors May Consolidate, Etc., Only on Certain
Terms.  Subject to Section 1208, each Subsidiary Guarantor shall
not, and the Company shall not permit any Subsidiary Guarantor to, consolidate
or merge with or into or wind up into (whether or not such Subsidiary Guarantor
is the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, any Person unless

 

(A)                              (1) such Subsidiary
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Subsidiary Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States of America, any state thereof, the District of Columbia, or
any territory thereof (such Subsidiary Guarantor or such Person, as the case
may be, being herein called the “Successor
Person”);

 

(2)                                  the Successor Person, if
other than such Subsidiary Guarantor, expressly assumes all the obligations of
such Subsidiary Guarantor under this Indenture and such Subsidiary Guarantor’s
Subsidiary Guarantee, pursuant to supplemental indentures or other documents or
instruments in form reasonably satisfactory to the Trustee;

 

(3)                                  immediately after such
transaction, no Default exists; and

 

(4)                                  the Company shall have
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer and such supplemental
indentures, if any, comply with this Indenture; or

 

(B)                                the transaction
is made in compliance with Section 1018 of this Indenture.

 

Notwithstanding
the foregoing, any Subsidiary Guarantor may merge into or transfer all or part
of its properties and assets to another Subsidiary Guarantor or the Company.

 

SECTION 803. 
Holdings May Consolidate, Etc., Only on Certain Terms. 
Holdings shall not consolidate or merge with or into or wind up into (whether
or not Holdings is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise

 

77

 

dispose
of all or substantially all of its properties or assets in one or more related
transactions to, any Person unless:

 

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

 

(2)                                  the Successor
Holdings Guarantor, if other than Holdings, expressly assumes all the
obligations of Holdings under this Indenture and the Guarantee of Holdings,
pursuant to supplemental indentures or other documents or instruments in form
reasonably satisfactory to the Trustee;

 

(3)                                  immediately
after such transaction, no Event of Default or payment Default exists; and

 

(4)                                  the Company
shall have delivered to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
supplemental indentures, if any, comply with this Indenture.

 

Notwithstanding
the foregoing, Holdings may merge into or transfer all or part of its properties
and assets to a Subsidiary Guarantor or the Company, and Holdings may merge
with an Affiliate of the Company incorporated solely for the purpose of
reincorporating Holdings in another state of the United States of America so
long as the amount of Indebtedness of Holdings, the Company and the Restricted
Subsidiaries is not increased thereby.

 

SECTION 804. 
Successor Substituted.  Subject to Section 1208 hereof (with
respect to any Subsidiary Guarantor only), upon any consolidation or merger, or
any sale, assignment, conveyance, transfer, lease or disposition of all or
substantially all of the assets of the Company, Holdings or any Subsidiary
Guarantor in accordance with Sections 801, 802 and 803 hereof, the
successor Person formed by such consolidation or into which the Company,
Holdings or such Subsidiary Guarantor, as the case may be, is merged or the
successor Person to which such sale, assignment, conveyance, transfer, lease or
disposition is made, shall succeed to, and be substituted for, and may exercise
every right and power of, the Company, Holdings or such Subsidiary Guarantor,
as the case may be, under this Indenture or the Guarantees, as the case may be,
with the same effect as if such successor Person had been named as the Company,
Holdings or such Subsidiary Guarantor, as the case may be, herein or the
Guarantees, as the case may be; provided
that the predecessor Company, Holdings or any Subsidiary Guarantor shall not be
relieved from the obligation to pay the principal of and interest and Additional
Interest, if any, on the Notes except in the case of a sale, assignment,
transfer, conveyance or other disposition of all of the assets of the Company,
Holdings or such

 

78

 

Subsidiary
Guarantor, as the case may be, that meets the requirements of
Sections 801, 802 and 803 hereof, as applicable.

 

SECTION 805. 
The Merger Permitted.  Notwithstanding the foregoing, the Merger
shall be permitted without compliance with this Article Eight.

 

SECTION 806. 
Assets of Subsidiary Apply to Company and Holdings.  For purposes
of this Article Eight, the sale, lease, conveyance, assignment, transfer
or other disposition of all or substantially all of the properties and assets
of one or more Subsidiaries of the Company or Holdings, as applicable, which
properties and assets, if held by the Company or Holdings, as applicable,
instead of such Subsidiaries, would constitute all or substantially all of the
properties and assets of the Company and its Subsidiaries on a consolidated
basis or Holdings and its Subsidiaries on a consolidated basis, as applicable,
shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company or Holdings, as applicable.

 

79

 

ARTICLE NINE

 

AMENDMENT,
SUPPLEMENT AND WAIVER

 

SECTION 901. 
Amendments or Supplements Without Consent of Holders. 
Notwithstanding Section 902 hereof, without the consent of any Holder, the
Company, any Guarantor (with respect to a Guarantee or this Indenture to which
it is a party), and the Trustee, at any time and from time to time, may amend
or supplement this Indenture, any Guarantee or the Notes, in form satisfactory
to the Trustee, for any of the following purposes:

 

(1)                                  to cure any
ambiguity, omission, mistake, defect or inconsistency;

 

(2)                                  to provide for
uncertificated Notes in addition to or in place of certificated Notes;

 

(3)                                  to comply with Article Eight
hereof and to provide for the assumption of the Company’s or such Guarantor’s
obligations to Holders in connection therewith;

 

(4)                                  to make any
change that would provide any additional rights or benefits to the Holders or
that does not adversely affect the legal rights of any such Holder under this
Indenture;

 

(5)                                  to add covenants
for the benefit of the Holders or to surrender any right or power conferred in
this Indenture upon the Company, Holdings or any Subsidiary Guarantor;

 

(6)                                  to comply with
requirements of the SEC in order to effect or maintain the qualification of
this Indenture under the Trust Indenture Act;

 

(7)                                  to evidence and
provide for the acceptance and appointment under this Indenture of a successor
Trustee pursuant to the requirements of Sections 609 and 610 hereof;

 

(8)                                  to provide for
the issuance of Exchange Notes or private exchange notes, which are identical
to Exchange Notes except that they are not freely transferable;

 

(9)                                  to add a
Subsidiary Guarantor or any other guarantor under this Indenture;

 

(10)                            to conform the
text of this Indenture, Guarantees or the Notes to any provision of the “Description
of the Notes” section of the Offering Circular to the extent that such
provision in the “Description of the Notes” was intended to be

 

80

 

a verbatim recitation of a provision of this
Indenture, the Guarantees or the Notes; or

 

(11)                            to make any
amendment to the provisions of this Indenture relating to the transfer and
legending of Notes; provided, however,
that (A) compliance with this Indenture as so amended would not result in
Notes being transferred in violation of the Securities Act or any applicable
securities law and (B) such amendment does not materially and adversely
affect the rights of Holders to transfer Notes.

 

Upon the request of the
Company accompanied by a Board Resolution authorizing the execution of any such
amended or supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 603 hereof, the Trustee shall join with the
Company and the Guarantors in the execution of any amended or supplemental
indenture authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into such amended or
supplemental indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.  Notwithstanding the foregoing, no Opinion of
Counsel shall be required in connection with the addition of a Guarantor under
this Indenture upon execution and delivery by such Guarantor and the Trustee of
a supplemental indenture to this Indenture, the form of which is attached as Exhibit B
hereto, and delivery of an Officer’s Certificate.

 

SECTION 902. 
Amendments or Supplements With Consent of Holders.  With the
written consent of the Holders of not less than a majority in principal amount
of the Outstanding Notes, delivered to the Company and the Trustee, the
Company, any Guarantor (with respect to any Guarantee or this Indenture to
which it is a party) and the Trustee may (a) amend or supplement this
Indenture, any Guarantee or the Notes (including consents obtained in
connection with a purchase of, or tender offer or Exchange Offer for, the
Notes) and (b) waive any existing Default or Event of Default or
compliance with any provision of this Indenture or the Notes (including
consents obtained in connection with a purchase of, or tender offer or Exchange
Offer, for Notes).  Notwithstanding the foregoing sentence, no such
amendment, supplement or waiver shall, without the consent of each Holder of
the Outstanding Notes affected thereby:

 

(1)                                  reduce the
principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver,

 

(2)                                  reduce the
principal of or change the Maturity of any such Note or alter or waive the
provisions with respect to the redemption of the Notes (other than Sections
1017 and 1018),

 

(3)                                  reduce the rate
of or change the time for payment of interest on any Note,

 

81

 

(4)                                  waive a Default
or Event of Default in the payment of principal of or premium, if any, or
interest on the Notes issued under this Indenture, except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Outstanding Notes and a waiver of the payment default
that resulted from such acceleration, or in respect of a covenant or provision
contained in this Indenture or any Guarantee that cannot be amended or modified
without the consent of all Holders,

 

(5)                                  make any Note
payable in money other than that stated in the Notes,

 

(6)                                  make any change
in the provisions of Section 508 or Section 513 of this Indenture,

 

(7)                                  make any change
in the ranking of this Indenture and the Notes that would adversely affect the
Holders,

 

(8)                                  except as
otherwise expressly permitted by this Indenture, modify the Guarantee of any
Significant Subsidiary (or any group of Subsidiaries that together would
constitute a Significant Subsidiary) in any manner adverse to the Holders,

 

(9)                                  make any change
in these amendment and waiver provisions, or

 

(10)                            impair the
right of any Holder to receive payment of principal of, or interest on such
Holder’s Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder’s Notes.

 

The
consent of the Holders is not necessary under this Indenture to approve the
particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.

 

SECTION 903. 
Execution of Amendments, Supplements or Waivers.  The Trustee shall
sign any amendment, supplement or waiver authorized pursuant to this Article Nine
if the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee.  The Company may not sign an
amendment, supplement or waiver until the Board of Directors approves it. 
In executing any amendment, supplement or waiver, the Trustee shall be entitled
to receive and (subject to Section 601 hereof) shall be fully protected in
relying upon, in addition to the documents required by Section 103 hereof,
an Officers’ Certificate and an Opinion of Counsel stating that the execution
of such amended or supplemental indenture is authorized or permitted by this
Indenture and that such amendment, supplement or waiver is the legal, valid and
binding obligation of the Company and any Guarantors party thereto, enforceable
against them in accordance with its terms, subject to customary exceptions, and
complies with the provisions hereof (including Section 905). 
Notwithstanding the foregoing, no Opinion of Counsel will be required for the
Trustee to execute any amendment or supplement adding a new Guarantor under
this Indenture.

 

82

 

SECTION 904. 
Effect of Amendments, Supplements or Waivers.  Upon the execution
of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such amendment, supplement or waiver
shall form a part of this Indenture for all purposes; and every Holder of Notes
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

 

SECTION 905. 
Compliance with Trust Indenture Act.  Every amendment or supplement
to this Indenture or the Notes shall be set forth in an amended or supplemental
indenture that complies with the Trust Indenture Act as then in effect.

 

SECTION 906. 
Reference in Notes to Supplemental Indentures.  Notes authenticated
and delivered after the execution of any supplemental indenture pursuant to
this Article may, and shall if required by the Trustee, bear a notation in
form approved by the Trustee as to any matter provided for in such supplemental
indenture.  If the Company shall so determine, new Notes so modified as to
conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Notes.

 

SECTION 907. 
Notice of Supplemental Indentures.  Promptly after the execution by
the Company, any Guarantor and the Trustee of any supplemental indenture
pursuant to the provisions of Section 902, the Company shall give notice
thereof to the Holders, in the manner provided for in Section 107, setting
forth in general terms the substance of such supplemental indenture.

 

83

 

ARTICLE TEN

 

COVENANTS

 

SECTION 1001. 
Payment of Principal, Premium, if any, and Interest.  The Company
shall pay or cause to be paid the principal of, premium, if any, Additional
Interest, if any, and interest on the Notes on the dates and in the manner
provided in the Notes.  Principal, premium, if any, Additional Interest
paid in cash, if any, and Cash Interest shall be considered paid on the date
due if the Paying Agent, if other than the Company or a Subsidiary, holds as of
noon Eastern Time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal,
premium, if any, Cash Interest and Additional Interest to be paid in cash, if
any, then due.

 

The
Company shall pay interest on overdue principal at the rate equal to the then
applicable interest rate on the Notes, and it shall pay interest on overdue
installments of interest at the same rate, in any case to the extent lawful.

 

SECTION 1002. 
Maintenance of Office or Agency.  The Company shall maintain, an
office or agency where Notes may be presented or surrendered for payment, where
Notes may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Notes and this Indenture
may be served.  The Corporate Trust Office of the Trustee shall be such
office or agency of the Company, unless the Company shall designate and
maintain some other office or agency for one or more of such purposes. 
The Company shall give prompt written notice to the Trustee of any change in
the location of any such office or agency.  If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive
all such presentations, surrenders, notices and demands.

 

The
Company may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind any such designation.  The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and any change in the location of any such other office or
agency.

 

SECTION 1003. 
Paying Agent to Hold Money in Trust.  If the Company shall at any
time act as its own Paying Agent, it shall, on or before each due date of the
principal of (or premium, if any) or interest on any of the Notes, segregate
and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal of (or premium, if any) or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and shall promptly notify the Trustee of its action or failure
so to act.

 

84

 

Whenever
the Company shall have one or more Paying Agents for the Notes, it shall, on or
before each due date of the principal of (or premium, if any) or interest on
any Notes, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium or interest,
and (unless such Paying Agent is the Trustee) the Company shall promptly notify
the Trustee of such action or any failure so to act.

 

The
Company shall cause each Paying Agent (other than the Trustee) to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent shall:

 

(1)                                  hold all sums
held by it for the payment of the principal of (and premium, if any) or
interest on Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided;

 

(2)                                  give the
Trustee notice of any Default by the Company (or any other obligor upon the
Notes) in the making of any payment of principal (and premium, if any) or
interest; and

 

(3)                                  at any time
during the continuance of any such Default, upon the written request of the
Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying
Agent.

 

The
Company may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such sums.

 

Subject
to applicable laws relating to abandoned property, any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of (or premium, if any) or interest on any Note and
remaining unclaimed for two years after such principal, premium or interest has
become due and payable shall be paid to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust; and the Holder
of such Note shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Company
as Trustee thereof, shall thereupon cease.

 

SECTION 1004. 
Corporate Existence.  Subject to Article Eight, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect the corporate existence and that of each Restricted Subsidiary
and the corporate rights (charter and statutory) and franchises of the Company
and each

 

85

 

Restricted
Subsidiary; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Subsidiaries as a whole.

 

SECTION 1005. 
Payment of Taxes and Other Claims.  The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary and (2) all lawful claims for
labor, materials and supplies, which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which appropriate reserves, if
necessary (in the good faith judgment of management of the Company) are being
maintained in accordance with GAAP.

 

SECTION 1006. 
Reserved.

 

SECTION 1007. 
Reserved.

 

SECTION 1008. 
Statement by Officers as to Default.  (a)  The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year, an
Officers’ Certificate stating that a review of the activities of the Company
and its Restricted Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining
whether it has kept, observed, performed and fulfilled, and has caused each of
its Restricted Subsidiaries to keep, observe, perform and fulfill its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, that, to the best of his or her knowledge, the
Company during such preceding fiscal year has kept, observed, performed and
fulfilled, and has caused each of its Restricted Subsidiaries to keep, observe,
perform and fulfill each and every such covenant contained in this Indenture
and no Default occurred during such year and at the date of such certificate
there is no Default which has occurred and is continuing or, if such signers do
know of such Default that is continuing, the certificate shall describe its
status, with particularity and what action each is taking or proposes to take
with respect thereto and that, to the best of his or her knowledge, no event
has occurred and remains by reason of which payments on the account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event.  The Officers’ Certificate shall
also notify the Trustee should the Company elect to change the manner in which
it fixes its fiscal year-end.  For purposes of this Section 1008(a),
such compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.

 

(b)                                 (1)  When any
Default has occurred and is continuing under this Indenture, or (2) if the
trustee for or the holder of any other evidence of Indebtedness of the Company
or any Restricted Subsidiary gives any notice or takes any other action with
respect to a claimed Default (other than with respect to Indebtedness in the
principal

 

86

 

amount
of less than $50,000,000), the Company shall deliver to the Trustee by
registered or certified mail or facsimile transmission an Officers’ Certificate
specifying such event, notice or other action within five Business Days of its
occurrence (with respect to clause (1)) or such notice or other action
(with respect to clause (2)).

 

SECTION 1009. 
Reports and Other Information.  Whether or not required by the SEC,
so long as any Notes are outstanding, the Company shall furnish to the Holders,
within the time periods specified in the SEC’s rules and regulations for
non-accelerated filers:

 

(1)                                  all quarterly
and annual financial information that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K (or any successor or comparable
forms) if the Company were required to file such forms, including a “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and,
with respect to the annual information only, a report on the annual financial
statements by the Company’s certified independent accountants; and

 

(2)                                  all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports.

 

In
addition, whether or not required by the SEC, the Company shall file a
copy of all of the information and reports referred to in clauses (1) and
(2) above with the SEC for public availability within the time periods
specified in the SEC’s rules and regulations (unless the SEC shall not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, the Company has
agreed that, for so long as any Notes remain outstanding, it shall furnish to
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.

 

(b)                                 Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee’s receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company’s compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers’
Certificates).

 

(c)                                  In addition, for so long as
Holdings is a Guarantor under this Indenture or if at any time any other direct
or indirect parent company of the Company is a guarantor of the Notes, the
reports, information and other documents required to be filed and furnished to
the Holders pursuant to this Section 1009 may, at the option of the
Company, be filed by and be those of Holdings or such other parent, as
applicable, rather than the Company; provided
that the same is accompanied by consolidating information that explains in
reasonable detail the differences between the information relating to Holdings
or such other parent, on the one hand, and the information relating to the
Company and its Restricted Subsidiaries on a standalone basis, on the other
hand.

 

87

 

(d)                                 Notwithstanding the
foregoing, the requirements of this Section 1009 shall be deemed satisfied
prior to the commencement of the Exchange Offer or the effectiveness of the
Shelf Registration Statement by the filing with the SEC of the Exchange Offer
Registration Statement or Shelf Registration Statement within the time periods
specified in the Registration Rights Agreement, and any amendments thereto,
with such financial information that satisfies Regulation S-X of the
Securities Act.

 

SECTION 1010. 
Limitation on Restricted Payments.  (a)  The Company
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly:

 

(1)                                  declare or pay
any dividend or make any distribution on account of the Company’s or any
Restricted Subsidiary’s Equity Interests, including any dividend or
distribution payable in connection with any merger or consolidation other than

 

(A)  dividends or
distributions by the Company payable in Equity Interests (other than
Disqualified Stock) of the Company or

 

(B)  dividends or
distributions by a Restricted Subsidiary so long as, in the case of any
dividend or distribution payable on or in respect of any class or series of
securities issued by a Restricted Subsidiary other than a Wholly-Owned
Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or
distribution in accordance with its Equity Interests in such class or series of
securities;

 

(2)                                  purchase,
redeem, defease or otherwise acquire or retire for value any Equity Interests
of the Company or any direct or indirect parent of the Company, including in
connection with any merger or consolidation;

 

(3)                                  make any
principal payment on, or redeem, repurchase, defease or otherwise acquire or
retire for value in each case, prior to any scheduled repayment, sinking fund
payment or maturity, any Subordinated Indebtedness, other than

 

(x)                                   Indebtedness permitted under
clauses (9) and (10) of Section 1011(b) of this Indenture
or

 

(y)                                 the purchase, repurchase or
other acquisition of Subordinated Indebtedness purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of purchase, repurchase or
acquisition; or

 

(4)                                  make any
Restricted Investment;

 

(all
such payments and other actions set forth in clauses (1) through
(4) above being collectively referred to as “Restricted Payments”), unless, at the time of such
Restricted Payment:

 

88

 

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

 

(B)  immediately after
giving effect to such transaction on a pro
forma basis, the Company could incur $1.00 of additional
Indebtedness under the provisions of Section 1011(a) of this
Indenture; and

 

(C)  such Restricted
Payment, together with the aggregate amount of all other Restricted Payments
made by the Company and the Restricted Subsidiaries after the Issue Date
pursuant to this Section 1010(a) or clauses (1), (2) (with
respect to the payment of dividends on Refunding Capital Stock pursuant to
clause (B) thereof only), (6)(C), (8) and (12) of Section 1010(b) (and
excluding, for the avoidance of doubt, all other Restricted Payments made
pursuant to Section 1010(b)), is less than the sum, without duplication,
of

 

(1)                                  50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from
August 1, 2005 to the end of the Company’s most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment, or, in the case such Consolidated Net Income for such
period is a deficit, minus 100% of such deficit, provided that if, at the time of a proposed Restricted
Payment under this Section 1010(a), the Consolidated Leverage Ratio of the
Company is less than 4.50 to 1.00, for purposes of calculating availability of
amounts hereunder for such Restricted Payment only, the reference to 50% in
this clause (1) above shall be deemed to be 75%, plus

 

(2)                                  100% of the aggregate net
cash proceeds and the fair market value, as determined in good faith by the
Company, of marketable securities or other property received by the Company
after the Issue Date (less the amount of such net cash proceeds to the extent
such amount has been relied upon to permit the incurrence of Indebtedness, or
issuance of Disqualified Stock or Preferred Stock pursuant to
clause (22)(ii) of Section 1011(b) of this Indenture) from
the issue or sale of

 

(x)                                   Equity Interests of the
Company, including /Retired Capital Stock (as defined below), but excluding
cash proceeds and the fair market value, as determined in good faith by the
Company, of marketable securities or other property received from the sale of

 

(A)                              Equity Interests to any
future, present or former employees, directors, managers or consultants of the
Company, any direct or indirect parent company of the Company or any of the
Company’s Subsidiaries after the Issue Date to the extent such amounts have
been applied to Restricted Payments made in accordance with clause (4) of
Section 1010(b) and

 

89

 

(B)                                Designated Preferred Stock

 

and
to the extent actually contributed to the Company, Equity Interests of the
Company’s direct or indirect parent companies (excluding contributions of the
proceeds from the sale of Designated Preferred Stock of such companies or
contributions to the extent such amounts have been applied to Restricted
Payments made in accordance with clause (4) of Section 1010(b))
or

 

(y)                                 debt securities of the
Company that have been converted into or exchanged for such Equity Interests of
the Company;

 

provided that this clause (2) shall
not include the proceeds from (a) Refunding Capital Stock (as defined
below), (b) Equity Interests of the Company or debt securities of the
Company that have been converted into or exchanged for Equity Interests of the
Company sold to a Restricted Subsidiary or the Company, as the case may be,
(c) Disqualified Stock or debt securities that have been converted into or
exchanged for Disqualified Stock or (d) Excluded Contributions, plus

 

(3)                                  100% of the aggregate amount
of cash and the fair market value, as determined in good faith by the Company,
of marketable securities or other property contributed to the capital of the
Company after the Issue Date (less
the amount of such net cash proceeds to the extent such amount has been relied
upon to permit the incurrence of Indebtedness or issuance of Disqualified Stock
or Preferred Stock pursuant to clause (22)(ii) of Section 1011(b) of
this Indenture) (other than by a Restricted Subsidiary and other than by any
Excluded Contributions), plus

 

(4)                                  to the extent not already
included in Consolidated Net Income, 100% of the aggregate amount received in
cash and the fair market value, as determined in good faith by the Company, of
marketable securities or other property received after the Issue Date by means
of

 

(A)  the sale or other
disposition (other than to the Company or a Restricted Subsidiary) of
Restricted Investments made by the Company or any Restricted Subsidiary and
repurchases and redemptions of such Restricted Investments from the Company or
any Restricted Subsidiary and repayments of loans or advances that constitute
Restricted Investments by the Company or any Restricted Subsidiary or

 

(B)  the sale (other
than to the Company or a Restricted Subsidiary) of the Capital Stock of an
Unrestricted Subsidiary (other than Kate Spade) or a distribution from an
Unrestricted Subsidiary (other than an Extraordinary Distribution) (other than
in

 

90

 

each case of such sale or distribution to the extent
the Investment in such Unrestricted Subsidiary was made by the Company or a
Restricted Subsidiary pursuant to clauses (9) or (13) of Section 1010(b) or
to the extent such Investment constituted a Permitted Investment) or a dividend
from an Unrestricted Subsidiary (other than an Extraordinary Distribution), plus

 

(5)                                  in the case of the
redesignation of an Unrestricted Subsidiary (other than Kate Spade) as a
Restricted Subsidiary after the Issue Date, the fair market value of the
Investment in such Unrestricted Subsidiary, as determined by the Company in
good faith or if, in the case of an Unrestricted Subsidiary, such fair market
value may exceed $125.0 million, in writing by an Independent Financial
Advisor, at the time of the redesignation of such Unrestricted Subsidiary as a
Restricted Subsidiary, other than an Unrestricted Subsidiary to the extent the
Investment in such Unrestricted Subsidiary was made by the Company or a
Restricted Subsidiary pursuant to clauses (9) or (13) of
Section 1010(b) or to the extent such Investment constituted a
Permitted Investment.

 

(b)                                 The foregoing provisions
shall not prohibit:

 

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

 

(2)                                  (A) the
redemption, repurchase, retirement or other acquisition of any Equity Interests
(“Retired Capital Stock”) or
Subordinated Indebtedness of the Company or any Equity Interests of any direct
or indirect parent company of the Company, in exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary) of, Equity Interests of the Company (in each case, other than any
Disqualified Stock) (“Refunding Capital
Stock”) and (B) if immediately prior to the retirement of
Retired Capital Stock, the declaration and payment of dividends thereon was
permitted under clause (6) of this Section 1010(b), the declaration
and payment of dividends on the Refunding Capital Stock (other than Refunding
Capital Stock the proceeds of which were used to redeem, repurchase, retire or
otherwise acquire any Equity Interests of any direct or indirect parent company
of the Company) in an aggregate amount per year no greater than the aggregate
amount of dividends per annum that was declarable and payable on such Retired
Capital Stock immediately prior to such retirement;

 

(3)                                  the defeasance,
redemption, repurchase or other acquisition or retirement of Subordinated
Indebtedness of the Company or a Subsidiary Guarantor made by exchange for, or
out of the proceeds of the substantially concurrent sale of, new Indebtedness
of such Person that is incurred in compliance with Section 1011 of this
Indenture so long as

 

91

 

(A)                              the principal
amount of such new Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Subordinated Indebtedness being so
defeased, redeemed, repurchased, acquired or retired for value, plus the amount
of any reasonable premium required to be paid under the terms of the instrument
governing the Subordinated Indebtedness being so defeased, redeemed,
repurchased, acquired or retired and any reasonable fees and expenses incurred
in connection with the issuance of such new Indebtedness,

 

(B)                                such
Indebtedness is subordinated to the Notes at least to the same extent as such
Subordinated Indebtedness so defeased, redeemed, repurchased, acquired or
retired,

 

(C)                                such
Indebtedness has a final scheduled maturity date equal to or later than the
final scheduled maturity date of the Subordinated Indebtedness being so
defeased, redeemed, repurchased, acquired or retired and

 

(D)                               such
Indebtedness has a Weighted Average Life to Maturity equal to or greater than
the remaining Weighted Average Life to Maturity of the Subordinated
Indebtedness being so defeased, redeemed, repurchased, acquired or retired;

 

(4)                                  a Restricted
Payment to pay for the repurchase, retirement or other acquisition or
retirement for value of Equity Interests (other than Disqualified Stock) of the
Company or any of its direct or indirect parent companies held by any future,
present or former employee, director, manager or consultant of the Company, any
of its Subsidiaries or any of its direct or indirect parent companies pursuant
to any management equity plan or stock option plan or any other management or
employee benefit plan or agreement; provided
that the aggregate Restricted Payments made under this clause (4) do
not exceed in any calendar year $10.0 million (with unused amounts in any
calendar year being carried over to succeeding calendar years subject to a
maximum (without giving effect to the following proviso) of $20.0 million
in any calendar year); provided, further,
that such amount in any calendar year may be increased by an amount not to
exceed

 

(A)                              the cash
proceeds from the sale of Equity Interests (other than Disqualified Stock) of
the Company and, to the extent contributed to the Company, Equity Interests of
any of the Company’s direct or indirect parent companies, in each case to
members of management, directors, managers or consultants of the Company, any
of its Subsidiaries or any of its direct or indirect parent companies that
occurs after the Issue Date, to the extent the cash proceeds from the sale of
such Equity Interests have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (C) of Section 1010(a), plus

 

92

 

(B)                                the cash
proceeds of key man life insurance policies received by the Company and the
Restricted Subsidiaries after the Issue Date, less

 

(C)                                the amount of
any Restricted Payments previously made pursuant to clauses (A) and
(B) of this clause (4);

 

and
provided, further, that
cancellation of Indebtedness owing to the Company from members of management,
directors, managers or consultants of the Company, any of its direct or
indirect parent companies or any Restricted Subsidiary in connection with a
repurchase of Equity Interests of the Company or any of its direct or indirect
parent companies shall not be deemed to constitute a Restricted Payment for
purposes of this Section 1010(b) or any other provision of this
Indenture;

 

(5)                                  the declaration
and payment of dividends to holders of any class or series of Disqualified
Stock of the Company or any Restricted Subsidiary issued in accordance with
Section 1011 of this Indenture to the extent such dividends are included
in the definition of Fixed Charges;

 

(6)                                  (A)  the
declaration and payment of dividends to holders of any class or series of
Designated Preferred Stock (other than Disqualified Stock) issued by the
Company after the Issue Date;

 

(B)                                the declaration
and payment of dividends to a direct or indirect parent company of the Company,
the proceeds of which shall be used to fund the payment of dividends to holders
of any class or series of Designated Preferred Stock (other than Disqualified
Stock) of such parent company issued after the Issue Date; provided that the amount of dividends paid
pursuant to this clause (B) shall not exceed the aggregate amount of
cash actually contributed to the Company from the sale of such Designated
Preferred Stock; or

 

(C)                                the declaration
and payment of dividends on Refunding Capital Stock that is Preferred Stock in
excess of the dividends declarable and payable thereon pursuant to clause (2) of
this Section 1010(b);

 

provided, however, in the case of each of
(A), (B) and (C) of this clause (6), that for the most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date of issuance of such Designated
Preferred Stock or the declaration of such dividends on Refunding Capital Stock
that is Preferred Stock, after giving effect to such issuance or declaration on
a pro forma basis, the Company
and the Restricted Subsidiaries on a consolidated basis would have had a Fixed
Charge Coverage Ratio of at least 2.00 to 1.00;

 

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

 

93

 

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

 

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

 

(10)                            the declaration
and payment of dividends by the Company to, or the making of loans to, its
direct parent company in amounts required for the Company’s direct or indirect
parent companies to pay

 

(A)                              franchise taxes
and other fees, taxes and expenses required to maintain their corporate
existence,

 

(B)                                Federal, state
and local income taxes, to the extent such income taxes are attributable to the
income of the Company and the Restricted Subsidiaries and, to the extent of the
amount actually received from its Unrestricted Subsidiaries, in amounts
required to pay such taxes to the extent attributable to the income of such
Unrestricted Subsidiaries,

 

(C)                                customary
salary, bonus and other benefits payable to officers and employees of any
direct or indirect parent company of the Company to the extent such salaries,
bonuses and other benefits are attributable to the ownership or operation of
the Company and the Restricted Subsidiaries,

 

(D)                               general
corporate overhead expenses of any direct or indirect parent company of the
Company to the extent such expenses are attributable to the ownership or
operation of the Company and the Restricted Subsidiaries, and

 

(E)                                 reasonable fees
and expenses incurred in connection with any unsuccessful debt or equity
offering by such direct or indirect parent company of the Company;

 

(11)                            any Restricted
Payments used to fund the Transactions and the fees and expenses related
thereto, including those owed to Affiliates, in each case to the extent
permitted by Section 1013 of this Indenture;

 

(12)                            the repurchase,
redemption or other acquisition or retirement for value of any Subordinated
Indebtedness pursuant to provisions similar to those described under
Section 1017 and Section 1018 of this Indenture; provided that, prior to such repurchase,
redemption or other acquisition, the Company (or a third party to the extent
permitted by this Indenture) shall have made a Change of Control Offer or Asset
Sale Offer, as the case may be, with respect to the Notes

 

94

 

and shall have repurchased all Notes validly
tendered and not withdrawn in connection with such Change of Control Offer or
Asset Sale Offer;

 

(13)                            Investments in
Unrestricted Subsidiaries, having an aggregate fair market value, taken
together with all other Investments made pursuant to this clause (13) that
are at the time outstanding, without giving effect to the sale of an
Unrestricted Subsidiary to the extent the proceeds of such sale do not consist
of cash or marketable securities, not to exceed the greater of
(x) $75.0 million and (y) 1.0% of Total Assets at the time of
such Investment (with the fair market value of each Investment being measured
at the time such Investment is made and without giving effect to subsequent
changes in value);

 

(14)                            distributions
or payments of Receivables Fees;

 

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

 

(16)                            other
Restricted Payments in an amount which, when taken together with all other
Restricted Payments made pursuant to this clause (16), does not exceed
$75.0 million;

 

provided, however, that at the time of, and
after giving effect to, any Restricted Payment permitted under clauses
(15) and (16) of this Section 1010(b), no Default shall have
occurred and be continuing or would occur as a consequence thereof.

 

(c)                                  As of the time of issuance
of the Notes, all of the Company’s Subsidiaries shall be Restricted
Subsidiaries other than Neiman Marcus Funding Corporation, Gurwitch Products,
L.L.C., Kate Spade and their respective Subsidiaries. The Company shall not
permit any Unrestricted Subsidiary to become a Restricted Subsidiary except
pursuant to the penultimate paragraph of the definition of “Unrestricted
Subsidiary”. For purposes of designating any Restricted Subsidiary as an
Unrestricted Subsidiary, all outstanding Investments by the Company and the
Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so
designated shall be deemed to be Restricted Payments in an amount determined as
set forth in the last sentence of the definition of “Investments”. Such
designation shall be permitted only if a Restricted Payment in such amount
would be permitted at such time, whether pursuant to Section 1010(a) or
under clauses (9), (13) or (16) of Section 1010(b), or pursuant to
the definition of “Permitted Investments”, and if such Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries
shall not be subject to any of the restrictive covenants set forth in this
Indenture.

 

(d)                                 Notwithstanding anything to
the contrary herein, the Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make any (x) Restricted Payment covered
in clauses (1) through (3) of the definition of Restricted Payments to the
holders of Equity Interests of the Company or any of its direct

 

95

 

or
indirect parent companies (which shall include the Sponsors, the Co-Investors
and their respective Affiliates) (other than to the Company and its Restricted
Subsidiaries, future, present or former employees, directors, managers, or
consultants of the Company, any of its Subsidiaries or any of its direct or
indirect parent companies with respect to Equity Interests held by them in such
capacities and other than a Restricted Payment made pursuant to clause (10) of
Section 1010(b)) or (y) Investment in any Sponsor, any Co-Investor, any
Permitted Holders who are members of a group (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision)
with the Sponsors or any Co-Investors or any Person or group who becomes a
Permitted Holder following a Change of Control as provided for in the
definition of “Permitted Holders” or their respective Affiliates (other than in
the Company and its Subsidiaries and members of management of the Company (or
its direct parent)), in each case during any period beginning on the date when
the Company makes an election to pay PIK Interest with respect to any Interest
Period and ending on the first date after such Interest Period on which the
Company makes a payment of Cash Interest with respect to a subsequent Interest
Period.

 

SECTION
1011.  Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock and Preferred Stock.  (a)  The Company shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any
Indebtedness (including Acquired Indebtedness), and the Company shall not issue
any shares of Disqualified Stock and shall not permit any Restricted Subsidiary
to issue any shares of Disqualified Stock or Preferred Stock; provided that the Company may incur
Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified
Stock, and any Restricted Subsidiary may incur Indebtedness (including Acquired
Indebtedness), issue shares of Disqualified Stock or issue shares of Preferred
Stock, if the Fixed Charge Coverage Ratio on a consolidated basis for the
Company’s and its Restricted Subsidiaries’ most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock or Preferred Stock is issued would have been at least 2.00
to 1.00, determined on a pro forma
basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock or Preferred Stock had been
issued, as the case may be, and the application of the proceeds therefrom had
occurred at the beginning of such four-quarter period; and provided, further, that the amount of
Indebtedness (including Acquired Indebtedness), Disqualified Stock and
Preferred Stock that may be incurred or issued, as applicable, pursuant to the
foregoing by Restricted Subsidiaries that are not Subsidiary Guarantors shall
not exceed $100.0 million at any one time outstanding.

 

(b)                                 The foregoing limitations
shall not apply to any of the following items (collectively, “Permitted Debt”):

 

(1)                                  Indebtedness
incurred pursuant to the Revolving Credit Facility by the Company or any
Restricted Subsidiary; provided
that immediately after giving

 

96

 

effect
to any such incurrence, the aggregate principal amount of all Indebtedness
incurred under this clause (1) and then outstanding does not exceed the
greater of (A) $800.0 million less
up to $150.0 million in the aggregate of all principal payments with
respect to such Indebtedness made pursuant to clause (1)(x) of
Section 1018(b) of this Indenture and (B) the lesser of
(x) 80.0% of the value of the eligible inventory of the Company and its
Restricted Subsidiaries valued at the lower of cost or market value and
(y) 85.0% of the net orderly liquidation value of the eligible inventory
of the Company and its Restricted Subsidiaries;

 

(2)                                  Indebtedness
incurred pursuant to the Term Loan Facility by the Company or any Restricted
Subsidiary; provided that after
giving effect to any such incurrence, the aggregate principal amount of all
Indebtedness incurred under this clause (2) and then outstanding does not
exceed $1,975.0 million less up to $250.0 million in the aggregate of
all principal payments with respect to such Indebtedness made pursuant to
clause (1)(x) of Section 1018(b) of this Indenture;

 

(3)                                  the incurrence
by the Company and any Subsidiary Guarantor of Indebtedness represented by the
Notes issued on the Issue Date (including any Subsidiary Guarantees thereof)
and the Exchange Notes and related exchange guarantees to be issued in exchange
for the Notes and the Subsidiary Guarantees pursuant to the Registration Rights
Agreement (other than any Additional Notes);

 

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

 

(5)                                  Existing
Indebtedness (other than Indebtedness described in clauses (1), (2), (3) and
(4) of this Section 1011(b)), including the Existing 2008 Notes and
the Existing 2028 Debentures;

 

(6)                                  Indebtedness
(including Capitalized Lease Obligations), Disqualified Stock and Preferred
Stock incurred by the Company or any of the Restricted Subsidiaries, to finance
the development, construction, purchase, lease (other than the lease, pursuant
to Sale and Lease-Back Transactions, of property (real or personal), equipment
or other fixed or capital assets owned by the Company or any Restricted
Subsidiary as of the Issue Date or acquired by the Company or any Restricted
Subsidiary after the Issue Date in exchange for, or with the proceeds of the
sale of, such assets owned by the Company or any Restricted Subsidiary as of
the Issue Date), repairs, additions or improvement of property (real or
personal), equipment or other fixed or capital assets that are used or useful
in a Similar Business, whether through the direct purchase of assets or the
Capital Stock of any Person owning such assets; provided that the aggregate

 

97

 

amount
of Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to
this clause (6) does not exceed $250.0 million at any one time outstanding;

 

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

 

(8)                                  Indebtedness
arising from agreements of the Company or a Restricted Subsidiary providing for
indemnification, adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of any business,
assets or a Subsidiary, other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or Subsidiary for
the purpose of financing such acquisition; provided
that

 

(A)                              such Indebtedness is not
reflected on the balance sheet of the Company or any Restricted Subsidiary
(contingent obligations referred to in a footnote to financial statements and
not otherwise reflected on the balance sheet shall not be deemed to be
reflected on such balance sheet for purposes of this clause (8)(A)) and

 

(B)                                the maximum assumable
liability in respect of all such Indebtedness shall at no time exceed the gross
proceeds including noncash proceeds (the fair market value of such noncash
proceeds being measured at the time received and without giving effect to any
subsequent changes in value) actually received by the Company and the
Restricted Subsidiaries in connection with such disposition;

 

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

 

(10)                            Indebtedness of
a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that if a Subsidiary Guarantor
incurs such Indebtedness to a Restricted Subsidiary that is not a Subsidiary
Guarantor such Indebtedness is subordinated in right of payment to the
Subsidiary Guarantee of such Subsidiary Guarantor; provided, further, that any subsequent issuance or transfer
of Capital Stock or any other event that results in any such Restricted

 

98

 

Subsidiary
ceasing to be a Restricted Subsidiary or any subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary) shall be
deemed, in each case, to be an incurrence of such Indebtedness;

 

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

 

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

 

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

 

(14)                            (x) any
guarantee by the Company or a Restricted Subsidiary of Indebtedness or other
Obligations of any Restricted Subsidiary, so long as the incurrence of such
Indebtedness by such Restricted Subsidiary is permitted under the terms of this
Indenture or (y) any guarantee by a Restricted Subsidiary of Indebtedness
of the Company permitted to be incurred under the terms of this Indenture; provided that such guarantee is incurred
in accordance with Section 1015 of this Indenture;

 

(15)                            the incurrence
by the Company or any Restricted Subsidiary of Indebtedness, Disqualified Stock
or Preferred Stock that serves to extend, replace, refund, refinance, renew or
defease any Indebtedness, Disqualified Stock or Preferred Stock incurred as
permitted under Section 1011(a) and clauses (3), (4), (5) and
(6) above, this clause (15) and clauses (16) and
(22)(ii) below of this Section 1011(b) or any Indebtedness,
Disqualified Stock or Preferred Stock issued to so extend, replace, refund,
refinance, renew or defease such Indebtedness, Disqualified Stock or Preferred
Stock including additional Indebtedness, Disqualified Stock or Preferred Stock
incurred to pay premiums and fees in connection therewith (the “Refinancing Indebtedness”) prior to its
respective maturity; provided, however,
that such Refinancing Indebtedness:

 

(A)                              has a Weighted Average Life
to Maturity at the time such Refinancing Indebtedness is incurred which is not
less than the remaining Weighted Average Life to Maturity of the Indebtedness,
Disqualified Stock or Preferred Stock being extended, replaced, refunded,
refinanced, renewed or defeased,

 

99

 

(B)                                to the extent such
Refinancing Indebtedness extends, replaces, refunds, refinances, renews or
defeases (i) Indebtedness subordinated to the Notes or any Subsidiary
Guarantee, such Refinancing Indebtedness is subordinated to the Notes or such
Subsidiary Guarantee at least to the same extent as the Indebtedness being
extended, replaced, refunded, refinanced, renewed or defeased or
(ii) Disqualified Stock or Preferred Stock, such Refinancing Indebtedness
must be Disqualified Stock or Preferred Stock, respectively and

 

(C)                                shall not include

 

(x)                                   Indebtedness, Disqualified
Stock or Preferred Stock of a Subsidiary that is not a Subsidiary Guarantor
that refinances Indebtedness, Disqualified Stock or Preferred Stock of the
Company,

 

(y)                                 Indebtedness, Disqualified
Stock or Preferred Stock of a Subsidiary that is not a Subsidiary Guarantor
that refinances Indebtedness, Disqualified Stock or Preferred Stock of a
Subsidiary Guarantor or

 

(z)                                   Indebtedness, Disqualified
Stock or Preferred Stock of the Company or a Restricted Subsidiary that
refinances Indebtedness, Disqualified Stock or Preferred Stock of an
Unrestricted Subsidiary;

 

and
provided, further, that subclause
(A) of this clause (15) shall not apply to any refunding or
refinancing of any Senior Indebtedness outstanding under the Existing 2028
Debentures;

 

(16)                            Indebtedness,
Disqualified Stock or Preferred Stock (x) of the Company or any of its
Restricted Subsidiaries incurred to finance the acquisition of any Person or assets
or (y) of Persons that are acquired by the Company or any Restricted
Subsidiary or merged into the Company or a Restricted Subsidiary in accordance
with the terms of this Indenture; provided
that either

 

(A)                              after giving effect to such
acquisition or merger, either

 

(i)                                     the Company would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 1011(a); or

 

(ii)                                  the Fixed Charge Coverage
Ratio of the Company and the Restricted Subsidiaries on a consolidated basis is
greater than immediately prior to such acquisition or merger; or

 

(B)                                such Indebtedness,
Disqualified Stock or Preferred Stock (i) is not Secured Indebtedness and
is Subordinated Indebtedness with

 

100

 

subordination
terms no more favorable to the holders thereof than the subordination terms set
forth in the Senior Subordinated Indenture as in effect on the Issue Date,
(ii) is not incurred while a Default exists and no Default shall result
therefrom, (iii) does not mature (and is not mandatorily redeemable in the
case of Disqualified Stock or Preferred Stock) and does not require any payment
of principal prior to the final maturity of the Notes and (iv) in the case
of sub-clause (y) above only, is not incurred in contemplation of such
acquisition or merger;

 

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

 

(18)                            Indebtedness of
the Company or any Restricted Subsidiary supported by a letter of credit issued
pursuant to the Senior Credit Facilities, in a principal amount not in excess
of the stated amount of such letter of credit;

 

(19)                            Indebtedness,
Disqualified Stock or Preferred Stock of a Restricted Subsidiary incurred to
finance or assumed in connection with an acquisition which, when aggregated
with the principal amount of all other Indebtedness, Disqualified Stock and
Preferred Stock incurred pursuant to this clause (19) and then
outstanding, does not exceed $75.0 million (it being understood that any
Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this
clause (19) shall cease to be deemed incurred or outstanding for purposes
of this clause (19) but shall be deemed incurred pursuant to
Section 1011(a) from and after the first date on which the Company or such
Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock
or Preferred Stock pursuant to Section 1011(a) without reliance on this
clause (19));

 

(20)                            Indebtedness
incurred by a Foreign Subsidiary which, when aggregated with the principal
amount of all other Indebtedness incurred pursuant to this clause (20) and
then outstanding, does not exceed 5.0% of Foreign Subsidiary Total Assets (it
being understood that any Indebtedness, Disqualified Stock and Preferred Stock
incurred pursuant to this clause (20) shall cease to be deemed incurred or
outstanding for purposes of this clause (20) but shall be deemed incurred
pursuant to Section 1011(a) from and after the first date on which the
Company or such Restricted Subsidiary could have incurred such Indebtedness,
Disqualified Stock or Preferred Stock pursuant to Section 1011(a) without
reliance on this clause (20));

 

(21)                            Indebtedness
consisting of Indebtedness issued by the Company or any Restricted Subsidiary
to current or former officers, managers, directors and employees thereof, their
respective estates, spouses or former spouses, in each case to finance the
purchase or redemption of Equity Interests of the Company or any direct or
indirect parent company of the Company to the extent described in
clause (4) of Section 1010(b) of this Indenture;

 

101

 

(22)                            Indebtedness,
Disqualified Stock and Preferred Stock of the Company or any Restricted
Subsidiary not otherwise permitted hereunder in an aggregate principal amount
or liquidation preference, which, when aggregated with the principal amount and
liquidation preference of all other Indebtedness, Disqualified Stock and
Preferred Stock incurred pursuant to this clause (22) and then
outstanding, does not at any one time outstanding exceed the sum of

 

(i)                                     $175.0 million (it
being understood that any Indebtedness, Disqualified Stock and Preferred Stock
incurred pursuant to this clause (22)(i) shall cease to be deemed
incurred or outstanding for purposes of this clause (22)(i) but shall
be deemed incurred pursuant to Section 1011(a) from and after the first
date on which the Company or such Restricted Subsidiary could have incurred
such Indebtedness, Disqualified Stock or Preferred Stock pursuant to Section 1011(a)
without reliance on this clause (22)(i));
plus

 

(ii)                                  200% of the net cash
proceeds received by the Company since after the Issue Date from the issue or
sale of Equity Interests of the Company or cash contributed to the capital of
the Company (in each case, other than proceeds of Disqualified Stock or sales
of Equity Interests to the Company or any of its Subsidiaries) as determined in
accordance with clauses (C)(2) and (C)(3) of Section 1010(a) of this
Indenture to the extent such net cash proceeds or cash have not been applied
pursuant to such clauses to make Restricted Payments or to make other
investments, payments or exchanges pursuant to Section 1010(b) of this
Indenture or to make Permitted Investments (other than Permitted Investments specified
in clauses (a) and (c) of the definition thereof); and

 

(23)                            Attributable
Debt incurred by the Company or any Restricted Subsidiary pursuant to Sale and
Lease-Back Transactions of property (real or personal), equipment or other
fixed or capital assets owned by the Company or any Restricted Subsidiary as of
the Issue Date or acquired by the Company or any Restricted Subsidiary after
the Issue Date in exchange for, or with the proceeds of the sale of, such
assets owned by the Company or any Restricted Subsidiary as of the Issue Date, provided that the aggregate amount of
Attributable Debt incurred under this clause (23) does not exceed
$100.0 million.

 

(c)                                  For purposes of determining
compliance with this Section 1011, in the event that an item of Indebtedness,
Disqualified Stock or Preferred Stock meets the criteria of more than one of
the categories of Permitted Debt described in clauses (1) through
(23) of Section 1011(b) or is entitled to be incurred pursuant to
Section 1011(a), the Company, in its sole discretion, shall classify or
reclassify, or later divide, classify or reclassify, such item of Indebtedness,
Disqualified Stock or Preferred Stock (or any portion thereof) and shall only
be required to include the amount and type of such Indebtedness, Disqualified
Stock or Preferred Stock in one or more of the above clauses; provided that all Indebtedness outstanding
under the Senior Credit Facilities on the

 

102

 

Issue
Date shall be deemed to have been incurred on such date in reliance on the
exception in clauses (1) and (2) of this Section 1011(b).

 

(d)                                 The accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness, Disqualified Stock or Preferred Stock shall not be
deemed to be an incurrence of Indebtedness, Disqualified Stock or Preferred
Stock for purposes of this Section 1011.

 

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

 

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

 

SECTION
1012.  Liens.  The Company shall not, and shall not permit any
of the Subsidiary Guarantors to, directly or indirectly, create, incur, assume
or suffer to exist any Lien (except Permitted Liens) that secures obligations
under any Indebtedness on any asset or property of the Company or any
Subsidiary Guarantor now owned or hereafter acquired, or any income or profits
therefrom, or assign or convey any right to receive income therefrom, unless:

 

(1)                                  in the case of
Liens securing Subordinated Indebtedness, the Notes or the applicable
Subsidiary Guarantee of a Subsidiary Guarantor, as the case may be, are secured
by a Lien on such property or assets that is senior in priority to such Liens;
and

 

(2)                                  in all other
cases, the Notes or the applicable Subsidiary Guarantee of a Subsidiary
Guarantor, as the case may be, are equally and ratably secured;

 

provided that any Lien which is
granted to secure the Notes under this Section 1012 shall be discharged at the
same time as the discharge of the Lien (other than through the

 

103

 

exercise
of remedies with respect thereto) that gave rise to the obligation to so secure
the Notes.

 

SECTION
1013.  Limitations on Transactions with Affiliates. 
(a)  The Company shall not, and shall not permit any Restricted
Subsidiary to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving
aggregate payments or consideration in excess of $10.0 million, unless

 

(1)                                  such Affiliate
Transaction is on terms that are not materially less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with
an unrelated Person and

 

(2)                                  the Company
delivers to the Trustee with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate payments or consideration in
excess of $30.0 million, a Board Resolution adopted by the majority of the
members of the Board of Directors of the Company approving such Affiliate
Transaction and set forth in an Officers’ Certificate certifying that such
Affiliate Transaction complies with clause (1) above.

 

(b)                                 The foregoing provisions shall
not apply to the following:

 

(1)                                  Transactions
between or among the Company or any of the Restricted Subsidiaries;

 

(2)                                  Restricted
Payments permitted by Section 1010 of this Indenture and the definition of
“Permitted Investments”;

 

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

 

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

 

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

 

104

 

(6)           transactions in which the Company or any Restricted
Subsidiary, as the case may be, delivers to the Trustee a letter from an
Independent Financial Advisor stating that such transaction is fair to the
Company or such Restricted Subsidiary from a financial point of view or meets
the requirements of clause (1) of Section 1013(a);

 

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

 

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

 

(9)           the existence of, or the performance by the Company or any
of the Restricted Subsidiaries of its obligations under the terms of, any
stockholders agreement or its equivalent (including any registration rights
agreement or purchase agreement related thereto) to which it is a party as of
the Issue Date and any similar agreements which it may enter into thereafter; provided, however, that the existence of,
or the performance by the Company or any Restricted Subsidiary of obligations
under any future amendment to any such existing agreement or under any similar
agreement entered into after the Issue Date shall only be permitted by this
clause (9) to the extent that the terms of any such existing agreement
together with all amendments thereto, taken as a whole, or new agreement are
not otherwise more disadvantageous to the Holders in any material respect than
the terms of the original agreement in effect on the Issue Date as reasonably
determined in good faith by the Company;

 

(10)         the Transactions, the Credit Card Sale and the payment of
all fees and expenses related to the Transactions and the Credit Card Sale, in
each case as disclosed in the Offering Circular;

 

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

 

(12)         the issuance of Equity Interests (other than Disqualified
Stock) of the Company to any Permitted Holder or to any director, manager,
officer,

 

105

 

employee or consultant of the Company or any direct
or indirect parent company thereof;

 

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

 

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

 

SECTION 1014. 
Limitations on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.  The Company shall not, and shall not permit any
Restricted Subsidiary that is not a Subsidiary Guarantor to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or consensual restriction on the ability of any such
Restricted Subsidiary to:

 

(a)           (1)                                  pay dividends
or make any other distributions to the Company or any Restricted Subsidiary on
its Capital Stock or with respect to any other interest or participation in, or
measured by, its profits or

 

 (2)          pay
any Indebtedness owed to the Company or any Restricted Subsidiary;

 

(b)           make loans or advances to the Company or any Restricted
Subsidiary; or

 

(c)           sell, lease or transfer any of its properties or assets to
the Company or any Restricted Subsidiary, 

 

except
(in each case) for such encumbrances or restrictions existing under or by
reason of:

 

(1)           contractual encumbrances or restrictions in effect on the
Issue Date, including pursuant to the Senior Credit Facilities and the related
documentation (including security documents and intercreditor agreements) and
Hedging Obligations, the Existing 2008 Notes and the Existing 2028 Debentures;

 

(2)           the Indentures and the New Notes and the Subsidiary
Guarantees;

 

(3)           purchase money obligations for property acquired in the
ordinary course of business and Capital Lease Obligations that impose
restrictions of the nature discussed in clause (c) above on the property
so acquired;

 

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

 

106

 

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

 

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

 

(7)           Secured Indebtedness otherwise permitted to be incurred
pursuant to Sections 1011 and 1012 of this Indenture that limit the right
of the debtor to dispose of the assets securing such Indebtedness;

 

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

 

(9)           other Indebtedness, Disqualified Stock or Preferred Stock
of Restricted Subsidiaries permitted to be incurred after the Issue Date
pursuant to the provisions of Section 1011 of this Indenture;

 

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

 

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

 

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

 

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

 

(14)         any encumbrances or restrictions of the type referred to in
clauses (a), (b) and (c) above imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings, replacements
or refinancings of the contracts, instruments or obligations referred to in
clauses (1) through (13) above;

 

107

 

provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are, in the good faith judgment of the
Company, not materially more restrictive with respect to such encumbrance and
other restrictions than those prior to such amendment, modification,
restatement, renewal, increase, supplement, refunding, replacement or
refinancing; provided, further,
that with respect to contracts, instruments or obligations existing on the
Issue Date, any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are not materially more
restrictive with respect to such encumbrances and other restrictions than those
contained in such contracts, instruments or obligations as in effect on the
Issue Date.

 

SECTION 1015. 
Limitation on Guarantees of Indebtedness by Restricted Subsidiaries. 
The Company shall not permit any of its Wholly-Owned Subsidiaries that are
Restricted Subsidiaries (and non-Wholly-Owned Subsidiaries if such
non-Wholly-Owned Subsidiaries guarantee other capital markets debt securities),
other than a Subsidiary Guarantor or a Foreign Subsidiary, to guarantee the
payment of any Indebtedness of the Company or any other Subsidiary Guarantor
unless:

 

(1)           such Restricted Subsidiary within 30 days executes and
delivers a supplemental indenture to this Indenture providing for a Subsidiary
Guarantee by such Restricted Subsidiary, except that with respect to a
guarantee of Indebtedness of the Company or any Subsidiary Guarantor that is by
its express terms subordinated in right of payment to the Notes or such
Subsidiary Guarantor’s Subsidiary Guarantee, any such guarantee by such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated
in right of payment to such Subsidiary Guarantee substantially to the same
extent as such Indebtedness is subordinated to the Notes;

 

(2)           such Restricted Subsidiary waives and shall not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee; and

 

(3)           such Restricted Subsidiary shall deliver to the Trustee an
Opinion of Counsel to the effect that:

 

(a)           such
Subsidiary Guarantee has been duly executed and authorized; and

 

(b)           such
Subsidiary Guarantee constitutes a valid, binding and enforceable obligation of
such Restricted Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including all laws relating
to fraudulent transfers) and except insofar as enforcement thereof is subject
to general principles of equity;

 

108

 

provided that this Section 1015
shall not be applicable to any guarantee of any Restricted Subsidiary that
existed at the time such Person became a Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary.

 

SECTION 1016. 
Limitation on Sale and Lease-Back Transactions.  The Company shall
not, and shall not permit any Restricted Subsidiary to, enter into any Sale and
Lease-Back Transaction with respect to any property unless:

 

(1)           the Company or such Restricted Subsidiary would be
entitled to (A) incur Indebtedness in an amount equal to the Attributable
Debt with respect to such Sale and Lease-Back Transaction pursuant to Section 1011
of this Indenture and (B) create a Lien on such property securing such
Attributable Debt without equally and ratably securing the Notes pursuant to Section 1012
of this Indenture;

 

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

 

(3)           the Company applies the proceeds of such transaction in
compliance with Section 1018 of this Indenture.

 

SECTION 1017. 
Change of Control.  (a) If a Change of Control occurs, the
Company shall make an offer to purchase all of the Notes pursuant to the offer
described below (the “Change of Control
Offer”) at a price in cash (the “Change
of Control Payment”) equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, and Additional Interest, if any, to
the date of purchase, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date.
Within 30 days following any Change of Control, the Company shall send notice
of such Change of Control Offer by first class mail, with a copy to the
Trustee, to each Holder to the address of such Holder appearing in the security
register with a copy to the Trustee, with the following information:

 

(1)           a Change of Control Offer is being made pursuant to this
Section 1017 and all Notes properly tendered pursuant to such Change of
Control Offer shall be accepted for payment;

 

(2)           the purchase price and the purchase date, which shall be
no earlier than 30 days nor later than 60 days from the date such notice is
mailed (the “Change of Control Payment Date”);

 

(3)           any Note not properly tendered shall remain outstanding
and continue to accrue interest;

 

(4)           unless the Company defaults in the payment of the Change
of Control Payment, all Notes accepted for payment pursuant to the Change of

 

109

 

Control Offer shall cease to accrue interest on the
Change of Control Payment Date;

 

(5)           Holders electing to have any Notes purchased pursuant to a
Change of Control Offer shall be required to surrender the Notes, with the form
entitled “Option of Holder to Elect Purchase” on the reverse of the Notes
completed, to the paying agent specified in the notice at the address specified
in the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date;

 

(6)           Holders shall be entitled to withdraw their tendered Notes
and their election to require the Company to purchase such Notes; provided that the paying agent receives,
not later than the close of business on the last day of the offer period, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Notes tendered for purchase, and a statement
that such Holder is withdrawing its tendered Notes and its election to have
such Notes purchased; and

 

(7)           Holders whose Notes are being purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (which unpurchased portion must be equal to $2,000 or an
integral multiple of $1,000 in excess of $2,000); provided that no Notes of less than $2,000 shall be redeemed
in part.

 

(b)           While
the Notes are in global form and the Company makes an offer to purchase all of
the Notes pursuant to the Change of Control Offer, a Holder may exercise its
option to elect for the purchase of the Notes through the facilities of DTC,
subject to its rules and regulations.

 

(c)           The
Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the
repurchase of the Notes pursuant to a Change of Control Offer. To the extent
that the provisions of any securities laws or regulations conflict with the
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in this Indenture by virtue thereof.

 

(d)           On
the Change of Control Payment Date, the Company shall, to the extent permitted
by law,

 

(1)           accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer,

 

(2)           deposit with the Paying Agent an amount equal to the
aggregate Change of Control Payment in respect of all Notes or portions thereof
so tendered and

 

110

 

(3)           deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an Officers’ Certificate
stating that such Notes or portions thereof have been tendered to and purchased
by the Company.

 

(e)           The
Paying Agent shall promptly mail to each Holder the Change of Control Payment
for such Notes, and the Trustee shall promptly authenticate and mail to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided
that no Notes of $2,000 or less shall be redeemed in part and each such new
Note shall be in a principal amount of $2,000 or an integral multiple of $1,000
in excess of $2,000. The Company shall publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.

 

(f)            The
Company shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the time and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by the Company
and purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer. A Change of Control Offer may be made in advance of a Change of
Control, conditional upon such Change of Control, if a definitive agreement is
in place for the Change of Control at the time of making of the Change of
Control Offer.

 

SECTION 1018. 
Asset Sales.  (a)  The Company shall not, and shall not permit
any Restricted Subsidiary to, cause, make or suffer to exist an Asset Sale,
unless:

 

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

 

(2)           except in the case of a Permitted Asset Swap, at least 75%
of the consideration therefor received by the Company or such Restricted
Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; provided that the amount of

 

(A)          any
liabilities (as shown on the Company’s or such Restricted Subsidiary’s most
recent balance sheet or in the notes thereto) of the Company or such Restricted
Subsidiary, other than liabilities that are by their terms subordinated to the
Notes, that are assumed by the transferee of any such assets (or a third party
on behalf of the transferee) and for which the Company or such Restricted
Subsidiary has been validly released by all creditors in writing,

 

(B)           any
securities, notes or other obligations or assets received by the Company or
such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash (to

 

111

 

the
extent of the cash received) within 180 days following the closing of such
Asset Sale and

 

(C)           any
Designated Noncash Consideration received by the Company or such Restricted
Subsidiary in such Asset Sale having an aggregate fair market value, taken
together with all other Designated Noncash Consideration received pursuant to
this clause (C) that is at that time outstanding, not to exceed the
greater of (x) $125.0 million and (y) 1.75% of Total Assets at the
time of the receipt of such Designated Noncash Consideration, with the fair
market value of each item of Designated Noncash Consideration being measured at
the time received and without giving effect to subsequent changes in value, 

 

shall
be deemed to be cash for purposes of this provision and for no other purpose.

 

(b)           Within
450 days after any of the Company’s or any Restricted Subsidiary’s receipt of
the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary
may, at its option, apply the Net Proceeds from such Asset Sale:

 

(1)           to permanently reduce

 

(x)            Obligations
under any Senior Indebtedness of the Company or any Subsidiary Guarantor and,
in the case of Obligations under revolving credit facilities or other similar
Indebtedness, to correspondingly permanently reduce commitments with respect
thereto (other than Obligations owed to the Company or a Restricted
Subsidiary); provided that if the
Company or any Restricted Subsidiary shall so reduce Obligations under any
Indebtedness that is not Secured Indebtedness, the Company or such Subsidiary
Guarantor shall, equally and ratably, reduce Obligations under the Notes by, at
its option, (A) redeeming Notes if the Notes are then redeemable as
provided by the terms of the Notes, (B) making an offer (in accordance
with the procedures set forth in this Section 1018) to all Holders to
purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued and unpaid
interest and Additional Interest, if any, on the principal amount of Notes to
be repurchased or (C) purchasing Notes through open market purchases (to
the extent such purchases are at a price equal to or higher than 100% of the
principal amount thereof) in a manner that complies with this Indenture and
applicable securities law; or

 

(y)           Indebtedness
of a Restricted Subsidiary that is not a Subsidiary Guarantor, other than
Indebtedness owed to the Company or another Restricted Subsidiary; or

 

112

 

(2)           to an investment in (A) any one or more businesses; provided that such investment in any
business is in the form of the acquisition of Capital Stock and results in the
Company or any Restricted Subsidiary owning an amount of the Capital Stock of
such business such that it constitutes a Restricted Subsidiary, (B) properties,
(C) capital expenditures and (D) acquisitions of other assets, that
in each of (A), (B), (C) and (D), are used or useful in a Similar Business
or replace the businesses, properties and assets that are the subject of such
Asset Sale.

 

(c)           Any
Net Proceeds from the Asset Sale that are not invested or applied in accordance
with the preceding paragraph within 450 days from the date of the receipt of
such Net Proceeds shall be deemed to constitute “Excess Proceeds”; provided
that if during such 450-day period the Company or a Restricted Subsidiary
enters into a definitive binding agreement committing it to apply such Net
Proceeds in accordance with the requirements of clause (2) of
Section 1018(b) after such 450th day, such 450-day period shall be
extended with respect to the amount of Net Proceeds so committed until such Net
Proceeds are required to be applied in accordance with such agreement (but such
extension shall in no event be for a period longer than 180 days) (or, if
earlier, the date of termination of such agreement). When the aggregate amount
of Excess Proceeds exceeds $45.0 million, the Company shall make an offer to
all Holders and, if required by the terms of any Senior Indebtedness, to the
holders of such Senior Indebtedness (other than with respect to Hedging
Obligations) (an “Asset Sale Offer”),
to purchase the maximum aggregate principal amount of Notes and such Senior
Indebtedness that is an integral multiple of $1,000 that may be purchased out
of the Excess Proceeds at an offer price in cash in an amount equal to 100% of
the principal amount thereof, plus
accrued and unpaid interest and Additional Interest, if any, to the date fixed
for the closing of such offer, in accordance with the procedures set forth in
this Indenture. The Company shall commence an Asset Sale Offer with respect to
Excess Proceeds within ten Business Days after the date that Excess Proceeds
exceed $45.0 million by mailing the notice required pursuant to the terms of
this Indenture, with a copy to the Trustee. The Company may satisfy the
foregoing obligations with respect to any Net Proceeds from an Asset Sale by
making an Asset Sale Offer with respect to such Net Proceeds prior to the
expiration of the relevant 450 days or with respect to Excess Proceeds of $45.0
million or less.  To the extent that the aggregate amount of Notes and
such Senior Indebtedness tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes, subject to the other covenants contained in this
Indenture. If the aggregate principal amount of Notes or the Senior
Indebtedness surrendered by such holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select or cause to be selected the Notes and such
Senior Indebtedness to be purchased on a pro
rata basis based on the accreted value or principal amount of the
Notes or such Senior Indebtedness tendered. Upon completion of any such Asset
Sale Offer, the amount of Excess Proceeds related to such Asset Sale Offer
shall be reset at zero.

 

(d)           Pending
the final application of any Net Proceeds pursuant to this Section 1018,
the Company or the applicable Restricted Subsidiary may apply such Net

 

113

 

Proceeds
temporarily to reduce Indebtedness outstanding under a revolving credit
facility or otherwise invest such Net Proceeds in any manner not prohibited by
this Indenture.

 

(e)           The
Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions
of this Indenture, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations
described in this Indenture by virtue thereof.

 

(f)            If
the Company is repurchasing less than all of the Notes at any time, the Trustee
shall select the Notes to be repurchased (a) if the Notes are listed on
any national securities exchange, in compliance with the requirements of the
principal national securities exchange on which such Notes are listed or (b) if
such Notes are not so listed, on a pro rata
basis to the extent practicable; provided
that no Notes of $2,000 or less shall be repurchased in part.

 

(g)           Notices
of repurchase shall be mailed by first class mail, postage prepaid, at least 30
days but not more than 60 days before the date of repurchase to each Holder at
such Holder’s registered address, except that notices of repurchase may be
mailed more than 60 days prior to a date of repurchase if the notice is issued
in connection with a defeasance of the Notes or a satisfaction and discharge of
this Indenture. If any Note is to be repurchased in part only, any notice of
repurchase that relates to such Note shall state the portion of the principal
amount thereof to be repurchased.

 

(h)           A
new Note in principal amount equal to the unrepurchased portion of any Note
repurchased in part shall be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for repurchase become due and
payable on the date fixed for repurchase. On and after the date of repurchase,
unless the Company defaults in the repurchase payment, interest shall cease to
accrue on the Note or portions thereof called for repurchase.

 

SECTION 1019. 
Additional Interest Notice.  In the event that the Company is
required to pay Additional Interest to Holders pursuant to the Registration
Rights Agreement, the Company shall provide written notice (an “Additional Interest Notice”) to the
Trustee of its obligation to pay Additional Interest no later than fifteen days
prior to the proposed payment date for the Additional Interest, and the
Additional Interest Notice shall set forth the amount of Additional Interest to
be paid by the Company on such payment date.  The Trustee shall not at any
time be under any duty or responsibility to any Holder to determine the
Additional Interest, or with respect to the nature, extent, or calculation of
the amount of Additional Interest owed, or with respect to the method employed
in such calculation of the Additional Interest.

 

(a)           Obligations
of the Company and the Restricted Subsidiaries Relating to Kate Spade. 
In the event that Kate Spade sells, conveys, transfers or

 

114

 

otherwise
disposes all or substantially all of its properties or assets in one or more
related transactions, the Company shall, subject to its fiduciary duties to the
holders of minority Equity Interests in Kate Spade and subject to any other
obligations in the organizational documents of Kate Spade or other agreements
with Kate Spade or holders of its Equity Interests (in each case, as in effect
on the Issue Date), exercise its rights and powers as a controlling holder of
Equity Interests in Kate Spade to cause Kate Spade to distribute to the Company
its pro rata share of the net proceeds of such sale, conveyance, transfer or
other disposition, the Company shall apply such proceeds in accordance with Section 1018
of this Indenture and such proceeds shall constitute “Net Proceeds” thereunder. 
In addition, the Company shall, and shall cause its Restricted Subsidiaries to,
apply the amount of any other Extraordinary Distribution in accordance with Section 1018
of this Indenture and such amount will constitute “Net Proceeds” thereunder. 
Furthermore, the Company, in its capacity as a holder of Equity Interests in
Kate Spade, shall not, and shall cause its Restricted Subsidiaries not to,
waive any of its rights to receive dividends, distributions or other payments
from Kate Spade or consent to an amendment of Kate Spade’s organizational
documents or other agreements that would restrict Kate Spade’s ability to make
any such distributions.

 

SECTION 1020. 
No Amendment to Subordination Provision.  Without the consent of
the Holders of a majority in Outstanding aggregate principal amount of the
Notes, the Company shall not amend, modify or alter the Senior Subordinated
Indenture in any way to:

 

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

 

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

 

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

 

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

 

SECTION 1021. 
Designation of “Designated Senior Indebtedness”.  The Company
hereby designates the Notes to be “Designated Senior Indebtedness” under the
Senior Subordinated Indenture.

 

115

 

ARTICLE ELEVEN

 

REDEMPTION
OF NOTES

 

SECTION 1101. 
Right of Redemption.  (a)  At any time prior to
October 15, 2010, the Company may redeem all or a part of the Notes, upon
not less than 30 nor more than 60 days’ prior notice, at a redemption
price equal to 100% of the principal amount of Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and Additional
Interest, if any, to the Redemption Date, subject to the rights of Holders on
the relevant Record Date to receive interest due on the relevant Interest
Payment Date.

 

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

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2010

  	
   

  	
  104.500

  	
  %

  
	
  2011

  	
   

  	
  103.000

  	
  %

  
	
  2012

  	
   

  	
  101.500

  	
  %

  
	
  2013 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

(c)          
Prior to October 15, 2008, the Company may, at its option, redeem up to
35% of the aggregate principal amount of Notes issued under this Indenture at a
redemption price equal to 109.000% of the aggregate principal amount thereof,
plus accrued and unpaid interest and Additional Interest, if any, thereon to
the applicable Redemption Date, subject to the right of Holders on the relevant
record date to receive interest due on the relevant interest payment date, with
the net cash proceeds of one or more Equity Offerings of the Company or any
direct or indirect parent of the Company to the extent such net cash proceeds
are contributed to the Company; provided that
at least 50% of the sum of the aggregate principal amount of Notes originally
issued under this Indenture and any Additional Notes issued under this
Indenture after the Issue Date remains Outstanding immediately after the
occurrence of each such redemption; provided,
further, that each such redemption occurs within 90 days of the
date of closing of each such Equity Offering.

 

SECTION 1102. 
Applicability of Article.  Redemption of Notes at the election of
the Company or otherwise, as permitted or required by any provision of this
Indenture or the Notes, shall be made in accordance with such provision and
this Article.

 

116

 

SECTION 1103. 
Election to Redeem; Notice to Trustee.  The election of the Company
to redeem any Notes pursuant to Section 1101 above shall be evidenced by a
Board Resolution.  If the Company elects to redeem Notes pursuant to Section 1101
hereof, it shall furnish to the Trustee, at least five Business Days before
notice of redemption is required to be mailed or caused to be mailed to Holders
pursuant to Section 1105 hereof, an Officers’ Certificate setting forth (i) the
paragraph or subparagraph of such Note and/or Section of this Indenture
pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the
principal amount of the Notes to be redeemed and (iv) the Redemption
Price.

 

SECTION 1104. 
Selection by Trustee of Notes to Be Redeemed.  (a)  If the
Company is redeeming less than all of the Notes at any time, the Trustee shall
select the Notes to be redeemed (a) if the Notes are listed on any
national securities exchange, in compliance with the requirements of the
principal national securities exchange on which such Notes are listed or
(b) if such Notes are not so listed, on a pro
rata basis to the extent practicable; provided that no Notes of $2,000 or less shall be redeemed
in part.

 

(b)          
If any Note is to be redeemed in part only, any notice of redemption that
relates to such Note shall state the portion of the principal amount thereof to
be redeemed.

 

(c)          
A new Note in principal amount equal to the unredeemed portion of any Note
redeemed in part shall be issued in the name of the Holder thereof upon
cancellation of the original Note.  Notes called for redemption become due
and payable on the date fixed for redemption.  On and after the Redemption
Date, unless the Company defaults in the redemption payment, interest shall
cease to accrue on the Note or portions thereof called for redemption.

 

SECTION 1105. 
Notice of Redemption.  Notices of redemption shall be mailed by
first class mail, postage prepaid, at least 30 days but not more than
60 days before the Redemption Date to each Holder at such Holder’s
registered address, except that notices of redemption may be mailed more than
60 days prior to a Redemption Date if the notice is issued in connection
with a defeasance of the Notes or a satisfaction and discharge of this
Indenture.

 

All
notices of redemption shall state:

 

(1)          
the Redemption Date,

 

(2)          
the Redemption Price and the amount of accrued interest to the Redemption Date
payable as provided in Section 1107, if any,

 

(3)          
if less than all Outstanding Notes are to be redeemed, the identification (and,
in the case of a partial redemption, the principal amounts) of the particular
Notes to be redeemed,

 

(4)          
in case any Note is to be redeemed in part only, the notice which relates to
such Note shall state that on and after the Redemption Date, upon

 

117

 

surrender of such Note, the Holder shall receive,
without charge, a new Note or Notes of authorized denominations for the
principal amount thereof remaining unredeemed,

 

(5)          
that on the Redemption Date the Redemption Price (and accrued interest, if any,
to the Redemption Date payable as provided in Section 1107) shall become due
and payable upon each such Note, or the portion thereof, to be redeemed, and
that interest thereon shall cease to accrue on and after said date,

 

(6)          
the place or places where such Notes are to be surrendered for payment of the
Redemption Price and accrued interest, if any,

 

(7)          
the name and address of the Paying Agent,

 

(8)          
that Notes called for redemption must be surrendered to the Paying Agent to
collect the Redemption Price,

 

(9)          
that, unless the Company defaults in making such redemption payment, interest
on Notes called for redemption ceases to accrue on and after the Redemption
Date;

 

(10)        
the “CUSIP” number, ISIN or “Common Code” number and that no
representation is made as to the accuracy or correctness of the “CUSIP” number, ISIN
or “Common Code” number, if any, listed in such notice or printed on the Notes,
and

 

(11)        
the paragraph of the Notes or Section of the Indenture pursuant to which
the Notes are to be redeemed.

 

At
the Company’s request, the Trustee shall give the notice of redemption in the
Company’s name and at its expense; provided
that the Company shall have delivered to the Trustee, at least five Business
Days before notice of redemption is required to be mailed or caused to be mailed
to Holders pursuant to this Section 1105 (unless a shorter notice shall be
agreed to by the Trustee), an Officers’ Certificate requesting that the Trustee
give such notice and setting forth the information to be stated in such notice
as provided in Section 1103.

 

SECTION 1106. 
Effect of Notice of Redemption.  Once notice of redemption is
mailed in accordance with Section 1105 hereof, Notes called for redemption
become irrevocably due and payable on the Redemption Date at the Redemption
Price.  The notice, if mailed in a manner herein provided, shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice.  In any case, failure to give such notice by mail or any
defect in the notice to the Holder of any Note designated for redemption in
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Note.  Subject to Section 1107 hereof, on and
after the Redemption Date, interest ceases to accrue on Notes or portions of
Notes called for redemption.

 

118

 

SECTION 1107. 
Deposit of Redemption Price.  Prior to 10:00 a.m. (Eastern
Time) on any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and accrued interest and
Additional Interest, if any, on, all the Notes that are to be redeemed on that
date.  The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
and unpaid interest and Additional Interest, if any, on, all Notes to be
redeemed or purchased.

 

SECTION 1108. 
Notes Payable on Redemption Date.  (a)  Notice of redemption
having been given as aforesaid, the Notes so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified (together with accrued interest and Additional Interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest.  Upon surrender of any such Note for
redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price, together with accrued interest and Additional
Interest, if any, to the Redemption Date and such Notes shall be canceled by
the Trustee; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Notes, or one or more
Predecessor Notes, registered as such at the close of business on the relevant
Record Dates according to their terms and the provisions of Section 306.

 

(b)          
If any Note called for redemption shall not be so paid upon surrender thereof
for redemption, the principal (and premium, if any) shall, until paid, bear
interest from the Redemption Date at the rate borne by the Notes.

 

SECTION 1109. 
Notes Redeemed in Part.  Any Note which is to be redeemed only in
part (pursuant to the provisions of this Article) shall be surrendered at the
office or agency of the Company maintained for such purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder’s
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Note without
service charge, a new Note or Notes, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Note so
surrendered; provided that no
Note of $2,000 or less will be redeemed in part.

 

119

 

ARTICLE TWELVE

 

GUARANTEES

 

SECTION 1201. 
Guarantees.  From and after the consummation of the Merger, each
Guarantor hereby jointly and severally, irrevocably and unconditionally
irrevocably guarantees, as primary obligor and not merely as surety, the Notes
and obligations of the Company hereunder and thereunder, and guarantees to each
Holder of a Note authenticated and delivered by the Trustee, and to the Trustee
for itself and on behalf of such Holder, that: (1) the principal of (and
premium, if any) and interest on, or Additional Interest in respect of, the
Notes shall be paid in full when due, whether at Stated Maturity, by
acceleration or otherwise (including the amount that would become due but for
the operation of the automatic stay under Section 362(a) of the
Bankruptcy Law), together with interest on the overdue principal, if any, and
interest on any overdue interest, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder shall be paid in full or performed, all in accordance with the terms
hereof and thereof; and (2) in case of any extension of time of payment or
renewal of any Notes or of any such other obligations, the same shall be paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration or otherwise, subject,
however, in the case of clauses (1) and (2) above, to the limitation
set forth in Section 1204 hereof.

 

(a)          
Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder with respect to any provisions hereof or
thereof, any release of any other Guarantor, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Guarantor.

 

(b)          
Each Guarantor hereby waives (to the extent permitted by law) the benefits of
diligence, presentment, demand for payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company or any other Person, protest, notice and
all demands whatsoever and covenants that the Guarantee of such Guarantor shall
not be discharged as to any Note except by complete performance of the
obligations contained in such Note, this Indenture and such Guarantee. 
Each Guarantor acknowledges that the Guarantee is a guarantee of payment,
performance and compliance when due and not of collection.  Each of the
Guarantors hereby agrees that, in the event of a default in payment of
principal (or premium, if any) or interest on such Note, whether at its Stated
Maturity, by acceleration, purchase or otherwise, legal proceedings may be
instituted by the Trustee on behalf of, or by, the Holder of such Note, subject
to the terms and conditions set forth in this Indenture, directly against each
of the Guarantors to enforce such Guarantor’s Guarantee without first
proceeding against the Company or any other Guarantor.  Each Guarantor
agrees that if, after the occurrence and during the

 

120

 

continuance
of an Event of Default, the Trustee or any of the Holders are prevented by
applicable law from exercising their respective rights to accelerate the
Maturity of the Notes, to collect interest on the Notes, or to enforce or
exercise any other right or remedy with respect to the Notes, such Guarantor
shall pay to the Trustee for the account of the Holder, upon demand therefor,
the amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Trustee or any of the Holders.

 

(c)          
If any Holder or the Trustee is required by any court or otherwise to return to
the Company or any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to either the Company or any Guarantor, any
amount paid by any of them to the Trustee or such Holder, the Guarantee of each
of the Guarantors, to the extent theretofore discharged, shall be reinstated in
full force and effect.  Each Guarantor further agrees that, as between
each Guarantor, on the one hand, and the Holders and the Trustee on the other
hand, (1) subject to this Article Twelve, the Maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five
hereof for the purposes of the Guarantee of such Guarantor notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the obligations guaranteed hereby, and (2) in the event of any
acceleration of such obligation as provided in Article Five hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of the Guarantee of such
Guarantor.  The Guarantors shall have the right to seek contribution from
any non-paying Guarantor so long as the exercise of such right does not impair
the rights of the Holders under the Guarantees.

 

(d)          
Each Guarantee shall remain in full force and effect and continue to be
effective should any petition be filed by or against the Company for
liquidation, reorganization, should the Company become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company’s assets, and shall,
to the fullest extent permitted by law, continue to be effective or be
reinstated, as the case may be, if at any time payment and performance of the
Notes are, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee on the Notes, whether as a “voidable
preference”, “fraudulent transfer” or otherwise, all as though such payment or
performance had not been made.  In the event that any payment or any part
thereof, is rescinded, reduced, restored or returned, the Notes shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

 

SECTION 1202. 
Severability.  In case any provision of any Guarantee shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby to the extent permitted by applicable law.

 

SECTION 1203. 
Reserved.

 

121

 

SECTION 1204. 
Limitation of Guarantors’ Liability.  Each Guarantor, and by its
acceptance of Notes, each Holder hereby confirms that it is the intention of
all such parties that the Guarantee of such Guarantor not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law to the extent applicable to any Guarantee or the
provisions of its local law relating to fraudulent transfer or
conveyance.  To effectuate the foregoing intention, the Trustee, the
Holders and each such Guarantor hereby irrevocably agree that the obligations
of such Guarantor under its Guarantee shall be limited to the maximum amount as
will, after giving effect to such maximum amount and all other contingent and
fixed liabilities of such Guarantor that are relevant under such laws and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article Eleven, result in
the obligations of such Guarantor under its Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under applicable law.

 

SECTION 1205. 
Contribution.  Each Guarantor that makes a payment under its
Guarantee shall be entitled upon payment in full of all guaranteed obligations
under this Indenture to a contribution from each other Guarantor in an amount
equal to such other Guarantor’s pro rata
portion of such payment based on the respective net assets of all the
Guarantors at the time of such payment determined in accordance with GAAP (and
for purposes of this Section 1205, Holdings’ net assets shall be those of
all its consolidated Subsidiaries (other than the Subsidiary Guarantors)).

 

SECTION 1206. 
Subrogation.  Each Guarantor shall be subrogated to all rights of
Holders against the Company in respect of any amounts paid by any Guarantor
pursuant to the provisions of Section 1201; provided, however, that, if a Default or Event of Default
has occurred and is continuing, no Guarantor shall be entitled to enforce or
receive any payments arising out of, or based upon, such right of subrogation
until all amounts then due and payable by the Company under this Indenture or
the Notes shall have been paid in full.

 

SECTION 1207. 
Reinstatement.  Each Guarantor hereby agrees (and each Person who
becomes a Guarantor shall agree) that the Guarantee provided for in Section 1201
shall continue to be effective or be reinstated, as the case may be, if at any
time, payment, or any part thereof, of any obligations or interest thereon is
rescinded or must otherwise be restored by a Holder to the Company upon the
bankruptcy or insolvency of the Company or any Guarantor.

 

SECTION 1208. 
Release of a Guarantor.  The Subsidiary Guarantee of a Subsidiary
Guarantor shall automatically and unconditionally be released and discharged,
and no further action by such Guarantor, the Company or the Trustee is required
for the release of such Guarantor’s Guarantee, upon:

 

(1)          
(A)  the sale, disposition or other transfer (including through merger or
consolidation) of all of the Capital Stock (or any sale, disposition or other
transfer of Capital Stock following which such

 

122

 

Subsidiary Guarantor is no longer a Restricted
Subsidiary), or all or substantially all the assets, of such Subsidiary
Guarantor (other than a sale, disposition or other transfer to a Restricted
Subsidiary) if such sale, disposition or other transfer is made in compliance
with the applicable provisions of this Indenture;

 

(B)  the designation by
the Company of such Subsidiary Guarantor as an Unrestricted Subsidiary in
accordance Section 1010 of this Indenture and the definition of “Unrestricted
Subsidiary”;

 

(C)  the release or
discharge of such Subsidiary Guarantor from its guarantee of Indebtedness under
the Senior Credit Facilities or the guarantee that resulted in the obligation
of such Subsidiary Guarantor to guarantee the Notes, in each case, if such
Subsidiary Guarantor would not then otherwise be required to guarantee the
Notes pursuant to Section 1015 of this Indenture (treating any guarantees
of such Subsidiary Guarantor that remain outstanding as incurred at least
30 days prior to such release), except, in each case, a release or
discharge by, or as a result of, payment under such Guarantee or payment in
full of the Indebtedness under the Senior Credit Facilities; or

 

(D)  exercise by the
Company of its Legal Defeasance of the Notes under Section 1302 of this
Indenture or its Covenant Defeasance of the Notes under Section 1303 of
this Indenture or if the Company’s obligations under this Indenture are
discharged in accordance with Section 401 of this Indenture; and

 

(2)          
in the case of clause (1) (a) above, the release of such
Subsidiary Guarantor from its guarantee, if any, of and all pledges and security,
if any, granted in connection with, the Senior Credit Facilities, the Senior
Subordinated Notes and any other Indebtedness of the Company or any Restricted
Subsidiary.

 

SECTION 1209. 
Benefits Acknowledged.  Each Guarantor acknowledges that it shall
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and from its guarantee and waivers pursuant to
its Guarantees under this Article Twelve.

 

123

 

ARTICLE THIRTEEN

 

LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

 

SECTION 1301. 
Company’s Option to Effect Legal Defeasance or Covenant Defeasance. 
The Company may, at its option, and at any time, elect to have either
Section 1302 or Section 1303 be applied to all Outstanding Notes upon
compliance with the conditions set forth below in this Article Thirteen.

 

SECTION 1302. 
Legal Defeasance and Discharge.  Upon the Company’s exercise under
Section 1301 of the option applicable to this Section 1302, each of
the Company and the Guarantors shall be deemed to have been discharged from its
respective obligations with respect to all Outstanding Notes on the date the
conditions set forth in Section 1304 are satisfied (hereinafter, “Legal Defeasance”).  For this
purpose, such Legal Defeasance means that each of the Company and the
Guarantors shall be deemed to have paid and discharged the entire indebtedness
represented by the Outstanding Notes, which shall thereafter be deemed to be “Outstanding”
only for the purposes of Section 1305 and the other Sections of this
Indenture referred to in (1) and (2) below, and to have satisfied all
its other obligations under such Notes and this Indenture insofar as such Notes
and their related Guarantees are concerned (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder:

 

(1)          
the rights of Holders of Outstanding Notes to receive payments in respect of
the principal of (and premium, if any, on) and interest on such Notes when such
payments are due, solely out of the trust created pursuant to this Indenture
(as described in Section 1304),

 

(2)          
the Company’s obligations with respect to such Notes under Sections 303, 304,
305, 1002 and 1003,

 

(3)          
the rights, powers, trusts, duties and immunities of the Trustee hereunder, and
the obligations of each of the Company and the Guarantors in connection
therewith and

 

(4)          
this Article Thirteen.

 

Subject to compliance with this Article Thirteen,
the Company may exercise its option under this Section 1302
notwithstanding the prior exercise of its option under Section 1303 with
respect to the Notes.

 

SECTION 1303. 
Covenant Defeasance.   Upon
the Company’s exercise under Section 1301 of the option applicable to this
Section 1303, each of the Company and the Guarantors shall be released
from its respective obligations under any covenant contained in
Sections 801, 802, 803 and in Sections 1005, 1006, 1007 and 1009
through and including 1018 and 1020 with respect to the Outstanding Notes on
and after the date

 

124

 

the
conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”), and the Notes shall
thereafter be deemed not to be “Outstanding” for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed “Outstanding”
for all other purposes hereunder.  For this purpose, such Covenant
Defeasance means that, with respect to the Outstanding Notes, the Company or
any Guarantor, as applicable, may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under
Sections 501(3), 501(4), 501(5) and 501(7) and, with respect to
only any Significant Subsidiary and not the Company, Section 501(6), but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby.

 

SECTION 1304. 
Conditions to Legal Defeasance or Covenant Defeasance.  The
following shall be the conditions to application of either Section 1302 or
Section 1303 to the Outstanding Notes:

 

(1)          
the Company shall irrevocably have deposited or caused to be deposited with the
Trustee (or another trustee satisfying the requirements of Section 608 who
shall agree to comply with the provisions of this Article Thirteen
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to the benefit of the Holders of such Notes; (A) cash in U.S. dollars, or (B) non-callable
Government Securities, or (C) a combination thereof, in such amounts as
shall be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied by
the Trustee (or other qualifying trustee) to pay and discharge, the principal
of (and premium, if any) and interest on the Outstanding Notes on the Stated
Maturity (or Redemption Date, if applicable) of such principal (and premium, if
any) or, interest due on the Notes; provided
that the Trustee shall have been irrevocably instructed to apply such cash or
the proceeds of such Government Securities to said payments with respect to the
Notes; before such a deposit, the Company may give to the Trustee, in
accordance with Section 1103 hereof, a notice of its election to redeem
all of the Outstanding Notes at a future date in accordance with
Article Eleven hereof, which notice shall be irrevocable; such irrevocable
redemption notice, if given, shall be given effect in applying the foregoing;

 

(2)          
in the case of Legal Defeasance, the Company shall have delivered to the
Trustee an Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that, subject to customary assumptions and exclusions,

 

(A)  the Company has
received from, or there has been published by, the United States Internal
Revenue Service a ruling, or

 

125

 

(B)  since the issuance
of the Notes, there has been a change in the applicable U.S. Federal income tax
law, 

 

in either case to the effect that, and based thereon
such Opinion of Counsel in the United States shall confirm that, subject to
customary assumptions and exclusions, the Holders shall not recognize income,
gain or loss for U.S. Federal income tax purposes as a result of such Legal
Defeasance and shall be subject to U.S. Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;

 

(3)          
in the case of Covenant Defeasance, the Company shall have delivered to the
Trustee an Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that, subject to customary assumptions and exclusions, the
Holders shall not recognize income, gain or loss for U.S. Federal income tax
purposes as a result of such Covenant Defeasance and shall be subject to such
tax on the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;

 

(4)          
no Default (other than that resulting from borrowing funds to be applied to
make such deposit and the granting of Liens in connection therewith) shall have
occurred and be continuing on the date of such deposit;

 

(5)          
such Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under any of the Senior Credit
Facilities, the Senior Subordinated Indenture, the Existing Indenture, the
Senior Subordinated Notes, the Existing 2028 Debentures or any other material
agreement or instrument (other than this Indenture) to which, the Company,
Holdings or any Subsidiary Guarantor is a party or by which the Company, Holdings
or any Subsidiary Guarantor is bound;

 

(6)          
the Company shall have delivered to the Trustee an Opinion of Counsel in the
United States of America to the effect that, as of the date of such opinion and
subject to customary assumptions and exclusions following the deposit, the
trust funds shall not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally under any applicable U.S. Federal or state law, and that the Trustee
has a perfected security interest in such trust funds for the ratable benefit
of the Holders;

 

(7)          
the Company shall have delivered to the Trustee an Officers’ Certificate
stating that the deposit was not made by the Company with the intent of
defeating, hindering, delaying or defrauding any creditors of the Company or
any Guarantor or others; and

 

(8)          
the Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel in the United States of America (which

 

126

 

Opinion of Counsel may be subject to customary
assumptions and exclusions) each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant Defeasance, as the case
may be, have been complied with.

 

SECTION 1305. 
Deposited Money and Government Securities to Be Held in Trust; Other
Miscellaneous Provisions.  All cash and Government Securities
(including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 1305, the “Qualifying Trustee”) pursuant to
Section 1304 in respect of the Outstanding Notes shall be held in trust
and applied by the Qualifying Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company or a Subsidiary acting as its own Paying
Agent) as the Qualifying Trustee may determine, to the Holders of such Notes of
all sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money or Government Securities need not be
segregated from other funds except to the extent required by law.

 

The
Company shall pay and indemnify the Qualifying Trustee against any tax, fee or
other charge imposed on or assessed against the Government Securities deposited
pursuant to Section 1304 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the Outstanding Notes.

 

Anything
in this Article Thirteen to the contrary notwithstanding, the Qualifying
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Securities held by it as provided in
Section 1304 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Qualifying Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance, as applicable, in accordance with this Article.

 

SECTION 1306. 
Reinstatement.  If the Trustee or any Paying Agent is unable to
apply any money or Government Securities in accordance with Section 1305
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company’s and each Guarantor’s obligations under this Indenture and the
Outstanding Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 1302 or 1303, as the case may be, until such
time as the Trustee or Paying Agent is permitted to apply all such money or
Government Securities in accordance with Section 1305; provided, however, that if the Company
makes any payment of principal of (or premium, if any) or interest on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money or Government Securities held by the Trustee or Paying Agent.

 

SECTION 1307. 
Repayment to Company.  Any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment of

 

127

 

the
principal of, premium and Additional Interest, if any, or interest on any Note
and remaining unclaimed for two years after such principal, and premium and
Additional Interest, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease.

 

128

 

IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the day and year first above written.

 

	
   

  	
   

  	
  NEWTON
  ACQUISITION MERGER SUB,

  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Kewsong Lee

  
	
   

  	
   

  	
   

  	
  Name:
  Kewsong Lee

  
	
   

  	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The
  undersigned hereby acknowledges and agrees that, upon the effectiveness of
  the merger of Newton Acquisition Merger Sub, Inc. with and into the
  Neiman Marcus Group, Inc. with the Neiman Marcus Group, Inc.
  continuing as the surviving corporation, it shall succeed by operation of law
  to all of the rights and obligations of Newton Acquisition Merger
  Sub, Inc., set forth herein and that all references to the “Company”
  shall thereupon be deemed to be references to the undersigned.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE
  NEIMAN MARCUS GROUP, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Nelson A. Bangs

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Nelson
  A. Bangs

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President and General Counsel

  	
   

  	
   

  

 

129

 

	
   

  	
  NEWTON
  ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Nelson A. Bangs

  
	
   

  	
   

  	
  Name:
  Nelson A. Bangs

  
	
   

  	
   

  	
  Title:
   Senior Vice President and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Neiman
  Marcus Special Events, Inc.,

  
	
   

  	
  NM
  Financial Services, Inc.,

  
	
   

  	
  NM
  Kitchens, Inc.,

  
	
   

  	
  BergdorfGoodman.com,
  LLC,

  
	
   

  	
  Bergdorf
  Goodman, Inc.,

  
	
   

  	
  Bergdorf
  Graphics, Inc.,

  
	
   

  	
  Neiman
  Marcus Holdings, Inc.,

  
	
   

  	
  NEMA
  Beverage Corporation,

  
	
   

  	
  NEMA
  Beverage Holding Corporation,

  
	
   

  	
  NEMA
  Beverage Parent Corporation,

  
	
   

  	
  Worth
  Avenue Leasing Company,

  
	
   

  	
  NMGP,
  LLC,

  
	
   

  	
  NM
  Nevada Trust,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Nelson A. Bangs

  
	
   

  	
   

  	
  Name:
  Nelson A. Bangs

  
	
   

  	
   

  	
  Title:
   Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph P. O’Donnell

  
	
   

  	
   

  	
  Name:
  Joseph P. O’Donnell

  
	
   

  	
   

  	
  Title:
   Vice President

  

 

130

 

SCHEDULE I

 

Subsidiary Guarantors

 

1.             Neiman Marcus Special Events, Inc.,
a Delaware corporation

 

2.             NM Financial Services, Inc.,
a Delaware corporation

 

3.             NM Kitchens, Inc., a
Delaware corporation

 

4.             BergdorfGoodman.com, LLC, a
Delaware limited liability company

 

5.             Bergdorf Goodman, Inc.,
a New York corporation

 

6.             Bergdorf Graphics, Inc.,
a New York corporation

 

7.             Neiman Marcus Holdings, Inc.,
a California corporation

 

8.             NEMA Beverage Corporation, a
Texas corporation

 

9.             NEMA Beverage Holding
Corporation, a Texas corporation

 

10.           NEMA Beverage Parent
Corporation, a Texas corporation

 

11.           Worth Avenue Leasing
Company, a Florida corporation

 

12.           NMGP, LLC, a Virginia
limited liability company

 

13.           NM Nevada Trust , a
Massachusetts business trust

 

 

Rule 144A / Regulation S Appendix

 

PROVISIONS RELATING TO INITIAL NOTES,

PRIVATE EXCHANGE NOTES

AND EXCHANGE NOTES

 

1.             Definitions

 

1.1           Definitions.

 

For
the purposes of this Appendix the following terms shall have the meanings
indicated below:

 

“Applicable
Procedures” means, with respect to any transfer or transaction involving a
Temporary Regulation S Global Note or beneficial interest therein, the rules and
procedures of the Depository for such a Temporary Regulation S Global Note, to
the extent applicable to such transaction and as in effect from time to time.

 

“Certificated
Note” means a certificated Initial Note or Exchange Note or Private Exchange
Note (other than a Global Note) bearing, if required, the appropriate
restricted notes legend set forth in Section 2.3(e) of this Appendix.

 

“Depository”
means The Depository Trust Company, its nominees and their respective
successors.

 

“Distribution
Compliance Period”, with respect to any Notes, means the period of 40
consecutive days beginning on and including the later of (i) the day on
which such Notes are first offered to Persons other than distributors (as
defined in Regulation S under the Securities Act) in reliance on Regulation S
and (ii) the issue date with respect to such Notes.

 

“Exchange
Notes” means (1) the 9%/93⁄4% Senior Notes Due 2015 issued pursuant to the
Indenture in connection with a Registered Exchange Offer pursuant to a
Registration Rights Agreement and (2) Additional Notes, if any, issued
pursuant to a registration statement filed with the SEC under the Securities
Act.

 

“Initial
Notes” means (1) $700,000,000 aggregate principal amount of 9%/93⁄4% 
Senior Notes Due 2015 issued on the Issue Date and (2) Additional
Notes, if any, issued in a transaction exempt from the registration
requirements of the Securities Act.

 

“Initial
Purchasers” means (1) with respect to the Initial Notes issued on the
Issue Date,  Credit Suisse First
Boston LLC, Deutsche Bank Securities Inc., Banc of America Securities LLC, and
Goldman Sachs & Co., and (2) with respect to each issuance
of Additional Notes, the Persons purchasing such Additional Notes under the
related Purchase Agreement.

 

“Notes”
means the Initial Notes, any PIK Notes, any Additional Notes, the Exchange
Notes and the Private Exchange Notes (including, in each case, any increase in
the principal amount thereof as a result of a PIK Payment), treated as a single
class.

 

 

“Notes
Custodian” means the custodian with respect to a Global Note (as appointed by
the Depository), or any successor Person thereto and shall initially be the
Trustee.

 

“Private
Exchange” means the offer by the Company, pursuant to a Registration Rights
Agreement, to the Initial Purchasers to issue and deliver to each Initial
Purchaser, in exchange for the Initial Notes held by the Initial Purchaser as
part of its initial distribution, a like aggregate principal amount of Private
Exchange Notes.

 

“Private
Exchange Notes” means any 9%/93⁄4% Senior Notes Due 2015 issued in connection
with a Private Exchange.

 

“Purchase
Agreement” means (1) with respect to the Initial Notes issued on the Issue
Date, the Purchase Agreement dated September 28, 2005, among the Company,
Holdings, the Subsidiary Guarantors and the Initial Purchasers, and
(2) with respect to each issuance of Additional Notes, the purchase agreement
or underwriting agreement among the Company, Holdings, the Subsidiary
Guarantors and the Persons purchasing such Additional Notes.

 

“QIB”
means a “qualified institutional buyer” as defined in Rule 144A.

 

“Registered
Exchange Offer” means the offer by the Company, pursuant to a Registration
Rights Agreement, to certain Holders of Initial Notes, to issue and deliver to
such Holders, in exchange for the Initial Notes, a like aggregate principal
amount of Exchange Notes registered under the Securities Act.

 

“Registration
Rights Agreement” means (1) with respect to the Initial Notes issued on
the Issue Date, the Exchange and Registration Rights Agreement dated October 6,
2005, among the Company, Holdings, the Subsidiary Guarantors and the Initial
Purchasers and (2) with respect to each issuance of Additional Notes
issued in a transaction exempt from the registration requirements of the
Securities Act, the registration rights agreement, if any, among the Company
and the Persons purchasing such Additional Notes under the related Purchase
Agreement.

 

“Representative”
means Credit Suisse First Boston LLC as representative of the Initial
Purchasers.

 

“Rule 144A
Notes” means all Notes offered and sold to QIBs in reliance on Rule 144A.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Shelf
Registration Statement” means the registration statement issued by the Company
in connection with the offer and sale of Initial Notes or Private Exchange
Notes pursuant to a Registration Rights Agreement.

 

2

 

“Transfer
Restricted Notes” means Notes that bear or are required to bear the legend
relating to restrictions on transfer relating to the Securities Act set forth
in Section 2.3(e) hereto.

 

1.2          
Other Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section:

  
	
  “Agent Members”

  	
   

  	
  2.1(b)

  
	
  “Global Notes”

  	
   

  	
  2.1(a)

  
	
  “Permanent Regulation S Global Note”

  	
   

  	
  2.1(a)

  
	
  “Regulation S”

  	
   

  	
  2.1(a)

  
	
  “Regulation S Global Note”

  	
   

  	
  2.1(a)

  
	
  “Rule 144A”

  	
   

  	
  2.1(a)

  
	
  “Rule 144A Global Note”

  	
   

  	
  2.1(a)

  
	
  “Temporary Regulation S Global Note”

  	
   

  	
  2.1(a)

  

 

1.3           Capitalized terms used in
this Appendix, but not defined, have the meanings ascribed to such terms in the
Indenture to which this Appendix is attached.

 

2.             The Notes.

 

2.1           (a)  Form and
Dating.  The Initial Notes shall be offered and sold by the Company
pursuant to a Purchase Agreement.  The Initial Notes shall be resold
initially only to (i) QIBs in reliance on Rule 144A under the
Securities Act (“Rule 144A”) and (ii) Persons other than U.S. Persons
(as defined in Regulation S) in reliance on Regulation S under the
Securities Act (“Regulation S”).  Initial Notes may thereafter be
transferred to, among others, QIBs and purchasers in reliance on
Regulation S, subject to the restrictions on transfer set forth
herein.  Initial Notes initially resold pursuant to Rule 144A shall
be issued initially in the form of one or more permanent global Notes in
definitive, fully registered form (collectively, the “Rule 144A Global
Note”); and Initial Notes initially resold pursuant to Regulation S shall be
issued initially in the form of one or more temporary global notes in fully
registered form (collectively, the “Temporary Regulation S Global Note”), in
each case without interest coupons and with the global notes legend and the
applicable restricted notes legend set forth in Exhibit 1 hereto, which
shall be deposited on behalf of the purchasers of the Initial Notes represented
thereby with the Notes Custodian and registered in the name of the Depository
or a nominee of the Depository, duly executed by the Company and authenticated
by the Trustee as provided in this Indenture.  Except as set forth in this
Section 2.1(a), beneficial ownership interests in the Temporary Regulation
S Global Note shall be held only through the Euroclear System (“Euroclear”) and
Clearstream Banking, S.A. (“Clearstream”) (as indirect participants in the
Depository) and shall not be exchangeable for interests in the Rule 144A
Global Note, a permanent Regulation S global note in fully registered form
(the “Permanent Regulation S Global Note”, and together with the Temporary
Regulation S Global Note, the “Regulation S Global Note”) or any other Note

 

3

 

prior
to the expiration of the Distribution Compliance Period and then, after the
expiration of the Distribution Compliance Period, may be exchanged for
interests in a Rule 144A Global Note or the Permanent Regulation S
Global Note only upon certification in the form attached hereto as
Exhibit 3 or otherwise in a form reasonably satisfactory to the Trustee
that beneficial ownership interests in such Temporary Regulation S Global Note
are owned either by non-U.S. persons or U.S. persons who purchased such
interests in a transaction that is exempt from the registration requirements
under the Securities Act.

 

Prior
to the expiration of the Distribution Compliance Period, beneficial interests
in Temporary Regulation S Global Notes may be exchanged for interests in
Rule 144A Global Notes if (1) such exchange occurs in connection with
a transfer of Notes in compliance with Rule 144A and (2) the
transferor of the beneficial interest in the Temporary Regulation S Global
Note first delivers to the Trustee a written certificate (in a form
substantially similar to that attached hereto as Exhibit 2) to the effect
that the beneficial interest in the Temporary Regulation S Global Note is being
transferred (a) to a Person who the transferor reasonably believes to be a
QIB that is purchasing for its own account or the account of a QIB in a transaction
meeting the requirements of Rule 144A, and (b) in accordance with all
applicable securities laws of the States of the United States and other
jurisdictions.

 

Beneficial
interests in a Rule 144A Global Note may be transferred to a Person who
takes delivery in the form of an interest in a Regulation S Global Note,
whether before or after the expiration of the Distribution Compliance Period,
only if the transferor first delivers to the Trustee a written certificate (in
a form substantially similar to that attached hereto as Exhibit 2) to the
effect that such transfer is being made in accordance with Rule 903 or 904
of Regulation S or Rule 144 (if applicable).

 

The
Rule 144A Global Note, the Temporary Regulation S Global Note and the
Permanent Regulation S Global Note are collectively referred to herein as “Global
Notes”.  The aggregate principal amount of the Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depository or its nominee as hereinafter provided.

 

(b)           Book-Entry Provisions.  This
Section 2.1(b) shall apply only to a Global Note deposited with or on
behalf of the Depository.

 

The
Company shall execute and the Trustee shall, in accordance with this
Section 2.1(b), authenticate and deliver initially one or more Global
Notes that (a) shall be registered in the name of the Depository or the
nominee of the Depository and (b) shall be delivered by the Trustee to the
Depository or pursuant to the Depository’s instructions or held by the Trustee
as custodian for the Depository.

 

Members
of, or participants in, the Depository (“Agent Members”) shall have no rights
under this Indenture with respect to any Global Note held on their behalf by
the Depository or by the Trustee as the custodian of the Depository or under
such Global Note, and the Company, the Trustee and any agent of the Company or
the Trustee

 

4

 

shall
be entitled to treat the Depository as the absolute owner of such Global Note
for all purposes whatsoever.  Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices of such Depository
governing the exercise of the rights of a holder of a beneficial interest in
any Global Note.

 

(c)           Certificated Notes.  Except
as provided in this Section 2.1 or Section 2.3 or 2.4, owners of
beneficial interests in Global Notes shall not be entitled to receive physical
delivery of Certificated Notes.

 

2.2           Authentication; PIK Interest.  The
Trustee shall upon receipt of a Company Order specified in Section 202 of
the Indenture authenticate and deliver:  (1) on the Issue Date, an
aggregate principal amount of $700,000,000 9%/93⁄4% Senior Notes Due 2015,
(2) any Additional Notes for an original issue in an aggregate principal
amount specified in the written order of the Company pursuant to
Section 202 of the Indenture, (3) any PIK Notes issued in payment of
PIK Interest in an aggregate principal amount specified in the written order of
the Company pursuant to Section 301 of the Indenture  and (4) Exchange Notes or Private
Exchange Notes for issue only in a Registered Exchange Offer or a Private
Exchange, respectively, pursuant to a Registration Rights Agreement, for a like
principal amount of Initial Notes, in each case upon a Company Order signed by
two Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company.  Such Company Order shall specify the amount of
the Notes to be authenticated and the date on which the original issue of Notes
is to be authenticated and, in the case of any issuance of Additional Notes
pursuant to Section 312 of the Indenture, shall certify that such issuance
is in compliance with Section 1011 of the Indenture.  On any Interest
Payment Date on which the Company pays PIK Interest with respect to a Global
Note, the Trustee shall increase the principal amount of such Global Note by an
amount equal to the interest payable, rounded up to the nearest $1,000, for the
relevant Interest Period on the principal amount of such Global Note as of the
relevant Record Date for such Interest Payment Date, to the credit of the
Holders on such Record Date, pro rata in accordance with their interests, and
an adjustment shall be made on the books and records of the Trustee (if it is
then the Notes Custodian for such Global Note) with respect to such Global
Note, by the Trustee or the Notes Custodian, to reflect such increase.

 

2.3           Transfer and Exchange.

 

(a)           Transfer and Exchange of
Certificated Notes.  When Certificated Notes are presented to the
Note Registrar with a request:

 

(x)            to register the transfer of such Certificated Notes;
or

 

(y)           to exchange such Certificated Notes for an equal
principal amount of Certificated Notes of other authorized denominations,

 

5

 

the
Note Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however, that the Certificated
Notes surrendered for transfer or exchange:

 

(i)            shall be duly
endorsed or accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Note Registrar, duly executed by the Holder
thereof or its attorney duly authorized in writing; and

 

(ii)           if such
Certificated Notes are required to bear a restricted notes legend, they are
being transferred or exchanged pursuant to an effective registration statement
under the Securities Act, pursuant to Section 2.3(b) or pursuant to
clause (A), (B) or (C) below, and are accompanied by the following
additional information and documents, as applicable:

 

(A)          if such Certificated Notes
are being delivered to the Note Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from such Holder to that
effect; or

 

(B)           if such Certificated Notes
are being transferred to the Company, a certification to that effect; or

 

(C)           if such Certificated Notes
are being transferred (x) pursuant to an exemption from registration in
accordance with Rule 144A, Regulation S or Rule 144 under the
Securities Act; or (y) in reliance upon another exemption from the
requirements of the Securities Act: (i) a certification to that effect (in
the form set forth on the reverse of the Note) and (ii) if the Company so
requests, an Opinion of Counsel or other evidence reasonably satisfactory to it
as to the compliance with the restrictions set forth in the legend set forth in
Section 2.3(e)(i).

 

(b)           Restrictions on Transfer of
a Certificated Note for a Beneficial Interest in a Global Note. 
A Certificated Note may not be exchanged for a beneficial interest in a Rule 144A
Global Note or a Permanent Regulation S Global Note except upon
satisfaction of the requirements set forth below.  Upon receipt by the
Trustee of a Certificated Note, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:

 

(i)            certification, in a form substantially similar to
that attached hereto as Exhibit 2, that such Certificated Note is either (A) being
transferred to a QIB in accordance with Rule 144A or (B) being
transferred after expiration of the Distribution Compliance Period by a Person
who initially purchased such Note in reliance on Regulation S to a buyer who
elects to hold its interest in such Note in the form of a beneficial interest
in the Permanent Regulation S Global Note; and

 

(ii)           written instructions directing the Trustee to make,
or to direct the Notes Custodian to make, an adjustment on its books and
records with respect to such Rule 144A Global Note (in the case of a

 

6

 

transfer
pursuant to clause (b)(i)(A)) or Permanent Regulation S Global Note
(in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an
increase in the aggregate principal amount of the Notes represented by the
Rule 144A Global Note or Permanent Regulation S Global Note, as
applicable, such instructions to contain information regarding the Depository
account to be credited with such increase,

 

then
the Trustee shall cancel such Certificated Note and cause, or direct the Notes
Custodian to cause, in accordance with the standing instructions and procedures
existing between the Depository and the Notes Custodian, the aggregate
principal amount of Notes represented by the Rule 144A Global Note or
Permanent Regulation S Global Note, as applicable, to be increased by the
aggregate principal amount of the Certificated Note to be exchanged and shall
credit or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Rule 144A Global Note or
Permanent Regulation S Global Note, as applicable, equal to the principal
amount of the Certificated Note so canceled.  If no Rule 144A Global
Notes or Permanent Regulation S Global Notes, as applicable, are then
outstanding, the Company shall issue and the Trustee shall authenticate, upon
receipt of a Company Order, a new Rule 144A Global Note or Permanent
Regulation S Global Note, as applicable, in the appropriate principal amount.

 

(c)           Transfer and Exchange of
Global Notes.

 

(i)            The transfer and exchange of Global Notes or
beneficial interests therein shall be effected through the Depository, in
accordance with this Indenture (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Depository therefor. 
A transferor of a beneficial interest in a Global Note shall deliver to the
Note Registrar a written order given in accordance with the Depository’s
procedures containing information regarding the participant account of the
Depository to be credited with a beneficial interest in the Global Note. 
The Note Registrar shall, in accordance with such instructions instruct the
Depository to credit to the account of the Person specified in such instructions
a beneficial interest in the Global Note and to debit the account of the Person
making the transfer the beneficial interest in the Global Note being
transferred.

 

(ii)           If the proposed transfer is a transfer of a
beneficial interest in one Global Note to a beneficial interest in another
Global Note, the Note Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Global Note to which such
interest is being transferred in an amount equal to the principal amount of the
interest to be so transferred, and the Note Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal amount
of the Global Note from which such interest is being transferred.

 

7

 

(iii)          Notwithstanding any other provisions of this
Appendix (other than the provisions set forth in Section 2.4), a Global
Note may not be transferred as a whole except by the Depository to a nominee of
the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.

 

(iv)          In the event that Global Note is exchanged for
Certificated Notes to Section 2.4 of this Appendix, prior to the
consummation of a Registered Exchange Offer or the effectiveness of a Shelf
Registration Statement with respect to such Notes, such Notes may be exchanged
only in accordance with such procedures as are substantially consistent with the
provisions of this Section 2.3 (including the certification requirements
set forth on the reverse of the Initial Notes (as set forth in Exhibit 2,
hereto) intended to ensure that such transfers comply with Rule 144A,
Regulation S or another applicable exemption under the Securities Act, as
the case may be) and such other procedures as may from time to time be adopted
by the Company.

 

(d)           Restrictions on Transfer of
Temporary Regulation S Global Notes.  During the
Distribution Compliance Period, beneficial ownership interests in Temporary
Regulation S Global Notes may only be sold, pledged or transferred in
accordance with the Applicable Procedures and only (i) to the Company,
(ii) in an offshore transaction in accordance with Regulation S
(other than a transaction resulting in an exchange for an interest in a
Permanent Regulation S Global Note), (iii) pursuant to an effective
registration statement under the Securities Act, in each case in accordance
with any applicable securities laws of any State of the United States.

 

(e)           Legend.

 

(i)            Except as permitted by the following
paragraphs (ii), (iii) and (iv), each Note certificate evidencing the
Global Notes (and all Notes issued in exchange therefor or in substitution
thereof), in the case of Notes offered otherwise than in reliance on
Regulation S shall bear a legend in substantially the following form:

 

THIS
NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. 
EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE

 

8

 

PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

 

THE
HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS
NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(I) TO THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(IV) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF
THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

 

Each
certificate evidencing a Note offered in reliance on Regulation S shall, in
addition to the foregoing, bear a legend in substantially the following form:

 

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

 

Each
Certificated Note shall also bear the following additional legend:

 

IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE NOTE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER

 

9

 

INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

(ii)           Upon any sale or transfer of a Transfer Restricted
Note (including any Transfer Restricted Note represented by a Global Note)
pursuant to Rule 144 under the Securities Act, the Note Registrar shall
permit the transferee thereof to exchange such Transfer Restricted Note for a
certificated Note that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Note, if the transferor
thereof certifies in writing to the Note Registrar that such sale or transfer
was made in reliance on Rule 144 (such certification to be in the form set
forth on the reverse of the Note).

 

(iii)          After a transfer of any Initial Notes or Private
Exchange Notes pursuant to and during the period of the effectiveness of a
Shelf Registration Statement with respect to such Initial Notes or Private
Exchange Notes, as the case may be, all requirements pertaining to legends on
such Initial Note or such Private Exchange Note shall cease to apply, the
requirements requiring any such Initial Note or such Private Exchange Note
issued to certain Holders be issued in global form shall cease to apply, and a
certificated Initial Note or Private Exchange Note or an Initial Note or
Private Exchange Note in global form, in each case without restrictive transfer
legends, shall be available to the transferee of the Holder of such Initial
Notes or Private Exchange Notes upon exchange of such transferring Holder’s
certificated Initial Note or Private Exchange Note or directions to transfer
such Holder’s interest in the Global Note, as applicable.

 

(iv)          Upon the consummation of a Registered Exchange Offer
with respect to the Initial Notes, all requirements pertaining to such Initial
Notes that Initial Notes issued to certain Holders be issued in global form
shall still apply with respect to Holders of such Initial Notes that do not
exchange their Initial Notes, and Exchange Notes in certificated or global
form, in each case without the restricted notes legend set forth in
Exhibit 1 hereto shall be available to Holders that exchange such Initial
Notes in such Registered Exchange Offer.

 

(v)           Upon the consummation of a Private Exchange with
respect to the Initial Notes, all requirements pertaining to such Initial Notes
that Initial Notes issued to certain Holders be issued in global form shall
still apply with respect to Holders of such Initial Notes that do not exchange
their Initial Notes, and Private Exchange Notes in global form with the global
notes legend and the applicable restricted notes legend set forth in
Exhibit 1 hereto shall be available to Holders that exchange such Initial
Notes in such Private Exchange.

 

10

 

(f)            Cancellation or Adjustment
of Global Note.  At such time as all beneficial interests in a
Global Note have been exchanged for Certificated Notes, redeemed, purchased or
canceled, such Global Note shall be returned to the Depository for cancellation
or retained and canceled by the Trustee.  At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for
certificated Notes, redeemed, purchased or canceled, the principal amount of
Notes represented by such Global Note shall be reduced and an adjustment shall
be made on the books and records of the Trustee (if it is then the Notes
Custodian for such Global Note) with respect to such Global Note, by the
Trustee or the Notes Custodian, to reflect such reduction.

 

(g)           No Obligation of the
Trustee.

 

(i)            The Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Note, a member of, or a
participant in the Depository or other Person with respect to the accuracy of
the records of the Depository or its nominee or of any participant or member
thereof, with respect to any ownership interest in the Notes or with respect to
the delivery to any participant, member, beneficial owner or other Person (other
than the Depository) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Notes.  All notices
and communications to be given to the Holders and all payments to be made to
Holders under the Notes shall be given or made only to or upon the order of the
registered Holders (which shall be the Depository or its nominee in the case of
a Global Note).  The rights of beneficial owners in any Global Note shall
be exercised only through the Depository subject to the applicable rules and
procedures of the Depository.  The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its members, participants and any beneficial owners.

 

(ii)           The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Note (including any transfers between or
among Depository participants, members or beneficial owners in any Global Note)
other than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

 

2.4           Certificated Notes.

 

(a)           A Global Note deposited with
the Depository or with the Trustee as Notes Custodian for the Depository
pursuant to Section 2.1 shall be transferred to the beneficial owners
thereof in the form of Certificated Notes in an aggregate principal

 

11

 

amount
equal to the principal amount of such Global Note, in exchange for such Global
Note, only if such transfer complies with Section 2.3 hereof and
(i) the Depository notifies the Company that it is unwilling or unable to
continue as depository for such Global Note and the Depository fails to appoint
a successor depository or if at any time such depository ceases to be a “clearing
agency” registered under the Exchange Act, in either case, and a successor
depository is not appointed by the Company within 90 days of such notice,
or (ii) a Default has occurred and is continuing or (iii) the
Company, in its sole discretion, notifies the Trustee in writing that it elects
to cause the issuance of Certificated Notes under this Indenture (although
Temporary Regulation S Global Notes at the Company’s election pursuant to this
clause may not be exchanged for Certificated Notes prior to (a) the
expiration of the Distribution Compliance Period and (b) the receipt of
any certificates required under the provisions of Regulation S).

 

(b)           Any Global Note that is
transferable to the beneficial owners thereof pursuant to this Section 2.4
shall be surrendered by the Depository to the Trustee located at its principal
corporate trust office to be so transferred, in whole or from time to time in
part, without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Note, an equal aggregate principal
amount of Certificated Notes of authorized denominations.  Any portion of
a Global Note transferred pursuant to this Section 2.4 shall be executed,
authenticated and delivered only in denominations of $2,000 principal amount
and any integral multiple of $1,000 in excess thereof and registered in such
names as the Depository shall direct.  Any Certificated Note delivered in
exchange for an interest in the Transfer Restricted Note shall, except as
otherwise provided by Section 2.3(e) hereof, bear the applicable
restricted notes legend and certificated notes legend set forth in
Exhibit 1 hereto.

 

(c)           Subject to the provisions of
Section 2.4(b) hereof, the registered Holder of a Global Note shall
be entitled to grant proxies and otherwise authorize any Person, including
Agent Members and Persons that may hold interests through Agent Members, to
take any action which a Holder is entitled to take under this Indenture or the
Notes.

 

(d)           In the event of the
occurrence of one of the events specified in Section 2.4(a) hereof,
the Company shall promptly make available to the Trustee a reasonable supply of
Certificated Notes in definitive, fully registered form without interest
coupons.  In the event that such Certificated Notes are not issued, the
Company expressly acknowledges, with respect to the right of any Holder to
pursue a remedy pursuant to this Indenture, including pursuant to Section 507,
the right of any beneficial owner of Notes to pursue such remedy with respect
to the portion of the Global Note that represents such beneficial owner’s Notes
as if such Certificated Notes had been issued.

 

12

 

EXHIBIT 1

to Rule 144A / Regulation S Appendix

 

[FORM OF FACE OF INITIAL NOTE]

[Global Notes Legend]

 

UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR 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.

 

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

 

[[FOR
REGULATION S GLOBAL NOTE ONLY] UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT OR
COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED
STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE
OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]

 

[Restricted Notes Legend for Notes offered otherwise

than in Reliance on Regulation S]

 

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

 

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

 

 

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

 

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

 

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

 

[Temporary Regulation S Global Note Legend]

 

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

 

2

 

UNDER
THE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.  HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL
NOTE WILL NOTIFY ANY PURCHASER OF THIS NOTE OF THE RESALE RESTRICTIONS REFERRED
TO ABOVE, IF THEN APPLICABLE.

 

AFTER
THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD BENEFICIAL INTERESTS IN
THIS TEMPORARY REGULATION S GLOBAL NOTE MAY BE EXCHANGED FOR
INTERESTS IN A RULE 144A GLOBAL NOTE ONLY IF (1) SUCH EXCHANGE OCCURS
IN CONNECTION WITH A TRANSFER OF THE NOTES IN COMPLIANCE WITH RULE 144A
AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL NOTE FIRST DELIVERS TO
THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS
CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL NOTE IS BEING
TRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A
PERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, AND
(C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS.

 

BENEFICIAL
INTERESTS IN A RULE 144A GLOBAL NOTE MAY BE TRANSFERRED TO A PERSON WHO
TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL NOTE,
WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE
PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE
(IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT SUCH
TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S
OR RULE 144 (IF AVAILABLE).

 

[Certificated Notes Legend]

 

IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE NOTE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

3

 

	
  No.

  	
   

  	
  $

  

 

9%/93⁄4% Senior Notes Due 2015

 

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

 

Interest
Payment Dates:  January 15, April 15, July 15 and October 15.

 

Record
Dates:  January 1, April 1, July 1 and October 1.

 

Additional
provisions of this Note are set forth on the other side of this Note.

 

Dated:

 

4

 

	
   

  	
   

  	
  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

  	
   

  	
   

  

 

5

 

[FORM OF REVERSE SIDE OF INITIAL NOTE]

 

9%/93/4% Senior Note Due 2015

 

Capitalized
terms used herein but not defined herein shall have the meanings given to such
terms in the Indenture.

 

1.             Principal and Interest.

 

The
Neiman Marcus Group, Inc. (the “Company”) shall pay the principal of this
Note on October 15, 2015.

 

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

 

The
Company shall pay interest with respect to the first Interest Period entirely
in cash. For any Interest Period thereafter through the Interest Period ending
October 14, 2010, the Company may, at its option, elect to pay interest on
the Notes:

 

(a)           entirely in cash (“Cash Interest”) or

 

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

 

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

 

Cash
Interest on the Notes shall accrue at the rate of 9%  per annum and be
payable in 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 of
the Notes at the close of business on January 1, April 1, July 1
or October 1 immediately preceding the Interest Payment Date) on each
Interest Payment Date, commencing January 15, 2006.

 

The
Holder of this Note is entitled to the benefits of the Exchange and Registration
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.

 

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

 

6

 

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

 

The
Company shall pay interest and Additional Interest if any, on overdue principal
and premium, if any, and interest on overdue installments of interest, to the
extent lawful, at a rate per annum equal to the rate of interest applicable to
the Notes.

 

2.             Method of Payment.

 

The
Company shall pay interest (except defaulted interest) on the principal amount
of the Notes on each January 15, April 15, July 15 and
October 15 to the Persons who are Holders (as reflected in the Note
Register at the close of business on January 1, April 1, July 1
and October 1 immediately preceding the Interest Payment Date), in each
case, even if the Note is transferred or exchanged after such Regular Record
Date, except as provided in Section 306(b) with respect to Defaulted
Interest; provided that, with
respect to the payment of principal, the Company shall make payment to the
Holder that surrenders this Note to any Paying Agent on or after
October 15, 2015.

 

PIK
Interest shall be payable by increasing the principal amount of this global
Note by an amount equal to the amount of PIK Interest for the applicable
Interest Period (rounded up to the nearest $1,000).  Following an increase
in the principal amount of the outstanding global Notes as a result of a PIK
Payment, this global Note shall bear interest on such increased principal
amount 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 shall
have the same rights and benefits as the Notes issued on the Issue Date.

 

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

 

3.             Paying Agent and Note
Registrar.

 

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

 

7

 

4.             Indenture.

 

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

 

The
Notes are unsecured senior obligations of the Company.  The Indenture does
not limit the aggregate principal amount of the Notes.  Subject to the
conditions set forth in the Indenture, the Company may issue Additional Notes.

 

5.             Redemption.

 

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

 

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

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2010

  	
   

  	
  104.500

  	
  %

  
	
  2011

  	
   

  	
  103.000

  	
  %

  
	
  2012

  	
   

  	
  101.500

  	
  %

  
	
  2013 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

In
addition, until October 15, 2008, the Company may, at its option, redeem
up to 35% of the aggregate principal amount of Notes issued under the Indenture
at a redemption price equal to 109.000%% of the aggregate principal amount thereof,
plus accrued and unpaid interest thereon and Additional Interest, if any, to
the applicable Redemption Date, subject to the right of Holders on the relevant
record date to receive interest due on the relevant Interest Payment Date, with
the net cash proceeds of one or more Equity Offerings of the Company or any
direct or indirect parent of the Company to the extent such net cash proceeds
are contributed to the Company; provided that
at least 50% of the sum of the aggregate principal amount of Notes originally
issued under the

 

8

 

Indenture
remains Outstanding immediately after the occurrence of each such redemption; provided, further, that each such
redemption occurs within 90 days of the date of closing of each such
Equity Offering.

 

6.             Repurchase upon a Change of
Control and Asset Sales.

 

Upon
the occurrence of (a) a Change of Control, the Holders shall have the
right to require that the Company purchase such Holder’s outstanding Notes, in
whole 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 date
of purchase and (b) Asset Sales, the Company may be obligated to make
offers to purchase Notes and Senior Indebtedness of the Company with a portion
of the Net Proceeds of such Asset Sales at a redemption price of 100% of the
principal amount thereof plus accrued and unpaid interest and Additional
Interest, if any, to the date of purchase.

 

7.             Denominations; Transfer;
Exchange.

 

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

 

8.             Persons Deemed Owners.

 

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

 

9.             Unclaimed Money.

 

Subject
to any laws relating to abandoned property, if money for the payment of
principal (premium, if any) or interest remains unclaimed for two years, the
Trustee and the Paying Agent shall pay the money back to the Company at its
request or (if then held by the Company) shall be discharged from such
trust.  After that, Holders entitled to the money must look to the Company
for payment and all liability of the Trustee and such Paying Agent with respect
to such money, and all liability of the Company as trustee thereof, shall
cease.

 

9

 

10.           Discharge and Defeasance
Prior to Redemption or Maturity.

 

Subject
to satisfaction of conditions set forth in the Indenture, the Company at any
time may terminate some or all of its obligations under the Notes and the
Indenture if the Company irrevocably deposits with the Trustee cash or
Government Securities or a combination thereof sufficient for the payment of
the then outstanding principal of and interest on the Notes to Redemption or
Stated Maturity, as the case may be.

 

11.           Amendment; Supplement;
Waiver.

 

Subject
to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
aggregate principal amount of the Outstanding Notes, including consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, the Notes, and any existing Default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes.  Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, omission, mistake, defect or inconsistency and make any change that does
not adversely affect the legal rights of any Holder.

 

12.           Restrictive Covenants.

 

The
Indenture contains certain covenants, including covenants with respect to the
following matters: (i) Restricted Payments; (ii) incurrence of
Indebtedness and issuance of Disqualified Stock and Preferred Stock; (iii) Liens;
(iv) transactions with Affiliates; (v) dividend and other payment
restrictions affecting Restricted Subsidiaries; (vi) guarantees of
Indebtedness by Restricted Subsidiaries; (vii) changes to the terms of certain
Subordinated Indebtedness; (viii) merger, consolidation or sale of all or
substantially all assets; (ix) purchase of Notes upon a Change in Control;
(x) sale and lease-back transactions; and (xi) disposition of
proceeds of Asset Sales.  Within 120 days (or the successor time period
then in effect under the rules and regulations of the Exchange Act) after
the end of each fiscal year, the Company must report to the Trustee on
compliance with such limitations.

 

13.           Successor Persons.

 

When
a successor Person or other entity assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor Person shall be
released from those obligations, subject to certain exceptions.

 

14.           Remedies for Events of
Default.

 

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

 

10

 

with
respect to the Company or any Significant Subsidiary occurs and is continuing,
the Notes automatically become immediately due and payable.  Subject to
the provisions of the Indenture relating to the duties of the Trustee, in case
an Event of Default occurs and is continuing, the Trustee shall be under no
obligation to exercise any rights or powers under the Indenture at the request
or direction of any of the Holders unless such Holders have offered to the
Trustee reasonable indemnity or security against any loss, liability or
expense.  Subject to certain restrictions, the Holders of a majority in
principal amount of the Outstanding Notes are given the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee. 
The Trustee, however, may refuse to follow any direction that conflicts with
law or the Indenture or that the Trustee determines is unduly prejudicial to
the rights of any other Holder of a Note or that would involve the Trustee in
personal liability.

 

15.           Guarantees.

 

The
Company’s obligations under the Notes are fully, irrevocably and unconditionally
guaranteed on an unsecured senior basis, to the extent set forth in the
Indenture, by Holdings and each of the Subsidiary Guarantors.

 

16.           Trustee Dealings with
Company.

 

The
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may make loans to, accept deposits
from, perform services for, and otherwise deal with, the Company and its
Affiliates as if it were not the Trustee.

 

17.           Authentication.

 

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

 

18.           Abbreviations.

 

Customary
abbreviations may be used in the name of a Holder or an assignee, such
as:  TEN COM (= 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.

 

Pursuant
to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Holders.  No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

 

11

 

20.           Holders’ Compliance with the
Registration Rights Agreement.

 

Each
Holder of a Note, by acceptance hereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, including the obligations of
the Holders with respect to a registration and the indemnification of the
Company to the extent provided therein.

 

21.           Governing Law.

 

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

 

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

 

12

 

 

EXHIBIT 2

to Rule 144A / Regulation S Appendix

 

ASSIGNMENT/TRANSFER FORM

 

To
assign and transfer this Note, fill in the form below:

 

I
or we assign and transfer this Note to

 

(Print
or type assignee’s name, address and zip code)

 

(Insert
assignee’s soc. sec. or tax I.D. No.)

 

and
irrevocably appoint
                                  
agent to transfer this Note on the books of the Company.  The agent may
substitute another to act for him.

 

 

	
  Date:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  	
   

  

 

 

 

Sign
exactly as your name appears on the other side of this Note.

 

In
connection with any transfer of any of the Notes evidenced by this certificate
occurring prior to the expiration of the period referred to in Rule 144(k) under
the Securities Act after the later of the date of original issuance of
such Notes and the last date, if any, on which such Notes were owned by the
Company or any Affiliate of the Company, the undersigned confirms that such
Notes are being transferred in accordance with its terms:

 

CHECK
ONE BOX BELOW

 

to
the Company; or

 

(1)           pursuant to an effective
registration statement under the Securities Act of 1933, as amended; or

 

(2)           inside the United States to a “qualified
institutional buyer” (as defined in Rule 144A under the Securities Act of
1933) that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933, as amended; or

 

(3)           outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities Act in compliance with
Rule 904 under the Securities Act of 1933, as amended; or

 

 

(4)           pursuant to the exemption from registration provided
by Rule 144 under the Securities Act of 1933, as amended.

 

Unless
one of the boxes is checked, the Trustee shall refuse to register any of the
Notes evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however,
that if box (4) is checked, the Trustee shall be entitled to require,
prior to registering any such transfer of the Notes, such legal opinions,
certifications and other information as the Company has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, as amended, such as the exemption provided by Rule 144 under such
Act.

 

 

	
   

  	
   

  
	
  Signature

  	
   

  

 

Signature
Guarantee:

 

 

	
   

  	
   

  	
   

  
	
  Signature
  must be guaranteed

  	
   

  	
  Signature

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

 

2

 

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

 

The
undersigned represents and warrants that it is purchasing this Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act of 1933, as
amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned’s foregoing representations in order
to claim the exemption from registration provided by Rule 144A.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notice:
  To be executed by

  an executive officer

  

 

3

 

[TO BE ATTACHED TO GLOBAL NOTES]

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The following increases or decreases in this Global Note have been
made:

 

	
  Date of Exchange

  or payment of

  PIK Interest

  	
   

  	
  Amount of decrease in

  Principal amount of

  this

  Global Note

  	
   

  	
  Amount of increase in

  Principal amount of

  this

  Global Note

  	
   

  	
  Principal amount of

  this

  Global Note following

  such

  decrease or increase

  	
   

  	
  Signature of

  authorized

  officer of Trustee or

  Notes

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

4

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If
you want to elect to have this Note purchased by the Company pursuant to
Section 1017 or  1018 of the
Indenture, check the box:

 

If
you want to elect to have only part of this Note purchased by the Company
pursuant to Section 1017 or 1018 of the Indenture, state the amount in
principal amount:  $

 

	
  Dated:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Sign exactly as your name appears on

  the other side of this Note.)

  

 

	
  Signature
  Guarantee:

  	
   

  	
   

  
	
   

  	
  (Signature must be guaranteed)

  	
   

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

 

5

 

EXHIBIT 3

to Rule 144A / Regulation S Appendix

 

FORM OF NON-U.S. BENEFICIAL OWNERSHIP

CERTIFICATION BY EURO CLEAR OR CLEARSTREAM LUXEMBOURG

 

	
   

  	
   

  	
  [Date]

  

 

Wells
Fargo Bank, N.A.

 

Re:          9%/93/4%  Senior Notes due 2015 (the “Notes”) of The Neiman Marcus
Group, Inc. (the “Company”)

 

Reference
is hereby made to the Senior Indenture, dated as of October 6, 2005 (as
amended and supplemented from time to time, the “Indenture”), among the
Company, the Guarantors named therein and Wells Fargo Bank, N.A., as
Trustee.  Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.

 

This
is to certify with respect to
$                
principal amount of the Notes that, except as set forth below, we have received
in writing, by tested telex or by electronic transmission, from member
organizations appearing in our records as persons being entitled to a portion
of such principal amount (our “Member Organizations”) certifications with
respect to such portion, that such portion is beneficially owned by (a) non-U.S.
person(s) or (b) U.S. person(s) who purchased the portion beneficially
owned by such U.S. person(s) in transactions that did not require
registration under the Securities Act of 1933, as amended (the “Act”).  As
used in this paragraph the term “U.S. person” has the meaning given to it by
Regulation S under the Act.

 

We
further certify:

 

(i) that
we are not making available herewith for exchange (or, if relevant, exercise of
any rights or collection of any interest) any portion of the Regulation S
Temporary Global Note excepted in such certifications; and

 

(ii) that
as of the date hereof we have not received any notification from any of our
Member Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, exercise of any rights or collection of any
interest) are no longer true and cannot be relied upon as the date hereof.

 

We
understand that this certification is required in connection with certain
securities laws of the United States.  In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certification is or would be relevant, we irrevocably authorize
you or the Company to produce this certification to any interested party in
such proceedings.

 

 

Dated:
                    ,
20

 

	
   

  	
  Yours
  faithfully,

  
	
   

  	
  [Euroclear
  or Clearstream Luxembourg]

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  

 

2

 

EXHIBIT A

 

[FORM OF FACE OF EXCHANGE NOTE

OR PRIVATE EXCHANGE NOTE] */**/

 

*/
[If the Note is to be issued in global form add the Global Notes Legend from Exhibit 1
to Appendix A and the attachment from such Exhibit 1 captioned “[TO BE
ATTACHED TO GLOBAL NOTES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE.”

 

**/
[If the Note is a Private Exchange Note issued in a Private Exchange to an
Initial Purchaser holding an unsold portion of its initial allotment, add the
Restricted Notes Legend from Exhibit 1 to Appendix A and replace the
Assignment Form included in this Exhibit A with the Assignment Form included
in such Exhibit 1.]

 

 

	
  No.

  	
   

  	
  $

  

 

9%/93⁄4% Senior Notes Due 2015

 

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

 

Interest
Payment Dates:  January 15, April 15, July 15 and
October 15.

 

Record
Dates:  January 1, April 1, July 1 and October 1.

 

Additional
provisions of this Note are set forth on the other side of this Note.

 

Dated:

 

 

	
   

  	
  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

  	
   

  

 

2

 

[FORM OF REVERSE SIDE OF EXCHANGE NOTE

OR PRIVATE EXCHANGE NOTE]

 

9%/93⁄4% Senior Note Due 2015

 

Capitalized
terms used herein but not defined herein shall have the meanings given to such
terms in the Indenture.

 

1.             Principal and Interest.

 

The
Neiman Marcus Group, Inc. (the “Company”) shall pay the principal of this
Note on October 15, 2015.

 

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

 

The
Company shall pay interest with respect to the first Interest Period entirely
in cash. For any Interest Period thereafter through the Interest Period ending
October 14, 2010, the Company may, at its option, elect to pay interest on
the Notes:

 

(a)           entirely in cash (“Cash Interest”) or

 

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

 

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

 

Cash
Interest on the Notes shall accrue at the rate of 9%  per annum and be
payable in 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 of
the Notes at the close of business on January 1, April 1, July 1
or October 1 immediately preceding the Interest Payment Date) on each
Interest Payment Date, commencing January 15, 2006.

 

[The
Holder of this Note is entitled to the benefits of the Exchange and
Registration Rights Agreement, dated October 6, 2005, among the Company,
Holdings,

 

3

 

the
Subsidiary Guarantors and the Initial Purchasers named therein (the “Registration
Rights Agreement”), including with respect to Additional Interest.](1)

 

Interest,
including Additional Interest, if any, on this Note shall accrue from the most
recent date to which interest has been paid on this Note or the Note
surrendered in exchange herefor or, if no interest has been paid, from
October 6, 2005; provided that,
if there is no existing Default in the payment of interest and if this Note is
authenticated between a Regular Record Date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date.  Interest shall be computed on the basis
of a 360-day year of twelve 30-day months.

 

The
Company shall pay interest and Additional Interest if any, on overdue principal
and premium, if any, and interest on overdue installments of interest, to the
extent lawful, at a rate per annum equal to the rate of interest applicable to
the Notes.

 

2.             Method of Payment.

 

The
Company shall pay interest (except defaulted interest) on the principal amount
of the Notes on each January 15, April 15, July 15 and
October 15 to the Persons who are Holders (as reflected in the Note
Register at the close of business on January 1, April 1, July 1
and October 1 immediately preceding the Interest Payment Date), in each
case, even if the Note is transferred or exchanged after such Regular Record
Date, except as provided in Section 306(b) with respect to defaulted
interest; provided that, with
respect to the payment of principal, the Company shall make payment to the
Holder that surrenders this Note to any Paying Agent on or after October 15, 2015.

 

PIK
Interest shall be payable by increasing the principal amount of this global
Note by an amount equal to the amount of PIK Interest for the applicable
Interest Period (rounded up to the nearest $1,000).  Following an increase
in the principal amount of the outstanding global Notes as a result of a PIK
Payment, this global Note shall bear interest on such increased principal
amount 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 shall
have the same rights and benefits as the Notes issued on the Issue Date.

 

The
Company shall pay principal (premium, if any) and Cash Interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts.  However, the Company may pay principal (premium, if
any) and Cash Interest by its check payable in such money.  The Company
may pay Cash Interest on the Notes either (a) by mailing a check for such
interest to a Holder’s registered address (as reflected in the Note Register)
or (b) by wire transfer to an account

 

(1) Insert
if at the date of issuance of the Exchange Note or Private Exchange Note (as
the case may be) any Registration Default has occurred with respect to the
related Initial Notes during the interest period in which such date of issuance
occurs.

 

4

 

located
in the United States maintained by the payee.  If a payment date is a date
other than a Business Day at a place of payment, payment may be made at that
place on the next succeeding day that is a Business Day and no interest shall
accrue for the intervening period.

 

3.             Paying Agent and Note
Registrar.

 

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

 

4.             Indenture.

 

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

 

The
Notes are unsecured senior obligations of the Company.  The Indenture does
not limit the aggregate principal amount of the Notes.  Subject to the
conditions set forth in the Indenture, the Company may issue Additional Notes.

 

5.             Redemption.

 

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

 

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

 

5

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2010

  	
   

  	
  104.500

  	
  %

  
	
  2011

  	
   

  	
  103.000

  	
  %

  
	
  2012

  	
   

  	
  101.500

  	
  %

  
	
  2013 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

In
addition, until October 15, 2008, the Company may, at its option, redeem
up to 35% of the aggregate principal amount of Notes issued under the Indenture
at a redemption price equal to 109.000% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable Redemption Date, subject to the right of Holders on the
relevant record date to receive interest due on the relevant Interest Payment
Date, with the net cash proceeds of one or more Equity Offerings of the Company
or any direct or indirect parent of the Company to the extent such net cash
proceeds are contributed to the Company; provided
that at least 50% of the sum of the aggregate principal amount of
Notes originally issued under the Indenture remains Outstanding immediately
after the occurrence of each such redemption; provided,
further, that each such redemption occurs within 90 days of the
date of closing of each such Equity Offering.

 

6.             Repurchase upon a Change of
Control and Asset Sales.

 

Upon
the occurrence of (a) a Change of Control, the Holders shall have the
right to require that the Company purchase such Holder’s outstanding Notes, in
whole 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 date
of purchase and (b) Asset Sales, the Company may be obligated to make offers
to purchase Notes and Senior Indebtedness of the Company with a portion of the
Net Proceeds of such Asset Sales at a redemption price of 100% of the principal
amount thereof plus accrued and unpaid interest and Additional Interest, if
any, to the date of purchase.

 

7.             Denominations; Transfer;
Exchange.

 

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

 

8.             Persons Deemed Owners.

 

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

 

6

 

9.             Unclaimed Money.

 

Subject
to any laws relating to abandoned property, if money for the payment of
principal (premium, if any) or interest remains unclaimed for two years, the
Trustee and the Paying Agent shall pay the money back to the Company at its
request or (if then held by the Company) shall be discharged from such
trust.  After that, Holders entitled to the money must look to the Company
for payment and all liability of the Trustee and such Paying Agent with respect
to such money and all liability of the Company as trustee thereof shall cease.

 

10.           Discharge and Defeasance
Prior to Redemption or Maturity.

 

Subject
to satisfaction of conditions set forth in the Indenture, the Company at any
time may terminate some or all of its obligations under the Notes and the
Indenture, if the Company irrevocably deposits with the Trustee cash or
Government Securities or a combination thereof sufficient for the payment of
the then outstanding principal of and interest on the Notes to Redemption or
Stated Maturity, as the case may be.

 

11.           Amendment; Supplement;
Waiver.

 

Subject
to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
aggregate principal amount of the Outstanding Notes, including consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, the Notes, and any existing Default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes.  Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, omission, mistake, defect or inconsistency and make any change that
does not adversely affect the legal rights of any Holder.

 

12.           Restrictive Covenants.

 

The
Indenture contains certain covenants, including covenants with respect to the
following matters: (i) Restricted Payments; (ii) incurrence of
Indebtedness and issuance of Disqualified Stock and Preferred Stock; (iii) Liens;
(iv) transactions with Affiliates; (v) dividend and other payment
restrictions affecting Restricted Subsidiaries; (vi) guarantees of
Indebtedness by Restricted Subsidiaries; (vii) changes to the terms of
certain Subordinated Indebtedness; (viii) merger, consolidation or sale of
all or substantially all assets; (ix) purchase of Notes upon a Change in
Control; (x) sale and lease-back transactions and (xi) disposition of
proceeds of Asset Sales.  Within 120 days (or the successor time period
then in effect under the rules and regulations of the Exchange Act) after
the end of each fiscal year, the Company must report to the Trustee on
compliance with such limitations.

 

7

 

13.           Successor Persons.

 

When
a successor Person or other entity assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor Person shall be
released from those obligations, subject to certain exceptions.

 

14.           Remedies for Events of
Default.

 

If
an Event of Default, as defined in the Indenture, occurs and is continuing, the
Trustee or the Holders of at least 30% in principal amount of the Outstanding
Notes may declare all Outstanding Notes to be immediately due and
payable.  If an Event of Default arising from certain events of bankruptcy
or insolvency with respect to the Company or any Significant Subsidiary occurs
and is continuing, the Notes automatically become immediately due and
payable.  Subject to the provisions of the Indenture relating to the
duties of the Trustee, in case an Event of Default occurs and is continuing,
the Trustee shall be under no obligation to exercise any rights or powers under
the Indenture at the request or direction of any of the Holders unless such
Holders have offered to the Trustee reasonable indemnity or security against
any loss, liability or expense.  Subject to certain restrictions, the
Holders of a majority in principal amount of the Outstanding Notes are given
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or of exercising any trust or power
conferred on the Trustee.  The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder of a Note or
that would involve the Trustee in personal liability.

 

15.           Guarantees.

 

The
Company’s obligations under the Notes are fully, irrevocably and
unconditionally guaranteed on an unsecured senior basis, to the extent set
forth in the Indenture, by Holdings and each of the Subsidiary Guarantors.

 

16.           Trustee Dealings with
Company.

 

The
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may make loans to, accept deposits
from, perform services for, and otherwise deal with, the Company and its
Affiliates as if it were not the Trustee.

 

17.           Authentication.

 

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

 

18.           Abbreviations.

 

Customary
abbreviations may be used in the name of a Holder or an assignee, such as:
 TEN COM (= 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).

 

8

 

19.           CUSIP Numbers.

 

Pursuant
to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Holders.  No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

 

20.           Holders’ Compliance with the
Registration Rights Agreement.

 

Each
Holder of a Note, by acceptance hereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, including the obligations of
the Holders with respect to a registration and the indemnification of the
Company to the extent provided therein.

 

21.           Governing Law.

 

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

 

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

 

9

 

ASSIGNMENT/TRANSFER FORM

 

To
assign and transfer this Note, fill in the form below:

 

I
or we assign and transfer this Note to

 

(Print
or type assignee’s name, address and zip code)

 

(Insert
assignee’s soc. sec. or tax I.D. No.)

 

and
irrevocably appoint
                                
agent to transfer this Note on the books of the Company.  The agent may
substitute another to act for him.

 

	
   

  

 

	
  Date:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  	
   

  

 

 

	
   

  

 

 

Sign
exactly as your name appears on the other side of this Note.

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If
you want to elect to have this Note purchased by the Company pursuant to
Section 1017 or  1018 of the
Indenture, check the box:

 

If
you want to elect to have only part of this Note purchased by the Company
pursuant to Section 1017 or 1018 of the Indenture, state the amount in
principal amount:  $

 

 

	
  Dated:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Sign
  exactly as your name appears

  on
  the other side of this Note.)

  	
   

  

 

	
  Signature

  	
   

  	
   

  
	
  Guarantee:

  	
   

  	
   

  
	
   

  	
  (Signature must be guaranteed)

  	
   

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

 

 

EXHIBIT B

 

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

 

SUPPLEMENTAL
INDENTURE (this “Supplemental Indenture”), dated as of
                      ,
200    , among
                             
(the “Guaranteeing Subsidiary”), a subsidiary of The Neiman Marcus Group, Inc.
(or its permitted successor), a Delaware corporation (the “Company”), the
Company, Newton Acquisition, Inc. (“Holdings”) the other Subsidiary
Guarantors (as defined in the Indenture referred to herein) and Wells Fargo
Bank, National Association, as trustee under the Indenture referred to below
(the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS,
the Company has heretofore executed and delivered to the Trustee a senior
unsecured indenture (the “Indenture”), dated as of October 6, 2005
providing for the issuance of 9%/93⁄4% Senior Notes Due 2015 (the “Notes”);

 

WHEREAS,
the Indenture provides that under certain circumstances the Guaranteeing
Subsidiary shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee
all of the Company’s Obligations under the Notes and the Indenture on the terms
and conditions set forth herein (the “Guarantee”); and

 

WHEREAS,
pursuant to Section 901 of the Indenture, the Trustee is authorized to
execute and deliver this Supplemental Indenture.

 

NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guaranteeing
Subsidiary and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders of the Notes as follows:

 

1.             CAPITALIZED TERMS. 
Capitalized terms used herein without definition shall have the meanings
assigned to them in the Indenture.

 

2.             AGREEMENT TO
GUARANTEE.  The Guaranteeing Subsidiary hereby agrees to provide an
unconditional Guarantee on the terms and subject to the conditions set forth in
the Note Guarantee and in the Indenture including but not limited to Article 12
thereof.

 

3.             NO RECOURSE AGAINST
OTHERS.  No past, present or future director, officer, employee,
incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such,
shall have any liability for any obligations of the Company or any Guaranteeing
Subsidiary under the Notes, any Note Guarantees, the Indenture or this
Supplemental Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation.  Each Holder of the Notes by
accepting a Note waives and releases all such liability.  The waiver and
release are part of the consideration for issuance of the Notes.  Such
waiver may not be effective to waive liabilities under the

 

 

federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.

 

4.             GOVERNING LAW.  THIS
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

 

5.             COUNTERPARTS.  The
parties may sign any number of copies of this Supplemental Indenture. 
Each signed copy shall be an original, but all of them together represent the
same agreement.

 

6.             EFFECT OF HEADINGS. 
The Section headings herein are for convenience only and shall not affect
the construction hereof.

 

7.             THE TRUSTEE.  The
Trustee shall not be responsible in any manner whatsoever for or in respect of
the validity or sufficiency of this Supplemental Indenture or for or in respect
of the recitals contained herein, all of which recitals are made solely by the
Guaranteeing Subsidiary and the Company.

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to
be duly executed and attested, all as of the date first above written.

 

Dated:
                        ,
20

 

	
   

  	
  [GUARANTEEING
  SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  THE
  NEIMAN MARCUS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  NEWTON
  ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  [Existing
  Guarantors]

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

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