Document:

Exhibit 10.7

 

EXECUTION COPY

 

PLEDGE AND SECURITY AND INTERCREDITOR
AGREEMENT

 

THIS PLEDGE AND SECURITY AND
INTERCREDITOR AGREEMENT (as it may be amended or modified from time to time, this
“Agreement”) is entered into as of October 6, 2005 by and among Newton
Acquisition, Inc., a Delaware corporation (“Holdings”), Newton
Acquisition Merger Sub., Inc., a Delaware corporation (“Merger Sub”
and, prior to the Merger, the “Borrower”), The Neiman Marcus Group, Inc.,
a Delaware corporation (“Neiman Marcus”, and after the Merger, the “Borrower”),
the Subsidiary Parties (as defined below) from time to time party hereto and Credit
Suisse, in its capacity as administrative agent and collateral agent for the
Secured Parties (as defined below) (in such capacity, the “Agent”).

 

PRELIMINARY STATEMENT

 

Reference
is hereby made to (a) the Credit Agreement dated as of the date hereof providing
for a term loan facility in an aggregate principal amount of $1,975,000,000
(as amended, restated, supplemented or otherwise modified from time to time,
the “Term Loan Credit Agreement”), among Holdings, Merger Sub, the Subsidiaries
of Neiman Marcus from time to time party thereto and Credit Suisse, as
administrative agent, and (b) the Indenture dated as of May 27, 1998
(as amended, restated, supplemented or otherwise modified from time to time,
the “Existing Notes Indenture”), between Neiman Marcus and The Bank of
New York, as trustee (in such capacity, the “Existing Notes Trustee”), pursuant
to which the Borrower’s 7.125% Debentures due 2028 in an initial aggregate
principal amount of $125,000,000 (the “2028 Debentures”) and the Borrower’s
6.65% Senior Notes due 2008 in an initial aggregate principal amount of
$125,000,000 (the “2008 Notes”) were issued.

 

Pursuant
to the Term Loan Credit Agreement, the Grantors are entering into this
Agreement in order to induce the Term Loan Lenders to enter into and extend
credit to the Borrower under the Term Loan Credit Agreement and to secure the Term
Loan Obligations.

 

Pursuant
to the Existing Notes Indenture, the Borrower may not secure the Term Loan
Obligations with any Existing Notes Designated Collateral unless the Borrower
shall have made effective provision to secure the 2028 Debentures and the 2008
Notes equally and ratably with the Term Loan Obligations for as long as such
obligations are secured by any Existing Notes Designated Collateral.

 

ACCORDINGLY,
the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1.                                   Terms Defined in Term Loan Credit Agreement.  All
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Term Loan Credit Agreement.

 

Section 1.2.                                   Terms Defined in UCC.  Terms
defined in the UCC that are not otherwise defined in this Agreement are used
herein as defined in the UCC.

 

 

Section 1.3.                                   Definitions of Certain Terms Used Herein.  As
used in this Agreement, in addition to the terms defined in the preamble and Preliminary
Statement above, the following terms shall have the following meanings:

 

“Account”
shall have the meaning set forth in Article 9 of the UCC.

 

“Aggregate
Term Loan Credit Exposure” means, at any time, the aggregate principal
amount of loans outstanding under the Term Loan Credit Agreement at such time.

 

“Article”
means a numbered article of this Agreement, unless another document is
specifically referenced.

 

“Bankruptcy
Proceeding” means, with respect to any Person, a general assignment by such
Person for the benefit of its creditors, or the institution by or against such
Person of any proceeding seeking relief as debtor, or seeking to adjudicate
such Person as bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment or composition of such Person or its debts, under any law relating
to bankruptcy, insolvency, reorganization or relief of debtors, or seeking
appointment of a receiver, trustee, custodian or other similar official for
such Person or for any substantial part of its property.

 

“Chattel
Paper” shall have the meaning set forth in Article 9 of the UCC.

 

“Collateral”
shall have the meaning set forth in Article II.

 

“Commercial
Tort Claim” shall have the meaning set forth in Article 9 of the UCC.

 

“Consignment
Inventory” means any Inventory held by a Grantor on a consignment basis,
which Inventory is not owned by a Grantor (and would not be reflected on a
consolidated balance sheet of Borrower and its Subsidiaries prepared in
accordance with GAAP).

 

“Consignment
Proceeds” means any proceeds from the sale of any Consignment Inventory,
solely to the extent that such proceeds are identifiable proceeds from the sale
of Consignment Inventory and that the Borrower identifies such proceeds as such
through a method of tracing reasonably satisfactory to the Agent.

 

 “Control” shall have the meaning set
forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106
or 9-107 of Article 9 of the UCC.

 

“Copyrights”
means, with respect to any Person, all of such Person’s right, title, and
interest in and to the following:  (a) all
copyrights, rights and interests in copyrights, works protectable by copyright,
copyright registrations, and copyright applications; (b) all renewals of
any of the foregoing; (c) all income, royalties, damages, and payments now
or hereafter due and/or payable under any of the foregoing, including, without
limitation, damages or payments for past or future infringements for any of the
foregoing; (d) the right to sue for past, present, and future
infringements of any of the foregoing; and (e) all rights corresponding to
any of the foregoing throughout the world.

 

“Credit
Agreement Event of Default” means any “Event of Default”, as defined in the
Term Loan Credit Agreement.

 

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“Deposit
Account” shall have the meaning set forth in Article 9 of the UCC.

 

“Document”
shall have the meaning set forth in Article 9 of the UCC.

 

“Equipment”
shall have the meaning set forth in Article 9 of the UCC.

 

“Event
of Default” means a Credit Agreement Event of Default or an Existing Notes
Event of Default.

 

“Excluded
Assets” means

 

(a)                                  the Specified Credit Card Receivables, any
Specified Credit Card Payments and any Specified In-Store Credit Card Payments;

 

(b)                                 the HSBC Credit Card Receivables Accounts;

 

(c)                                  more than 65% of the issued and outstanding
voting Equity Interests of any Foreign Subsidiary;

 

(d)                                 any Domestic Subsidiary that is taxed as a
partnership for federal income tax purposes that holds Equity Interests of a
Foreign Subsidiary whose Equity Interests are pledged pursuant to this Security
Agreement;

 

(e)                                  any Margin Stock;

 

(f)                                    Equity Interests in Kate Spade LLC, Gurwitch
Products, L.L.C. and Willow Bend Beverage Corporation;

 

(g)                                 any intercompany Indebtedness of (i) the
Borrower or any Subsidiary that is a Loan Party owing to a Subsidiary that is a
Loan Party, (ii) a Subsidiary that is a Loan Party owing to the Borrower
or (iii) any Subsidiary that is not a Loan Party owing to the Borrower or
owing to a Subsidiary that is a Loan Party (in the case of (iii), other than
such Indebtedness that is Indebtedness for borrowed money and has a principal
amount of $5,000,000 or more);

 

(h)                                 subject to Section 11.16(d), any
Equity Interests to the extent that a pledge of such Equity Interests would
give rise to additional subsidiary reporting requirements under Rule 3-10
or Rule 3-16 of Regulation S-X promulgated under the Exchange Act of 1934;

 

(i)                                     any Consignment Inventory and any Consignment
Proceeds;

 

(j)                                     any Leased-Department Inventory and any
Leased-Department Proceeds;

 

(k)                                  any leases, licenses, rights or other
agreements contained within the Collateral to which any Grantor is a party or
any of its rights or interests are subject thereto to the extent and solely to
the extent that the proximate result of the grant of such security interest
shall be to (1) constitute or result in the abandonment, invalidation or
unenforceability of any right, title or interest in such Grantor therein, or (2) create
a situation under which such Grantor shall be deemed to have breached or
terminated pursuant to the terms of, or defaulted under, any such Collateral;
and in each case under

 

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clauses
(1) and (2) above such abandonment, invalidation, unenforceability,
breach, termination or default would not be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any
successor provision or provisions) of any relevant jurisdiction or any other
applicable law or principles or equity; provided, however, that the Excluded
Assets shall not include, and such security interest shall attach immediately
at such time as the condition causing such abandonment, invalidation,
unenforceability, breach, termination or default shall be remedied and to the
extent severable, shall attach immediately to, any portion of such lease,
license, right or agreement that does not result in any of the consequences
specified in (1) or (2) above; and

 

(l)                                     assets that are acquired by any Grantor with
the proceeds of Indebtedness incurred pursuant to Section 6.01(b)(vi) of
the Term Loan Credit Agreement and that are subject to a purchase money Lien in
favor of the lenders under such Indebtedness; provided, however,
that the aggregate purchase price paid for the acquisition of such assets shall
not exceed $75,000,000 in the aggregate.

 

 “Exhibit” refers to a specific exhibit
to this Agreement, unless another document is specifically referenced.

 

 “Existing Notes Designated Collateral”
means (a) any “Principal Property” (as such term is defined in the
Existing Notes Indenture) of the Borrower or any Restricted Subsidiary (as
defined in the Existing Notes Indenture) and (b) any Equity Interests or
indebtedness of any Subsidiary of the Borrower. 
For the avoidance of doubt, Existing Notes Designated Collateral does
not include (i) any Equity Interests of the Borrower or (ii) any
Excluded Assets.

 

“Existing
Notes Event of Default” means any “Event of Default”, as defined in the
Existing Notes Indenture.

 

“Existing Notes Indenture” has the meaning set forth in the
Preliminary Statement.

 

“Existing
Notes Obligations” means the 2008 Notes Obligations and the 2028 Debenture
Obligations.

 

“Existing
Notes Trustee” means The Bank of New York, in its capacity as trustee under
the Existing Notes Indenture.

 

“Existing
Notes Secured Parties” means the 2008 Notes Secured Parties and the 2028
Debentures Secured Parties.

 

“Fixture”
shall have the meaning set forth in Article 9 of the UCC.

 

“General
Intangible” shall have the meaning set forth in Article 9 of the UCC.

 

“Goods”
shall have the meaning set forth in Article 9 of the UCC.

 

“Grantors”
means Holdings, the Borrower and the Subsidiary Parties.

 

“HSBC
Credit Card Receivables Accounts” means the deposit accounts # 001846205
held at HSBC Bank USA, N.A. and # 08806372312 held at JPMorgan Chase Bank,
containing proceeds of Specified Credit Card Receivables, which account is
owned by the Borrower but

 

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controlled by HSBC and the
ownership of which is anticipated to be transferred to HSBC in the first or
second calendar quarter of 2006.

 

 “Instrument” shall have the meaning set
forth in Article 9 of the UCC.

 

“Intercreditor
Agreement” means the Lien Subordination and Intercreditor Agreement dated as
of the date hereof, among Holdings, the Borrower, the Subsidiaries from time to
time party thereto, the Revolving Facility Agent and the Agent, as amended,
modified or supplemented from time to time.

 

“Inventory”
shall have the meaning set forth in Article 9 of the UCC.

 

“Investment
Property” shall have the meaning set forth in Article 9 of the UCC.

 

“Leased-Department
Inventory” means any Inventory relating to a leased department within one
of the Grantors’ retail stores, which Inventory is not owned by a Grantor (and
would not be reflected on a consolidated balance sheet of Borrower and its
Subsidiaries prepared in accordance with GAAP).

 

“Leased-Department
Proceeds” means any proceeds from the sale of any Leased-Department
Inventory, solely to the extent that such proceeds are identifiable proceeds
from the sale of Leased-Department Inventory and that the Borrower identifies
such proceeds as such through a method of tracing reasonably satisfactory to
the Agent.

 

“Letter-of-Credit
Right” shall have the meaning set forth in Article 9 of the UCC.

 

“Licenses”
means, with respect to any Grantor, all of such Grantor’s right, title, and
interest in and to (a) any and all licensing agreements or similar
arrangements in and to its owned (1) Patents, (2) Copyrights, or (3) Trademarks,
(b) all income, royalties, damages, claims, and payments now or hereafter
due or payable under and with respect thereto, including, without limitation,
damages and payments for past and future breaches thereof, and (c) all
rights to sue for past, present, and future breaches thereof.

 

“Obligations” means the Term Loan Obligations and the Existing
Notes Obligations.

 

“Patents”
means, with respect to any Person, all of such Person’s right, title, and
interest in and to:  (a) any and all
patents and patent applications; (b) all inventions and improvements described
and claimed therein; (c) all reissues, divisions, continuations, renewals,
extensions, and continuations-in-part thereof; (d) all income, royalties,
damages, claims, and payments now or hereafter due or payable under and with
respect thereto, including, without limitation, damages and payments for past
and future infringements thereof; (e) all rights to sue for past, present,
and future infringements thereof; and (f) all rights corresponding to any
of the foregoing throughout the world.

 

“Perfection
Certificate”  means a certificate
substantially in the form of Exhibit I completed and supplemented
with the schedules and attachments contemplated thereby, and duly executed by a
Responsible Officer of the Borrower.

 

5

 

“Permitted
Liens” means the “Permitted Liens” as defined in the Term Loan Credit
Agreement.

 

“Pledged
Collateral” means all Instruments, Securities and other Investment Property
owned by any Grantor, other than any Instruments, Securities or Investment
Property that is an Excluded Asset (for so long and to the extent such
exclusion is applicable), whether or not physically delivered to the Agent
pursuant to this Agreement.

 

“Receivables”
means the Accounts, Chattel Paper, Documents, Investment Property, Instruments
and any other rights or claims to receive money (other than the Specified Credit
Card Receivables) that are General Intangibles or that are otherwise included
as Collateral.

 

“Required
Secured Parties” means (a) prior to an acceleration of the Term Loan
Obligations under the Term Loan Credit Agreement, the “Required Lenders” as
defined in the Term Loan Credit Agreement (with any loans under the Term Loan
Credit Agreement and unused commitments thereunder held by the Borrower or any
of its Affiliates being excluded for such purpose), (b) after an
acceleration of the Term Loan Obligations under the Term Loan Credit Agreement
but prior to the date upon which the Term Loan Credit Agreement has terminated
by its terms and all of the obligations thereunder have been paid in full, Term
Loan Lenders holding in the aggregate loans under the Term Loan Credit
Agreement representing more than 50% of the Aggregate Term Loan Credit Exposure
(with any such loans held by the Borrower or any of its Affiliates being
excluded for this purpose), and (c) after the Term Loan Credit Agreement
has terminated by its terms and all of the Term Loan Obligations thereunder
have been paid in full (whether or not the Term Loan Obligations under the Term
Loan Credit Agreement were ever accelerated), Term Loan Lenders holding in the
aggregate at least a majority of the aggregate net Secured Hedging Obligations
then due and unpaid from the Grantors to the Term Loan Lenders under Hedge
Agreements, as determined by the Term Loan Agent in its reasonable discretion.

 

“Revolving
Facility Agent” means Deutsche Bank Trust Company Americas, in its capacity
as administrative agent and collateral agent under the Revolving Facility
Credit Agreement.

 

“Revolving
Facility Credit Agreement” means the Credit Agreement dated the date hereof
among Holdings, the Borrower, the Subsidiary Parties and the Revolving Facility
Agent, as amended, restated supplemented or otherwise modified from time to
time.

 

“Revolving
Facility First Lien Collateral Transition Date” has the meaning set forth
in the Intercreditor Agreement.

 

“Section”
means a numbered section of this Agreement, unless another document is
specifically referenced.

 

“Secured
Parties” means the Term Loan Secured Parties and the Existing Notes Secured
Parties.

 

“Security”
shall have the meaning set forth in Article 8 of the UCC.

 

“Specified
Credit Card Receivables” means the Accounts, Documents and other rights or
claims to receive money which are General Intangibles and that have been or from
time to time are

 

6

 

sold or otherwise
transferred to (i) HSBC pursuant to the HSBC Arrangements or (ii) any
third party pursuant to any Permitted Replacement Credit Card Program.

 

“Specified
Credit Card Payments” means any payments by the holder of a private label
credit card subject to the HSBC Arrangements or any Permitted Replacement
Credit Card Program to the issuer of such credit card that are (i) in the
case of the HSBC Arrangements, made to a HSBC Credit Card Receivables Accounts
or (ii) in the case of any Permitted Replacement Credit Card Program, made
to any account of a Grantor prior to the transition of ownership of such
account to the applicable third party in connection with the establishment of
the applicable Permitted Replacement Credit Card Program.

 

“Specified
In-Store Credit Card Payments” means any payments made in-person by
customers in respect of private label credit cards subject to the HSBC
Arrangements or any Permitted Replacement Credit Card Program in one of the
Grantors’ retail stores, solely to the extent that such payments are
identifiable payments from the holders of such private label credit cards and
that the Borrower identifies such payments as such through a method of tracing
reasonably satisfactory to the Agent.

 

 “Stock Rights” means all dividends,
instruments or other distributions and any other right or property which any
Grantor shall receive or shall become entitled to receive for any reason
whatsoever with respect to, in substitution for or in exchange for any Equity
Interest constituting Collateral, any right to receive an Equity Interest constituting
Collateral and any right to receive earnings, in which such Grantor now has or
hereafter acquires any right, issued by an issuer of such Equity Interest.

 

“Subsidiary
Parties” means (a) the Subsidiaries identified on Exhibit J
hereto, (b) NM Nevada Trust, a Massachusetts business trust, and (c) each
other Domestic Subsidiary that becomes a party to this Agreement as a Subsidiary
Party after the date hereof, in accordance with Section 11.14 herein and Section 5.11
of the Term Loan Credit Agreement.

 

“Supporting
Obligation” shall have the meaning set forth in Article 9 of the UCC.

 

“Term Loan Credit Agreement” has the meaning set forth in the
Preliminary Statement.

 

“Term
Loan/Notes Documents” has the meaning set forth in the Intercreditor
Agreement.

 

“Term
Loan Lenders” means the “Lenders” under and as defined in the Term Loan
Credit Agreement.

 

“Term
Loan Obligations” means (a) the due and punctual payment by the
Borrower of (i) the principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, on the loans under the Term Loan
Credit Agreement and (ii) all other monetary obligations of the
Borrower or any other Grantor to any of the Term Loan Secured Parties under the
Term Loan Credit Agreement and each of the Term Loan Security Documents,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or

 

7

 

otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and punctual performance
of all other obligations of the Borrower or any other Grantor to any of the
Term Loan Secured Parties under or pursuant to the Term Loan Credit Agreement
and each of the Term Loan Security Documents and (c) the due and punctual
payment and performance of all the obligations of the Borrower and each other
Grantor to any of the Term Loan Secured Parties under this Agreement and each
of the Term Loan Security Documents.

 

“Term
Loan Secured Parties” means (a) the Term Loan Lenders, (b) the Agent,
(c) each counterparty to any Hedge Agreement with a Loan Party the
obligations under which constitute Secured Hedge Obligations, (d) each
beneficiary of any indemnification obligation undertaken by the
Borrower or any other Grantor under any Term Loan/Notes Document
and (e) the successors and assigns of each of the foregoing.

 

“Term
Loan Security Documents” shall have the meaning set forth in the
Intercreditor Agreement.

 

“Trademarks”
means, with respect to any Person, all of such Person’s right, title, and interest
in and to the following:  (a) all
trademarks (including service marks), trade names, trade dress, and trade
styles and the registrations and applications for registration thereof and the
goodwill of the business symbolized by the foregoing; (b) all licenses of
the foregoing, whether as licensee or licensor; (c) all renewals of the
foregoing; (d) all income, royalties, damages, and payments now or
hereafter due or payable with respect thereto, including, without limitation,
damages, claims, and payments for past and future infringements thereof; (e) all
rights to sue for past, present, and future infringements of the foregoing,
including the right to settle suits involving claims and demands for royalties
owing; and (f) all rights corresponding to any of the foregoing throughout
the world.

 

“2008
Notes Obligations” means (a) the due and punctual payment by the
Borrower of (i) the principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, on the 2008 Notes (ii) and all
other monetary obligations of the Borrower or any other Grantor to any of the
2008 Notes Secured Parties under the Existing Notes Indenture and each of the Term
Loan Security Documents related thereto, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and punctual
performance of all other obligations of the Borrower or any other Grantor to
any of the 2008 Notes Secured Parties under or pursuant to the Existing Notes
Indenture and each of the Term Loan Security Documents related thereto and (c) the
due and punctual payment and performance of all the obligations of each other
Grantor to any of the 2008 Notes Secured Parties under this Agreement and each
of the Term Loan Security Documents related thereto.

 

“2008
Notes Secured Parties” means (a) the holders of the 2008 Notes, (b) each beneficiary
of any indemnification obligation undertaken by the Borrower or any other
Grantor under any Existing Notes Indenture and (c) the successors and
assigns of each of the foregoing.

 

8

 

“2028
Debentures Obligations” means (a) the due and punctual payment by the
Borrower of (i) the principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, on the 2028 Debentures and (ii) all
other monetary obligations of the Borrower or any other Grantor to any of the
2028 Debentures Secured Parties under the Existing Notes Indenture and each of
the Term Loan Security Documents related thereto, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), (b) the
due and punctual performance of all other obligations of the Borrower or any
other Grantor to any of the 2028 Debentures Secured Parties under or pursuant
to the Existing Notes Indenture and each of the Term Loan Security Documents
related thereto and (c) the due and punctual payment and performance of
all the obligations of each other Grantor to any of the 2028 Debentures Secured
Parties under this Agreement and each of the Term Loan Security Documents
related thereto.

 

“2028
Debentures Secured Parties” means (a) the holders of the 2028 Debentures, (b) each
beneficiary of any indemnification obligation undertaken by the Borrower or any
other Grantor under any Existing Notes Indenture and (c) the successors
and assigns of each of the foregoing.

 

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

 

The
foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

 

ARTICLE II

GRANT OF SECURITY INTEREST

 

Each
Grantor hereby pledges, assigns and grants to the Agent, on behalf of and for
the ratable benefit of the Secured Parties, a security interest in all of its
right, title and interest in, to and under all personal property and other
assets, whether now owned by or owing to, or hereafter acquired by or arising
in favor of such Grantor (including under any trade name or derivations
thereof), and regardless of where located (all of which are collectively
referred to as the “Collateral”), including:

 

(i)                                     all Accounts;

 

(ii)                                  all Chattel Paper;

 

(iii)                               all Copyrights, Patents and Trademarks;

 

(iv)                              all Documents;

 

(v)                                 all Equipment;

 

(vi)                              all Fixtures;

 

(vii)                           all General Intangibles;

 

9

 

(viii)                        all Goods;

 

(ix)                                all Instruments;

 

(x)                                   all Inventory;

 

(xi)                                all Investment Property;

 

(xii)                             all cash or cash equivalents;

 

(xiii)                          all letters of credit, Letter-of-Credit
Rights and Supporting Obligations;

 

(xiv)                         all Deposit Accounts with any bank or other
financial institution;

 

(xv)                            all Commercial Tort Claims as specified from
time to time in Exhibit E;
and

 

(xvi)                         all accessions to, substitutions for and
replacements, proceeds (including Stock Rights), insurance proceeds and
products of the foregoing, together with all books and records, customer lists,
credit files, computer files, programs, printouts and other computer materials
and records related thereto and any General Intangibles at any time evidencing
or relating to any of the foregoing;

 

to
secure the prompt and complete payment and performance of the Obligations.

 

Notwithstanding the foregoing or anything herein to
the contrary, in no event shall the “Collateral” include or the security
interest attach to any Excluded Asset.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

The
Grantors, jointly and severally, represent and warrant to the Agent, for the
benefit of the Secured Parties, that:

 

Section 3.1.                                   Title, Perfection and Priority.  Each
Grantor has good and valid rights in, or the power to transfer the Collateral
and title to, the Collateral with respect to which it has purported to grant a
security interest hereunder, free and clear of all Liens except Permitted
Liens, and has full power and authority to grant to the Agent the security
interest in such Collateral pursuant hereto. 
When financing statements have been filed in the appropriate offices
against such Grantor in the locations listed on Exhibit G, the Agent
will have a fully perfected first priority security interest in that Collateral
in which a security interest may be perfected by filing under the Uniform
Commercial Code in effect in the applicable jurisdiction, subject only to
Permitted Liens and to the terms of the Intercreditor Agreement.

 

Section 3.2.                                   Type and Jurisdiction of Organization,
Organizational and Identification Numbers.  The type of entity of each Grantor,
its jurisdiction of organization, the organizational number issued to it by its
jurisdiction of organization and its federal employer identification number are
set forth on Exhibit A.

 

10

 

Section 3.3.                                   Principal Location.  Each
Grantor’s mailing address and the location of its place of business (if it has
only one) or its chief executive office (if it has more than one place of
business), is disclosed on Exhibit A.

 

Section 3.4.                                   Collateral Locations.  Each
location where Collateral is located as of the date hereof (except for
Inventory in transit) is listed on Exhibit A.  All of said locations are owned by a Grantor
except for locations (i) that are leased by a Grantor as lessee and
designated in Part III(b) of Exhibit A and (ii) at
which Inventory is held in a public warehouse or is otherwise held by a bailee
or on consignment as designated in Part III(c) of Exhibit A.

 

Section 3.5.                                   Bailees, Warehousemen, Etc.  Exhibit B
hereto sets forth a list, as of the date hereof, of each bailee, warehouseman
and other third party in possession or control of any Inventory of any Grantor (except
for Inventory in transit) and specifies as to each bailee, warehouseman or
other third party whether the value of the Inventory, at cost, possessed or
controlled by such bailee, warehouseman or other third party exceeds $2,500,000.

 

Section 3.6.                                   Exact Names.  The
name in which each Grantor has executed this Agreement is the exact name as it
appears in such Grantor’s organizational documents, as amended, as filed with
such Grantor’s jurisdiction of organization. 
No Grantor has, during the past five years, been known by or used any
other corporate or fictitious name, or been a party to any merger or
consolidation (other than, in the case of the Borrower, the Merger) except as
disclosed in the Perfection Certificate.

 

Section 3.7.                                   Letter-of-Credit Rights and Chattel Paper.  Exhibit C
lists all Letter-of-Credit Rights and Chattel Paper of each Grantor.  All actions necessary or desirable to protect
and perfect the Agent’s Lien under the laws of the United States, on each item
listed on Exhibit C (including the delivery of all originals as
required hereunder) has been duly taken by each Grantor. The Agent will have a
fully perfected first priority security interest in the Collateral listed on Exhibit C,
subject only to Permitted Liens and to the terms of the Intercreditor Agreement.

 

Section 3.8.                                   Accounts and Chattel Paper.  The
names of the obligors, amounts owing, due dates and other information with
respect to each Grantor’s Accounts and Chattel Paper that are Collateral are
and will be correctly stated, at the time furnished, in all records of such
Grantor relating thereto and in all invoices furnished to the Agent by such
Grantor from time to time.

 

Section 3.9.                                   Intellectual Property.  No
Grantor has any interest in, or title to, any Patent, Trademark or Copyright
except as set forth on Exhibit D. 
This Agreement is effective to create a valid and continuing Lien under
the UCC and the laws of the United States and, upon filing of appropriate
financing statements in the offices listed on Exhibit G and this
Agreement with the United States Copyright Office and the United States Patent
and Trademark Office, fully perfected first priority security interests under
the UCC and the laws of the United States (subject to the terms of the
Intercreditor Agreement) in favor of the Agent for the ratable benefit of the
Secured Parties on the Patents, Trademarks and Copyrights of the Grantors, such
perfected security interests are enforceable as such as against any and all
creditors of and purchasers from the Grantors; and all action necessary or
desirable under the UCC and the laws of the United States to protect and
perfect the Agent’s Lien on the Patents, Trademarks or Copyrights of the
Grantors shall have been duly taken.

 

11

 

Section 3.10.                             No Financing Statements, Security Agreements.  No
financing statement or security agreement describing all or any portion of the
Collateral that has not lapsed or been terminated naming a Grantor as debtor
has been filed or is of record in any jurisdiction except (a) for
financing statements or security agreements naming the Agent on behalf of the Secured
Parties as the secured party and (b) Permitted Liens.

 

Section 3.11.                             Pledged Collateral.

 

(a)                                  Exhibit F sets forth a complete and accurate list of
all of the Pledged Collateral and the percentage of the total issued and
outstanding Equity Interests of the issuer represented thereby (except any
Equity Interests in respect of which a Grantor owns less than 10% of the Equity
Interests of the issuer of such Equity Interests).  Each Grantor is the direct, sole beneficial
owner and sole holder of record of the Pledged Collateral listed on Exhibit F
as being owned by it, free and clear of any Liens, except for the security
interest granted to the Agent for the ratable benefit of the Secured Parties
hereunder and Permitted Liens.  Each
Grantor further represents and warrants that (i) all Pledged Collateral
constituting an Equity Interest has been (to the extent such concepts are
relevant with respect to such Pledged Collateral) duly authorized and validly
issued by the issuer thereof and are fully paid and non-assessable, (ii) with
respect to any certificates delivered to the Agent representing an Equity
Interest, either such certificates are Securities as defined in Article 8
of the UCC as a result of actions by the issuer or otherwise, or, if such certificates
are not Securities, such Grantor has so informed the Agent so that the Agent may
take steps to perfect its security interest therein as a General Intangible, (iii) it
shall have used commercially reasonable efforts to ensure that all Pledged
Collateral held by a securities intermediary is covered by a control agreement
among the applicable Grantor, the securities intermediary and the Agent
pursuant to which the Agent has Control and (iv) all Pledged Collateral that
represents Indebtedness owed to any Grantor has been duly authorized,
authenticated or issued and delivered by the issuer of such Indebtedness, is
the legal, valid and binding obligation of such issuer and such issuer is not
in default thereunder.

 

(b)                                 (i) None of the Pledged Collateral has
been issued or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which such
issuance or transfer may be subject, (ii) none of the Pledged Collateral
is or will be subject to any option, right of first refusal, shareholders
agreement, charter or by-law provisions or contractual restriction of any
nature that might prohibit, impair, delay or otherwise affect the pledge of
such Pledged Collateral hereunder, the sale or disposition thereof pursuant
hereto or the exercise by the Agent of rights and remedies hereunder, and (iii) no
consent, approval, authorization, or other action by, and no giving of notice,
filing with, any governmental authority or any other Person is required for the
pledge by the Grantors of the Pledged Collateral pursuant to this Agreement or
for the execution, delivery and performance of this Agreement by the Grantors,
or for the exercise by the Agent of the voting or other rights provided for in this
Agreement or for the remedies in respect of the Pledged Collateral pursuant to this
Agreement, except as may be required in connection with such disposition by
laws affecting the offering and sale of securities generally.

 

(c)                                  Except as set forth on Exhibit F,
none of the Pledged Collateral which represents Indebtedness owed to a Grantor
is subordinated in right of payment to other Indebtedness or subject to the
terms of an indenture.

 

12

 

Section 3.12.                             Commercial Tort Claims.  As of
the date hereof, no Grantor holds any Commercial Tort Claims having a value in
excess of $1,000,000 for which such Grantor has filed a complaint in a court of
competent jurisdiction, except as indicated on Exhibit E hereto.

 

Section 3.13.                             Perfection Certificate.  The
Perfection Certificate has been duly prepared, completed and executed and the
information set forth therein is correct and complete in all material respects as
of the date hereof.

 

ARTICLE IV

COVENANTS

 

From
the date hereof, and thereafter until this Agreement is terminated, each
Grantor agrees that:

 

Section 4.1.                                   General.

 

(a)                                  Collateral Records.  Each
Grantor will maintain complete and accurate books and records as is consistent
with its practices as of the date hereof in all material respects with respect
to the Collateral, and furnish to the Agent such reports relating to the
Collateral as the Agent shall from time to time reasonably request.

 

(b)                                 Authorization to File Financing Statements;
Ratification.  Each Grantor hereby authorizes the Agent to
file, and if requested will deliver to the Agent, all financing statements and
other documents and take such other actions as may from time to time be
requested by the Agent in order to maintain a first priority (subject to the
terms of the Intercreditor Agreement) perfected security interest in and, if
applicable, Control of, the Collateral. 
Any financing statement filed by the Agent may be filed in any filing
office in any applicable Uniform Commercial Code jurisdiction and may (i) indicate
the Collateral (1) as all assets of the applicable Grantor or words of
similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Uniform Commercial
Code of such jurisdiction, or (2) by any other description which
reasonably approximates the description contained in this Agreement, and (ii) contain
any other information required by part 5 of Article 9 of the UCC for the
sufficiency or filing office acceptance of any financing statement or
amendment, including (A) whether the Grantor is an organization, the type
of organization and any organization identification number issued to the
Grantor and (B) in the case of a financing statement filed as a fixture
filing, a sufficient description of real property to which the Collateral
relates.  Each Grantor also agrees to
furnish any such information to the Agent promptly upon request.  Each Grantor also ratifies its authorization
for the Agent to have filed in any Uniform Commercial Code jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof.

 

(c)                                  Further Assurances.  Each
Grantor will, if reasonably requested by the Agent, but not more frequently
than once per quarter, furnish to the Agent statements and schedules further identifying
and describing the Collateral and such other reports and information in
connection with the Collateral as the Agent may reasonably request, all in such
detail as the Agent may reasonably specify. 
Each Grantor also agrees to take any and all actions necessary to defend
title to the Collateral against all persons and to defend the security interest
of the Agent in the Collateral and the priority thereof against any Lien other
than Permitted Liens.

 

13

 

(d)                                 Disposition of Collateral.  No
Grantor will sell, lease, transfer or otherwise dispose of the Collateral except
for sales, leases, transfers and other dispositions specifically permitted
pursuant to the terms of the Term Loan Credit Agreement.

 

(e)                                  Liens.  No Grantor will create, incur,
or suffer to exist any Lien on the Collateral except (i) the security interest
created by this Agreement and (ii) Permitted Liens.

 

(f)                                    Other Financing Statements.  No
Grantor will authorize the filing of any financing statement naming it as
debtor covering all or any portion of the Collateral, except to cover security
interests that are Permitted Liens. Each Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination statement
with respect to any financing statement without the prior written consent of
the Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of
the UCC.  Without limiting the foregoing,
each Grantor shall use its commercially reasonable efforts to ensure that any
financing statement filed by any Person with respect to Consignment Inventory
shall clearly indicate that such financing statement relates to a consignment
transaction with respect to such Consignment Inventory between the applicable Grantor
and such Person.

 

(g)                                 Change of Name, Etc.  Each
Grantor agrees to furnish to the Agent prompt written notice of any change
in:  (i) such Grantor’s name; (ii) the
location of such Grantor’s chief executive office or its principal place of
business; (iii) such Grantor’s organizational legal entity designation or
jurisdiction of incorporation or formation; (iv) such Grantor’s Federal
Taxpayer Identification Number or organizational identification number assigned
to it by its jurisdiction of incorporation or formation; or (v) the
acquisition by such Grantor of any material property for which additional
filings or recordings are necessary to perfect and maintain the Agent’s
security interest therein (to the extent perfection of the security interest in
such property is required by the terms hereof). 
Each Grantor agrees not to effect or permit any change referred to in
the preceding sentence unless all filings have been made under the Uniform Commercial
Code or other applicable law that are required in order for the Agent to
continue at all times following such change to have a valid, legal and
perfected, first priority security interest (subject to the terms of the
Intercreditor Agreement and to Permitted Liens that have priority by operation
of applicable law) in the Collateral for its benefit and the benefit of the
other Secured Parties.

 

(h)                                 Compliance with Terms.  Each
Grantor will perform and comply in all material respects with all obligations
in respect of the Collateral and all material agreements relating to the
Collateral to which it is a party or by which it is bound.

 

Section 4.2.                                   Receivables.

 

(a)                                  Certain Agreements on Receivables.  No
Grantor will make or agree to make any discount, credit, rebate or other
reduction in the original amount owing on a Receivable or accept in
satisfaction of a Receivable less than the original amount thereof, except
that, prior to the occurrence of an Event of Default, any Grantor may reduce
the amount of Accounts, whether from the sale of Inventory or otherwise, in
accordance with its present policies and in the ordinary course of business.

 

14

 

(b)                                 Collection of Receivables. 
Except as otherwise provided in this Agreement, each Grantor will
collect and enforce, in accordance with its present policies and in the
ordinary course of business, all amounts due or hereafter due to such Grantor
under the Receivables.

 

(c)                                  Electronic Chattel Paper.  If
any Grantor at any time holds or acquires an interest in any Electronic Chattel
Paper or any “transferable record”, as that term is defined in Section 201
of the Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction, such Grantor shall promptly notify the Agent thereof
and, at the request of the Agent, shall take such action as the Agent may
reasonably request to vest in the Agent Control under UCC Section 9-105 of
such Electronic Chattel Paper or control (to the extent the meaning of “control”
has not been clearly established under such provisions, “control” in this
paragraph (c) to have such meaning as the Agent shall in good faith
specify in writing after consultation with the Borrower) under Section 201
of the Federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, Section 16 of the Uniform Electronic Transactions Act, as
so in effect in such jurisdiction, of such transferable record.  The Agent agrees with such Grantor that the
Agent will arrange, pursuant to procedures reasonably satisfactory to the Agent
and so long as such procedures will not result in the Agent’s loss of Control
or control, as applicable, for the Grantor to make alterations to the
Electronic Chattel Paper or transferable record permitted under UCC Section 9-105
or, as the case may be, Section 201 of the Federal Electronic Signatures
in Global and National Commerce Act or Section 16 of the Uniform
Electronic Transactions Act for a party in Control to allow without loss of
Control or control, as applicable, unless an Event of Default has occurred and
is continuing or would occur after taking into account any action by such
Grantor with respect to such Electronic Chattel Paper or transferable record.

 

Section 4.3.                                   Delivery of Instruments, Securities, Chattel
Paper and Documents. Each
Grantor will (a) deliver to the Agent immediately upon execution of this
Agreement the originals of all Chattel Paper, Securities and Instruments
constituting Collateral (if any then exist), (b) hold in trust for the Agent
upon receipt and promptly thereafter deliver to the Agent any Chattel Paper,
Securities and Instruments constituting Collateral received after the date
hereof, (c) upon the Agent’s request, deliver to the Agent, and thereafter
hold in trust for the Agent upon receipt and promptly deliver to the Agent any
Document evidencing or constituting Collateral and (d) upon the Agent’s
request, deliver to the Agent a duly executed amendment to this Agreement, in
the form of Exhibit H hereto (each, an “Amendment”),
pursuant to which such Grantor will pledge any additional Collateral.  Each Grantor hereby authorizes the Agent to
attach each Amendment to this Agreement and agrees that all additional collateral
set forth in such Amendments shall be considered to be part of the Collateral.

 

Section 4.4.                                   Uncertificated Pledged Collateral.  The
Grantors will permit the Agent from time to time to cause the appropriate
issuers (and, if held with a securities intermediary, such securities intermediary)
of uncertificated securities or other types of Pledged Collateral with respect
to which a Grantor owns 50% or more of the Equity Interests of the issuer of
such Pledged Collateral not represented by certificates to mark their books and
records with the numbers and face amounts of all such uncertificated securities
or other types of Pledged Collateral not represented by certificates and all
rollovers and replacements therefor to reflect the Lien of the Agent granted
pursuant to this Agreement.  The Grantors
will take any actions reasonably necessary to cause (a) the issuers of
uncertificated securities which are Pledged Collateral with respect to which a
Grantor owns 50% or more of the Equity Interests of the issuer of such Pledged
Collateral, and (b) any securities intermediary which is the holder of any
Pledged Collateral, to cause the Agent to have and retain

 

15

 

Control over such Pledged Collateral.  Without limiting the foregoing, each applicable
Grantor will use its commercially reasonable efforts to cause, with respect to
Pledged Collateral held with a securities intermediary in an account with an
aggregate asset value of $5,000,000 or more, such securities intermediary to
enter into a control agreement with the Agent, in form and substance
satisfactory to the Agent, giving the Agent Control.

 

Section 4.5.                                   Pledged Collateral.

 

(a)                                  Registration in Nominee Name; Denominations.  The Agent,
on behalf of the Secured Parties, shall hold certificated Pledged Collateral in
the name of the applicable Grantor, endorsed or assigned in blank or in favor
of the Agent, but following the occurrence and during the continuance of an
Event of Default shall have the right (in its sole and absolute discretion) to
hold the Pledged Collateral in its own name as pledgee, or in the name of its
nominee (as pledgee or as sub-agent). 
Each Grantor will promptly give to the Agent copies of any notices or
other communications received by it with respect to Pledged Collateral registered
in the name of such Grantor.  Following
the occurrence and during the continuance of an Event of Default, the Agent
shall at all times have the right to exchange the certificates representing
Pledged Collateral for certificates of smaller or larger denominations for any
purpose consistent with this Agreement.

 

(b)                                 Any Indebtedness of any Subsidiary that is
not a Loan Party owing to the Borrower or any Subsidiary that is a Loan Party
in excess of $5,000,000 shall be or become evidenced by a promissory note or
other instrument, and such note or instrument shall be promptly pledged and
delivered to the Agent, duly endorsed in a manner satisfactory to the Agent.

 

(c)                                  Exercise of Rights in Pledged Collateral.

 

(i)                                     Without in any way limiting the foregoing and
subject to clause (ii) below, each Grantor shall have the right to
exercise all voting rights or other rights relating to the Pledged Collateral
for all purposes not inconsistent with this Agreement and the other Term
Loan/Note Documents; provided however,
that no vote or other right shall be exercised or action taken which would reasonably
be expected to have the effect of materially and adversely impairing the rights
of the Agent in respect of the Pledged Collateral.

 

(ii)                                  Each Grantor will permit the Agent or its
nominee at any time after the occurrence and during the continuance of an Event
of Default, without notice, to exercise all voting rights or other rights
relating to Pledged Collateral, including, without limitation, exchange,
subscription or any other rights, privileges, or options pertaining to any
Equity Interest or Investment Property constituting Pledged Collateral as if it
were the absolute owner thereof.

 

(iii)                               Each Grantor shall be entitled to receive and
retain any and all dividends, interest, principal and other distributions paid
on or distributed in respect of the Pledged Collateral to the extent and only
to the extent that such dividends, interest, principal and other distributions
are permitted by, and otherwise paid or distributed in accordance with, the
terms and conditions of the Term Loan/Note Documents and applicable law; provided, however, that any non-cash
dividends, interest, principal or other distributions that would constitute
Pledged Collateral, whether resulting from a subdivision, combination or
reclassification of the

 

16

 

outstanding Equity Interests of the issuer of
any Pledged Collateral or received in exchange for Pledged Collateral or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer may
be a party or otherwise, shall be and become part of the Pledged Collateral,
and, if received by any Grantor, shall not be commingled by such Grantor with
any of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the ratable benefit of the Secured
Parties and shall be forthwith delivered to the Agent in the same form as so
received (with any necessary endorsement or instrument of assignment).  The proviso to the first sentence of this
clause (iii) shall not apply to dividends between or among the Grantors
only of property subject to a perfected security interest under this Agreement;
provided that the Borrower notifies the Agent in writing, specifically
referring to this Section 4.5 at the time of such dividend and takes any
actions the Agent reasonably specifies to ensure the continuance of its perfected
security interest in such property under this Agreement.

 

Section 4.6.                                   Intellectual Property.

 

(a)                                  Upon the occurrence and during the
continuance of an Event of Default, each Grantor will use its best efforts to obtain
all consents and approvals necessary or appropriate for the assignment to or for
the benefit of the Agent of any License held by such Grantor and to enforce the
security interests granted hereunder.

 

(b)                                 Each Grantor shall notify the Agent promptly
if it knows or reasonably expects that any application or registration relating
to any Patent, Trademark or Copyright (now or hereafter existing) material to
the conduct of such Grantor’s business may become abandoned or dedicated, or of
any material adverse determination or development (including the institution
of, or any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court) regarding such Grantor’s ownership of any such Patent, Trademark or
Copyright, its right to register the same, or to keep and maintain the same.

 

(c)                                  In no event shall any Grantor, either
directly or through any agent, employee, licensee or designee, file an
application for the registration of any material Patent, Trademark or Copyright
with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency without giving the Agent prompt written
notice thereof, and, upon request of the Agent, such Grantor shall execute and
deliver any and all security agreements or other instruments as the Agent may reasonably
request to evidence the Agent’s security interest in such Patent, Trademark or
Copyright, and the General Intangibles of such Grantor relating thereto or
represented thereby.

 

(d)                                 Each Grantor shall take all actions necessary
or reasonably requested by the Agent to maintain and pursue each material application,
to obtain the relevant registration and to maintain the registration of each of
the Patents, Trademarks and Copyrights (now or hereafter existing) material to
the conduct of such Grantor’s business, except in cases where, in the ordinary
course of business consistent with past practice, such Grantor reasonably
decides to abandon, allow to lapse or expire any Patent, Trademark or
Copyright, including the filing of applications for renewal, affidavits of use,
affidavits of noncontestability and, if consistent with good business judgment
and past practice, to initiate opposition and interference and cancellation
proceedings against third parties.

 

17

 

(e)                                  Consistent with each Grantor’s past practice,
each Grantor shall, unless it shall reasonably determine that a Patent,
Trademark or Copyright is not material to the conduct of its business, promptly
notify the Agent and shall, if consistent with good business judgment, promptly
sue for infringement, misappropriation or dilution of such Patent, Trademark or
Copyright and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as are appropriate
under the circumstances to protect such Patent, Trademark or Copyright.

 

Section 4.7.                                   Commercial Tort Claims.  Each
Grantor shall promptly notify the Agent of any Commercial Tort Claim having a
value in excess of $1,000,000 acquired by it for which such Grantor has filed a
complaint in a court of competent jurisdiction and, unless the Agent otherwise
consents, such Grantor shall update Exhibit E to this Agreement, thereby
granting to the Agent a first priority security interest in such Commercial Tort
Claim (subject to the Intercreditor Agreement).

 

Section 4.8.                                   Letter-of-Credit Rights.  If any
Grantor is or becomes the beneficiary of a letter of credit having a face
amount in excess of $1,000,000, such Grantor shall promptly notify the Agent
thereof and cause the issuer and/or confirmation bank to consent to the
assignment of any Letter-of-Credit Rights to the Agent.

 

Section 4.9.                                   No Interference.  Each Grantor
agrees that it will not interfere with any right, power and remedy of the Agent
provided for in this Agreement or now or hereafter existing at law or in equity
or by statute or otherwise, or the exercise or beginning of the exercise by the
Agent of any one or more of such rights, powers or remedies.

 

Section 4.10.                             Insurance.  (a)                    In the event any Collateral is located in any
area that has been designated by the Federal Emergency Management Agency as a “Special
Flood Hazard Area”, the applicable Grantor shall purchase and maintain flood
insurance on such Collateral (including any personal property which is located
on any real property leased by such Loan Party within a “Special Flood Hazard
Area”).  The amount of all insurance
required by this Section shall at a minimum comply with applicable law,
including the Flood Disaster Protection Act of 1973, as amended.  All premiums on such insurance shall be paid
when due by such Grantor, and copies of the policies delivered to the Agent.  If any Grantor fails to obtain any insurance
as required by this Section, the Agent at the direction of the Required Lenders
may obtain such insurance at the Borrower’s expense.  By purchasing such insurance, the Agent shall
not be deemed to have waived any default arising from the Grantors’ failure to
maintain such insurance or pay any premiums therefor.

 

(b)                                 All insurance policies required under Section 5.10
of the Term Loan Credit Agreement shall name the Agent (for the benefit of the Secured
Parties) as an additional insured or as loss payee, as applicable, and shall
contain loss payable clauses or mortgagee clauses, through endorsements in form
and substance satisfactory to the Agent, which provide that: (i) subject
to the Intercreditor Agreement, all proceeds thereunder with respect to any
Collateral shall be payable to the Agent; (ii) no such insurance shall be
affected by any act or neglect of the insured or owner of the property described
in such policy; and (iii) such policy and loss payable or mortgagee
clauses may be canceled, amended, or terminated only upon at least thirty (30)
days prior written notice given to the Agent.

 

Section 4.11.                             Certain Accounts.  Each
Grantor shall use commercially reasonable efforts to transfer ownership of (i) the
HSBC Credit Card Receivables Accounts by the end of the second

 

18

 

calendar quarter of 2006 and (ii) any
account established in connection with the establishment of the applicable
Permitted Replacement Credit Card Program prior to the establishment thereof or
as promptly thereafter as is reasonably practicable.

 

ARTICLE V

REMEDIES

 

Section 5.1.                                   Remedies.

 

(a)                                  Upon the occurrence and during the
continuance of an Event of Default, the Agent may exercise any or all of the
following rights and remedies:

 

(i)                                     those rights and remedies provided in this
Agreement, the Term Loan Credit Agreement, the Existing Notes Indenture or any
other Term Loan/Note Document; provided that
this Section 5.1(a) shall not be understood to limit any rights
available to the Agent, the Term Loan Lenders or the Existing Noteholders prior
to an Event of Default;

 

(ii)                                  those rights and remedies available to a
secured party under the UCC (whether or not the UCC applies to the affected
Collateral) or under any other applicable law (including, without limitation,
any law governing the exercise of a bank’s right of setoff or bankers’ Lien)
when a debtor is in default under a security agreement;

 

(iii)                               give notice of sole control or any other
instruction under any securities account control agreement and take any action
provided therein with respect to the applicable Collateral;

 

(iv)                              without notice (except as specifically
provided in Section 11.2 or elsewhere herein), demand or advertisement of
any kind to any Grantor or any other Person, enter the premises of any Grantor
where any Collateral is located (through self-help and without judicial
process) to collect, receive, assemble, process, appropriate, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of,
deliver, or realize upon, the Collateral or any part thereof in one or more
parcels at public or private sale or sales (which sales may be adjourned or
continued from time to time with or without notice and may take place at such
Grantor’s premises or elsewhere), for cash, on credit or for future delivery
without assumption of any credit risk, and upon such other terms as the Agent
may deem commercially reasonable; and

 

(v)                                 concurrently with written notice to the
Grantors, transfer and register in its name or in the name of its nominee the
whole or any part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations, to exercise the voting and all
other rights as a holder with respect thereto, to collect and receive all cash
dividends, interest, principal and other distributions made thereon and to
otherwise act with respect to the Pledged Collateral as though the Agent was
the outright owner thereof.

 

(b)                                 Each Grantor acknowledges and agrees that the
compliance by the Agent, on behalf of the Secured Parties, with any applicable
state or federal law requirements in connection with

 

19

 

a disposition of the Collateral and
compliance will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.

 

(c)                                  The Agent shall have the right upon any
public sale or sales and, to the extent permitted by law, upon any private sale
or sales, to purchase for the benefit of the Agent and the Secured Parties, the
whole or any part of the Collateral so sold, free of any right of equity
redemption, which equity redemption each Grantor hereby expressly releases.

 

(d)                                 Until the Agent is able to effect a sale,
lease, transfer or other disposition of Collateral, the Agent shall have the
right to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or the value of the
Collateral, or for any other purpose deemed appropriate by the Agent.  The Agent may, if it so elects, seek the
appointment of a receiver or keeper to take possession of Collateral and to
enforce any of the Agent’s remedies (for the benefit of the Agent and Secured
Parties), with respect to such appointment without prior notice or hearing as
to such appointment.

 

(e)                                  Notwithstanding the foregoing, neither the Agent
nor the Secured Parties shall be required to (i) make any demand upon, or
pursue or exhaust any of their rights or remedies against, the Grantors, any
other obligor, guarantor, pledgor or any other Person with respect to the
payment of the Obligations or to pursue or exhaust any of their rights or
remedies with respect to any Collateral therefor or any direct or indirect
guarantee thereof, (ii) marshal the Collateral or any guarantee of the
Obligations or to resort to the Collateral or any such guarantee in any
particular order, or (iii) effect a public sale of any Collateral.

 

(f)                                    Each Grantor recognizes that the Agent may be
unable to effect a public sale of any or all the Pledged Collateral and may be
compelled to resort to one or more private sales thereof.  Each Grantor also acknowledges that any
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall not be deemed to have been made in a
commercially unreasonable manner solely by virtue of such sale being private.  The Agent shall be under no obligation to
delay a sale of any of the Pledged Collateral for the period of time necessary
to permit any Grantor or the issuer of the Pledged Collateral to register such
securities for public sale under the Securities Act of 1933, as amended, or
under applicable state securities laws, even if any Grantor and the issuer
would agree to do so (it being acknowledged and agreed that no Grantor shall
have any obligation hereunder to do so).

 

(g)                                 Notwithstanding the foregoing, any rights and
remedies provided in this Section 5.1 shall be subject to the
Intercreditor Agreement.

 

Section 5.2.                                   Grantor’s Obligations Upon Default.  Upon
the request of the Agent after the occurrence and during the continuance of an
Event of Default, each Grantor will:

 

(a)                                  assemble and make available to the Agent the
Collateral and all books and records relating thereto at any place or places reasonably
specified by the Agent, whether at such Grantor’s premises or elsewhere;

 

(b)                                 permit the Agent, by the Agent’s
representatives and agents, to enter, occupy and use any premises where all or
any part of the Collateral, or the books and records relating thereto,

 

20

 

or both, are located, to take possession of
all or any part of the Collateral or the books and records relating thereto, or
both, to remove all or any part of the Collateral or the books and records
relating thereto, or both, and to conduct sales of the Collateral, without any
obligation to pay any Grantor for such use and occupancy;

 

Section 5.3.                                   Grant of Intellectual Property License.  For
the purpose of enabling the Agent to exercise the rights and remedies under
this Article V at such time as the Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby (a) grants to the Agent,
for the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sublicense any intellectual
property rights now owned or hereafter acquired by such Grantor, wherever the
same may be located, and including in such license access to all media in which
any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof and (b) irrevocably
agrees that, at any time and from time to time following the occurrence and
during the continuance of an Event of Default, the Agent may sell any Grantor’s
Inventory directly to any Person, including without limitation Persons who have
previously purchased any Grantor’s Inventory from such Grantor and in
connection with any such sale or other enforcement of the Agent’s rights under this
Agreement, may (subject to any restrictions contained in applicable third party
licenses entered into by a Grantor) sell Inventory which bears any Trademark
owned by or licensed to any Grantor and any Inventory that is covered by any
Copyright owned by or licensed to such Grantor and the Agent may finish any
work in process and affix any relevant Trademark owned by or licensed to any
Grantor and sell such Inventory as provided herein.  The use of the license granted pursuant to clause
(a) of the preceding sentence by the Agent may be exercised, at the option
of the Agent, only upon the occurrence and during the continuance of an Event
of Default; provided, however, that any license, sublicense or
other transaction entered into by the Agent in accordance herewith shall be
binding upon each Grantor notwithstanding any subsequent cure of an Event of
Default.

 

Section 5.4.                                   Application of Proceeds.  Subject
to the Intercreditor Agreement, the Agent shall apply the proceeds of any
collection, sale, foreclosure or other realization upon any Collateral, as well
as any Collateral consisting of cash, as follows:

 

FIRST, to the payment of all
reasonable costs and expenses incurred by the Agent (in its capacity as such
hereunder or under any other Term Loan Security Document) in connection with
such collection, sale, foreclosure or realization or otherwise in connection
with this Agreement, any other Term Loan Security Document or any of the
Obligations, including all court costs and the reasonable fees and expenses of
its agents and legal counsel, the repayment of all advances made by the Agent
hereunder or under any other Term Loan Security Document on behalf of any
Grantor and any other reasonable costs or expenses incurred by the Agent in
connection with the exercise of any remedy hereunder or under any other Term
Loan Security Document, if reimbursable pursuant to a Term Loan Security
Document;

 

SECOND, to the payment in
full of the Term Loan Obligations and the Existing Notes Obligations, ratably
in accordance with the respective amounts thereof on the date of any such
distribution; and

 

21

 

THIRD, to the Grantors,
their successors or assigns, or as a court of competent jurisdiction may
otherwise direct.

 

Except
as otherwise provided herein, the Agent shall have absolute discretion as to
the time of application of any such proceeds, moneys or balances in accordance
with this Agreement.  Upon any sale of
Collateral by the Agent (including pursuant to a power of sale granted by
statute or under a judicial proceeding), the receipt of the Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Agent or such officer or be answerable in any way for the
misapplication thereof.

 

ARTICLE VI

CONCERNING THE EXISTING NOTES TRUSTEE AND HOLDERS OF 2028 DEBENTURES AND 2008
NOTES

 

Section 6.1.                                   Agent’s Consent to Serve.  The Agent
has consented to serve as Agent hereunder on the express understanding, and the
Existing Notes Trustee and each holder of 2028 Debentures and 2008 Notes, by
accepting the benefits of this Agreement, shall be deemed to have agreed, that
the Agent shall have no duty and shall owe no obligation or responsibility
(fiduciary or otherwise) to the Existing Notes Trustee or such holders, other
than the duty to perform its express obligations under this Agreement in
accordance with its terms.  Without limiting
the foregoing, each of the Existing Notes Trustee and each holder of 2028
Debentures and 2008 Notes, by accepting the benefits of this Agreement, shall
be deemed to have waived any right it might have, under applicable law or
otherwise, to compel the sale or other disposition of any Collateral, and any
obligation the Agent might have, under applicable law or otherwise, to obtain
any minimum price for any Collateral upon the sale thereof, it being expressly
understood, and the availability of the benefits of this Agreement to the
Existing Notes Trustee and each holder of 2028 Debentures and 2008 Notes being
conditioned upon the understanding, that the sole right of the holders of the
2028 Debentures and the 2008 Notes shall be to receive their ratable share of
any proceeds of Collateral in accordance with and subject to the provisions of
this Agreement, the Intercreditor Agreement and the other Term Loan Security
Documents.

 

Section 6.2.                                   Determination of Amounts of Obligations and
Existence of Existing Notes Events of Default; Acceleration.  Whenever
the Agent is required to determine the existence or amount of any of the Existing
Notes Obligations or the existence of any Existing Notes Event of Default for
any purposes of this Agreement, it shall request written certification of such
existence or amount from the Existing Notes Trustee and shall be entitled to
make such determination on the basis of such certification; provided, however,
that if, notwithstanding the request of the Agent, the Existing Notes Trustee
shall fail or refuse reasonably promptly to certify as to the existence or
amount of any Existing Notes Obligation or the existence of any Existing Notes
Event of Default, the Agent shall be entitled to determine such existence or
amount by such commercially reasonable method as the Agent may, in the exercise
of its good faith judgment, determine, including by reliance upon a certificate
of the Borrower.  The Agent may rely
conclusively, and shall be fully protected in so relying, on any determination
made by it in accordance with the provisions of the preceding sentence (or as
otherwise directed by a court of competent jurisdiction) and shall have no
liability to the Borrower, any other Grantor, any Secured Party or any other
Person as a result of such determination or any action taken pursuant thereto
except to the extent such liability is determined by a court of competent
jurisdiction

 

22

 

by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of the Agent.  The Existing Notes Trustee shall promptly
notify the Agent of any Existing Notes Event of Default of which it shall have
been notified by any Existing Notes Secured Party or of which it shall have
otherwise become aware or any acceleration of any of the Existing Notes
Obligations; provided that failure to give any such notice shall not
affect any rights or remedies of the Agent or any Secured Party arising in
connection with any such acceleration.

 

ARTICLE VII

CERTAIN INTERCREDITOR AGREEMENTS

 

Section 7.1.                                   Priority
of Security Interests.  The Agent
and each of the Secured Parties hereby agrees that the Liens and security
interests granted to the Agent hereunder shall be treated, as among the Secured
Parties, as being for the equal and proportionate benefit of all the Secured
Parties, without preference, priority, prejudice or distinction as to Lien or
security interest of any Secured Party over any other Secured Party (except as
expressly provided in Section 5.4), and shall at all times be shared by
the Secured Parties as provided herein.

 

Section 7.2.                                   Notices to Existing Notes Trustee.  The Agent
shall promptly notify the Existing Notes Trustee in the event of a Credit
Agreement Event of Default or the acceleration of any Term Loan Obligations.

 

Section 7.3.                                   Actions Under This Agreement.  By
acceptance of the benefits of this Agreement, each of the Secured Parties shall
be deemed irrevocably to confirm that the Agent shall have the authority
to act as the exclusive agent of such Secured Party for enforcement of any
provisions of this Agreement against any Grantor and of any other Term Loan Security
Document against any “grantor” or “pledgor” thereunder or the exercise of
remedies hereunder or under any other Term Loan Security Document and to
agree that such Secured Party shall not take any action to enforce any
provisions of this Agreement against any Grantor or of any of the other Term
Loan Security Documents against any “grantor” or “pledgor” thereunder or to
exercise any remedy hereunder or under any other Term Loan Security
Document.  The Agent shall not be
obligated to take any action under this Agreement except for the performance of
such duties as are specifically set forth herein.

 

Section 7.4.                                   Turnover of Collateral; Sharing of Setoffs.  (a) If
any Secured Party acquires custody, control or possession of any Collateral or
proceeds therefrom, other than pursuant to the terms of this Agreement, such
Secured Party shall promptly cause such Collateral or proceeds to be delivered
to or put in the custody, possession or control of the Agent for disposition or
distribution in accordance with the provisions hereof.  Until such time as the provisions of the
immediately preceding sentence have been complied with, such Secured Party
shall be deemed to hold such Collateral and proceeds in trust for the parties
entitled thereto hereunder. 
Notwithstanding the foregoing, no Secured Party shall be required to
deliver to or put in the custody, possession or control of the Agent or to hold
in trust as specified in the preceding sentence any amount of any Obligation
paid or prepaid by the Borrower to it (and not obtained by it through any sale
of or other realization upon Collateral) in accordance with the terms of the
Term Loan Credit Agreement or the Existing Notes Indenture, as applicable.

 

(b) Each
Secured Party agrees that if it shall through the exercise of a right of banker’s
lien, setoff or counterclaim against the Borrower or any other Grantor,
including, without limitation,

 

23

 

any right of the Term Loan
Lenders pursuant to Section 9.08 of the Term Loan Credit Agreement, or
pursuant to a secured claim under Section 506 of Title 11 of the
United States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Secured Party under any applicable
bankruptcy, insolvency or other similar law, obtain payment (voluntary or
involuntary) in respect of any Obligations owing to it, it shall promptly
purchase from each other Secured Party participations in (or, if and to the
extent specified by such Secured Party, direct interests in) the Obligations
held by such other Secured Party in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Secured Parties shall share the benefit of such payment (net of any expenses
which may be incurred by such benefitted Secured Party in obtaining or
preserving such excess payment) pro rata in accordance with the respective
principal amounts of the Obligations owing to such Secured Parties.  To such end, all the Secured Parties shall
make appropriate adjustments among themselves (by the release of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored.  The Borrower and each other Grantor agrees
that any Secured Party so purchasing a participation (or direct interest) in
the Obligations owing to other Secured Parties may exercise all rights of
setoff and similar rights with respect to such participation as fully as if
such Secured Party were a direct holder of Obligations in the amount of such
participation.

 

ARTICLE VIII

RELATIONSHIP AMONG SECURED PARTIES

 

Section 8.1.                                   Restrictions on Actions.  Each
Secured Party agrees that, so long as any Term Loan Obligations are
outstanding, the provisions of this Agreement shall provide the exclusive
method by which any Secured Party may exercise rights and remedies hereunder
and under the other Term Loan Security Documents in respect of the
Collateral.  Therefore, each Secured
Party shall, for the mutual benefit of all Secured Parties, except as otherwise
permitted under this Agreement:

 

(a)                                  refrain from taking or filing any action,
judicial or otherwise, to enforce any rights or pursue any remedy hereunder and
under any other Term Loan Security Document, except for delivering notices
hereunder;

 

(b)                                 refrain from (i) selling any Obligations
to any Grantor or any Affiliate of any Grantor and (ii) accepting any other
security for the Obligations from any Grantor or its Affiliates, except for any
security granted to the Agent for the benefit of all Secured Parties; and

 

(c)                                  refrain from exercising any rights or
remedies hereunder or under any other Term Loan Security Document that have or
may have arisen or which may arise as a result of an Event of Default;

 

provided, however, that nothing contained in this Section shall
prevent any Secured Party from (i) imposing a default rate of interest in
accordance with the Term Loan Credit Agreement or the Existing Notes Indenture,
as applicable, (ii) accelerating the maturity of any Obligations, (iii) raising
any defenses in any action in which it has been made a party defendant or has
been joined as a third party, except that the Agent may direct and control any
defense directly relating to the Collateral or any one or more of the Term Loan
Security Documents, which shall be governed by the provisions of this Agreement
or (iv) subject to Section 7.4(b), exercising any right of setoff,
recoupment or similar right.

 

24

 

Section 8.2.                                   Cooperation; Accountings.  Each
of the Secured Parties will, upon the reasonable request of the Agent or
Existing Notes Trustee, from time to time execute and deliver or cause to be
executed and delivered such further instruments, and do and cause to be done
such further acts, as may be necessary or proper to carry out more effectively
the provisions of this Agreement.  The
Secured Parties agree to provide to each other upon reasonable request a
statement of all payments received in respect of Obligations.

 

Section 8.3.                                   Secured Parties; Other Collateral.  The
Secured Parties agree that all of the provisions of this Agreement shall apply
to any and all properties, assets and rights of the Grantors and their Affiliates
in which the Agent at any time acquires a security interest or Lien pursuant
hereto or to any other Term Loan Security Document, including, without
limitation, real property or rights in, on or over real property,
notwithstanding any provision to the contrary in any mortgage, leasehold
mortgage or other document purporting to grant or perfect any Lien in favor of
the Secured Parties or any of them or the Agent for the benefit of the Secured
Parties or any of them.

 

ARTICLE IX

CONCERNING THE AGENT

 

Section 9.1.                                   Appointment of Agent.  Each
of the Secured Parties appoints Credit Suisse to act, and Credit Suisse agrees
to act, as Agent for the Secured Parties pursuant to the terms of this
Agreement and the other Term Loan Security Documents and to execute and enter
into this Agreement, the Intercreditor Agreement and the other Term Loan
Security Documents and all other instruments relating to this Agreement and the
other Term Loan Security Documents and (a) to take actions on its behalf
that are expressly permitted under the provisions of this Agreement and the
other Term Loan Security Documents and all other instruments or agreements
relating hereto or thereto and (b) to exercise such powers and perform
such duties as are, in each case, expressly delegated to the Agent by the terms
hereof and thereof.  By acceptance of the
benefits of this Agreement, each Secured Party that is not a party to this
Agreement shall be deemed to have consented to the appointment and
authorization set forth in the immediately preceding sentence. THE AGENT HAS CONSENTED TO SERVE AS AGENT HEREUNDER ON THE EXPRESS
UNDERSTANDING, AND THE  SECURED PARTIES, BY
ACCEPTING THE BENEFITS OF THIS AGREEMENT, SHALL BE DEEMED TO HAVE AGREED, THAT
THE AGENT SHALL HAVE NO DUTY AND SHALL OWE NO OBLIGATION OR RESPONSIBILITY
(FIDUCIARY OR OTHERWISE), REGARDLESS OF WHETHER AN EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING, TO THE SECURED PARTIES, OTHER THAN THE DUTY TO PERFORM ITS
EXPRESS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER TERM LOAN SECURITY
DOCUMENTS IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, SUBJECT IN ALL EVENTS TO
THE PROVISIONS OF THIS AGREEMENT LIMITING THE RESPONSIBILITY OR LIABILITY OF
THE AGENT HEREUNDER.

 

Section 9.2.                                   Limitations on Responsibility of Agent.  The Agent
shall not be required to ascertain or inquire as to (i) any statement,
warranty or representation made herein or in connection herewith or in or in
connection with any other Term Loan/Note Document, (ii) the contents of
any certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Term
Loan/Note Document, (iv) the validity, enforceability, effectiveness or genuineness
of any Term Loan/Note Document or any other agreement, instrument or document,
or

 

25

 

(v) the satisfaction of any condition
set forth in any Term Loan/Note Document, other than to confirm receipt of
items expressly required to be delivered to the Agent.  Neither the Agent nor any officer, agent or
representative thereof shall be personally liable for any action taken or
omitted to be taken by any such Person in connection with this Agreement except
for its own gross negligence or wilful misconduct or, in the case of the Agent,
in the case of the loss of any moneys in the possession of the Agent, for the
failure of the Agent to accord such moneys the same care as a prudent person in
the same or similar circumstances would accord its own assets.  The Agent may execute any of the powers
granted to it under this Agreement and perform any duty hereunder either
directly or by or through sub-agents or attorneys-in-fact, and shall not be
responsible for the negligence (including gross negligence) or misconduct
(including wilful misconduct) of any sub-agents or attorneys-in-fact selected
by it with the care that a prudent person in similar circumstances would have
employed in such selection.  The Agent
and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Affiliates.  The exculpatory provisions set forth in this Article IX
and in the other Term Loan/Note Documents shall apply to any such sub-agent and
to the Affiliates of the Agent and any such sub-agent.

 

Section 9.3.                                   Reliance by Agent; Indemnity Against
Liabilities, etc.

 

(a)                                  Whenever in the performance of its duties
under this Agreement the Agent shall deem it necessary or desirable that a
matter be proved or established with respect to the Grantors or any other
Person in connection with the taking, suffering or omitting of any action
hereunder by the Agent, such matter may be conclusively deemed to be proved or
established by a certificate executed by an officer of such Person, and the Agent
shall have no liability with respect to any action taken, suffered or omitted
in reliance thereon.

 

(b)                                 The Agent shall be fully protected in relying
upon any resolution, statement, certificate, instrument, opinion, report, notice
(including any notice of an Event of Default or of the cure or waiver thereof),
request, consent, order or other paper or document or oral conversation
(including, telephone conversations) which it in good faith believes to be
genuine and correct and to have been signed, presented or made by the proper
party.  The Agent may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed
therein, upon any notice, certificate or opinion furnished to the Agent in
connection with this Agreement.

 

(c)                                  The Agent shall not be deemed to have actual,
constructive, direct or indirect notice or knowledge of the occurrence of any
Event of Default unless and until the Agent shall have received written notice
thereof from any Secured Party or the Borrower or any other Grantor.  The Agent shall have no obligation whatsoever
either prior to or after receiving such a notice to inquire whether an Event of
Default has, in fact, occurred and shall be entitled to rely conclusively, and
shall be fully protected in so relying, on any notice so furnished to it.

 

Section 9.4.                                   Exercise of Remedies.  The
remedies of the Agent hereunder and under the other Term Loan Security Documents
shall include, but not be limited to, the disposition of the Collateral by
foreclosure or other sale and the exercising of all remedies of a secured
lender under the UCC, bankruptcy laws or similar laws of any applicable
jurisdiction.

 

Section 9.5.                                   Cooperation.  To
the extent the exercise of the rights, powers and remedies of the Agent in
accordance with this Agreement requires that any action be taken by any Secured
Party,

 

26

 

such Secured Party shall take such action and
cooperate with the Agent to ensure that the rights, powers and remedies of all
Secured Parties are exercised in full.

 

Section 9.6.                                   Authorized Investments.  Any
and all funds held by the Agent in its capacity as Agent, whether pursuant to
any provision hereof or of any other Term Loan Security Document or otherwise,
shall to the extent reasonably practicable be invested by the Agent within a
reasonable time in Cash Equivalents.  Any
interest earned on such funds shall be disbursed in accordance with Section 5.4.  The Agent may hold any such funds in a common
interest bearing account.  To the extent
that the interest rate payable with respect to any such account varies over
time, the Agent may use an average interest rate in making the interest
allocations among the respective Secured Parties.  The Agent shall have no duty to select
investments which provide a maximum return. 
In the absence of gross negligence or wilful misconduct, the Agent shall
not be responsible for any investment losses in respect of any funds invested
in accordance with this Section.

 

Section 9.7.                                   Bankruptcy Proceedings.  The
following provisions shall apply during any Bankruptcy Proceeding of any Grantor:

 

(a)                                  The Agent shall represent all Secured Parties
in connection with all matters directly relating to the Collateral, including,
without limitation, any use, sale or lease of Collateral, use of cash
collateral, request for relief from the automatic stay and request for adequate
protection; provided that the Agent shall not treat the Term Loan
Lenders or the Existing Noteholders differently form each other with respect to
rights in the Collateral (except differences in respect of rights to receive
the proceeds thereof arising from differences in their interests as they may
appear based on the relative amount of Obligations of each such class of
Secured Parties).

 

(b)                                 Each Secured Party shall be free to act
independently on any issue not affecting the Collateral.  Each Secured Party shall give prior notice to
the Agent of any such action that could materially affect the rights or
interests of the Agent or the other Secured Parties to the extent that such
notice is reasonably practicable.  If
such prior notice is not given, such Secured Party shall give prompt notice
following any action taken hereunder.

 

(c)                                  Any proceeds of the Collateral received by
any Secured Party as a result of, or during, any Bankruptcy Proceeding will be
delivered promptly to the Agent for distribution in accordance with Section 5.4.

 

ARTICLE X

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

 

Section 10.1.                             Account Verification.  The Agent
may at any time and from time to time following the occurrence and during the
continuance of an Event of Default, in the Agent’s own name, in the name of a
nominee of the Agent, or in the name of any Grantor communicate (by mail,
telephone, facsimile or otherwise) with the Account Debtors of such Grantor,
parties to contracts with such Grantor and obligors in respect of Instruments
of such Grantor to verify with such Persons, to the Agent’s satisfaction, the existence,
amount, terms of, and any other matter relating to, Accounts, Instruments,
Chattel Paper, payment intangibles and/or other Receivables that are
Collateral.

 

27

 

Section 10.2.                             Authorization for Secured Party to Take
Certain Action.

 

(a)                                  Each Grantor irrevocably authorizes the Agent
and appoints the Agent as its attorney in fact (i) at any time and from
time to time in the sole discretion of the Agent (1) to execute on behalf
of such Grantor as debtor and to file financing statements necessary or
desirable in the Agent’s reasonable discretion to perfect and to maintain the
perfection and priority of the Agent’s security interest in the Collateral, (2) to
file a carbon, photographic or other reproduction of this Agreement or any
financing statement with respect to the Collateral as a financing statement and
to file any other financing statement or amendment of a financing statement
(which would not add new collateral or add a debtor) in such offices as the Agent
in its reasonable discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the Agent’s security interest in the
Collateral, (3) to contact and enter into one or more agreements with the
issuers of uncertificated securities which are Pledged Collateral or with
securities intermediaries holding Pledged Collateral as may be necessary or
advisable to give the Agent Control over such Pledged Collateral, and (4) to
discharge past due taxes, assessments, charges, fees or Liens on the Collateral
(except for Permitted Liens); (ii) at any time following the occurrence
and during the continuance of an Event of Default, (1) to endorse and
collect any cash proceeds of the Collateral and to apply the proceeds of
any Collateral received by the Agent to the Obligations as provided herein or
in any other Term Loan/Note Document, subject to the terms of the Intercreditor
Agreement, (2) to demand payment or enforce payment of the Receivables in
the name of the Agent or any Grantor and to endorse any and all checks, drafts,
and other instruments for the payment of money relating to the Receivables, (3) to
sign any Grantor’s name on any invoice or bill of lading relating to the
Receivables, drafts against any Account Debtor of such Grantor, assignments and
verifications of Receivables, (4) to exercise all of any Grantor’s rights
and remedies with respect to the collection of the Receivables and any other
Collateral, (5) to settle, adjust, compromise, extend or renew the
Receivables (including, without limitation, making, settling and adjusting
claims in respect of Collateral under policies of insurance and making all
determinations and decisions with respect thereto, subject to the terms of the
Intercreditor Agreement), (6) to settle, adjust or compromise any legal
proceedings brought to collect Receivables, (7) to prepare, file and sign
any Grantor’s name on a proof of claim in bankruptcy or similar document
against any Account Debtor of such Grantor, (8) to prepare, file and sign
any Grantor’s name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables, (9) to change the
address for delivery of mail addressed to any Grantor to such address as the Agent
may designate and to receive, open and dispose of all mail addressed to such
Grantor; and (iii) to do all other acts and things necessary to carry out
the terms of this Agreement; and each Grantor agrees to reimburse the Agent on
demand for any reasonable payment made or any reasonable documented expense
incurred by the Agent in connection with any of the foregoing; provided that this authorization shall not relieve any Grantor of
any of its obligations under this Agreement, the Term Loan Credit Agreement or
the Existing Notes Indenture.

 

(b)                                 All acts of said attorney or designee are
hereby ratified and approved by the Grantors. The powers conferred on the Agent,
for the benefit of the Agent and Secured Parties, under this Section 10.2
are solely to protect the Agent’s interests in the Collateral and shall not
impose any duty upon the Agent or any Secured Party to exercise any such
powers.

 

Section 10.3.                             PROXY. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE AGENT AS
ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION 10.2 ABOVE) WITH
RESPECT TO THE PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED
COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT
TO VOTE ANY SUCH PLEDGED COLLATERAL,

 

28

 

THE APPOINTMENT OF THE AGENT AS PROXY AND
ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE
ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS,
CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH
PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION
(INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF
THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED
COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT.

 

Section 10.4.                             NATURE OF APPOINTMENT; LIMITATION OF DUTY.  THE
APPOINTMENT OF THE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE X
IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH
THIS AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 11.16.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE AGENT, NOR ANY SECURED
PARTY, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER
GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE
FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT TO THE EXTENT
SUCH DAMAGES ARE ATTRIBUTABLE TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED
THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.

 

ARTICLE XI

GENERAL PROVISIONS

 

Section 11.1.                             Notice.  All notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

 

(a)                                  if to the Agent, to it at Credit Suisse,
Eleven Madison Avenue, New York, New York 10010, Attention of Agency Group
(Telecopy No. (212) 325-8304);

 

(b)                                 if to the Existing Notes Trustee, to it at
The Bank of New York, Plaza of the Americas, Corporate Trust Division, 600
North Pearl Street, Suite 420, Dallas, Texas 75201, Attention of Patrick
Giordano (Telecopy No. (214) 880-8234); and

 

(c)                                  if to Grantors, at The Neiman Marcus Group, Inc.,
One Marcus Square, 1618 Main Street, Dallas, Texas 75201, Attention of General
Counsel (Telecopy No. (214) 743-7611).

 

Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (and for this
purpose a notice to the Borrower shall be deemed to be a notice to each
Grantor).  All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been

 

29

 

given on the date of receipt
if delivered by hand or overnight courier service or sent by telecopy or on the
date five (5) Business Days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 11.1 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 11.1.  As agreed to among the parties from time to
time, notices and other communications may also be delivered by e-mail to the
e-mail address of a representative of the applicable person provided from time
to time by such Person.

 

Section 11.2.                             Waivers.  Each Grantor hereby waives
notice of the time and place of any public sale or the time after which any
private sale or other disposition of all or any part of the Collateral may be
made.  To the extent such notice may not
be waived under applicable law, any notice made shall be deemed reasonable if
sent to the Grantors, addressed as set forth in Section 11.1, at least ten
(10) days prior to (i) the date of any such public sale or (ii) the
time after which any such private sale or other disposition may be made.  To the maximum extent permitted by applicable
law, each Grantor waives all claims, damages, and demands against the Agent or
any Secured Party arising out of the repossession, retention or sale of the
Collateral, except such as arise solely out of the gross negligence or willful
misconduct of the Agent or such Secured Party as finally determined by a court
of competent jurisdiction. To the extent it may lawfully do so, each Grantor
absolutely and irrevocably waives and relinquishes the benefit and advantage
of, and covenants not to assert against the Agent or any Secured Party, any
valuation, stay, appraisal, extension, moratorium, redemption or similar laws
and any and all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Agreement, or otherwise.  Except as otherwise specifically provided herein,
each Grantor hereby waives presentment, demand, protest or any notice (to the
maximum extent permitted by applicable law) of any kind in connection with this
Agreement or any Collateral.

 

Section 11.3.                             Limitation on Agent’s and Secured Party’s
Duty with Respect to the Collateral. The Agent shall have no obligation to clean-up or otherwise prepare
the Collateral for sale. The Agent and each Secured Party shall use reasonable
care with respect to the Collateral in its possession or under its
control.  Neither the Agent nor any
Secured Party shall have any other duty as to any Collateral in its possession
or control or in the possession or control of any agent or nominee of the Agent
or such Secured Party, or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto. To the
extent that applicable law imposes duties on the Agent to exercise remedies in
a commercially reasonable manner, each Grantor acknowledges and agrees that it
would be commercially reasonable for the Agent (i) to fail to incur
expenses deemed significant by the Agent to prepare Collateral for disposition
or otherwise to transform raw material or work in process into finished goods
or other finished products for disposition, (ii) to fail to obtain third
party consents for access to Collateral to be disposed of, or to obtain or, if
not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or
disposed of, (iii) to fail to exercise collection remedies against Account
Debtors or other Persons obligated on Collateral or to remove Liens on or any
adverse claims against Collateral, (iv) to exercise collection remedies
against Account Debtors and other Persons obligated on Collateral directly or through
the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as the Grantor, for
expressions of interest in acquiring all or any portion of such Collateral, (vii) to
hire

 

30

 

one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral is of a
specialized nature, (viii) to dispose of Collateral by utilizing internet
sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capacity of doing so, or that match
buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such
as title, possession or quiet enjoyment, (xi) to purchase insurance or
credit enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral.  Each Grantor acknowledges that the purpose of
this Section 11.3 is to provide non-exhaustive indications of what actions
or omissions by the Agent would be commercially reasonable in the Agent’s
exercise of remedies against the Collateral and that other actions or omissions
by the Agent shall not be deemed commercially unreasonable solely on account of
not being indicated in this Section 11.3. 
Without limitation upon the foregoing, nothing contained in this Section 11.3
shall be construed to grant any rights to any Grantor or to impose any duties
on the Agent that would not have been granted or imposed by this Agreement or
by applicable law in the absence of this Section 11.3.

 

Section 11.4.                             Compromises and Collection of Collateral.  Each
Grantor and the Agent recognize that setoffs, counterclaims, defenses and other
claims may be asserted by obligors with respect to certain of the Receivables,
that certain of the Receivables may be or become uncollectible in whole or in
part and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be
recovered with respect to a Receivable. 
In view of the foregoing, each Grantor agrees that the Agent may at any
time and from time to time, if an Event of Default has occurred and is
continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as the Agent in its sole discretion shall
determine or abandon any Receivable, and any such action by the Agent shall be
commercially reasonable so long as the Agent acts in good faith based on
information known to it at the time it takes any such action.

 

Section 11.5.                             Secured Party Performance of Debtor
Obligations.  Without having any obligation to do so, the Agent
may perform or pay any obligation which any Grantor has agreed to perform or pay
under this Agreement and the Grantor shall reimburse the Agent for any amounts
paid by the Agent pursuant to this Section 11.5.  Each Grantor’s obligation to reimburse the Agent
pursuant to the preceding sentence shall be an Obligation payable on demand.

 

Section 11.6.                             Specific Performance of Certain Covenants.  The
Grantor acknowledges and agrees that a breach of any of the covenants contained
in Sections 4.1(d), 4.1(e), 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.10, or 5.2, will
cause irreparable injury to the Agent and the Secured Parties, that the Agent
and the Secured Parties have no adequate remedy at law in respect of such
breaches and therefore agrees, without limiting the right of the Agent or the
Secured Parties to seek and obtain specific performance of other obligations of
any Grantor contained in this Agreement, that the covenants of such Grantor
contained in the Sections referred to in this Section 11.6 shall be
specifically enforceable against such Grantor.

 

Section 11.7.                             Dispositions Not Authorized.  No
Grantor is authorized to sell or otherwise dispose of the Collateral except as
set forth in Section 4.1(d) and notwithstanding any course of

 

31

 

dealing between any Grantor and the Agent or
other conduct of the Agent, no authorization to sell, lease or transfer or
otherwise dispose of the Collateral (except as set forth in Section 4.1(d))
shall be binding upon the Agent or the Secured Parties unless such
authorization is in writing signed by the Agent with the consent or at the
direction of the Required Secured Parties.

 

Section 11.8.                             No Waiver; Amendments; Cumulative Remedies.  No
delay or omission of the Agent to exercise any right or remedy granted under
this Agreement shall impair such right or remedy or be construed to be a waiver
of any default or an acquiescence therein, and any single or partial exercise
of any such right or remedy shall not preclude any other or further exercise
thereof or the exercise of any other right or remedy. No waiver, amendment or
other variation of the terms, conditions or provisions of this Agreement
whatsoever shall be valid unless in writing signed by the Agent with the
concurrence or at the direction of the Lenders required under Section 10.02
of the Credit Agreement and then only to the extent in such writing
specifically set forth.  All rights and
remedies contained in this Agreement or by law afforded shall be cumulative and
all shall be available to the Agent and the Secured Parties until the Term Loan
Obligations have been paid in full.

 

Section 11.9.                             Limitation by Law; Severability of
Provisions.  All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of
this Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Agreement invalid, unenforceable
or not entitled to be recorded or registered, in whole or in part.  Any provision in any this Agreement that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without affecting
the remaining provisions in that jurisdiction or the operation, enforceability,
or validity of that provision in any other jurisdiction, and to this end the
provisions of this Agreement are declared to be severable.

 

Section 11.10.                       Reinstatement.  This
Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against any Grantor for liquidation or
reorganization, should any Grantor become insolvent or make an assignment for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of its Grantor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a “voidable
preference,” “fraudulent conveyance,” 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 Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.

 

Section 11.11.                       Benefit of Agreement.  The
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of each Grantor, the Agent and the Parties and their respective
successors and permitted assigns (including all Persons who become bound as a
debtor to this Agreement), except that no Grantor shall have the right to
assign its rights or delegate its obligations under this Agreement or any
interest herein, without the prior written consent of the Agent.  No sales of participations, assignments,
transfers, or other dispositions of any agreement governing the Obligations or
any portion thereof or interest therein shall in any manner impair the Lien
granted to the Agent, for the benefit of the Agent and the Secured Parties,
hereunder.

 

32

 

Section 11.12.  Survival
of Representations.  All
representations and warranties of each Grantor contained in this Agreement
shall survive the execution and delivery of this Agreement.

 

Section 11.13.  Taxes and
Expenses.  Each Grantor jointly and
severally agrees to pay any taxes payable or ruled payable by Federal or State
authority in respect of this Agreement, together with interest and penalties,
if any.  Each Grantor jointly and
severally agrees to reimburse the Agent for any and reasonable documented all
out-of-pocket expenses paid or incurred by the Agent in connection with the
preparation, execution, delivery, administration, collection and enforcement of
this Agreement and in the audit, analysis, administration, collection,
preservation or sale of the Collateral (including the expenses and charges
associated with any periodic or special audit of the Collateral).  Any and all costs and expenses incurred by
any Grantor in the performance of actions required pursuant to the terms hereof
shall be borne solely by such Grantor.

 

Section 11.14.  Additional
Subsidiaries.  Pursuant to and in
accordance with Section 5.11 of the Term Loan Credit Agreement, each
Domestic Subsidiary (other than any Unrestricted Subsidiary) of the Borrower
that was not in existence or not a Subsidiary on the date hereof is required to
enter in this Agreement as a Subsidiary Party promptly upon becoming a
Subsidiary.  Upon execution and delivery
by the Agent and a Subsidiary of an instrument in the form of Exhibit K
hereto, such Subsidiary shall become a Subsidiary Party hereunder with the same
force and effect as if originally named as a Subsidiary Party herein.  The execution and delivery of any such
instrument shall not require the consent of any other Person.  The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Person as a party to this Agreement.

 

Section 11.15.  Headings.  The title of and section headings in
this Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Agreement.

 

Section 11.16.  Termination
and Release.  (a)  This Agreement
shall continue in effect until (i) the Term Loan Credit Agreement has been
terminated pursuant to its express terms and (ii) all of the Term Loan
Obligations and have been indefeasibly paid and performed in full; provided,
however, that no such termination shall be effective at any time when
any Existing Notes Obligations remain outstanding unless and until (i) the
Borrower shall have notified the Agent in writing whether at such time there is
outstanding any debt of any Person that is secured by the Existing Notes
Designated Collateral (which notification the Borrower hereby agrees to provide
promptly upon the Agent’s request therefor) and (ii) if any such secured
debt is outstanding at such time, the Agent shall have taken such actions, at
the expense of the Borrower, as the Borrower may reasonably request to transfer
all Collateral consisting of Existing Notes Designated Collateral and all
related Liens thereon and security interests therein (without any
representation or warranties (other than a representation and warranty as to no
Liens on the Existing Notes Designated Collateral created by the Agent in its
individual capacity)) to the Existing Notes Trustee or such other agent or
Person as the Borrower may direct (provided further, however,
that if such other secured debt is under the Revolving Facility Credit
Agreement, all such Collateral in the form of possessory collateral shall be
transferred to the Revolving Facility Agent, notwithstanding anything in the
foregoing to the contrary).

 

(b)                                 A Subsidiary
Party shall automatically be released from its obligations hereunder and the
security interests created hereunder in the Collateral of such Subsidiary Party
shall

 

33

 

be
automatically released upon the consummation of any transaction permitted
pursuant to the Term Loan Credit Agreement as a result of which such Subsidiary
Party ceases to be a Subsidiary.

 

(c)                                  Upon any sale,
lease, transfer or other disposition by any Grantor of any Collateral that is
permitted under Section 4.1(d) to any Person that is not another
Grantor or, upon the effectiveness of any written consent to the release of the
security interest granted hereby in any Collateral pursuant to Section 10.02
of the Term Loan Credit Agreement, the security interest in such Collateral
shall be automatically released.

 

(d)                                 In the event
that Rule 3-10 or Rule 3-16 of Regulation S-X of the Exchange Act is
amended, modified or interpreted by the SEC or any other relevant Governmental
Authority to require (or is replaced with another rule or regulation, or
any other law, rule or regulation is adopted, which would require) the
filing with the SEC (or any other Governmental Authority) of separate financial
statements of any Subsidiary of the Borrower due to the fact that the Equity
Interests of such Subsidiary are pledged under this Agreement, then the Equity
Interests of such Subsidiary shall automatically be deemed not to be part of
the Collateral to the extent necessary not to be subject to such
requirement.  Notwithstanding anything to
the contrary in this Agreement, if Equity Interests of any Subsidiary are not
required to be pledged under this Agreement because Rule 3-10 or Rule 3-16
of Regulation S-X of the Exchange Act would require the filing of separate
financial statements of such Subsidiary if its Equity Interests were so pledged,
in the event that Rule 3-10 or Rule 3-16 of Regulation S-X of the
Exchange Act is amended, modified or interpreted by the SEC or any other
relevant Governmental Authority to no longer require (or is replaced with
another rule or regulation that would not require) the filing of separate
financial statements of such Subsidiary if some or all of its Equity Interests
are pledged under this Agreement, then such Equity Interests of such Subsidiary
shall automatically be deemed part of the Collateral and pledged under this
Agreement.

 

(e)                                  In connection
with any termination or release pursuant to paragraph (a), (b), (c) or (d) above,
the Agent shall promptly execute and deliver to any Grantor, at such Grantor’s
expense, all UCC termination statements and similar documents that such Grantor
shall reasonably request to evidence such termination or release.  Any execution and delivery of documents
pursuant to this Section 11.16 shall be without recourse to or
representation or warranty by the Agent or any Secured Party.  Without limiting the provisions of Section 11.13,
the Borrower shall reimburse the Agent upon demand for all reasonable and
documented costs and out of pocket expenses, including the fees, charges and
expenses of counsel, incurred by it in connection with any action contemplated
by this Section 11.16.

 

Section 11.17.  Entire
Agreement.  This Agreement, together
with the other Term Loan/Note Documents and the Intercreditor Agreement,  embodies the entire agreement and
understanding between each Grantor and the Agent relating to the Collateral and
supersedes all prior agreements and understandings between any Grantor and the
Agent relating to the Collateral.

 

Section 11.18.  CHOICE OF LAW.  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

Section 11.19.  CONSENT TO JURISDICTION.  EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK, NEW YORK IN THE

 

34

 

BOROUGH
OF MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TERM LOAN/NOTE DOCUMENT AND THE GRANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY SECURED PARTY TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE
COURTS OF ANY OTHER JURISDICTION.  ANY
JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE AGENT OR ANY SECURED PARTY OR
ANY AFFILIATE OF THE AGENT OR ANY SECURED PARTY INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR ANY OTHER TERM LOAN/NOTE DOCUMENT SHALL BE BROUGHT ONLY IN A
COURT IN NEW YORK, NEW YORK IN THE BOROUGH OF MANHATTAN.

 

Section 11.20.  WAIVER OF JURY TRIAL. EACH GRANTOR, THE
AGENT AND EACH SECURED PARTY HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.

 

Section 11.21.  Indemnity.  Each Grantor hereby agrees to indemnify the
Agent and the Secured Parties, and their respective successors, assigns, agents
and employees, from and against any and all losses, claims, damages, penalties,
liabilities, and related expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Agent or any Secured Party
is a party thereto) imposed on, incurred by or asserted against the Agent or
the Secured Parties, or their respective successors, assigns, agents and
employees, in any way relating to or arising out of this Agreement, or the
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Collateral (including any claim for Patent,
Trademark or Copyright infringement).

 

Section 11.22.  Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one agreement,
and any of the parties hereto may execute this Agreement by signing any such
counterpart.

 

Section 11.23.  INTERCREDITOR
AGREEMENT GOVERNS. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THIS AGREEMENT,
THE LIENS AND SECURITY INTERESTS CREATED HEREBY AND THE RIGHTS, REMEDIES,
DUTIES AND OBLIGATIONS PROVIDED FOR HEREIN ARE SUBJECT IN ALL RESPECTS TO THE
PROVISIONS OF THE INTERCREDITOR AGREEMENT AND, TO THE EXTENT PROVIDED THEREIN,
THE APPLICABLE SENIOR OBLIGATIONS SECURITY DOCUMENTS (AS DEFINED IN THE
INTERCREDITOR AGREEMENT). IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN
THE PROVISIONS OF THE INTERCREDITOR AGREEMENT 

 

35

 

AND
THIS AGREEMENT, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL CONTROL.

 

Section 11.24.  Delivery
of Collateral.  Prior to the
Revolving Facility First Lien Collateral Transition Date, to the extent any
Grantor is required hereunder to deliver Collateral to the Agent for purposes
of possession and control and is unable to do so as a result of having
previously delivered such Collateral to the Revolving Facility Agent in
accordance with the terms of the Revolving Facility Security Documents, such
Grantor’s obligations hereunder with respect to such delivery shall be deemed
satisfied by the delivery to the Revolving Facility Agent, acting as a
gratuitous bailee of the Agent.

 

Section 11.25.  Mortgages.  In the case of a conflict between this
Agreement and the Mortgages with respect to Collateral that is real property
(including Fixtures), the Mortgages shall govern.  In all other conflicts between this Agreement
and the Mortgages, this Agreement shall govern.

 

[Signature Page Follows]

 

36

 

IN
WITNESS WHEREOF, each Grantor and the Agent have executed this Agreement as of
the date first above written.

 

	
   

  	
  NEWTON
  ACQUISITION, INC.,

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and
  General Counsel

  	
   

  

 

 

	
   

  	
  NEWTON ACQUISITION MERGER SUB, INC.,

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Kewsong Lee

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Kewsong Lee

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  

 

 

	
   

  	
  THE
  NEIMAN MARCUS GROUP, INC.,

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President and
  General Counsel

  	
   

  

 

	
   

  	
  EACH
  OF THE SUBSIDIARY PARTIES LISTED ON

  EXHIBIT J HERETO,

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

	
   

  	
  NM
  NEVADA TRUST,

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

 

	
   

  	
  CREDIT
  SUISSE, CAYMAN ISLANDS BRANCH,

  as Agent

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert Hetu

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Hetu

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  

 

 

	
   

  	
  By:

  	
  /s/ Vanessa Gomez

  	
   

  
	
   

  	
  Name:

  	
  Vanessa Gomez

  	
   

  
	
   

  	
  Title:

  	
  Vice PresidentExhibit 10.8

 

EXECUTION COPY

 

 

 

LIEN SUBORDINATION AND
INTERCREDITOR AGREEMENT

 

dated as of

 

October 6, 2005,

 

among

 

DEUTSCHE BANK TRUST COMPANY
AMERICAS,

 

as Revolving Facility Agent,

 

CREDIT SUISSE,

 

as Term Loan Agent,

 

NEWTON ACQUISITION, INC.,

 

NEWTON ACQUISITION MERGER SUB,
INC. (to be merged with

and into The Neiman Marcus Group, Inc.)

 

and

 

The subsidiaries of The Neiman
Marcus Group, Inc. named herein

 

 

[CS&M #5865-334]

 

 

LIEN SUBORDINATION AND INTERCREDITOR AGREEMENT dated as of October 6,
2005, among DEUTSCHE BANK TRUST COMPANY AMERICAS, as agent for the Revolving
Facility Secured Parties referred to herein; CREDIT SUISSE, as agent for the
Term Loan Secured Parties and the Existing Notes Secured Parties referred to
herein; NEWTON ACQUISITION, INC.; NEWTON ACQUISITION MERGER SUB, INC. (to be
merged with and into The Neiman Marcus Group, Inc.); and the subsidiaries
of The Neiman Marcus Group, Inc. named herein.

 

Reference
is made to (a) the Revolving Facility Credit Agreement (such term and each
other capitalized term used and not otherwise defined herein having the meaning
assigned to it in Article I), under which the Revolving Facility Lenders
have extended and agreed to extend credit to the Company, (b) the Term
Loan Credit Agreement, under which the Term Loan Lenders have extended credit
to the Company and (c) the Existing Notes Indenture governing the Existing
Notes. 

 

In
consideration of the mutual agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Revolving Facility Agent (for itself and on behalf of the
Revolving Facility Secured Parties), the Term Loan Agent (for itself and on
behalf of the Term Loan Secured Parties and the Existing Notes Secured Parties),
Holdings, the Company, NM Nevada Trust, a Massachusetts business trust, and the
subsidiaries of the Company identified on Schedule I hereto agree as
follows:

 

ARTICLE I

Definitions

 

SECTION 1.01.  Construction;
Certain Defined Terms.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified, (ii) any
reference herein to any person shall be construed to include such person’s
successors and permitted assigns, but shall not be deemed to include the
subsidiaries of such person unless express reference is made to such
subsidiaries, (iii) the words “herein”, “hereof” and “hereunder”, and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (iv) all references
herein to Articles and Sections shall be construed to refer to Articles and
Sections of this Agreement and (v) unless otherwise expressly qualified
herein, the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and

 

 

all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

 

SECTION 1.02.  As used in this Agreement, the following
terms have the meanings specified below: 

 

“Bankruptcy Code” means Title 11
of the United States Code.

 

“Collateral” means the Revolving
Facility Collateral and the Term Loan Collateral.

 

“Company” means The Neiman Marcus
Group, Inc., a Delaware corporation, as the surviving corporation of the
merger with Newton Acquisition Merger Sub, Inc.

 

“Excluded Assets” has the meaning set
forth (a) in the Term Loan Security Agreement, in the case of Term Loan
First Lien Collateral, and (b) in the Revolving Facility Security
Agreement, in the case of Revolving Facility First Lien Collateral.

 

“Existing Noteholders” means the
Securityholders under and as defined in the Existing Notes Indenture.

 

“Existing Notes” means the 2008 Notes and
the 2028 Debentures.

 

“Existing Notes Designated Collateral” has the meaning set forth in
the Term Loan Security Agreement.

 

“Existing Notes Event of Default” means any “Event
of Default”, as defined in the Existing Notes Indenture.

 

“Existing Notes Indenture” means the
Indenture dated as of May 27, 1998, between the Company and the Existing
Notes Trustee, pursuant to which the Existing Notes were issued.

 

“Existing Notes Obligations” has the
meaning set forth in the Term Loan Security Agreement.

 

“Existing Notes Secured Parties” has the
meaning set forth in the Term Loan Security Agreement.

 

“Existing Notes Trustee” means The Bank
of New York, in its capacity as trustee under the Existing Notes Indenture, and
its successors in such capacity.

 

“Grantor” means Holdings, the Company
and each subsidiary of the Company that shall have created any Lien on any of
its assets or properties to secure any of the Obligations.

 

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“Holdings” means Newton Acquisition, Inc.,
a Delaware corporation.

 

“Junior Documents” means (a) in
respect of the Term Loan First Lien Collateral, the Revolving Facility
Documents, and (b) in respect of the Revolving Facility First Lien
Collateral, the Term Loan/Notes Documents.

 

“Junior Liens” means (a) in respect
of the Revolving Facility First Lien Collateral, the Term Loan Liens on such
Collateral, and (b) in respect of the Term Loan First Lien Collateral, the
Revolving Facility Liens on such Collateral. 

 

“Junior Obligations” means (a) with
respect to the Term Loan Obligations and the Existing Notes Obligations (to the
extent such Obligations are secured by the Term Loan First Lien Collateral),
the Revolving Facility Obligations, and (b) with respect to Revolving
Facility Obligations (to the extent such Obligations are secured by the
Revolving Facility First Lien Collateral), the Term Loan Obligations and the
Existing Notes Obligations. 

 

“Junior Obligations Collateral” means, with
respect to any Senior Obligations, the Collateral securing the related Junior
Obligations.

 

“Junior Obligations Event of Default” means (a) with
respect to the Term Loan First Lien Collateral, any Revolving Facility Event of
Default, and (b) with respect to the Revolving Facility First Lien
Collateral, any Term Loan Event of Default or Existing Notes Event of Default.

 

“Junior Obligations Secured Parties” means (a) with
respect to the Term Loan First Lien Collateral, the Revolving Facility Secured
Parties, and (b) with respect to the Revolving Facility First Lien
Collateral, the Term Loan Secured Parties and the Existing Notes Secured
Parties.

 

“Junior Obligations Security Documents” means (a) with
respect to the Revolving Facility First Lien Collateral, the Term Loan Security
Documents, and (b) with respect to the Term Loan First Lien Collateral,
the Revolving Facility Security Documents.

 

“Junior Representative” means (a) with
respect to the Term Loan First Lien Collateral, the Revolving Facility Agent,
and (b) with respect to the Revolving Facility First Lien Collateral, the
Term Loan Agent. 

 

“Lien” means any pledge, security
interest, mortgage or other lien or encumbrance created to secure any
indebtedness or other obligation.

 

“Mortgages” means the Term
Loan Mortgages and the Revolving Facility Mortgages.

 

“Obligations” means the Term Loan
Obligations, the Existing Notes Obligations and the Revolving Facility
Obligations.

 

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“Refinance” means, in respect of any
indebtedness, to refinance, extend, renew, defease, amend, modify, supplement,
restructure, replace, refund or repay, or to issue other indebtedness, in
exchange or replacement for, such indebtedness in whole or in part; provided that the Refinancing indebtedness is secured by
Liens in respect of the same assets and properties that secured the Refinanced
indebtedness prior to such Refinancing. “Refinanced”
and “Refinancing” shall have correlative
meanings.

 

“Representative” means (a) in the case
of any Revolving Facility Obligations, the Revolving Facility Agent, and (b) in
the case of any Term Loan Obligations and Existing Notes Obligations, the Term
Loan Agent.

 

“Revolving Facility Agent” means Deutsche
Bank Trust Company Americas, in its capacity as administrative agent and
collateral agent under the Revolving Facility Credit Agreement.

 

“Revolving Facility Collateral” means all
assets and properties subject to Liens created by the Revolving Facility
Security Documents to secure the Revolving Facility Obligations.

 

“Revolving Facility Credit Agreement” means the
Credit Agreement dated as of October 6, 2005, among Holdings, the Company,
the subsidiaries of the Company from time to time party thereto, the Revolving
Facility Lenders and the Revolving Facility Agent, as amended, extended,
renewed, restated, supplemented or otherwise modified from time to time, with
the same or different lenders and agents.

 

“Revolving Facility Documents” means the
Revolving Facility Credit Agreement and the Revolving Facility Security
Documents.

 

“Revolving Facility Event of Default” means any “Event
of Default”, as defined in the Revolving Facility Credit Agreement.

 

“Revolving Facility First Lien Collateral” means any and
all of the following assets and properties now owned or at any time hereafter
acquired by any Grantor: (a) all Accounts arising from the sale or other
disposition of Inventory; (b) all Inventory; (c) to the extent
evidencing, governing, securing or otherwise related to the items referred to
in the preceding clauses (a) and (b), all (i) General Intangibles, (ii) Chattel
Paper, (iii) Instruments and (iv) Documents; (d) all Payment
Intangibles (including corporate tax refunds), other than any Payment
Intangibles that represent tax refunds in respect of or otherwise relate to
real property, Fixtures or Equipment; (e) all payments received from the
Grantors’ credit card clearinghouses and processors or otherwise in respect of
all credit card charges for sales of Inventory by the Company and its
subsidiaries; (f) all collection accounts, deposit accounts and commodity
accounts and any cash or other assets in any such accounts (excluding any net
cash proceeds from the sale or other disposition of any Term Loan First Lien
Collateral held in trust by the Term Loan Agent pending application in
accordance with the Term Loan Credit Agreement); (g) all books and records
related to the foregoing; and (h) all Products and Proceeds of any and all
of the foregoing in whatever form received, including proceeds of insurance

 

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policies related to Inventory of any Grantor and business interruption
insurance; provided, however,
under no circumstances shall Excluded Assets be Revolving Facility First Lien
Obligations.  All capitalized terms used
in this definition and not defined elsewhere in this Agreement have the
meanings assigned to them in the UCC.

 

“Revolving Facility First Lien Collateral
Transition Date” means the earlier of (a) the date on which all
the Revolving Facility Obligations shall have been paid in full (other than
unripened or contingent indemnity obligations under the relevant Revolving
Facility Documents for which no demand has been made) and the Revolving
Facility Credit Agreement shall have been terminated and (b) the date on
which the Revolving Facility First Lien Collateral shall have been released
from the Liens created under the Revolving Facility Documents.

 

“Revolving Facility Lenders” means the
Lenders under and as defined in the Revolving Facility Credit Agreement.

 

“Revolving Facility Liens” means the
Liens on the Revolving Facility Collateral created under Revolving Facility
Security Documents to secure the Revolving Facility Obligations. 

 

“Revolving Facility Mortgages” means any
mortgage, deed of trust or other agreement which conveys or evidences a Lien in favor of the
Revolving Facility Agent, for the benefit of the Revolving Facility Agent and
the Revolving Facility Secured Parties, on real property of a Grantor,
including any amendment, modification or supplement thereto.

 

“Revolving Facility Obligations” means all “Secured
Obligations” as such term is defined in the Revolving Facility Credit
Agreement.

 

“Revolving Facility Required Parties” means the “Required
Secured Parties” as such term is defined in the Revolving Facility Security
Agreement.

 

“Revolving Facility Secured Parties” means, at any
time, the Revolving Facility Agent, each Revolving Facility Lender and each
other holder of, or obligee in respect of, any Revolving Facility Obligations
outstanding at such time.

 

“Revolving Facility Security Agreement” means the
Pledge and Security Agreement dated as of October 6, 2005, among Holdings,
the Company, the subsidiaries of the Company from time to time party thereto
and the Revolving Facility Agent, as amended, extended, renewed, restated,
supplemented or otherwise modified from time to time.

 

“Revolving Facility Security Documents” means the
Revolving Facility Security Agreement, the Revolving Facility Mortgages, and
any other documents now existing or entered into after the date hereof that
create Liens on any assets or properties of Holdings, the Company or any of its
subsidiaries to secure any Revolving Facility Obligations.

 

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“Secured Parties” means the Term
Loan Secured Parties, the Existing Notes Secured Parties the Revolving Facility
Secured Parties. 

 

“Security Documents” means the Term
Loan Security Documents and the Revolving Facility Security Documents.

 

“Senior Liens” means (a) in respect
of the Revolving Facility First Lien Collateral, the Revolving Facility Liens
on such Collateral, and (b) in respect of the Term Loan First Lien
Collateral, the Term Loan Liens on such Collateral (in the case of the Existing
Notes Obligations, solely to the extent such Collateral constitutes Existing
Notes Designated Collateral).

 

“Senior Obligations” means (a) with
respect to the Revolving Facility Obligations (to the extent such Obligations
are secured by the Term Loan First Lien Collateral), the Term Loan Obligations
and the Existing Notes Obligations, and (b) with respect to Term Loan
Obligations and the Existing Notes Obligations (to the extent such Obligations
are secured by the Revolving Facility First Lien Collateral), the Revolving
Facility Obligations. 

 

“Senior Obligations Collateral” means (a) with
respect to the Term Loan Obligations and the Existing Notes Obligations, the
Revolving Facility First Lien Collateral, and (b) with respect to the
Revolving Facility Obligations, the Term Loan First Lien Collateral. 

 

“Senior Obligations Required Parties” means (a) with
respect to the Revolving Facility First Lien Collateral, the Revolving Facility
Required Parties, and (b) with respect to the Term Loan First Lien
Collateral, the Term Loan Required Parties.

 

“Senior Obligations Secured Parties” means (a) with
respect to the Term Loan First Lien Collateral, the Term Loan Secured Parties
and the Existing Notes Secured Parties, and (b) with respect to the
Revolving Facility First Lien Collateral, the Revolving Facility Secured
Parties.

 

“Senior Obligations Security Documents” means (a) with
respect to the Revolving Facility First Lien Collateral, the Revolving Facility
Security Documents, and (b) with respect to the Term Loan First Lien
Collateral, the Term Loan Security Documents.

 

“Senior Representative” means (a) with
respect to the Term Loan First Lien Collateral, the Term Loan Agent, and (b) with
respect to the Revolving Facility First Lien Collateral, the Revolving Facility
Agent.

 

“subsidiary” means, with respect to any
person (herein referred to as the “parent”), any corporation, partnership,
association or other business entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than 50%
of the ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned, controlled
or held, or (b) that is, at the time any determination is made, otherwise
controlled, by the parent or

 

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one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.

 

“Term Loan Agent” means Credit
Suisse, in its capacity as collateral agent for the Term Loan Secured Parties
and the Existing Notes Secured Parties.

 

“Term Loan Collateral” means all
assets and properties subject to Liens created by the Term Loan Security
Documents to secure the Term Loan Obligations and the Existing Notes
Obligations.

 

“Term Loan Credit Agreement” means the
Credit Agreement dated as of October 6, 2005, among Holdings, the Company,
the subsidiaries of the Company from time to time party thereto, the Term Loan
Lenders and the Term Loan Agent, as amended, extended, renewed, restated,
supplemented or otherwise modified from time to time, with the same or
different lenders and agents.

 

“Term Loan Event of Default” means any “Event
of Default”, as defined in the Term Loan Credit Agreement.

 

“Term Loan First Lien Collateral” means any and
all of the following assets and properties now owned or at any time hereafter
acquired by any Grantor (in the case of the Existing Notes Obligations, solely
to the extent such assets or property constitute Existing Notes Designated
Collateral): (a) all Accounts (but not including Accounts arising from the
sale or other disposition of Inventory); (b) all real property, Fixtures
and Equipment; (c) all Intellectual Property; (d) all Equity
Interests in the Company and its subsidiaries; (e) all General
Intangibles, Chattel Paper, Instruments and Documents (other than General
Intangibles, Chattel Paper, Instruments and Documents that are Revolving
Facility First Lien Collateral); (f) all Payment Intangibles that
represent tax refunds in respect of or otherwise relate to real property,
Fixtures or Equipment; (g) all intercompany indebtedness of Holdings and
its subsidiaries; (h) all permits and licenses related to any of the
foregoing (including any permits or licenses related to the ownership or
operation of real property, Fixtures or Equipment of any Grantor); (i) all
proceeds of insurance policies (other than any such proceeds that are Revolving
Facility First Lien Collateral); (j) all books and records related to the
foregoing and not constituting Revolving Facility First Lien Collateral;
(k) all Products and Proceeds of any and all of the foregoing; and
(l) all other Collateral not constituting Revolving Facility First Lien
Collateral; provided, however,
under no circumstances shall Excluded Assets be Term Loan First Lien
Collateral.  All capitalized terms used
in this definition and not defined elsewhere in this Agreement have the
meanings assigned to them in the UCC.

 

“Term Loan First Lien Collateral Transition Date” means the
earlier of (a) the date on which all the Term Loan Obligations shall have
been paid in full (other than unripened or contingent indemnity obligations
under the relevant Term Loan/Notes Documents for which no demand has been made)
and the Term Loan Credit Agreement shall have been terminated and (b) the
date on which the Term Loan First Lien Collateral shall have been released from
the Liens created under the Term Loan/Notes Documents.

 

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“Term Loan Lenders” means the
Lenders under and as defined in the Term Loan Credit Agreement.

 

“Term Loan Liens” means the
Liens on the Term Loan Collateral created under the Term Loan Security
Documents to secure the Term Loan Obligations and the Existing Notes
Obligations.

 

“Term Loan Mortgages” means any
mortgage, deed of trust or other agreement which conveys or evidences a Lien in favor of the Term
Loan Agent, for the benefit of the Term Loan Agent, Term Loan
Secured Parties and the Existing Notes Secured Parties, on real property of a Grantor, including
any amendment, modification or supplement thereto.

 

“Term Loan Obligations” has the
meaning set forth in the Term Loan Security Agreement.

 

“Term Loan Pari Passu Indebtedness” means
indebtedness of the Company or its subsidiaries that is equally and ratably
secured on a pari passu basis with the Term Loan Obligations, the Existing
Notes Obligations and Refinancings thereof and is permitted to be so incurred
in accordance with the Revolving Facility Credit Agreement and the Term Loan
Credit Agreement.

 

“Term Loan Required Parties” means the “Required
Secured Parties” as such term is defined in the Term Loan Security Agreement.

 

“Term Loan Secured Parties” has the
meaning set forth in the Term Loan Security Agreement.

 

“Term Loan Security Agreement” means the
Pledge and Security and Intercreditor Agreement dated as of October 6,
2005, among Holdings, the Company, the subsidiaries of the Company from time to
time party thereto and the Term Loan Agent, as amended, extended, renewed,
restated, supplemented or otherwise modified from time to time.

 

“Term Loan Security Documents” means the Term
Loan Security Agreement, the Term Loan Mortgages, and any other documents now
existing or entered into after the date hereof that creates Liens on any assets
or properties of Holdings, the Company or any of its subsidiaries to secure any
Term Loan Obligations and Existing Notes Obligations.

 

“Term Loan/Notes Documents” means the
Existing Notes Indenture, the Term Loan Credit Agreement and the Term Loan
Security Documents.

 

“2008 Notes” means the Company’s 6.65%
Senior Notes due 2008 in an initial aggregate principal amount of $125,000,000.

 

“2028 Debentures” means the
Company’s 7.125% Debentures due 2028 in an initial aggregate principal amount
of $125,000,000.

 

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

 

ARTICLE II

Subordination of Junior Liens; Certain Agreements

 

SECTION 2.01.  Subordination of Junior Liens.  (a)  All Junior Liens in respect of any
Collateral are expressly subordinated and made junior in right, priority,
operation and effect to any and all Senior Liens in respect of such Collateral,
notwithstanding anything contained in this Agreement, the Term Loan/Notes
Documents, the Revolving Facility Documents or any other agreement or
instrument to the contrary, and irrespective of the time, order or method of
creation, attachment or perfection of such Junior Liens and such Senior Liens
or any defect or deficiency or alleged defect or deficiency in any of the
foregoing.

 

(b)  It is acknowledged that (i) the
aggregate amount of the Senior Obligations may, subject to the limitations set
forth in the Existing Notes Indenture, the Term Loan Credit Agreement and the
Revolving Facility Credit Agreement, be increased, (ii) a portion of the
Senior Obligations consists or may consist of indebtedness that is revolving in
nature, and the amount thereof that may be outstanding at any time or from time
to time may be increased or reduced and subsequently reborrowed, and (iii) the
Senior Obligations may be increased, extended, renewed or otherwise amended or
modified from time to time, all without affecting the subordination of the
Junior Liens hereunder or the provisions of this Agreement defining the
relative rights of the Revolving Facility Secured Parties, the Term Loan
Secured Parties and the Existing Notes Secured Parties.  The lien priorities provided for herein shall
not be altered or otherwise affected by any amendment, modification,
supplement, extension, increase, replacement, renewal, restatement or refinancing
of either the Junior Obligations or the Senior Obligations, by the release of
any Collateral or guarantees securing any Senior Obligations or by any action
that any Representative or Secured Party may take or fail to take in respect of
any Collateral.

 

SECTION 2.02.  No
Action With Respect to Junior Obligations Collateral Subject to Senior Liens.  No Junior Representative or
other Junior Obligations Secured Party shall commence or instruct any Junior
Representative to commence any judicial or nonjudicial foreclosure proceedings
with respect to, seek to have a trustee, receiver, liquidator or similar
official appointed for or over, attempt any action to take possession of,
exercise any right, remedy or power with respect to, or otherwise take any action
to enforce its interest in or realize upon, or take any other action available
to it in respect of, any Junior Obligations Collateral under any Junior
Obligations Security Document, applicable law or otherwise, at any time when
such Junior Obligations Collateral shall be subject to any Senior Lien and any
Senior Obligations secured by such Senior Lien shall remain outstanding or any
commitment to extend credit that would constitute Senior Obligations secured by
such Senior Lien shall remain in effect, it being agreed that only the Senior
Representative, acting in accordance with the applicable Senior Obligations
Security Documents, shall be entitled to take any such actions or

 

9

 

exercise
any such remedies.  Notwithstanding the
foregoing, any Junior Representative may, subject to Section 2.05, take
all such actions as it shall deem necessary to perfect or continue the
perfection of its Junior Liens.

 

SECTION 2.03.  No
Duties of Senior Representative.  Each Junior Obligations Secured Party
acknowledges and agrees that neither the Senior Representative nor any other
Senior Obligations Secured Party shall have any duties or other obligations to
such Junior Obligations Secured Party with respect to any Senior Obligations
Collateral, other than to transfer to the Junior Representative any proceeds of
any such Collateral that constitutes Junior Obligations Collateral remaining in
its possession following any sale, transfer or other disposition of such
Collateral, the payment and satisfaction in full of the Senior Obligations
secured thereby and the termination of any commitment to extend credit that
would constitute Senior Obligations secured thereby, or, if the Senior
Representative shall be in possession of all or any part of such Collateral
after such payment and satisfaction in full and termination, such Collateral or
any part thereof remaining, in each case without representation or warranty on
the part of the Senior Representative or any Senior Obligations Secured
Party.  In furtherance of the foregoing,
each Junior Obligations Secured Party acknowledges and agrees that until the
Senior Obligations secured by any Collateral shall have been paid and satisfied
in full and any commitment to extend credit that would constitute Senior
Obligations secured thereby shall have been terminated, the Senior
Representative shall be entitled, for the benefit of the holders of such Senior
Obligations, to sell, transfer or otherwise dispose of or deal with such
Collateral as provided herein and in the Senior Obligations Security Documents
without regard to any Junior Lien or any rights to which the holders of the
Junior Obligations would otherwise be entitled as a result of such Junior
Lien.  Without limiting the foregoing,
each Junior Obligations Secured Party agrees that neither the Senior
Representative nor any other Senior Obligations Secured Party shall have any
duty or obligation first to marshall or realize upon any type of Collateral (or
any other collateral securing the Senior Obligations), or to sell, dispose of
or otherwise liquidate all or any portion of the Collateral (or any other
collateral securing the Senior Obligations), in any manner that would maximize
the return to the Junior Obligations Secured Parties, notwithstanding that the
order and timing of any such realization, sale, disposition or liquidation may
affect the amount of proceeds actually received by the Junior Obligations
Secured Parties from such realization, sale, disposition or liquidation. Each
of the Junior Obligations Secured Parties waives any claim such Junior
Obligations Secured Party may now or hereafter have against the Senior
Representative or any other Senior Obligations Secured Party (or their
representatives) arising out of (i) any actions which the Senior
Representative or the Senior Obligations Secured Parties take or omit to take
(including, actions with respect to the creation, perfection or continuation of
Liens on any Collateral, actions with respect to the foreclosure upon, sale,
release or depreciation of, or failure to realize upon, any of the Collateral
and actions with respect to the collection of any claim for all or any part of
the Senior Obligations from any account debtor, guarantor or any other party)
in accordance with the Senior Obligations Security Documents or any other
agreement related thereto or to the collection of the Senior Obligations or the
valuation, use, protection or release of any security for the Senior
Obligations, (ii) any election by the Senior Representative or any Senior
Obligations Secured Parties, in any proceeding instituted under the 

 

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Bankruptcy
Code, of the application of Section 1111(b) of the Bankruptcy Code
and/or (iii) any borrowing of, or grant of a security interest or
administrative expense priority under Section 364 of the Bankruptcy Code
to, Holdings or any of its subsidiaries as debtor-in-possession.

 

SECTION 2.04.  No
Interference; Application of Proceeds; Payment Over; Reinstatement.  (a)  Each Junior Obligations Secured
Party agrees that (i) it will not take or cause to be taken any action the
purpose or effect of which is, or could be, to make any Junior Lien pari
passu
with, or to give such Junior Obligations Secured Party any preference or priority
relative to, any Senior Lien with respect to the Collateral subject to such
Junior Lien or any part thereof, (ii) it will not challenge or question in
any proceeding the validity or enforceability of any Senior Obligations or
Senior Obligations Security Document, or the validity, attachment, perfection
or priority of any Senior Lien, or the validity or enforceability of the
priorities, rights or duties established by, or other provisions of, this
Agreement, (iii) it will not take any action the purpose or intent of
which is to interfere, hinder or delay, in any manner, whether by judicial
proceedings or otherwise, any sale, transfer or other disposition of any Senior
Obligations Collateral subject to any Junior Lien by any Senior Obligations
Secured Party or any Senior Representative acting on their behalf, (iv) it
shall have no right to (A) direct any Senior Representative or any holder
of Senior Obligations to exercise any right, remedy or power with respect to
the Collateral subject to any Junior Lien or (B) consent to the exercise
by any Senior Representative or any other Senior Obligations Secured Party of
any right, remedy or power with respect to the Collateral subject to any Junior
Lien, (v) it will not institute any suit or assert in any suit,
bankruptcy, insolvency or other proceeding any claim against any Senior
Representative or other Senior Obligations Secured Party seeking damages from
or other relief by way of specific performance, instructions or otherwise with
respect to, and neither any Senior Representative nor any other Senior
Obligations Secured Party shall be liable for, any action taken or omitted to
be taken by such Senior Representative or other Senior Obligations Secured
Party with respect to any Collateral securing any Senior Obligations that is
subject to any Junior Lien, (vi) it will not seek, and hereby waives any
right, to have any Senior Obligations Collateral subject to any Junior Lien or
any part thereof marshaled upon any foreclosure or other disposition of such
Collateral and (vii) it will not attempt, directly or indirectly, whether
by judicial proceedings or otherwise, to challenge the enforceability of any
provision of this Agreement.

 

(b)  Prior to the Revolving Facility
First Lien Collateral Transition Date, whether or not any proceeding under the
Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law by or against Holdings or any of its subsidiaries
has been commenced, all Revolving Facility First Lien Collateral or proceeds
thereof received in connection with the sale or other disposition of, or
collection on, such Collateral upon the exercise of remedies by the Revolving
Facility Agent or Revolving Facility Secured Parties, shall be applied by the
Revolving Facility Agent to the Revolving Facility Obligations in such order as
specified in the relevant Revolving Facility Documents. After the Revolving
Facility First Lien Collateral Transition Date, the Revolving Facility Agent
shall deliver to the Term Loan Agent any Revolving Facility First Lien
Collateral and proceeds of such Collateral held by it in the same form

 

11

 

as received, with any necessary endorsements or as a
court of competent jurisdiction may otherwise direct, to be applied by the Term
Loan Agent in such order as specified in the Term Loan Security Agreement
and/or the other relevant Term Loan/Notes Documents.  The Revolving Facility Agent shall provide
the Term Loan Agent and the Company with notice of a pending Revolving Facility
First Lien Collateral Transition Date within 5 Business Days of the Revolving
Facility Agent becoming aware of the pendency of such date in order that the
Term Loan Agent may make the necessary preparations for the transfer of any
Collateral.

 

(c)  Prior to the Term Loan First Lien
Collateral Transition Date, whether or not any proceeding under the Bankruptcy
Code or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law by or against Holdings or any of its subsidiaries
has been commenced, all Term Loan First Lien Collateral or proceeds thereof
received in connection with the sale or other disposition of, or collection on,
such Collateral upon the exercise of remedies by the Term Loan Agent or the
Term Loan Secured Parties, shall be applied by the Term Loan Agent to the Term
Loan Obligations and the Existing Notes Obligations in such order as specified
in the Term Loan Security Agreement and/or the other relevant Term Loan/Notes
Documents.  After the Term Loan First
Lien Collateral Transition Date, the Term Loan Agent shall deliver to the
Revolving Facility Agent any Term Loan First Lien Collateral and proceeds of
such Collateral held by it in the same form as received, with any necessary
endorsements or as a court of competent jurisdiction may otherwise direct, to
be applied by the Revolving Facility Agent in such order as specified in the
relevant Revolving Facility Documents. 
The Term Loan Agent shall provide the Revolving Facility Agent and the Company
with notice of a pending Term Loan First Lien Collateral Transition Date within
5 Business Days of the Term Loan Agent becoming aware of the pendency of such
date in order that the Revolving Facility Agent may make the necessary
preparations for the transfer of any Collateral, including cooperating with the
Grantors to grant any Liens in any Existing Notes Designated Collateral
required to be granted pursuant to the Revolving Facility Documents and the
Existing Notes Indenture. 

 

(d)  The Junior Representative and each
other Junior Obligations Secured Party hereby agrees that if it shall obtain
possession of any Senior Obligations Collateral or shall realize any proceeds
or payment in respect of any such Collateral, pursuant to any Junior Obligations
Security Document or by the exercise of any rights available to it under
applicable law or in any bankruptcy, insolvency or similar proceeding or
through any other exercise of remedies, at any time when any Senior Obligations
secured or intended to be secured by such Collateral shall remain outstanding
or any commitment to extend credit that would constitute Senior Obligations
secured or intended to be secured by such Senior Lien shall remain in effect,
then it shall hold such Collateral, proceeds or payment in trust for the Senior
Obligations Secured Parties and transfer such Collateral, proceeds or payment,
as the case may be, to the Senior Representative.  Each Junior Obligations Secured Party agrees
that if, at any time, all or part of any payment with respect to any Senior
Obligations previously made shall be rescinded for any reason whatsoever, such
Junior Obligations Secured Party shall promptly pay over to the Senior
Representative any payment received by it in respect of any Collateral subject
to any Senior Lien securing such Senior Obligations and shall promptly turn any
Collateral

 

12

 

subject to any such Senior Lien then held by it over
to the Senior Representative, and the provisions set forth in this Agreement
shall be reinstated as if such payment had not been made, until the payment and
satisfaction in full of the Senior Obligations.

 

SECTION 2.05.  Automatic
Release of Junior Liens.  The Junior Representative and each other
Junior Obligations Secured Party agrees that any Junior Lien on any Senior
Obligations Collateral shall terminate and be released automatically and
without further action if the applicable Senior Liens on such Senior
Obligations Collateral are released and such release (a) is in connection
with the sale, transfer or other disposition of such Senior Obligations
Collateral subject to such Junior Lien, so long as such sale, transfer or other
disposition is then permitted by the Junior Documents, (b) occurs in
connection with the foreclosure upon or other exercise of rights and remedies
with respect to such Senior Obligations Collateral or (c) shall have been
approved by the Senior Obligations Required Parties, so long as no Junior
Obligations Event of Default shall have occurred and be continuing at such
time.  The Junior Representative agrees
to execute and deliver all such releases and other instruments as shall
reasonably be requested by the Senior Representative or the Company to evidence
and confirm any release of Junior Obligations Collateral provided for in this
Section.

 

SECTION 2.06.  Certain
Agreements With Respect to Bankruptcy or Insolvency Proceedings.  (a)  This Agreement shall continue in
full force and effect notwithstanding the commencement of any proceeding under
the Bankruptcy Code or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law by or against Holdings or any of its
subsidiaries.

 

(b)  If Holdings or any of its
subsidiaries shall become subject to a case under the U.S. Bankruptcy Code and
shall, as debtor(s)-in-possession, move for approval of financing (“DIP Financing”) to be provided by
one or more lenders (the “DIP Lenders”)
under Section 364 of the U.S. Bankruptcy Code or the use of cash
collateral with the consent of the DIP Lenders under Section 363 of the
U.S. Bankruptcy Code, each Term Loan Secured Party and Existing Notes Secured
Party agrees that it will raise no objection to any such financing or to the
Liens securing the same (“DIP Financing Liens”)
or to any use of cash collateral that constitutes Revolving Facility First Lien
Collateral, unless the Revolving Facility Secured Parties, or a representative
authorized by the Revolving Facility Secured Parties, shall then oppose or
object to such DIP Financing or such DIP Financing Liens or use of cash
collateral (and, to the extent that such DIP Financing Liens are senior to, or
rank pari passu with, the Revolving
Facility Liens, the Term Loan Agent will, for itself and on behalf of the other
Term Loan Secured Parties and Existing Notes Secured Parties, subordinate the
Term Loan Liens to the Revolving Facility Liens and the DIP Financing Liens),
so long as the Term Loan Secured Parties and Existing Notes Secured Parties
retain Liens on all the Term Loan First Lien Collateral, including proceeds
thereof arising after the commencement of such proceeding, with the same
priority relative to the priority of the Liens of the Revolving Secured Parties
as existed prior to the commencement of the case under the U.S. Bankruptcy Code.

 

13

 

SECTION 2.07.  Reinstatement.  In the event that any of the Senior
Obligations shall be paid in full and such payment or any part thereof shall
subsequently, for whatever reason (including an order or judgment for
disgorgement of a preference under Title 11 of the United Stated Code, or any
similar law, or the settlement of any claim in respect thereof), be required to
be returned or repaid, the terms and conditions of this Article II shall
be fully applicable thereto until all such Senior Obligations shall again have
been paid in full in cash.

 

SECTION 2.08.  Entry
Upon Premises by the Revolving Facility Agent.  (a)  If the Revolving
Facility Agent takes any enforcement action with respect to the Revolving
Facility First Lien Collateral, the Term Loan Secured Parties and the Existing
Notes Secured Parties (i) shall cooperate with the Revolving Facility
Agent in its efforts to enforce its security interest in the Revolving Facility
First Lien Collateral and to finish any work-in-process and assemble the
Revolving Facility First Lien Collateral, (ii) shall not hinder or
restrict in any respect the Revolving Facility Agent from enforcing its
security interest in the Revolving Facility First Lien Collateral or from
finishing any work-in-process or assembling the Revolving Facility First Lien
Collateral, and (iii) shall permit the Revolving Facility Agent, its
employees, agents, advisers and representatives, at the sole cost and expense
of the Revolving Facility Secured Parties, to enter upon and use the Term Loan
First Lien Collateral (including (x) equipment, processors, computers and
other machinery related to the storage or processing of records, documents or
files and (y) intellectual property), for a period not to exceed
180 days after the taking of such enforcement action, for purposes of (A) assembling
and storing the Revolving Facility First Lien Collateral and completing the
processing of and turning into finished goods any Revolving Facility First Lien
Collateral consisting of work-in-process, (B) selling any or all of the
Revolving Facility First Lien Collateral located on such Term Loan First Lien
Collateral, whether in bulk, in lots or to customers in the ordinary course of
business or otherwise, (C) removing any or all of the Revolving Facility
First Lien Collateral located on such Term Loan First Lien Collateral, and/or (D) taking
reasonable actions to protect, secure, and otherwise enforce the rights of the
Revolving Facility Secured Parties in and to the Revolving Facility First Lien
Collateral; provided, however, that nothing
contained in this Agreement shall restrict the rights of the Term Loan Agent
from selling, assigning or otherwise transferring any Term Loan First Lien
Collateral prior to the expiration of such 180 day period if the
purchaser, assignee or transferee thereof agrees to be bound by the provisions
of this Section.  If any stay or other
order prohibiting the exercise of remedies with respect to the Revolving
Facility First Lien Collateral has been entered by a court of competent
jurisdiction, such 180 day period shall be tolled during the pendency of
any such stay or other order.

 

(b)  During the period of actual
occupation, use and/or control by the Revolving Facility Secured Parties or
their agents or representatives of any Term Loan First Lien Collateral, the
Revolving Facility Secured Parties shall be obligated to repair at their
expense any physical damage to such Term Loan First Lien Collateral resulting
from such occupancy, use or control, and to leave such Term Loan First Lien
Collateral in substantially the same condition as it was at the commencement of
such occupancy, use or control, ordinary wear and tear excepted.  Notwithstanding the foregoing, in no event
shall the Revolving Facility Secured Parties have any liability to the Term
Loan

 

14

 

Secured Parties or the Existing Notes Secured
Parties pursuant to this Section as a result of any condition (including
any environmental condition, claim or liability) on or with respect to the Term
Loan First Lien Collateral existing prior to the date of the exercise by the
Revolving Facility Secured Parties of their rights under this Section and
the Revolving Facility Secured Parties shall have no duty or liability to
maintain the Term Loan First Lien Collateral in a condition or manner better
than that in which it was maintained prior to the use thereof by the Revolving
Facility Secured Parties, or for any diminution in the value of the Term Loan
First Lien Collateral that results from ordinary wear and tear resulting from
the use of the Term Loan First Lien Collateral by the Revolving Facility
Secured Parties in the manner and for the time periods specified under this Section 2.08.  Without limiting the rights granted in this
paragraph, the Revolving Facility Secured Parties shall cooperate with the Term
Loan Secured Parties in connection with any efforts made by the Term Loan
Secured Parties to sell the Term Loan First Lien Collateral.

 

SECTION 2.09.  Amendments
to Security Documents.  (a)  Without the prior written consent
of the Senior Representative, no Junior Obligations Security Document may be
amended, supplemented or otherwise modified or entered into to the extent such
amendment, supplement or modification, or the terms of any new Junior
Obligations Security Document, would be prohibited by or inconsistent with any
of the terms of this Agreement.

 

(b)  In the event that the Senior
Representative enters into any amendment, waiver or consent in respect of any
of the Senior Obligations Security Documents for the purpose of adding to, or
deleting from, or waiving or consenting to any departures from any provisions
of, any Senior Obligations Security Document or changing in any manner the
rights of the Senior Representative, the Senior Obligations Secured Parties,
the Company or any other Grantor thereunder (including the release of any Liens
on Senior Obligations Collateral permitted by Section 2.05), then such
amendment, waiver or consent shall apply automatically to any comparable
provision of the comparable Junior Obligations Security Document without the
consent of the Junior Representative or any Junior Obligations Secured Party
and without any action by the Junior Representative, the Company or any other
Grantor; provided, however,
that written notice of such
amendment, waiver or consent shall have been given to the Junior
Representative.

 

SECTION 2.10.  Refinancings.  The Revolving Facility Obligations, Term Loan
Obligations and the Existing Notes Obligations may be Refinanced, in whole or
in part, in each case, without notice to, or the consent (except to the extent
a consent is required to permit the Refinancing transaction under any Revolving
Facility Document or any Term Loan/Notes Document) of the Revolving Facility
Agent, the Revolving Facility Secured Parties, the Term Loan Agent, the Term
Loan Secured Parties or the Existing Notes Secured Parties, as the case may be,
all without affecting the lien priorities provided for herein or the other
provisions hereof, provided, however, that the holders
of such Refinancing indebtedness (or an authorized agent or trustee on their
behalf) bind themselves in writing to the terms of this Agreement pursuant to
such documents or agreements (including amendments or supplements to this
Agreement) as the Revolving Facility Agent or the Term Loan Agent, as the case
may be, shall reasonably request and

 

15

 

in
form and substance reasonably acceptable to the Revolving Facility Agent or the
Term Loan Agent, as the case may be, and any such Refinancing transaction shall
be in accordance with the provisions of both the Revolving Facility Documents
and the Term Loan/Notes Documents.

 

SECTION 2.11.  Insurance.  Unless and until the Revolving Facility Agent
shall have delivered written notice to the Term Loan Agent that the Revolving
Facility Obligations have been paid in full, as between the Revolving Facility
Agent, on the one hand, and the Term Loan Agent, on the other hand, only the
Revolving Facility Agent will have the right to adjust or settle any insurance
policy or claim covering or constituting Revolving Facility First Lien
Collateral in the event of any loss thereunder and to approve any award granted
in any condemnation or similar proceeding affecting the Revolving Facility
First Lien Collateral.  Unless and until
the Term Loan Agent shall have delivered written notice to the Revolving
Facility Agent that the Term Loan Obligations have been paid in full, as
between the Revolving Facility Agent, on the one hand, and the Term Loan Agent,
on the other hand, only the Term Loan Agent will have the right to adjust or
settle any insurance policy covering or constituting Term Loan First Lien
Collateral in the event of any loss thereunder and to approve any award granted
in any condemnation or similar proceeding solely affecting the Term Loan First
Lien Collateral.  To the extent that an
insured loss covers or applies to assets or property, some of which constitute
Revolving Facility First Lien Collateral and some of which constitute Term Loan
First Lien Collateral, then the Revolving Facility Agent and the Term Loan
Agent will work jointly and in good faith to collect, adjust or settle under
the relevant insurance policy.

 

ARTICLE III

Sub-Agency for Perfection of Certain Security Interests; Rights Under Permits
and Licenses

 

SECTION 3.01.  General.  The Senior Representative agrees that if it
shall at any time hold a Senior Lien on any Junior Obligations Collateral that
can be perfected by the possession or control of such Collateral or of any
account in which such Collateral is held, and if such Collateral or any such
account is in fact in the possession or under the control of the Senior
Representative, the Senior Representative will serve as sub-agent for the
Junior Representative for the sole purpose of perfecting the Junior Lien of the
Junior Representative and the other Junior Obligations Secured Parties on such
Collateral.  It is agreed that the
obligations of the Senior Representative and the rights of the Junior
Representative and the other Junior Obligations Secured Parties in connection
with any such sub-agency arrangement will be in all respects subject to the
provisions of Article II.  The
Senior Representative will be deemed to make no representation as to the
adequacy of the steps taken by it to perfect the Junior Lien on any such
Collateral and shall have no responsibility to the Junior Representative or any
other Junior Obligations Secured Party for such perfection, it being understood
that the sole purpose of this Article is to enable the Junior Obligations
Secured Parties to obtain a perfected Junior Lien in such Collateral to the
extent, if any, that such perfection results from the possession or control of
such Collateral or any such account by the Senior Representative.  Subject to

 

16

 

Section 2.07,
at such time as the Senior Obligations secured by the Senior Lien of the Senior
Representative and the other Senior Obligations Secured Parties shall have been
paid and satisfied in full and any commitment to extend credit that would
constitute such Senior Obligations shall have been terminated, the Senior
Representative shall take all such actions in its power as shall reasonably be
requested by the Junior Representative to transfer possession or control of
such Collateral or any such account to the Junior Representative.

 

SECTION 3.02.  Depositary
Accounts.  Holdings
and its subsidiaries, in accordance with the Revolving Facility Credit
Agreement, shall maintain blocked account arrangements relating to depositary
accounts (the “Depositary
Accounts”) with certain depositary banks (the “Depositary
Banks”) in which all collections from any
Inventory and related Accounts are deposited. 
The Revolving Facility Agent will act as sub-agent for the Term Loan
Agent for the purpose of perfecting the Liens of the Term Loan Secured Parties
in all such Depositary Accounts and the cash and other assets therein as provided
in Section 3.01 (but will have no duty, responsibility or obligation to
the Term Loan Secured Parties except as set forth in the last sentence of this
Section).  After the occurrence of the
Revolving Facility First Lien Collateral Transition Date, the Revolving
Facility Agent shall (a) at the request of the Term Loan Agent, transfer
all cash and other assets in such Depositary Accounts maintained with it to the
Term Loan Agent and (b) at the request of the Term Loan Agent, cooperate
with the Company and the Term Loan Agent (at the expense of the Company) in
permitting control of any other Depositary Accounts to be transferred to the
Term Loan Agent (or for other arrangements with respect to each such Depositary
Account satisfactory to the Term Loan Agent to be made).

 

SECTION 3.03.  Rights under Permits and
Licenses.  The Term Loan Agent agrees that if the Revolving Facility Agent shall require rights
available under any permit or license controlled by the Term Loan
Agent in order to
realize on any Revolving Facility First Lien Collateral, the Term
Loan Agent shall
take all such actions as shall be available to it, consistent with applicable
law and reasonably requested by the Revolving Facility Agent, to make such
rights available to the Revolving Facility Agent.

 

ARTICLE IV

Existence
and Amounts of Liens and Obligations

 

Whenever
a Representative shall be required, in connection with the exercise of its
rights or the performance of its obligations hereunder, to determine the
existence or amount of any Senior Obligations or Junior Obligations, or the
existence of any Lien securing any such obligations, or the Collateral subject
to any such Lien, it may request that such information be furnished to it in
writing by the other Representative and shall be entitled to make such
determination on the basis of the information so furnished; provided, however,
that if a Representative shall fail or refuse reasonably promptly to provide
the requested information, the requesting Representative shall be entitled to make
any such determination by such commercially reasonable method as it may, in the
exercise its good faith judgment, determine, including by reliance upon a
certificate of

 

17

 

the Company.  Each Representative
may rely conclusively, and shall be fully protected in so relying, on any
determination made by it in accordance with the provisions of the preceding
sentence (or as otherwise directed by a court of competent jurisdiction) and
shall have no liability to Holdings, the Company or any of its subsidiaries,
any Secured Party or any other person as a result of such determination.

 

ARTICLE V

Consent of Grantors

 

Each
Grantor hereby consents to the provisions of this Agreement and the
intercreditor arrangements provided for herein and agrees that (a) no
Representative or other Secured Party shall have any liability to any Grantor
as a result of the performance of its obligations hereunder and (b) the
obligations of the Grantors under the Security Documents will in no way be
diminished or otherwise affected by such provisions or arrangements.

 

ARTICLE VI

Representations and Warranties

 

SECTION 6.01.  Representations
and Warranties of Each Representative.  Each Representative represents and warrants
to the other parties hereto as follows:

 

(a)  Such party is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite power and authority to enter into and
perform its obligations under this Agreement. 

 

(b)  This Agreement has been duly
executed and delivered by such party and constitutes a legal, valid and binding
obligation of such party, enforceable in accordance with its terms.  

 

(c)  The execution, delivery and
performance by such party of this Agreement (i) do not require any consent
or approval of, registration or filing with or any other action by any
governmental authority and (ii) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of such
party or any order of any governmental authority or any indenture, agreement or
other instrument binding upon such party. 

 

(d)  In the case of the Term Loan Agent,
it represents and warrants to the other parties hereto that it is authorized
under the Term Loan Credit Agreement and the Term Loan Security Agreement to
enter into this Agreement.

 

(e)  In the case of the Revolving
Facility Agent, it represents and warrants to the other parties hereto that it
is authorized under the Revolving Facility Credit Agreement to enter into this
Agreement.

 

18

 

ARTICLE VII

Miscellaneous

 

SECTION 7.01.  Notices.  All notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:

 

(a)  if to the Revolving Facility Agent,
to it at Deutsche Bank Trust Company Americas, 60 Wall Street, New York, New
York 10005, Attention of Marguerite Sutton (Telecopy No. (212) 797-5690);

 

(b)  if to the Term Loan Agent, to it at
Credit Suisse, Eleven Madison Avenue, New York, New York 10010, Attention of
Agency Group (Telecopy No. (212) 325-8304);

 

(c)  if to Holdings or the Company, to
it at The Neiman Marcus Group, Inc., One Marcus Square, 1618 Main Street,
Dallas, Texas 75201, Attention of General Counsel (Telecopy No. (214)
743-7611); and

 

(d)  if to any other Grantor, to it in
care of the Company as provided in clause (c) above.

 

Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (and for this
purpose a notice to the Company shall be deemed to be a notice to each
Grantor).  All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt if delivered by hand
or overnight courier service or sent by telecopy or on the date five Business
Days after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in
this Section 7.01 or in accordance with the latest unrevoked direction
from such party given in accordance with this Section 7.01.  As agreed to in writing among the Company and
the Representatives from time to time, notices and other communications may
also be delivered by e-mail to the e-mail address of a representative of the
applicable person provided from time to time by such person.

 

SECTION 7.02.  Waivers;
Amendment.  (a)   No
failure or delay on the part of any party hereto in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the parties hereto
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of this Agreement or consent to any departure by any party therefrom
shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which

 

19

 

given.  No notice or demand on any party hereto in
any case shall entitle such party to any other or further notice or demand in
similar or other circumstances.

 

(b)  Neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by each Representative,
Holdings and the Company; provided, however,
this Agreement may be amended from time to time as necessary at the request of
the Company, at the Company’s expense, and without the consent of Term Loan
Agent, the Revolving Facility Agent or any other Secured Party (i) to add
other parties holding Term Loan Pari Passu Indebtedness (or any authorized
agent or trustee thereof), (ii) to establish that the Liens on any Term
Loan First Lien Collateral securing such Term Loan Pari Passu Indebtedness
shall be senior and superior in right, priority, operation and effect to any
and all Liens on the Term Loan First Lien Collateral securing any Revolving
Facility Obligations, (iii) to establish that the Liens on any Revolving
Facility First Lien Collateral securing such Term Loan Pari Passu Indebtedness
shall be subordinated and junior in right, priority, operation and effect to
any and all Liens on the Revolving Facility First Lien Collateral securing any
Revolving Facility Obligations, and (iv) to provide to the holders of such
Term Loan Pari Passu Indebtedness (or any authorized agent or trustee thereof)
the comparable rights and benefits as are provided to the holders of the Term
Loan Obligations and the Existing Notes Obligations under this Agreement.  Any such additional party, the Revolving
Facility Agent and the Term Loan Agent shall be entitled to rely on the
determination of officers of the Company that such modifications do not violate
any Term Loan/Notes Document or Revolving Facility Document if such determination
is set forth in an Officers’ Certificate (as such term is defined in the Term
Loan Credit Agreement) delivered to such party, the Revolving Facility Agent
and the Term Loan Agent; provided, however, that
no such determination will affect whether or not Company has complied with its
undertakings under the Term Loan/Notes Documents or the Revolving Facility
Documents.

 

SECTION 7.03.  Parties
in Interest. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, as well as the
other Secured Parties, all of whom are intended to be bound by, and to be third
party beneficiaries of, this Agreement.

 

SECTION 7.04.  Certain
Provisions. 
The Company and each of the Representatives agrees that the Term Loan
Credit Agreement, the Revolving Facility Credit Agreement and the Security
Documents shall contain the applicable provisions set forth on Annex I hereto
(or provisions substantially similar thereto). 
The Company and each of the Representatives further agrees that each
Mortgage covering any Collateral shall contain such language as the Revolving
Facility Agent and the Term Loan Agent may request to reflect the Lien
priorities covering such Collateral provided for herein. 

 

SECTION 7.05.  Survival
of Agreement. 
All covenants, agreements, representations and warranties made by any
party in this Agreement shall be considered to have been relied upon by the
other parties hereto and shall survive the execution and delivery of this
Agreement.

 

20

 

SECTION 7.06.  Counterparts.  This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute a single contract.  Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.

 

SECTION 7.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.  The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

 

SECTION 7.08.  Governing
Law; Jurisdiction; Consent to Service of Process.  (a)  This Agreement shall be construed
in accordance with and governed by the law of the State of New York, without
giving effect to the conflict of laws provisions thereof.

 

(b)  Each party hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement shall affect any right that any party hereto may otherwise have to
bring any action or proceeding relating to this Agreement in the courts of any
jurisdiction.

 

(c)  Each party hereto hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to in paragraph (b) of this
Section.  Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

 

(d)  Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section 7.01.  Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.

 

21

 

SECTION 7.09.  WAIVER
OF JURY TRIAL. 
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT.  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 7.10.  Headings.  Article and Section headings used
herein are for convenience of reference only, are not part of this Agreement
and are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.

 

SECTION 7.11.  Conflicts.  In the event of any conflict or inconsistency
between the provisions of this Agreement and the provisions of any of the other
Security Documents, the provisions of this Agreement shall control.

 

SECTION 7.12.  Provisions
Solely to Define Relative Rights.  The provisions of this Agreement are and are
intended solely for the purpose of defining the relative rights of the
Revolving Facility Secured Parties, on the one hand, and the Term Loan Secured
Parties and the Existing Notes Secured Parties, on the other hand.  None of Holdings, the Company, any other Grantor
or any other creditor thereof shall have any rights or obligations hereunder,
except as expressly provided in this Agreement, and none of Holdings, the
Company, or any other Grantor may rely on the terms hereof.  Nothing in this Agreement is intended to or
shall impair the obligations of Holdings, the Company or any other Grantor,
which are absolute and unconditional, to pay the Obligations as and when the
same shall become due and payable in accordance with their terms.

 

22

 

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

 

 

	
   

  	
  DEUTSCHE BANK TRUST
  COMPANY

  AMERICAS, as Revolving Facility Agent,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  	
  /s/ Mark E. Funk

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mark E. Funk

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  
	
   

  	
   

  	
   

  	
  /s/ Marguerita Sutton

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Marguerita Sutton

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT SUISSE, CAYMAN
  ISLANDS

  BRANCH, as Term Loan Agent,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Robert Hetu

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Robert Hetu

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Vanessa Gomez

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Vanessa Gomez

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEWTON ACQUISITION, INC.,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President and General Counsel

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEWTON ACQUISITION MERGER SUB,

  INC. (to be merged with and into The

  Neiman Marcus Group, Inc.),

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Kewsong Lee

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Kewsong Lee

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
									

 

23

 

	
   

  	
  EACH OF THE SUBSIDIARIES
  LISTED

  ON SCHEDULE I HERETO,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NM NEVADA TRUST,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

24

 

SCHEDULE I

 

Subsidiary Parties

 

	
  Bergdorf Goodman, Inc.

  
	
  BergdorfGoodman.com, LLC

  
	
  Bergdorf Graphics, Inc.

  
	
  Neiman Marcus Holdings, Inc.

  
	
  Neiman Marcus Special Events, Inc.

  
	
  NEMA Beverage Corporation

  
	
  NEMA Beverage Holding
  Corporation

  
	
  NEMA Beverage Parent
  Corporation

  
	
  NM Financial Services, Inc.

  
	
  NM Kitchens, Inc.

  
	
  NMGP, LLC

  
	
  Worth Avenue Leasing
  Company

  

 

 

ANNEX I

 

Provision for
the Revolving Facility Credit Agreement and the Term Loan Credit Agreement

 

Reference is made to the Intercreditor Agreement.  Each Lender hereunder (a) consents to
the subordination of Liens provided for in the Intercreditor Agreement, (b) agrees
that it will be bound by and will take no actions contrary to the provisions of
the Intercreditor Agreement and (c) authorizes and instructs the
[Revolving Facility Agent] [Term Loan Agent] to enter into the Intercreditor
Agreement as [Revolving Facility Agent] [Term Loan Agent] and on behalf of such
Lender.  The foregoing provisions are
intended as an inducement to the Lenders under the Credit Agreement to extend
credit and such Lenders are intended third party beneficiaries of such
provisions and the provisions of the Intercreditor Agreement.

 

Provision for
Revolving Facility Security Documents and the Term Loan Security Documents

 

Reference is made to the Intercreditor Agreement.  Notwithstanding any other provision contained
herein, this Agreement, the Liens created hereby and the rights, remedies,
duties and obligations provided for herein are subject in all respects to the
provisions of the Intercreditor Agreement and, to the extent provided therein,
the applicable Senior Obligations Security Documents (as defined in the
Intercreditor Agreement).  In the event
of any conflict or inconsistency between the provisions of this Agreement and
the Intercreditor Agreement, the provisions of the Intercreditor Agreement
shall control.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]