Document:

Exhibit 10.1

                                   AGREEMENT

                           BY AND BETWEEN THE PARTIES

                                October 11, 2005

Legacy Mining Ltd., a Nevada Company with offices at Suite 806, 1288 Alberni,
Vancouver, British Columbia, Canada, V6E 4N5, being represented by Carlton
Parfitt, Director, hereinafter "LGMN".

                                      AND

Golden Spirit Gaming Ltd., a Delaware Company with offices at Suite 806, 1288
Alberni, Vancouver, British Columbia, Canada, V6E 4N5, being represented by
Robert Klein, Director, hereinafter "GSGL".

                                   RECITALS:

Legacy Mining Ltd. Is a reporting Company, which is currently not trading, but
intends to be trading  on the Bulletin Board in the United States of America
Public Markets in early 2006. LGMN is desirous of acquiring an asset to work
with and increase in value for the benefit of its shareholders.  GSGL is the
owner of mineral assets in the form of certain State of Alaska Mining Claims
(claims), shown on Exhibit "A", on and around Ester Creek, which is located on
the mineralized earthen dome structure called Ester Dome, some 8 miles north and
west of Fairbanks, Alaska.  GSGL will transfer its ninety-percent (90%)
ownership in the claims, and LGMN agrees to acquire and take full responsibility
for the claims for the purpose of increasing the claims value. It is understood
that the claims listed in Exhibit "B" and Exhibit "C" are the claims to be
acquired.  In addition, it is understood that the claims in Exhibit "B" are
subject to a 10% retained interest belonging to Ester Creek Gold Company
("Ester"), a Private Nevada corporation controlled by the Bergman family with a
records office located at 1060 South Main St., Suite #12, Brigham City, Utah,
84302. The ten-percent (10%) retained interest of "Ester" in the claims is non-
assessable, meaning that LGMN cannot make a funds call to Ester for any reason
whatsoever and cannot for any reason reduce the ten-percent (10%) retained
interest.  Further, it is understood that the claims in Exhibit "C" are subject
to a 10% retained interest belonging to Lee Holland ("Holland"), a resident of
Alaska, with a mailing address at HC 33, Box 32940, Nenana, Alaska, 99760. The
ten-percent (10%) retained interest of "Holland" in the claims is non-
assessable, meaning that LGMN cannot make a funds call to Holland for any reason
whatsoever and cannot for any reason reduce the ten-percent (10%) retained
interest.

UNDER THE TERMS AND CONDITIONS AS FOLLOWS:

(1) LGMN will issue GSGL, 750,000 shares of LGMN treasury stock; which stock
    will be classified as being under rule 144 of the Securities Exchange
    Commission for a period of one year, with trading restrictions under rule
    144 for another year.

(2) The ten-percent (10%) retained interest of Ester in the Exhibit "B" claims
    and the ten-percent (10%) retained interest of Holland in the Exhibit "C"
    claims will continue under the same terms and conditions of this agreement.

(3) LGMN will prepare and submit all required paperwork for yearly mining claim
    Assessment Work, State of Alaska fees for each claim, State of Alaska Mining
    Permits, State of Alaska Exploration Permits, State of Alaska Water Rights
    Permits, State of Alaska Reclamation programs and yearly reportable mining
    tax forms, etc., and any other paperwork that may be required by the local,
    State of Federal governments.  LGMN will pay the actual fees as required by
    a check made out to the proper government office to be submitted with the
    paperwork prepared by LGMN.  Fees for the years 2004/2005 came due as of
    September 1, 2005.  Fees are anticipated at $650.00 and duplicate filing
    fees of $1.00 per page.  These fees are paid each year after the State of
    Alaska sends out the bill at the end of August of each year.  They should be
    paid by the end of October each year.

(4)The State of Alaska requires that work must be performed on the claims each
   year before the 1st of September and recorded at the mining office. LGMN will
   be responsible to insure that this assessment work is accomplished.   Mining
   Claim assessment work basically consists of performing a minimum of $100.00
   worth of work, per claim, per year before the 1st day of September.
   Assessment work can be Labor, Equipment time, sampling, basically anything
   that improves the claims.

(5) In the event that LGMN does not perform the required assessment work on the
    claims by or before August 1st of any year, both Ester and Holland reserves
    the right to perform that work on their claims under Alaska State Law.  And
    if LGMN does not pay the required fees by the State of Alaska on or before
    October 20th of any year, both Ester and Holland reserves the right to pay
    the fees under Alaska State Law.

(6) In the event LGMN decides to abandon the claims listed in

 Exhibits "B" and "C", both Ester and Holland will have the first right to buy
                    back their respective claims from LGMN.

(7) LGMN agrees to conduct itself concerning the claims in a manner as to not
    cause the claims to suffer any undue legal or other undesirable problems.

(8) LGMN agrees to expand the claims boundaries and make any new claims a part
    of this agreement, as might be necessary, to protect the rights of Ester and
    Holland and the LGMN shareholders.

(9) The parties both LGMN and GSGL agree that time is of the essence in  all
    particulars of this agreement.

(10) The parties both LGMN and GSGL agree that this agreement can be expanded by
     mutual consent upon the terms and conditions herein.

(11) The parties agree that this agreement constitutes the entirety of the
     agreement between parties and any other agreements either verbal or written
     are of no consequence concerning this agreement other than some particular
     consultants/finder's fees which apply and are understood by the principal
     parties.

Signed and agreed this 11th day of October, 2005 by the parties,

/s/: Carton Parfitt
---------------------------
Carlton Parfitt for Legacy Mining Ltd.

/s/: Robert Klein
-----------------------------------------
Robert Klein for Golden Spirit Minerals Ltd.

Exhibti A- MAP
-----------------------------------------------------

                                 Exhibit B

ESTER CREEK GOLD MINING CLAIMS
Main Ester Creek Drainage Claims

ADL	NUMBER 	CLAIM NUMBER	     STATE FEE
-----------------------------------------------
AD1.	574100	  NB 2	                55.00

ADL	574101    NB 3    	        55.00

ADL	579153	NO SECOND CHANCE 3	55.00

ADL	579154	NO SECOND CHANCE 4	55.00

ADL	579155	NO SECOND CHANCE 5	55.00

ADL	559257	K B ROSANA GREEN FRAC	55.00

ADL	559258	K B ROSANA GREEN 4	55.00

ADL	559259	N B  1            	55.00

ADL	559260	ROBERT JOHN 2    	55.00

ADL	559261	ROBERT JOHN 3	        55.00

ADL	559262	DO  1	                55.00

ADL	559263	DO 2	                55.00

ADL	559264	DG 3	                55.00

ADL	574841	KB A	                55.00

ADL	574842	KB B	                55.00

ADL	57S327	NB 4	                55.00

ADL	575328	NB 5	                55.00

ADL	575329	NB 6 (HOT DOG)	        55.00

ADL	575330	NB 7 (HOT DOG)	        55.00

ADL	575331	NB 8 (HOT DOG)	        55.00

ADL     575332	NB 9 (HOT DOG)	        55.00

ADL	586182	STOLEN  1	        55.00

ADL	586183	STOLEN 2	        55.00

Exposed Hard Rock Vein, Claims presently in Dispute (with court ruling)

ADL	NUMBER 	CLAIM NUMBER	     STATE FEE
-------------------------------------------------
ADL     579151  No. Second Chance 1    55.00

ADL     579152  No. Second Chance 2    55.00

ADL     579326  No. Second Chance 6    55.00

                         ESTER CREEK GOLD MINING CLAIMS

Mining Claims Under the Two-Year Prospect Rule of Alaska

	API.                      NUMBER
-------------------------------------------
NOT ASSIGNED	                 E M #5 A
	                         E M IK B
	                         E M Hi C
	                         E M #5 D

NOT ASSIGNED            	 E M #7 A
                                 E M #7 B
	                         E Mill C
	                         E M #7 D

NOT ASSIGNED	                 E M #13 A
	                         E M #13 B
 	                         E M #13 C
	                         E M #13 D

NOT ASSIGNED	                 E M #15 A
 	                         E M #15 B
	                         E M #15 C
	                         E M #15 D

NOT ASSIGNED	                 E M #30 A
	                         E M #130 B
	                         E M #30 C
	                         E M #30 D

NOT ASSIGNED	                 E M #32 A
	                         E M #32 B
	                         E M #32 C
	                         E M #32 D

NOT ASSIGNED	                 E M #49 A
	                         E M #49 B
	                         E M #49 C
	                         E M #49 D

NOT ASSIGNED	                 E M 851 A
                                 E M #51 B
	                         E M #51 C
	                         E M #51  D
-------------------------------------------------------------

                           Exhibit C - Mining Names

ADL Number    Claim Name
--------------------------
559320	Second Chance 1
559321	Second Chance 2
559322	Second Chance 3
559324	Second Chance 4
559325	Second Chance 5Exhibit 4.1

 

EXECUTION COPY

 

 

NEWTON ACQUISITION MERGER SUB, INC.

 

to be merged with and into 

 

THE NEIMAN MARCUS GROUP, INC.

 

NEWTON ACQUISITION, INC., as a guarantor 

 

the SUBSIDIARY GUARANTORS named in Schedule I hereto

 

and

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

 

 

SENIOR INDENTURE

 

Dated as of October 6, 2005

 

 

$700,000,000

9%/93⁄4% Senior Notes Due 2015

 

 

Reconciliation and tie between Trust Indenture Act

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

 

	
  Trust
  Indenture Act Section

  	
   

  	
  Indenture
  Section

  
	
  §
  310 (a)(1)

  	
   

  	
   

  	
  608

  
	
  (a)(2)

  	
   

  	
   

  	
  608

  
	
  (a)(3)

  	
   

  	
   

  	
  N.A.

  
	
  (a)(4)

  	
   

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
   

  	
  608,
  609

  
	
  (c)

  	
   

  	
   

  	
  N.A.

  
	
  §
  311 (a)

  	
   

  	
   

  	
  605

  
	
  (b)

  	
   

  	
   

  	
  605

  
	
  (c)

  	
   

  	
   

  	
  N.A.

  
	
  §
  312 (a)

  	
   

  	
   

  	
  701

  
	
  (b)

  	
   

  	
   

  	
  702

  
	
  (c)

  	
   

  	
   

  	
  702

  
	
  §
  313 (a)

  	
   

  	
   

  	
  703

  
	
  (a)(4)

  	
   

  	
   

  	
  1008

  
	
  (b)(1)

  	
   

  	
   

  	
  N.A.

  
	
  (b)(2)

  	
   

  	
   

  	
  703

  
	
  (c)(1)

  	
   

  	
   

  	
  102

  
	
  (c)(2)

  	
   

  	
   

  	
  102

  
	
  (d)

  	
   

  	
   

  	
  703

  
	
  (e)

  	
   

  	
   

  	
  102

  
	
  § 314 (a)

  	
   

  	
   

  	
  1009

  
	
  (b)

  	
   

  	
   

  	
  N.A.

  
	
  (c)(1)

  	
   

  	
   

  	
  102

  
	
  (c)(2)

  	
   

  	
   

  	
  102

  
	
  (c)(3)

  	
   

  	
   

  	
  N.A.

  
	
  (d)

  	
   

  	
   

  	
  N.A.

  
	
  (e)

  	
   

  	
   

  	
  102

  
	
  (f)

  	
   

  	
   

  	
  1017

  
	
  §
  315 (a)

  	
   

  	
   

  	
  601

  
	
  (b)

  	
   

  	
   

  	
  602

  
	
  (c)

  	
   

  	
   

  	
  601

  
	
  (d)

  	
   

  	
   

  	
  601

  
	
  (e)

  	
   

  	
   

  	
  514

  
	
  §
  316 (a) (last sentence)

  	
   

  	
   

  	
  101(“Outstanding”)

  
	
  (a)(1)(A)

  	
   

  	
   

  	
  502,
  512

  
	
  (a)(1)(B)

  	
   

  	
   

  	
  513

  
	
  (a)(2)

  	
   

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
   

  	
  508

  
	
  (c)

  	
   

  	
   

  	
  104(d)

  
	
  §
  317 (a)(1)

  	
   

  	
   

  	
  503

  
	
  (a)(2)

  	
   

  	
   

  	
  504

  
	
  (b)

  	
   

  	
   

  	
  1003

  
	
  §
  318 (a)

  	
   

  	
   

  	
  111

  
	
   

  	
  N.A. means Not Applicable.

  	
   

  	
   

  

 

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

 

 

Table of Contents*

 

	
  ARTICLE
  ONE

  
	
   

  	
   

  
	
  DEFINITIONS
  AND OTHER PROVISIONS OF GENERAL APPLICATION

  
	
   

  	
   

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

  	
   

  
	
  SECTION 102. Definitions

  	
   

  
	
  SECTION
  103. Compliance Certificates and Opinions

  	
   

  
	
  SECTION
  104. Form of Documents Delivered to Trustee

  	
   

  
	
  SECTION
  105. Acts of Holders

  	
   

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

  	
   

  
	
  SECTION
  107. Notice to Holders; Waiver

  	
   

  
	
  SECTION
  108. Effect of Headings and Table of Contents

  	
   

  
	
  SECTION 109. Successors and Assigns

  	
   

  
	
  SECTION 110. Separability Clause

  	
   

  
	
  SECTION 111. Benefits of Indenture

  	
   

  
	
  SECTION
  112. Governing Law

  	
   

  
	
  SECTION
  113. Legal Holidays

  	
   

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

  	
   

  
	
  SECTION
  115. Trust Indenture Act Controls

  	
   

  
	
  SECTION
  116. Counterparts

  	
   

  
	
   

  	
   

  
	
  ARTICLE TWO

  
	
   

  	
   

  
	
  NOTE
  FORMS

  
	
   

  	
   

  
	
  SECTION
  201. Form and Dating

  	
   

  
	
  SECTION 202. Execution, Authentication,
  Delivery and Dating

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  THREE

  
	
   

  	
   

  
	
  THE
  NOTES

  
	
   

  	
   

  
	
  SECTION 301. Title and Terms

  	
   

  
	
  SECTION 302. Denominations

  	
   

  
	
  SECTION 303. Temporary Notes

  	
   

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

  	
   

  

 

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

 

i

 

	
  SECTION 305. Mutilated, Destroyed,
  Lost and Stolen Notes

  	
   

  
	
  SECTION 306. Payment of Interest;
  Interest Rights Preserved

  	
   

  
	
  SECTION
  307. Persons Deemed Owners

  	
   

  
	
  SECTION
  308. Cancellation

  	
   

  
	
  SECTION
  309. Computation of Interest

  	
   

  
	
  SECTION
  310. Transfer and Exchange

  	
   

  
	
  SECTION
  311. CUSIP Numbers

  	
   

  
	
  SECTION
  312. Issuance of Additional Notes

  	
   

  
	
   

  	
   

  
	
  ARTICLE FOUR

  
	
   

  	
   

  
	
  SATISFACTION AND
  DISCHARGE

  
	
   

  	
   

  
	
  SECTION
  401. Satisfaction and Discharge of Indenture

  	
   

  
	
  SECTION 402.
  Application of Trust Money

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  FIVE

  
	
   

  	
   

  
	
  REMEDIES

  
	
   

  	
   

  
	
  SECTION
  501. Events of Default

  	
   

  
	
  SECTION
  502. Acceleration of Maturity; Rescission and Annulment

  	
   

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

  	
   

  
	
  SECTION
  504. Trustee May File Proofs of Claim

  	
   

  
	
  SECTION
  505. Trustee May Enforce Claims Without Possession of Notes

  	
   

  
	
  SECTION
  506. Application of Money Collected

  	
   

  
	
  SECTION
  507. Limitation on Suits

  	
   

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

  	
   

  
	
  SECTION
  509. Restoration of Rights and Remedies

  	
   

  
	
  SECTION
  510. Rights and Remedies Cumulative

  	
   

  
	
  SECTION 511. Delay or Omission Not
  Waiver

  	
   

  
	
  SECTION
  512. Control by Holders

  	
   

  
	
  SECTION
  513. Waiver of Default

  	
   

  
	
  SECTION
  514. Waiver of Stay or Extension Laws

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  SIX

  
	
   

  	
   

  
	
  THE
  TRUSTEE

  
	
   

  	
   

  
	
  SECTION
  601. Duties of the Trustee

  	
   

  
	
  SECTION
  602. Notice of Defaults

  	
   

  
	
  SECTION
  603. Certain Rights of Trustee

  	
   

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

  	
   

  
	
  SECTION
  605. May Hold Notes

  	
   

  
	
  SECTION
  606. Money Held in Trust

  	
   

  
	
  SECTION
  607. Compensation and Reimbursement

  	
   

  

 

ii

 

	
  SECTION
  608. Corporate Trustee Required; Eligibility

  	
   

  
	
  SECTION
  609. Resignation and Removal; Appointment of Successor

  	
   

  
	
  SECTION
  610. Acceptance of Appointment by Successor

  	
   

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

  	
   

  
	
  SECTION
  612. Appointment of Authenticating Agent

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  SEVEN

  
	
   

  	
   

  
	
  HOLDERS
  LISTS AND REPORTS BY TRUSTEE AND COMPANY

  
	
   

  	
   

  
	
  SECTION
  701. Holder Lists

  	
   

  
	
  SECTION
  702. Disclosure of Names and Addresses of Holders

  	
   

  
	
  SECTION
  703. Reports by Trustee

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  EIGHT

  
	
   

  	
   

  
	
  MERGER,
  CONSOLIDATION OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS

  
	
   

  	
   

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

  	
   

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

  	
   

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

  	
   

  
	
  SECTION
  804. Successor Substituted

  	
   

  
	
  SECTION
  805. The Merger Permitted

  	
   

  
	
  SECTION
  806. Assets of Subsidiary Apply to Company and Holdings

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  NINE

  
	
   

  	
   

  
	
  AMENDMENT,
  SUPPLEMENT AND WAIVER

  
	
   

  	
   

  
	
  SECTION
  901. Amendments or Supplements Without Consent of Holders

  	
   

  
	
  SECTION
  902. Amendments or Supplements With Consent of Holders

  	
   

  
	
  SECTION
  903. Execution of Amendments, Supplements or Waivers

  	
   

  
	
  SECTION 904. Effect of Amendments,
  Supplements or Waivers

  	
   

  
	
  SECTION 905. Compliance with Trust
  Indenture Act

  	
   

  
	
  SECTION 906. Reference in Notes to
  Supplemental Indentures

  	
   

  
	
  SECTION 907. Notice of Supplemental
  Indentures

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  TEN

  
	
   

  	
   

  
	
  COVENANTS

  
	
   

  	
   

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

  	
   

  
	
  SECTION 1002. Maintenance of Office
  or Agency

  	
   

  
	
  SECTION 1003. Paying Agent to Hold
  Money in Trust

  	
   

  
	
  SECTION 1004. Corporate Existence

  	
   

  
	
  SECTION 1005. Payment of Taxes and
  Other Claims

  	
   

  
	
  SECTION 1006. Reserved

  	
   

  

 

iii

 

	
  SECTION 1007. Reserved

  	
   

  
	
  SECTION
  1008. Statement by Officers as to Default

  	
   

  
	
  SECTION
  1009. Reports and Other Information

  	
   

  
	
  SECTION
  1010. Limitation on Restricted Payments

  	
   

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

  	
   

  
	
  SECTION
  1012. Liens

  	
   

  
	
  SECTION 1013.
  Limitations on Transactions with Affiliates

  	
   

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

  	
   

  
	
  SECTION
  1015. Limitation on Guarantees of Indebtedness by Restricted Subsidiaries

  	
   

  
	
  SECTION
  1016. Limitation on Sale and Lease-Back Transactions

  	
   

  
	
  SECTION
  1017. Change of Control

  	
   

  
	
  SECTION
  1018. Asset Sales

  	
   

  
	
  SECTION
  1019. Additional Interest Notice

  	
   

  
	
  SECTION
  1020. No Amendment to Subordination Provision

  	
   

  
	
  SECTION
  1021. Designation of “Designated Senior Indebtedness”

  	
   

  
	
   

  	
   

  
	
  ARTICLE ELEVEN

  
	
   

  	
   

  
	
  REDEMPTION OF NOTES

  
	
   

  	
   

  
	
  SECTION
  1101. Right of Redemption

  	
   

  
	
  SECTION
  1102. Applicability of Article

  	
   

  
	
  SECTION
  1103. Election to Redeem; Notice to Trustee

  	
   

  
	
  SECTION
  1104. Selection by Trustee of Notes to Be Redeemed

  	
   

  
	
  SECTION
  1105. Notice of Redemption

  	
   

  
	
  SECTION
  1106. Effect of Notice of Redemption

  	
   

  
	
  SECTION
  1107. Deposit of Redemption Price

  	
   

  
	
  SECTION
  1108. Notes Payable on Redemption Date

  	
   

  
	
  SECTION
  1109. Notes Redeemed in Part

  	
   

  
	
   

  	
   

  
	
  ARTICLE TWELVE

  
	
   

  	
   

  
	
  GUARANTEES

  
	
   

  	
   

  
	
  SECTION
  1201. Guarantees

  	
   

  
	
  SECTION
  1202. Severability

  	
   

  
	
  SECTION 1203. Reserved

  	
   

  
	
  SECTION
  1204. Limitation of Guarantors’ Liability

  	
   

  
	
  SECTION
  1205. Contribution

  	
   

  
	
  SECTION
  1206. Subrogation

  	
   

  
	
  SECTION
  1207. Reinstatement

  	
   

  
	
  SECTION
  1208. Release of a Guarantor

  	
   

  
	
  SECTION
  1209. Benefits Acknowledged

  	
   

  

 

iv

 

	
  ARTICLE
  THIRTEEN

  
	
   

  	
   

  
	
  LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  
	
   

  	
   

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

  	
   

  
	
  SECTION
  1302. Legal Defeasance and Discharge

  	
   

  
	
  SECTION
  1303. Covenant Defeasance

  	
   

  
	
  SECTION
  1304. Conditions to Legal Defeasance or Covenant Defeasance

  	
   

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

  	
   

  
	
  SECTION 1306.
  Reinstatement

  	
   

  
	
  SECTION
  1307. Repayment to Company

  	
   

  

 

	
  APPENDIX & EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Rule 144A / Regulation S Appendix

  	
   

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

  	
   

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

  	
   

  
	
  Letter of Representation

  	
   

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

  	
   

  
	
  EXHIBIT
  A – Form of Exchange Security or Private Exchange Security

  	
   

  
	
  EXHIBIT
  B – Form of Supplemental Indenture

  	
   

  

 

v

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

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

 

2

 

ARTICLE
ONE

 

DEFINITIONS
AND OTHER PROVISIONS

OF GENERAL APPLICATION

 

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

 

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

 

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

 

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

 

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

 

(5)  ”or” is not exclusive;

 

(6)  ”including” means including without
limitation;

 

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

 

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

 

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

 

(1)           “Commission” means the SEC;

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

SECTION
102.  Definitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

(2)           the excess, if any, of:

 

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

 

(b)           the principal amount of the Note.

 

“Asset Sale” means

 

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

 

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

 

in
each case, other than:

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

(i)            foreclosures on assets;

 

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

 

(k)           the unwinding of any Hedging Obligations.

 

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

 

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

 

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

 

“Board of Directors”
means:

 

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

 

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

 

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

 

6

 

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

 

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

 

“Capital Stock” means

 

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

 

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

 

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

 

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

 

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

 

“Cash Equivalents” means

 

(1)           United States of America dollars,

 

(2)           (a)           Canadian dollars,

 

(b)           Japanese yen,

 

(c)           pounds sterling,

 

(d)           euro or

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

(c)           interest income for such period.

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

(2)           to advance or supply funds

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

(1)           increased by (without duplication):

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

(a)           contributions to its common equity capital,
and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

“Government Securities”
means securities that are

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Indebtedness” means,
with respect to any Person,

 

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

 

(1)           in respect of borrowed money,

 

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

 

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

 

(4)           representing any Hedging Obligations,

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Investment Grade Securities”
means:

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

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

 

“Issue Date” means
October 6, 2005.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

“Permitted Investments”
means:

 

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

 

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

 

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

 

27

 

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

 

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

 

(ii)           any Investment held by such Person;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

(7)           Liens existing on the Issue Date;

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

“SEC” means the
Securities and Exchange Commission.

 

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

 

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

 

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

 

“Senior Indebtedness”
means with respect to any Person:

 

35

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

“Subordinated Indebtedness”
means:

 

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

 

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

 

“Subsidiary” means, with
respect to any Person,

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

“Unrestricted Subsidiary”
means:

 

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

 

(2)           any Subsidiary of an Unrestricted Subsidiary.

 

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

 

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

 

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

 

(c)           each of

 

(1)           the Subsidiary to be so designated and

 

(2)           its Subsidiaries

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)           the sum of all such payments.

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

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

 

45

 

ARTICLE TWO

 

NOTE FORMS

 

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

 

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

 

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

 

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

 

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

 

46

 

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

 

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

 

Each
Note shall be dated the date of its authentication.

 

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

 

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

 

47

 

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

 

48

 

ARTICLE THREE

 

THE NOTES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

49

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

50

 

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

 

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

 

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

 

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

 

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

 

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

 

51

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

52

 

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

 

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

 

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

 

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

 

53

 

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

 

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

 

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

 

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

 

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

 

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

 

54

 

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

 

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

 

55

 

ARTICLE FOUR

 

SATISFACTION
AND DISCHARGE

 

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

 

(1)           either,

 

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

 

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

 

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

 

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

 

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

 

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

 

56

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

57

 

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

 

58

 

ARTICLE FIVE

 

REMEDIES

 

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

 

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

 

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

 

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

 

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

 

(A)  such default either

 

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

 

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

 

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

 

59

 

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

 

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

 

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

 

(i)      commences a voluntary case;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

60

 

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

 

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

 

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

 

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

 

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

 

(A)  all overdue interest on all Outstanding
Notes,

 

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

 

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

 

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

 

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

 

61

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

62

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

63

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

64

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

65

 

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

 

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

 

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

 

66

 

ARTICLE SIX

 

THE TRUSTEE

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

67

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

68

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

69

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

70

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

71

 

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

 

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

 

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

 

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

 

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

 

72

 

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

 

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

 

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

 

73

 

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

 

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

 

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

 

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

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  	
     as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  as Authenticating Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  as Authorized Officer

  	
   

  

 

74

 

ARTICLE SEVEN

 

HOLDERS
LISTS AND REPORTS BY TRUSTEE AND COMPANY

 

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

 

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

 

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

 

75

 

ARTICLE EIGHT

 

MERGER,
CONSOLIDATION OR SALE

OF ALL OR SUBSTANTIALLY ALL ASSETS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

76

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

77

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

78

 

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

 

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

 

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

 

79

 

ARTICLE NINE

 

AMENDMENT,
SUPPLEMENT AND WAIVER

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

80

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

81

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

82

 

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

 

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

 

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

 

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

 

83

 

ARTICLE TEN

 

COVENANTS

 

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

 

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

 

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

 

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

 

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

 

84

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

85

 

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

 

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

 

SECTION 1006.  Reserved.

 

SECTION
1007.  Reserved.

 

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

 

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

 

86

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

87

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(4)           make any Restricted Investment;

 

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

 

88

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

89

 

(B)           Designated Preferred Stock

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

90

 

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

 

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

 

(b)           The foregoing provisions shall not
prohibit:

 

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

 

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

 

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

 

91

 

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

 

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

 

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

 

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

 

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

 

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

 

92

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

93

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

94

 

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

 

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

 

(14)         distributions or payments of Receivables
Fees;

 

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

 

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

 

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

 

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

 

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

 

95

 

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

 

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

 

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

 

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

 

96

 

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

 

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

 

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

 

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

 

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

 

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

 

97

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

98

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

99

 

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

 

(C)           shall not include

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

100

 

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

 

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

 

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

 

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

 

(20)         Indebtedness incurred by a Foreign Subsidiary
which, when aggregated with the principal amount of all other Indebtedness
incurred pursuant to this clause (20) and then outstanding, does not
exceed 5.0% of Foreign Subsidiary Total Assets (it being understood that any
Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to this
clause (20) shall cease to be deemed incurred or outstanding for purposes
of this clause (20) but shall be deemed incurred pursuant to
Section 1011(a) from and after the first date on which the Company or such
Restricted Subsidiary could have incurred such Indebtedness, Disqualified Stock
or Preferred Stock pursuant to Section 1011(a) without reliance on this
clause (20));

 

(21)         Indebtedness consisting of Indebtedness
issued by the Company or any Restricted Subsidiary to current or former
officers, managers, directors and employees thereof, their respective estates,
spouses or former spouses, in each case to finance the purchase or redemption
of Equity Interests of the Company or any direct or indirect parent company of
the Company to the extent described in clause (4) of Section 1010(b)
of this Indenture;

 

101

 

(22)         Indebtedness, Disqualified Stock and
Preferred Stock of the Company or any Restricted Subsidiary not otherwise
permitted hereunder in an aggregate principal amount or liquidation preference,
which, when aggregated with the principal amount and liquidation preference of
all other Indebtedness, Disqualified Stock and Preferred Stock incurred
pursuant to this clause (22) and then outstanding, does not at any one
time outstanding exceed the sum of

 

(i)            $175.0 million (it being understood that
any Indebtedness, Disqualified Stock and Preferred Stock incurred pursuant to
this clause (22)(i) shall cease to be deemed incurred or outstanding
for purposes of this clause (22)(i) but shall be deemed incurred
pursuant to Section 1011(a) from and after the first date on which the
Company or such Restricted Subsidiary could have incurred such Indebtedness,
Disqualified Stock or Preferred Stock pursuant to Section 1011(a) without
reliance on this clause (22)(i)); plus

 

(ii)           200% of the net cash proceeds received by the
Company since after the Issue Date from the issue or sale of Equity Interests
of the Company or cash contributed to the capital of the Company (in each case,
other than proceeds of Disqualified Stock or sales of Equity Interests to the
Company or any of its Subsidiaries) as determined in accordance with clauses
(C)(2) and (C)(3) of Section 1010(a) of this Indenture to the extent such
net cash proceeds or cash have not been applied pursuant to such clauses to
make Restricted Payments or to make other investments, payments or exchanges
pursuant to Section 1010(b) of this Indenture or to make Permitted
Investments (other than Permitted Investments specified in clauses (a) and
(c) of the definition thereof); and

 

(23)         Attributable Debt incurred by the Company or
any Restricted Subsidiary pursuant to Sale and Lease-Back Transactions of property
(real or personal), equipment or other fixed or capital assets owned by the
Company or any Restricted Subsidiary as of the Issue Date or acquired by the
Company or any Restricted Subsidiary after the Issue Date in exchange for, or
with the proceeds of the sale of, such assets owned by the Company or any
Restricted Subsidiary as of the Issue Date, provided
that the aggregate amount of Attributable Debt incurred under this
clause (23) does not exceed $100.0 million.

 

(c)           For purposes of determining compliance
with this Section 1011, in the event that an item of Indebtedness,
Disqualified Stock or Preferred Stock meets the criteria of more than one of
the categories of Permitted Debt described in clauses (1) through
(23) of Section 1011(b) or is entitled to be incurred pursuant to
Section 1011(a), the Company, in its sole discretion, shall classify or
reclassify, or later divide, classify or reclassify, such item of Indebtedness,
Disqualified Stock or Preferred Stock (or any portion thereof) and shall only
be required to include the amount and type of such Indebtedness, Disqualified
Stock or Preferred Stock in one or more of the above clauses; provided that all Indebtedness outstanding
under the Senior Credit Facilities on the

 

102

 

Issue Date shall be deemed to have been incurred on
such date in reliance on the exception in clauses (1) and (2) of this
Section 1011(b).

 

(d)           The accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness, Disqualified Stock or Preferred Stock shall not be deemed to be
an incurrence of Indebtedness, Disqualified Stock or Preferred Stock for
purposes of this Section 1011.

 

(e)           For purposes of determining compliance
with any U.S. dollar-denominated restriction on the incurrence of
Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness
denominated in a foreign currency shall be calculated based on the relevant
currency exchange rate in effect on the date such Indebtedness was incurred, in
the case of term debt, or first committed, in the case of revolving credit
debt; provided that if such
Indebtedness is incurred to extend, replace, refund, refinance, renew or
defease other Indebtedness denominated in a foreign currency, and such
extension, replacement, refunding, refinancing, renewal or defeasance would
cause the applicable U.S. dollar-denominated restriction to be exceeded
if calculated at the relevant currency exchange rate in effect on the date of
such extension, replacement, refunding, refinancing, renewal or defeasance,
such U.S. dollar-denominated restriction shall be deemed not to have been
exceeded so long as the principal amount of such refinancing Indebtedness does
not exceed the principal amount of such Indebtedness being extended, replaced,
refunded, refinanced, renewed or defeased.

 

(f)            The principal amount of any Indebtedness
incurred to extend, replace, refund, refinance, renew or defease other
Indebtedness, if incurred in a different currency from the Indebtedness being
extended, replaced, refunded, refinanced, renewed or defeased, shall be
calculated based on the currency exchange rate applicable to the currencies in
which such respective Indebtedness is denominated that is in effect on the date
of such extension, replacement, refunding, refinancing, renewal or defeasance.

 

SECTION
1012.  Liens.  The Company shall not, and shall not permit
any of the Subsidiary Guarantors to, directly or indirectly, create, incur,
assume or suffer to exist any Lien (except Permitted Liens) that secures
obligations under any Indebtedness on any asset or property of the Company or
any Subsidiary Guarantor now owned or hereafter acquired, or any income or
profits therefrom, or assign or convey any right to receive income therefrom,
unless:

 

(1)           in the case of Liens securing Subordinated
Indebtedness, the Notes or the applicable Subsidiary Guarantee of a Subsidiary
Guarantor, as the case may be, are secured by a Lien on such property or assets
that is senior in priority to such Liens; and

 

(2)           in all other cases, the Notes or the
applicable Subsidiary Guarantee of a Subsidiary Guarantor, as the case may be,
are equally and ratably secured;

 

provided that any Lien which is granted to secure the Notes under this Section
1012 shall be discharged at the same time as the discharge of the Lien (other
than through the

 

103

 

exercise
of remedies with respect thereto) that gave rise to the obligation to so secure
the Notes.

 

SECTION
1013.  Limitations on Transactions
with Affiliates.  (a)  The
Company shall not, and shall not permit any Restricted Subsidiary to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate of the Company
(each of the foregoing, an “Affiliate
Transaction”) involving aggregate payments or consideration in
excess of $10.0 million, unless

 

(1)           such Affiliate Transaction is on terms
that are not materially less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary with an unrelated
Person and

 

(2)           the Company delivers to the Trustee with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in excess of $30.0
million, a Board Resolution adopted by the majority of the members of the Board
of Directors of the Company approving such Affiliate Transaction and set forth
in an Officers’ Certificate certifying that such Affiliate Transaction complies
with clause (1) above.

 

(b)           The foregoing provisions shall not apply
to the following:

 

(1)           Transactions between or among the Company
or any of the Restricted Subsidiaries;

 

(2)           Restricted Payments permitted by
Section 1010 of this Indenture and the definition of “Permitted
Investments”;

 

(3)           the payment of management, consulting,
monitoring and advisory fees and related expenses to the Sponsors and any
termination or other fee payable to the Sponsors upon a change of control or
initial public equity offering of the Company or any direct or indirect parent
company thereof pursuant to the Management Services Agreement as in effect on
the Issue Date;

 

(4)           the payment of reasonable and customary
fees paid to, and indemnities provided on behalf of, officers, directors,
managers, employees or consultants of the Company, any of its direct or
indirect parent companies or any Restricted Subsidiary;

 

(5)           payments by the Company or any Restricted
Subsidiary to any of the Sponsors and the Co Investors for any financial
advisory, financing, underwriting or placement services or in respect of other
investment banking activities, including in connection with acquisitions or
divestitures, which payments are approved by a majority of the members of the
Board of Directors of the Company in good faith;

 

104

 

(6)           transactions in which the Company or any
Restricted Subsidiary, as the case may be, delivers to the Trustee a letter
from an Independent Financial Advisor stating that such transaction is fair to
the Company or such Restricted Subsidiary from a financial point of view or
meets the requirements of clause (1) of Section 1013(a);

 

(7)           payments or loans (or cancellations of
loans) to employees or consultants of the Company, any of its direct or
indirect parent companies or any Restricted Subsidiary and employment
agreements, stock option plans and other compensatory arrangements with such
employees or consultants that are, in each case, approved by the Company in good
faith;

 

(8)           any agreement, instrument or arrangement
as in effect as of the Issue Date, or any amendment thereto (so long as any
such amendment is not disadvantageous to the Holders in any material respect as
compared to the applicable agreement as in effect on the Issue Date as
reasonably determined in good faith by the Company);

 

(9)           the existence of, or the performance by
the Company or any of the Restricted Subsidiaries of its obligations under the
terms of, any stockholders agreement or its equivalent (including any
registration rights agreement or purchase agreement related thereto) to which
it is a party as of the Issue Date and any similar agreements which it may
enter into thereafter; provided, however,
that the existence of, or the performance by the Company or any Restricted
Subsidiary of obligations under any future amendment to any such existing
agreement or under any similar agreement entered into after the Issue Date
shall only be permitted by this clause (9) to the extent that the terms of any
such existing agreement together with all amendments thereto, taken as a whole,
or new agreement are not otherwise more disadvantageous to the Holders in any
material respect than the terms of the original agreement in effect on the
Issue Date as reasonably determined in good faith by the Company;

 

(10)         the Transactions, the Credit Card Sale
and the payment of all fees and expenses related to the Transactions and the
Credit Card Sale, in each case as disclosed in the Offering Circular;

 

(11)         transactions with customers, clients,
suppliers, or purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the terms of this
Indenture that are fair to the Company and the Restricted Subsidiaries, in the
reasonable determination of the Board of Directors or the senior management of
the Company, or are on terms at least as favorable as might reasonably have
been obtained at such time from an unaffiliated party;

 

(12)         the issuance of Equity Interests (other
than Disqualified Stock) of the Company to any Permitted Holder or to any
director, manager, officer,

 

105

 

employee or consultant of
the Company or any direct or indirect parent company thereof;

 

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

 

(14)         investments by the Sponsors and the Co
Investors in securities of the Company or any of its Restricted Subsidiaries so
long as (i) the investment is being offered generally to other investors on the
same or more favorable terms and (ii) the investment constitutes less than 5.0%
of the proposed or outstanding issue amount of such class of securities.

 

SECTION
1014.  Limitations on Dividend and Other
Payment Restrictions Affecting Restricted Subsidiaries.  The Company shall not, and shall not permit
any Restricted Subsidiary that is not a Subsidiary Guarantor to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or consensual restriction on the ability of any such
Restricted Subsidiary to:

 

(a)           (1)       pay
dividends or make any other distributions to the Company or any Restricted
Subsidiary on its Capital Stock or with respect to any other interest or
participation in, or measured by, its profits or

 

(2)       pay
any Indebtedness owed to the Company or any Restricted Subsidiary;

 

(b)           make loans or advances to the Company or
any Restricted Subsidiary; or

 

(c)           sell, lease or transfer any of its
properties or assets to the Company or any Restricted Subsidiary,

 

except
(in each case) for such encumbrances or restrictions existing under or by
reason of:

 

(1)           contractual encumbrances or restrictions
in effect on the Issue Date, including pursuant to the Senior Credit Facilities
and the related documentation (including security documents and intercreditor
agreements) and Hedging Obligations, the Existing 2008 Notes and the Existing
2028 Debentures;

 

(2)           the Indentures and the New Notes and the
Subsidiary Guarantees;

 

(3)           purchase money obligations for property
acquired in the ordinary course of business and Capital Lease Obligations that
impose restrictions of the nature discussed in clause (c) above on the property
so acquired;

 

(4)           applicable law or any applicable rule,
regulation or order;

 

106

 

(5)           any agreement or other instrument of a
Person acquired by the Company or any Restricted Subsidiary in existence at the
time of such acquisition (but not created in connection therewith or in
contemplation thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired;

 

(6)           contracts for the sale of assets,
including customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary;

 

(7)           Secured Indebtedness otherwise permitted
to be incurred pursuant to Sections 1011 and 1012 of this Indenture that
limit the right of the debtor to dispose of the assets securing such
Indebtedness;

 

(8)           restrictions on cash or other deposits or
net worth imposed by customers under contracts entered into in the ordinary
course of business;

 

(9)           other Indebtedness, Disqualified Stock or
Preferred Stock of Restricted Subsidiaries permitted to be incurred after the
Issue Date pursuant to the provisions of Section 1011 of this Indenture;

 

(10)         customary provisions in joint venture
agreements and other similar agreements;

 

(11)         customary provisions contained in leases
and other agreements entered into in the ordinary course of business;

 

(12)         restrictions created in connection with
any Receivables Facility; provided
that in the case of Receivables Facilities established after the Issue Date,
such restrictions are necessary or advisable, in the good faith determination
of the Company, to effect such Receivables Facility;

 

(13)         restrictions or conditions contained in
any trading, netting, operating, construction, service, supply, purchase or
other agreement to which the Company or any of its Restricted Subsidiaries is a
party entered into in the ordinary course of business; provided that such agreement prohibits the
encumbrance of solely the property or assets of the Company or such Restricted
Subsidiary that are the subject of such agreement, the payment rights arising
thereunder or the proceeds thereof and does not extend to any other asset or
property of the Company or such Restricted Subsidiary or the assets or property
of any other Restricted Subsidiary; and

 

(14)         any encumbrances or restrictions of the
type referred to in clauses (a), (b) and (c) above imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (1) through (13) above;

 

107

 

provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Company, not materially
more restrictive with respect to such encumbrance and other restrictions than
those prior to such amendment, modification, restatement, renewal, increase,
supplement, refunding, replacement or refinancing; provided, further, that with respect to contracts,
instruments or obligations existing on the Issue Date, any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are not materially more restrictive with respect
to such encumbrances and other restrictions than those contained in such
contracts, instruments or obligations as in effect on the Issue Date.

 

SECTION
1015.  Limitation on Guarantees of
Indebtedness by Restricted Subsidiaries. 
The Company shall not permit any of its Wholly-Owned Subsidiaries that
are Restricted Subsidiaries (and non-Wholly-Owned Subsidiaries if such
non-Wholly-Owned Subsidiaries guarantee other capital markets debt securities),
other than a Subsidiary Guarantor or a Foreign Subsidiary, to guarantee the
payment of any Indebtedness of the Company or any other Subsidiary Guarantor
unless:

 

(1)           such Restricted Subsidiary within 30 days
executes and delivers a supplemental indenture to this Indenture providing for
a Subsidiary Guarantee by such Restricted Subsidiary, except that with respect
to a guarantee of Indebtedness of the Company or any Subsidiary Guarantor that
is by its express terms subordinated in right of payment to the Notes or such
Subsidiary Guarantor’s Subsidiary Guarantee, any such guarantee by such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated
in right of payment to such Subsidiary Guarantee substantially to the same
extent as such Indebtedness is subordinated to the Notes;

 

(2)           such Restricted Subsidiary waives and
shall not in any manner whatsoever claim or take the benefit or advantage of,
any rights of reimbursement, indemnity or subrogation or any other rights
against the Company or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Subsidiary Guarantee; and

 

(3)           such Restricted Subsidiary shall deliver
to the Trustee an Opinion of Counsel to the effect that:

 

(a)           such Subsidiary Guarantee has been duly
executed and authorized; and

 

(b)           such Subsidiary Guarantee constitutes a
valid, binding and enforceable obligation of such Restricted Subsidiary, except
insofar as enforcement thereof may be limited by bankruptcy, insolvency or
similar laws (including all laws relating to fraudulent transfers) and except
insofar as enforcement thereof is subject to general principles of equity;

 

108

 

provided that this Section 1015 shall not be applicable to any guarantee of any
Restricted Subsidiary that existed at the time such Person became a Restricted
Subsidiary and was not incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary.

 

SECTION
1016.  Limitation on Sale and
Lease-Back Transactions.  The Company
shall not, and shall not permit any Restricted Subsidiary to, enter into any
Sale and Lease-Back Transaction with respect to any property unless:

 

(1)           the Company or such Restricted Subsidiary
would be entitled to (A) incur Indebtedness in an amount equal to the
Attributable Debt with respect to such Sale and Lease-Back Transaction pursuant
to Section 1011 of this Indenture and (B) create a Lien on such property
securing such Attributable Debt without equally and ratably securing the Notes
pursuant to Section 1012 of this Indenture;

 

(2)           the consideration received by the Company
or any Restricted Subsidiary in connection with such Sale and Lease-Back
Transaction is at least equal to the fair market value (as determined in good
faith by the Company) of such property; and 

 

(3)           the Company applies the proceeds of such
transaction in compliance with Section 1018 of this Indenture.

 

SECTION
1017.  Change of Control.  (a) If a Change of Control occurs, the
Company shall make an offer to purchase all of the Notes pursuant to the offer
described below (the “Change of Control
Offer”) at a price in cash (the “Change
of Control Payment”) equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, and Additional Interest, if any, to
the date of purchase, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date.
Within 30 days following any Change of Control, the Company shall send notice
of such Change of Control Offer by first class mail, with a copy to the
Trustee, to each Holder to the address of such Holder appearing in the security
register with a copy to the Trustee, with the following information:

 

(1)           a Change of Control Offer is being made
pursuant to this Section 1017 and all Notes properly tendered pursuant to
such Change of Control Offer shall be accepted for payment;

 

(2)           the purchase price and the purchase date,
which shall be no earlier than 30 days nor later than 60 days from the date
such notice is mailed (the “Change of
Control Payment Date”);

 

(3)           any Note not properly tendered shall
remain outstanding and continue to accrue interest;

 

(4)           unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of

 

109

 

Control Offer shall cease
to accrue interest on the Change of Control Payment Date;

 

(5)           Holders electing to have any Notes
purchased pursuant to a Change of Control Offer shall be required to surrender
the Notes, with the form entitled “Option of Holder to Elect Purchase” on the
reverse of the Notes completed, to the paying agent specified in the notice at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;

 

(6)           Holders shall be entitled to withdraw
their tendered Notes and their election to require the Company to purchase such
Notes; provided that the paying
agent receives, not later than the close of business on the last day of the
offer period, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Notes tendered for purchase,
and a statement that such Holder is withdrawing its tendered Notes and its
election to have such Notes purchased; and

 

(7)           Holders whose Notes are being purchased
only in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered (which unpurchased portion must be
equal to $2,000 or an integral multiple of $1,000 in excess of $2,000); provided that no Notes of less than $2,000
shall be redeemed in part.

 

(b)           While the Notes are in global form and
the Company makes an offer to purchase all of the Notes pursuant to the Change
of Control Offer, a Holder may exercise its option to elect for the purchase of
the Notes through the facilities of DTC, subject to its rules and regulations.

 

(c)           The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws or regulations are
applicable in connection with the repurchase of the Notes pursuant to a Change
of Control Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Indenture, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in this Indenture by virtue
thereof.

 

(d)           On the Change of Control Payment Date,
the Company shall, to the extent permitted by law,

 

(1)           accept for payment all Notes or portions
thereof properly tendered pursuant to the Change of Control Offer,

 

(2)           deposit with the Paying Agent an amount
equal to the aggregate Change of Control Payment in respect of all Notes or
portions thereof so tendered and

 

110

 

(3)           deliver, or cause to be delivered, to the
Trustee for cancellation the Notes so accepted together with an Officers’
Certificate stating that such Notes or portions thereof have been tendered to
and purchased by the Company.

 

(e)           The Paying Agent shall promptly mail to
each Holder the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail to each Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any; provided that no Notes of $2,000 or less
shall be redeemed in part and each such new Note shall be in a principal amount
of $2,000 or an integral multiple of $1,000 in excess of $2,000. The Company
shall publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.

 

(f)            The Company shall not be required to make
a Change of Control Offer following a Change of Control if a third party makes
the Change of Control Offer in the manner, at the time and otherwise in
compliance with the requirements set forth in this Indenture applicable to a
Change of Control Offer made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer. A Change of
Control Offer may be made in advance of a Change of Control, conditional upon
such Change of Control, if a definitive agreement is in place for the Change of
Control at the time of making of the Change of Control Offer.

 

SECTION
1018.  Asset Sales.  (a) 
The Company shall not, and shall not permit any Restricted Subsidiary
to, cause, make or suffer to exist an Asset Sale, unless:

 

(1)           the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such
Asset Sale at least equal to the fair market value (as determined in good faith
by the Company) of the assets sold or otherwise disposed of; and

 

(2)           except in the case of a Permitted Asset
Swap, at least 75% of the consideration therefor received by the Company or
such Restricted Subsidiary, as the case may be, is in the form of cash or Cash
Equivalents; provided that the
amount of

 

(A)          any liabilities (as shown on the Company’s or
such Restricted Subsidiary’s most recent balance sheet or in the notes thereto)
of the Company or such Restricted Subsidiary, other than liabilities that are
by their terms subordinated to the Notes, that are assumed by the transferee of
any such assets (or a third party on behalf of the transferee) and for which the
Company or such Restricted Subsidiary has been validly released by all
creditors in writing,

 

(B)           any securities, notes or other obligations or
assets received by the Company or such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash (to

 

111

 

the
extent of the cash received) within 180 days following the closing of such
Asset Sale and

 

(C)           any Designated Noncash Consideration received
by the Company or such Restricted Subsidiary in such Asset Sale having an
aggregate fair market value, taken together with all other Designated Noncash
Consideration received pursuant to this clause (C) that is at that time
outstanding, not to exceed the greater of (x) $125.0 million and (y) 1.75% of
Total Assets at the time of the receipt of such Designated Noncash
Consideration, with the fair market value of each item of Designated Noncash
Consideration being measured at the time received and without giving effect to
subsequent changes in value,

 

shall
be deemed to be cash for purposes of this provision and for no other purpose.

 

(b)           Within 450 days after any of the
Company’s or any Restricted Subsidiary’s receipt of the Net Proceeds of any
Asset Sale, the Company or such Restricted Subsidiary may, at its option, apply
the Net Proceeds from such Asset Sale:

 

(1)           to permanently reduce

 

(x)            Obligations under any Senior Indebtedness of
the Company or any Subsidiary Guarantor and, in the case of Obligations under
revolving credit facilities or other similar Indebtedness, to correspondingly
permanently reduce commitments with respect thereto (other than Obligations
owed to the Company or a Restricted Subsidiary); provided that if the Company or any Restricted Subsidiary
shall so reduce Obligations under any Indebtedness that is not Secured
Indebtedness, the Company or such Subsidiary Guarantor shall, equally and
ratably, reduce Obligations under the Notes by, at its option, (A) redeeming
Notes if the Notes are then redeemable as provided by the terms of the Notes,
(B) making an offer (in accordance with the procedures set forth in this
Section 1018) to all Holders to purchase their Notes at 100% of the
principal amount thereof, plus
the amount of accrued and unpaid interest and Additional Interest, if any, on
the principal amount of Notes to be repurchased or (C) purchasing Notes through
open market purchases (to the extent such purchases are at a price equal to or
higher than 100% of the principal amount thereof) in a manner that complies
with this Indenture and applicable securities law; or

 

(y)           Indebtedness of a Restricted Subsidiary that
is not a Subsidiary Guarantor, other than Indebtedness owed to the Company or
another Restricted Subsidiary; or

 

112

 

(2)           to an investment in (A) any one or more
businesses; provided that such
investment in any business is in the form of the acquisition of Capital Stock
and results in the Company or any Restricted Subsidiary owning an amount of the
Capital Stock of such business such that it constitutes a Restricted
Subsidiary, (B) properties, (C) capital expenditures and (D) acquisitions
of other assets, that in each of (A), (B), (C) and (D), are used or useful in a
Similar Business or replace the businesses, properties and assets that are the
subject of such Asset Sale.

 

(c)           Any Net Proceeds from the Asset Sale that
are not invested or applied in accordance with the preceding paragraph within
450 days from the date of the receipt of such Net Proceeds shall be deemed to
constitute “Excess Proceeds”; provided that if during such 450-day
period the Company or a Restricted Subsidiary enters into a definitive binding
agreement committing it to apply such Net Proceeds in accordance with the
requirements of clause (2) of Section 1018(b) after such 450th day, such
450-day period shall be extended with respect to the amount of Net Proceeds so
committed until such Net Proceeds are required to be applied in accordance with
such agreement (but such extension shall in no event be for a period longer
than 180 days) (or, if earlier, the date of termination of such agreement).
When the aggregate amount of Excess Proceeds exceeds $45.0 million, the Company
shall make an offer to all Holders and, if required by the terms of any Senior
Indebtedness, to the holders of such Senior Indebtedness (other than with
respect to Hedging Obligations) (an “Asset
Sale Offer”), to purchase the maximum aggregate principal amount of
Notes and such Senior Indebtedness that is an integral multiple of $1,000 that
may be purchased out of the Excess Proceeds at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and
Additional Interest, if any, to the date fixed for the closing of such offer,
in accordance with the procedures set forth in this Indenture. The Company
shall commence an Asset Sale Offer with respect to Excess Proceeds within ten
Business Days after the date that Excess Proceeds exceed $45.0 million by mailing
the notice required pursuant to the terms of this Indenture, with a copy to the
Trustee. The Company may satisfy the foregoing obligations with respect to any
Net Proceeds from an Asset Sale by making an Asset Sale Offer with respect to
such Net Proceeds prior to the expiration of the relevant 450 days or with
respect to Excess Proceeds of $45.0 million or less.  To the extent that the aggregate amount of
Notes and such Senior Indebtedness tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes, subject to the other covenants
contained in this Indenture. If the aggregate principal amount of Notes or the
Senior Indebtedness surrendered by such holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select or cause to be selected the Notes and
such Senior Indebtedness to be purchased on a pro
rata basis based on the accreted value or principal amount of the
Notes or such Senior Indebtedness tendered. Upon completion of any such Asset
Sale Offer, the amount of Excess Proceeds related to such Asset Sale Offer
shall be reset at zero.

 

(d)           Pending the final application of any Net
Proceeds pursuant to this Section 1018, the Company or the applicable Restricted
Subsidiary may apply such Net

 

113

 

Proceeds
temporarily to reduce Indebtedness outstanding under a revolving credit
facility or otherwise invest such Net Proceeds in any manner not prohibited by
this Indenture.

 

(e)           The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws or regulations are
applicable in connection with the repurchase of Notes pursuant to an Asset Sale
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this Indenture, the Company shall comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations described in this Indenture by virtue thereof.

 

(f)            If the Company is repurchasing less than
all of the Notes at any time, the Trustee shall select the Notes to be
repurchased (a) if the Notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities exchange
on which such Notes are listed or (b) if such Notes are not so listed, on a pro rata basis to the extent practicable; provided that no Notes of $2,000 or less
shall be repurchased in part.

 

(g)           Notices of repurchase shall be mailed by
first class mail, postage prepaid, at least 30 days but not more than 60 days
before the date of repurchase to each Holder at such Holder’s registered
address, except that notices of repurchase may be mailed more than 60 days
prior to a date of repurchase if the notice is issued in connection with a
defeasance of the Notes or a satisfaction and discharge of this Indenture. If
any Note is to be repurchased in part only, any notice of repurchase that
relates to such Note shall state the portion of the principal amount thereof to
be repurchased.

 

(h)           A new Note in principal amount equal to
the unrepurchased portion of any Note repurchased in part shall be issued in
the name of the Holder thereof upon cancellation of the original Note. Notes
called for repurchase become due and payable on the date fixed for repurchase.
On and after the date of repurchase, unless the Company defaults in the
repurchase payment, interest shall cease to accrue on the Note or portions
thereof called for repurchase.

 

SECTION
1019.  Additional Interest Notice.  In the event that the Company is required to
pay Additional Interest to Holders pursuant to the Registration Rights
Agreement, the Company shall provide written notice (an “Additional Interest Notice”) to the
Trustee of its obligation to pay Additional Interest no later than fifteen days
prior to the proposed payment date for the Additional Interest, and the
Additional Interest Notice shall set forth the amount of Additional Interest to
be paid by the Company on such payment date. 
The Trustee shall not at any time be under any duty or responsibility to
any Holder to determine the Additional Interest, or with respect to the nature,
extent, or calculation of the amount of Additional Interest owed, or with
respect to the method employed in such calculation of the Additional Interest.

 

(a)           Obligations of the Company and the
Restricted Subsidiaries Relating to Kate Spade.  In the event
that Kate Spade sells, conveys, transfers or

 

114

 

otherwise
disposes all or substantially all of its properties or assets in one or more
related transactions, the Company shall, subject to its fiduciary duties to the
holders of minority Equity Interests in Kate Spade and subject to any other
obligations in the organizational documents of Kate Spade or other agreements
with Kate Spade or holders of its Equity Interests (in each case, as in effect
on the Issue Date), exercise its rights and powers as a controlling holder of
Equity Interests in Kate Spade to cause Kate Spade to distribute to the Company
its pro rata share of the net proceeds of such sale, conveyance, transfer or
other disposition, the Company shall apply such proceeds in accordance with
Section 1018 of this Indenture and such proceeds shall constitute “Net
Proceeds” thereunder.  In addition, the
Company shall, and shall cause its Restricted Subsidiaries to, apply the amount
of any other Extraordinary Distribution in accordance with Section 1018 of this
Indenture and such amount will constitute “Net Proceeds” thereunder.  Furthermore, the Company, in its capacity as
a holder of Equity Interests in Kate Spade, shall not, and shall cause its
Restricted Subsidiaries not to, waive any of its rights to receive dividends,
distributions or other payments from Kate Spade or consent to an amendment of
Kate Spade’s organizational documents or other agreements that would restrict
Kate Spade’s ability to make any such distributions.

 

SECTION
1020.  No Amendment to Subordination
Provision.  Without the consent of
the Holders of a majority in Outstanding aggregate principal amount of the
Notes, the Company shall not amend, modify or alter the Senior Subordinated
Indenture in any way to:

 

(1)           increase the rate of or change the time
for payment of interest on any Senior Subordinated Notes;

 

(2)           increase the principal of, advance the
final maturity date of or shorten the Weighted Average Life to Maturity of any
Senior Subordinated Notes;

 

(3)            alter the redemption provisions or the
price or terms at which the Company is required to offer to purchase any Senior
Subordinated Notes; or

 

(4)           amend the provisions of the Senior
Subordinated Indenture that relate to subordination.

 

SECTION
1021.  Designation of “Designated
Senior Indebtedness”.  The Company
hereby designates the Notes to be “Designated Senior Indebtedness” under the
Senior Subordinated Indenture.

 

115

 

ARTICLE
ELEVEN

REDEMPTION OF NOTES

 

SECTION
1101.  Right of Redemption.  (a)  At
any time prior to October 15, 2010, the Company may redeem all or a part
of the Notes, upon not less than 30 nor more than 60 days’ prior notice,
at a redemption price equal to 100% of the principal amount of Notes redeemed
plus the Applicable Premium as of, and accrued and unpaid interest and
Additional Interest, if any, to the Redemption Date, subject to the rights of
Holders on the relevant Record Date to receive interest due on the relevant
Interest Payment Date.

 

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

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2010

  	
   

  	
  104.500

  	
  %

  
	
  2011

  	
   

  	
  103.000

  	
  %

  
	
  2012

  	
   

  	
  101.500

  	
  %

  
	
  2013 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

(c)           Prior to October 15, 2008, the Company
may, at its option, redeem up to 35% of the aggregate principal amount of Notes
issued under this Indenture at a redemption price equal to 109.000% of the
aggregate principal amount thereof, plus accrued and unpaid interest and
Additional Interest, if any, thereon to the applicable Redemption Date, subject
to the right of Holders on the relevant record date to receive interest due on
the relevant interest payment date, with the net cash proceeds of one or more
Equity Offerings of the Company or any direct or indirect parent of the Company
to the extent such net cash proceeds are contributed to the Company; provided that at least 50% of the sum of
the aggregate principal amount of Notes originally issued under this Indenture
and any Additional Notes issued under this Indenture after the Issue Date
remains Outstanding immediately after the occurrence of each such redemption; provided, further, that each such
redemption occurs within 90 days of the date of closing of each such
Equity Offering.

 

SECTION
1102.  Applicability of Article.  Redemption of Notes at the election of the
Company or otherwise, as permitted or required by any provision of this
Indenture or the Notes, shall be made in accordance with such provision and
this Article.

 

116

 

SECTION
1103.  Election to Redeem; Notice to
Trustee.  The election of the Company
to redeem any Notes pursuant to Section 1101 above shall be evidenced by a
Board Resolution.  If the Company elects
to redeem Notes pursuant to Section 1101 hereof, it shall furnish to the
Trustee, at least five Business Days before notice of redemption is required to
be mailed or caused to be mailed to Holders pursuant to Section 1105 hereof, an
Officers’ Certificate setting forth (i) the paragraph or subparagraph of such
Note and/or Section of this Indenture pursuant to which the redemption shall
occur, (ii) the Redemption Date, (iii) the principal amount of the Notes to be
redeemed and (iv) the Redemption Price.

 

SECTION
1104.  Selection by Trustee of Notes
to Be Redeemed.  (a)  If the Company is redeeming less than all of
the Notes at any time, the Trustee shall select the Notes to be redeemed
(a) if the Notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities exchange
on which such Notes are listed or (b) if such Notes are not so listed, on
a pro rata basis to the extent
practicable; provided that no
Notes of $2,000 or less shall be redeemed in part.

 

(b)           If any Note is to be redeemed in part
only, any notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed.

 

(c)           A new Note in principal amount equal to
the unredeemed portion of any Note redeemed in part shall be issued in the name
of the Holder thereof upon cancellation of the original Note.  Notes called for redemption become due and
payable on the date fixed for redemption. 
On and after the Redemption Date, unless the Company defaults in the
redemption payment, interest shall cease to accrue on the Note or portions
thereof called for redemption.

 

SECTION
1105.  Notice of Redemption.  Notices of redemption shall be mailed by
first class mail, postage prepaid, at least 30 days but not more than
60 days before the Redemption Date to each Holder at such Holder’s
registered address, except that notices of redemption may be mailed more than
60 days prior to a Redemption Date if the notice is issued in connection
with a defeasance of the Notes or a satisfaction and discharge of this
Indenture.

 

All
notices of redemption shall state:

 

(1)           the Redemption Date,

 

(2)           the Redemption Price and the amount of
accrued interest to the Redemption Date payable as provided in
Section 1107, if any,

 

(3)           if less than all Outstanding Notes are to
be redeemed, the identification (and, in the case of a partial redemption, the
principal amounts) of the particular Notes to be redeemed,

 

(4)           in case any Note is to be redeemed in
part only, the notice which relates to such Note shall state that on and after
the Redemption Date, upon

 

117

 

surrender of such Note,
the Holder shall receive, without charge, a new Note or Notes of authorized
denominations for the principal amount thereof remaining unredeemed,

 

(5)           that on the Redemption Date the
Redemption Price (and accrued interest, if any, to the Redemption Date payable
as provided in Section 1107) shall become due and payable upon each such
Note, or the portion thereof, to be redeemed, and that interest thereon shall
cease to accrue on and after said date,

 

(6)           the place or places where such Notes are
to be surrendered for payment of the Redemption Price and accrued interest, if
any,

 

(7)           the name and address of the Paying Agent,

 

(8)           that Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price,

 

(9)           that, unless the Company defaults in
making such redemption payment, interest on Notes called for redemption ceases
to accrue on and after the Redemption Date;

 

(10)         the “CUSIP” number, ISIN or “Common Code”
number and that no representation is made as to the accuracy or correctness of
the “CUSIP” number, ISIN or “Common Code” number, if any, listed in such notice
or printed on the Notes, and

 

(11)         the paragraph of the Notes or Section of
the Indenture pursuant to which the Notes are to be redeemed.

 

At
the Company’s request, the Trustee shall give the notice of redemption in the
Company’s name and at its expense; provided
that the Company shall have delivered to the Trustee, at least five Business
Days before notice of redemption is required to be mailed or caused to be
mailed to Holders pursuant to this Section 1105 (unless a shorter notice shall
be agreed to by the Trustee), an Officers’ Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in Section 1103.

 

SECTION
1106.  Effect of Notice of Redemption.  Once notice of redemption is mailed in
accordance with Section 1105 hereof, Notes called for redemption become
irrevocably due and payable on the Redemption Date at the Redemption
Price.  The notice, if mailed in a manner
herein provided, shall be conclusively presumed to have been given, whether or
not the Holder receives such notice.  In
any case, failure to give such notice by mail or any defect in the notice to
the Holder of any Note designated for redemption in whole or in part shall not
affect the validity of the proceedings for the redemption of any other
Note.  Subject to Section 1107 hereof, on
and after the Redemption Date, interest ceases to accrue on Notes or portions
of Notes called for redemption.

 

118

 

SECTION
1107.  Deposit of Redemption Price.  Prior to 10:00 a.m. (Eastern Time) on
any Redemption Date, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and accrued interest and Additional
Interest, if any, on, all the Notes that are to be redeemed on that date.  The Trustee or the Paying Agent shall
promptly return to the Company any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued and unpaid interest and Additional Interest,
if any, on, all Notes to be redeemed or purchased.

 

SECTION
1108.  Notes Payable on Redemption
Date.  (a)  Notice of redemption having been given as
aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified (together with
accrued interest and Additional Interest, if any, to the Redemption Date), and
from and after such date (unless the Company shall default in the payment of
the Redemption Price and accrued interest) such Notes shall cease to bear
interest.  Upon surrender of any such
Note for redemption in accordance with said notice, such Note shall be paid by
the Company at the Redemption Price, together with accrued interest and
Additional Interest, if any, to the Redemption Date and such Notes shall be
canceled by the Trustee; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Notes, or one or more
Predecessor Notes, registered as such at the close of business on the relevant
Record Dates according to their terms and the provisions of Section 306.

 

(b)           If any Note called for redemption shall
not be so paid upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the Redemption Date at
the rate borne by the Notes.

 

SECTION
1109.  Notes Redeemed in Part.  Any Note which is to be redeemed only in part
(pursuant to the provisions of this Article) shall be surrendered at the office
or agency of the Company maintained for such purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder’s
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Note without
service charge, a new Note or Notes, of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Note so
surrendered; provided that no
Note of $2,000 or less will be redeemed in part.

 

119

 

ARTICLE TWELVE

GUARANTEES

 

SECTION
1201.  Guarantees.  From and after the consummation of the
Merger, each Guarantor hereby jointly and severally, irrevocably and
unconditionally irrevocably guarantees, as primary obligor and not merely as
surety, the Notes and obligations of the Company hereunder and thereunder, and
guarantees to each Holder of a Note authenticated and delivered by the Trustee,
and to the Trustee for itself and on behalf of such Holder, that: (1) the
principal of (and premium, if any) and interest on, or Additional Interest in
respect of, the Notes shall be paid in full when due, whether at Stated
Maturity, by acceleration or otherwise (including the amount that would become
due but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Law), together with interest on the overdue principal, if any, and
interest on any overdue interest, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or
thereunder shall be paid in full or performed, all in accordance with the terms
hereof and thereof; and (2) in case of any extension of time of payment or
renewal of any Notes or of any such other obligations, the same shall be paid
in full when due or performed in accordance with the terms of the extension or
renewal, whether at Stated Maturity, by acceleration or otherwise, subject,
however, in the case of clauses (1) and (2) above, to the limitation set forth
in Section 1204 hereof.

 

(a)           Each Guarantor hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder with respect to
any provisions hereof or thereof, any release of any other Guarantor, the
recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor.

 

(b)           Each Guarantor hereby waives (to the
extent permitted by law) the benefits of diligence, presentment, demand for
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company or
any other Person, protest, notice and all demands whatsoever and covenants that
the Guarantee of such Guarantor shall not be discharged as to any Note except
by complete performance of the obligations contained in such Note, this
Indenture and such Guarantee.  Each
Guarantor acknowledges that the Guarantee is a guarantee of payment,
performance and compliance when due and not of collection.  Each of the Guarantors hereby agrees that, in
the event of a default in payment of principal (or premium, if any) or interest
on such Note, whether at its Stated Maturity, by acceleration, purchase or
otherwise, legal proceedings may be instituted by the Trustee on behalf of, or
by, the Holder of such Note, subject to the terms and conditions set forth in
this Indenture, directly against each of the Guarantors to enforce such
Guarantor’s Guarantee without first proceeding against the Company or any other
Guarantor.  Each Guarantor agrees that
if, after the occurrence and during the

 

120

 

continuance
of an Event of Default, the Trustee or any of the Holders are prevented by
applicable law from exercising their respective rights to accelerate the
Maturity of the Notes, to collect interest on the Notes, or to enforce or
exercise any other right or remedy with respect to the Notes, such Guarantor
shall pay to the Trustee for the account of the Holder, upon demand therefor,
the amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Trustee or any of the Holders.

 

(c)           If any Holder or the Trustee is required
by any court or otherwise to return to the Company or any Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
either the Company or any Guarantor, any amount paid by any of them to the
Trustee or such Holder, the Guarantee of each of the Guarantors, to the extent
theretofore discharged, shall be reinstated in full force and effect.  Each Guarantor further agrees that, as
between each Guarantor, on the one hand, and the Holders and the Trustee on the
other hand, (1) subject to this Article Twelve, the Maturity of the obligations
guaranteed hereby may be accelerated as provided in Article Five hereof for the
purposes of the Guarantee of such Guarantor notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (2) in the event of any acceleration of such
obligation as provided in Article Five hereof, such obligations (whether or not
due and payable) shall forthwith become due and payable by each Guarantor for
the purpose of the Guarantee of such Guarantor. 
The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantees.

 

(d)           Each Guarantee shall remain in full force
and effect and continue to be effective should any petition be filed by or
against the Company for liquidation, reorganization, should the Company become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Company’s assets, and shall, to the fullest extent permitted by law, continue
to be effective or be reinstated, as the case may be, if at any time payment
and performance of the Notes are, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee on
the Notes, whether as a “voidable preference”, “fraudulent transfer” or
otherwise, all as though such payment or performance had not been made.  In the event that any payment or any part
thereof, is rescinded, reduced, restored or returned, the Notes shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned. 

 

SECTION
1202.  Severability.  In case any provision of any Guarantee shall
be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby to the extent permitted by applicable law.

 

SECTION
1203.  Reserved.

 

121

 

SECTION
1204.  Limitation of Guarantors’
Liability.  Each Guarantor, and by
its acceptance of Notes, each Holder hereby confirms that it is the intention
of all such parties that the Guarantee of such Guarantor not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law to the extent applicable to any Guarantee or the
provisions of its local law relating to fraudulent transfer or conveyance.  To effectuate the foregoing intention, the
Trustee, the Holders and each such Guarantor hereby irrevocably agree that the
obligations of such Guarantor under its Guarantee shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Guarantor that are relevant
under such laws and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under this
Article Eleven, result in the obligations of such Guarantor under its Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under
applicable law.

 

SECTION
1205.  Contribution.  Each Guarantor that makes a payment under its
Guarantee shall be entitled upon payment in full of all guaranteed obligations
under this Indenture to a contribution from each other Guarantor in an amount
equal to such other Guarantor’s pro rata
portion of such payment based on the respective net assets of all the
Guarantors at the time of such payment determined in accordance with GAAP (and for
purposes of this Section 1205, Holdings’ net assets shall be those of all its
consolidated Subsidiaries (other than the Subsidiary Guarantors)).

 

SECTION
1206.  Subrogation.  Each Guarantor shall be subrogated to all
rights of Holders against the Company in respect of any amounts paid by any
Guarantor pursuant to the provisions of Section 1201; provided, however, that, if a Default or
Event of Default has occurred and is continuing, no Guarantor shall be entitled
to enforce or receive any payments arising out of, or based upon, such right of
subrogation until all amounts then due and payable by the Company under this
Indenture or the Notes shall have been paid in full.

 

SECTION
1207.  Reinstatement.  Each Guarantor hereby agrees (and each Person
who becomes a Guarantor shall agree) that the Guarantee provided for in Section
1201 shall continue to be effective or be reinstated, as the case may be, if at
any time, payment, or any part thereof, of any obligations or interest thereon
is rescinded or must otherwise be restored by a Holder to the Company upon the
bankruptcy or insolvency of the Company or any Guarantor.

 

SECTION
1208.  Release of a Guarantor.  The Subsidiary Guarantee of a Subsidiary
Guarantor shall automatically and unconditionally be released and discharged,
and no further action by such Guarantor, the Company or the Trustee is required
for the release of such Guarantor’s Guarantee, upon:

 

(1)           (A) 
the sale, disposition or other transfer (including through merger or
consolidation) of all of the Capital Stock (or any sale, disposition or other
transfer of Capital Stock following which such

 

122

 

Subsidiary Guarantor is
no longer a Restricted Subsidiary), or all or substantially all the assets, of
such Subsidiary Guarantor (other than a sale, disposition or other transfer to
a Restricted Subsidiary) if such sale, disposition or other transfer is made in
compliance with the applicable provisions of this Indenture;

 

(B)  the designation by the Company of such
Subsidiary Guarantor as an Unrestricted Subsidiary in accordance
Section 1010 of this Indenture and the definition of “Unrestricted
Subsidiary”;

 

(C)  the release or discharge of such Subsidiary
Guarantor from its guarantee of Indebtedness under the Senior Credit Facilities
or the guarantee that resulted in the obligation of such Subsidiary Guarantor
to guarantee the Notes, in each case, if such Subsidiary Guarantor would not
then otherwise be required to guarantee the Notes pursuant to Section 1015
of this Indenture (treating any guarantees of such Subsidiary Guarantor that
remain outstanding as incurred at least 30 days prior to such release),
except, in each case, a release or discharge by, or as a result of, payment
under such Guarantee or payment in full of the Indebtedness under the Senior
Credit Facilities; or

 

(D)  exercise by the Company of its Legal
Defeasance of the Notes under Section 1302 of this Indenture or its
Covenant Defeasance of the Notes under Section 1303 of this Indenture or
if the Company’s obligations under this Indenture are discharged in accordance
with Section 401 of this Indenture; and

 

(2)           in the case of clause (1) (a)
above, the release of such Subsidiary Guarantor from its guarantee, if any, of
and all pledges and security, if any, granted in connection with, the Senior
Credit Facilities, the Senior Subordinated Notes and any other Indebtedness of
the Company or any Restricted Subsidiary.

 

SECTION
1209.  Benefits Acknowledged.  Each Guarantor acknowledges that it shall receive
direct and indirect benefits from the financing arrangements contemplated by
this Indenture and from its guarantee and waivers pursuant to its Guarantees
under this Article Twelve.

 

123

 

ARTICLE
THIRTEEN

LEGAL
DEFEASANCE AND COVENANT DEFEASANCE

 

SECTION
1301.  Company’s Option to Effect
Legal Defeasance or Covenant Defeasance. 
The Company may, at its option, and at any time, elect to have either
Section 1302 or Section 1303 be applied to all Outstanding Notes upon
compliance with the conditions set forth below in this Article Thirteen.

 

SECTION
1302.  Legal Defeasance and Discharge.  Upon the Company’s exercise under
Section 1301 of the option applicable to this Section 1302, each of
the Company and the Guarantors shall be deemed to have been discharged from its
respective obligations with respect to all Outstanding Notes on the date the
conditions set forth in Section 1304 are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, such Legal Defeasance means
that each of the Company and the Guarantors shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Notes, which
shall thereafter be deemed to be “Outstanding” only for the purposes of Section 1305
and the other Sections of this Indenture referred to in (1) and (2) below, and
to have satisfied all its other obligations under such Notes and this Indenture
insofar as such Notes and their related Guarantees are concerned (and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder:

 

(1)           the rights of Holders of Outstanding
Notes to receive payments in respect of the principal of (and premium, if any,
on) and interest on such Notes when such payments are due, solely out of the
trust created pursuant to this Indenture (as described in Section 1304), 

 

(2)           the Company’s obligations with respect to
such Notes under Sections 303, 304, 305, 1002 and 1003, 

 

(3)           the rights, powers, trusts, duties and
immunities of the Trustee hereunder, and the obligations of each of the Company
and the Guarantors in connection therewith and 

 

(4)           this Article Thirteen.  

 

Subject to compliance
with this Article Thirteen, the Company may exercise its option under this
Section 1302 notwithstanding the prior exercise of its option under
Section 1303 with respect to the Notes.

 

SECTION
1303.  Covenant Defeasance.   Upon
the Company’s exercise under Section 1301 of the option applicable to this
Section 1303, each of the Company and the Guarantors shall be released
from its respective obligations under any covenant contained in
Sections 801, 802, 803 and in Sections 1005, 1006, 1007 and 1009
through and including 1018 and 1020 with respect to the Outstanding Notes on
and after the date

 

124

 

the conditions set forth below are satisfied
(hereinafter, “Covenant Defeasance”),
and the Notes shall thereafter be deemed not to be “Outstanding” for the
purposes of any direction, waiver, consent or declaration or Act of Holders
(and the consequences of any thereof) in connection with such covenants, but
shall continue to be deemed “Outstanding” for all other purposes
hereunder.  For this purpose, such
Covenant Defeasance means that, with respect to the Outstanding Notes, the
Company or any Guarantor, as applicable, may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Sections 501(3), 501(4), 501(5) and 501(7) and, with respect to only any
Significant Subsidiary and not the Company, Section 501(6), but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby.

 

SECTION
1304.  Conditions to Legal Defeasance
or Covenant Defeasance.  The
following shall be the conditions to application of either Section 1302 or
Section 1303 to the Outstanding Notes:

 

(1)           the Company shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 608 who shall agree to comply with
the provisions of this Article Thirteen applicable to it) as trust funds
in trust for the purpose of making the following payments, specifically pledged
as security for, and dedicated solely to the benefit of the Holders of such
Notes; (A) cash in U.S. dollars, or (B) non-callable Government Securities, or
(C) a combination thereof, in such amounts as shall be sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, the principal of (and premium, if any) and
interest on the Outstanding Notes on the Stated Maturity (or Redemption Date,
if applicable) of such principal (and premium, if any) or, interest due on the
Notes; provided that the Trustee
shall have been irrevocably instructed to apply such cash or the proceeds of
such Government Securities to said payments with respect to the Notes; before
such a deposit, the Company may give to the Trustee, in accordance with Section 1103
hereof, a notice of its election to redeem all of the Outstanding Notes at a
future date in accordance with Article Eleven hereof, which notice shall
be irrevocable; such irrevocable redemption notice, if given, shall be given
effect in applying the foregoing;

 

(2)           in the case of Legal Defeasance, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions,

 

(A)  the Company has received from, or there has
been published by, the United States Internal Revenue Service a ruling, or

 

125

 

(B)  since the issuance of the Notes, there has
been a change in the applicable U.S. Federal income tax law,

 

in
either case to the effect that, and based thereon such Opinion of Counsel in
the United States shall confirm that, subject to customary assumptions and
exclusions, the Holders shall not recognize income, gain or loss for U.S. Federal
income tax purposes as a result of such Legal Defeasance and shall be subject
to U.S. Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;

 

(3)           in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, the Holders shall not recognize income,
gain or loss for U.S. Federal income tax purposes as a result of such Covenant
Defeasance and shall be subject to such tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;

 

(4)           no Default (other than that resulting
from borrowing funds to be applied to make such deposit and the granting of
Liens in connection therewith) shall have occurred and be continuing on the
date of such deposit;

 

(5)           such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a
default under any of the Senior Credit Facilities, the Senior Subordinated
Indenture, the Existing Indenture, the Senior Subordinated Notes, the Existing
2028 Debentures or any other material agreement or instrument (other than this
Indenture) to which, the Company, Holdings or any Subsidiary Guarantor is a
party or by which the Company, Holdings or any Subsidiary Guarantor is bound;

 

(6)           the Company shall have delivered to the
Trustee an Opinion of Counsel in the United States of America to the effect
that, as of the date of such opinion and subject to customary assumptions and
exclusions following the deposit, the trust funds shall not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally under any applicable U.S. Federal or
state law, and that the Trustee has a perfected security interest in such trust
funds for the ratable benefit of the Holders;

 

(7)           the Company shall have delivered to the
Trustee an Officers’ Certificate stating that the deposit was not made by the
Company with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or any Guarantor or others; and

 

(8)           the Company shall have delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel in the United States
of America (which

 

126

 

Opinion of Counsel may be
subject to customary assumptions and exclusions) each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance, as the case may be, have been complied with.

 

SECTION
1305.  Deposited Money and Government
Securities to Be Held in Trust; Other Miscellaneous Provisions.  All cash and Government Securities (including
the proceeds thereof) deposited with the Trustee (or other qualifying trustee,
collectively for purposes of this Section 1305, the “Qualifying Trustee”) pursuant to Section 1304
in respect of the Outstanding Notes shall be held in trust and applied by the
Qualifying Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company or a Subsidiary acting as its own Paying Agent) as the
Qualifying Trustee may determine, to the Holders of such Notes of all sums due
and to become due thereon in respect of principal (and premium, if any) and
interest, but such money or Government Securities need not be segregated from
other funds except to the extent required by law.

 

The
Company shall pay and indemnify the Qualifying Trustee against any tax, fee or
other charge imposed on or assessed against the Government Securities deposited
pursuant to Section 1304 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the Outstanding Notes.

 

Anything
in this Article Thirteen to the contrary notwithstanding, the Qualifying
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Securities held by it as provided in
Section 1304 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Qualifying Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance, as applicable, in accordance with this Article.

 

SECTION
1306.  Reinstatement.  If the Trustee or any Paying Agent is unable
to apply any money or Government Securities in accordance with
Section 1305 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company’s and each Guarantor’s obligations under this
Indenture and the Outstanding Notes shall be revived and reinstated as though
no deposit had occurred pursuant to Section 1302 or 1303, as the case may
be, until such time as the Trustee or Paying Agent is permitted to apply all
such money or Government Securities in accordance with Section 1305; provided, however, that if the Company
makes any payment of principal of (or premium, if any) or interest on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money or Government Securities held by the Trustee or Paying Agent.

 

SECTION
1307.  Repayment to Company.  Any money deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment of

 

127

 

the principal of, premium and Additional
Interest, if any, or interest on any Note and remaining unclaimed for two years
after such principal, and premium and Additional Interest, if any, or interest
has become due and payable shall be paid to the Company on its request or (if
then held by the Company) shall be discharged from such trust; and the Holder
of such Note shall thereafter look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease.

 

128

 

IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the day and year first above written.

 

 

	
   

  	
  NEWTON ACQUISITION MERGER SUB,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kewsong Lee

  	
   

  
	
   

  	
   

  	
  Name:
  Kewsong Lee

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  The
  undersigned hereby acknowledges and agrees that, upon the effectiveness of
  the merger of Newton Acquisition Merger Sub, Inc. with and into the Neiman
  Marcus Group, Inc. with the Neiman Marcus Group, Inc. continuing as the
  surviving corporation, it shall succeed by operation of law to all of the
  rights and obligations of Newton Acquisition Merger Sub, Inc., set forth
  herein and that all references to the “Company” shall thereupon be deemed to
  be references to the undersigned.

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE
  NEIMAN MARCUS GROUP, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Nelson A. Bangs

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Nelson
  A. Bangs

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President and

  General Counsel

  	
   

  
									

 

129

 

	
   

  	
  NEWTON
  ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:
  Nelson A. Bangs

  
	
   

  	
   

  	
  Title:
   Senior Vice President and

  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Neiman
  Marcus Special Events, Inc.,

  
	
   

  	
  NM
  Financial Services, Inc.,

  
	
   

  	
  NM
  Kitchens, Inc.,

  
	
   

  	
  BergdorfGoodman.com,
  LLC,

  
	
   

  	
  Bergdorf
  Goodman, Inc.,

  
	
   

  	
  Bergdorf
  Graphics, Inc.,

  
	
   

  	
  Neiman
  Marcus Holdings, Inc.,

  
	
   

  	
  NEMA
  Beverage Corporation,

  
	
   

  	
  NEMA
  Beverage Holding Corporation,

  
	
   

  	
  NEMA
  Beverage Parent Corporation,

  
	
   

  	
  Worth
  Avenue Leasing Company,

  
	
   

  	
  NMGP,
  LLC,

  
	
   

  	
  NM
  Nevada Trust,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:
  Nelson A. Bangs

  
	
   

  	
   

  	
  Title:
   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL

  ASSOCIATION,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph P. O’Donnell

  	
   

  
	
   

  	
   

  	
  Name:
  Joseph P. O’Donnell

  
	
   

  	
   

  	
  Title:
   Vice President

  

 

130

 

SCHEDULE I

 

Subsidiary
Guarantors

 

1.             Neiman Marcus Special Events, Inc., a
Delaware corporation

 

2.             NM Financial Services, Inc., a Delaware
corporation

 

3.             NM Kitchens, Inc., a Delaware corporation

 

4.             BergdorfGoodman.com, LLC, a Delaware limited
liability company

 

5.             Bergdorf Goodman, Inc., a New York
corporation

 

6.             Bergdorf Graphics, Inc., a New York
corporation

 

7.             Neiman Marcus Holdings, Inc., a California
corporation

 

8.             NEMA Beverage Corporation, a Texas
corporation

 

9.             NEMA Beverage Holding Corporation, a Texas
corporation

 

10.           NEMA Beverage Parent Corporation, a Texas
corporation

 

11.           Worth Avenue Leasing Company, a Florida
corporation

 

12.           NMGP, LLC, a Virginia limited liability
company

 

13.           NM Nevada Trust , a Massachusetts business
trust

 

 

Rule 144A / Regulation S Appendix

 

PROVISIONS RELATING TO INITIAL NOTES,

PRIVATE EXCHANGE NOTES

AND EXCHANGE NOTES

 

1.             Definitions

 

1.1           Definitions.

 

For
the purposes of this Appendix the following terms shall have the meanings
indicated below:

 

“Applicable
Procedures” means, with respect to any transfer or transaction involving a
Temporary Regulation S Global Note or beneficial interest therein, the rules
and procedures of the Depository for such a Temporary Regulation S Global Note,
to the extent applicable to such transaction and as in effect from time to
time.

 

“Certificated
Note” means a certificated Initial Note or Exchange Note or Private Exchange
Note (other than a Global Note) bearing, if required, the appropriate
restricted notes legend set forth in Section 2.3(e) of this Appendix.

 

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

 

“Distribution
Compliance Period”, with respect to any Notes, means the period of 40
consecutive days beginning on and including the later of (i) the day on which
such Notes are first offered to Persons other than distributors (as defined in
Regulation S under the Securities Act) in reliance on Regulation S and (ii) the
issue date with respect to such Notes.

 

“Exchange
Notes” means (1) the 9%/93⁄4% Senior Notes Due 2015 issued pursuant to the
Indenture in connection with a Registered Exchange Offer pursuant to a
Registration Rights Agreement and (2) Additional Notes, if any, issued
pursuant to a registration statement filed with the SEC under the Securities
Act.

 

“Initial
Notes” means (1) $700,000,000 aggregate principal amount of 9%/93⁄4%  Senior Notes Due 2015 issued on the
Issue Date and (2) Additional Notes, if any, issued in a transaction
exempt from the registration requirements of the Securities Act.

 

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

 

“Notes”
means the Initial Notes, any PIK Notes, any Additional Notes, the Exchange
Notes and the Private Exchange Notes (including, in each case, any increase in
the principal amount thereof as a result of a PIK Payment), treated as a single
class.

 

 

“Notes
Custodian” means the custodian with respect to a Global Note (as appointed by
the Depository), or any successor Person thereto and shall initially be the
Trustee.

 

“Private
Exchange” means the offer by the Company, pursuant to a Registration Rights
Agreement, to the Initial Purchasers to issue and deliver to each Initial
Purchaser, in exchange for the Initial Notes held by the Initial Purchaser as
part of its initial distribution, a like aggregate principal amount of Private
Exchange Notes.

 

“Private
Exchange Notes” means any 9%/93⁄4% Senior Notes Due 2015 issued in connection
with a Private Exchange.

 

“Purchase
Agreement” means (1) with respect to the Initial Notes issued on the Issue
Date, the Purchase Agreement dated September 28, 2005, among the Company,
Holdings, the Subsidiary Guarantors and the Initial Purchasers, and
(2) with respect to each issuance of Additional Notes, the purchase
agreement or underwriting agreement among the Company, Holdings, the Subsidiary
Guarantors and the Persons purchasing such Additional Notes.

 

“QIB”
means a “qualified institutional buyer” as defined in Rule 144A.

 

“Registered
Exchange Offer” means the offer by the Company, pursuant to a Registration
Rights Agreement, to certain Holders of Initial Notes, to issue and deliver to
such Holders, in exchange for the Initial Notes, a like aggregate principal
amount of Exchange Notes registered under the Securities Act.

 

“Registration
Rights Agreement” means (1) with respect to the Initial Notes issued on
the Issue Date, the Exchange and Registration Rights Agreement dated October 6,
2005, among the Company, Holdings, the Subsidiary Guarantors and the Initial
Purchasers and (2) with respect to each issuance of Additional Notes
issued in a transaction exempt from the registration requirements of the
Securities Act, the registration rights agreement, if any, among the Company
and the Persons purchasing such Additional Notes under the related Purchase
Agreement.

 

“Representative”
means Credit Suisse First Boston LLC as representative of the Initial
Purchasers.

 

“Rule
144A Notes” means all Notes offered and sold to QIBs in reliance on
Rule 144A.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Shelf
Registration Statement” means the registration statement issued by the Company
in connection with the offer and sale of Initial Notes or Private Exchange
Notes pursuant to a Registration Rights Agreement.

 

2

 

“Transfer
Restricted Notes” means Notes that bear or are required to bear the legend
relating to restrictions on transfer relating to the Securities Act set forth
in Section 2.3(e) hereto.

 

1.2           Other Definitions.

 

	
  Term

  	
   

  	
  Defined in

  Section:

  	
   

  
	
  “Agent
  Members”

  	
   

  	
  2.1(b)

  	
   

  
	
  “Global
  Notes”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Permanent
  Regulation S Global Note”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Regulation
  S”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Regulation
  S Global Note”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Rule 144A”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Rule 144A
  Global Note”

  	
   

  	
  2.1(a)

  	
   

  
	
  “Temporary
  Regulation S Global Note”

  	
   

  	
  2.1(a)

  	
   

  

 

1.3           Capitalized terms used in this Appendix, but
not defined, have the meanings ascribed to such terms in the Indenture to which
this Appendix is attached.

 

2.             The Notes.

 

2.1           (a)  Form and Dating.  The Initial Notes shall be offered and sold
by the Company pursuant to a Purchase Agreement.  The Initial Notes shall be resold initially
only to (i) QIBs in reliance on Rule 144A under the Securities Act
(“Rule 144A”) and (ii) Persons other than U.S. Persons (as defined in
Regulation S) in reliance on Regulation S under the Securities Act
(“Regulation S”).  Initial Notes may
thereafter be transferred to, among others, QIBs and purchasers in reliance on
Regulation S, subject to the restrictions on transfer set forth
herein.  Initial Notes initially resold
pursuant to Rule 144A shall be issued initially in the form of one or more
permanent global Notes in definitive, fully registered form (collectively, the
“Rule 144A Global Note”); and Initial Notes initially resold pursuant to
Regulation S shall be issued initially in the form of one or more temporary
global notes in fully registered form (collectively, the “Temporary Regulation
S Global Note”), in each case without interest coupons and with the global
notes legend and the applicable restricted notes legend set forth in
Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of
the Initial Notes represented thereby with the Notes Custodian and registered
in the name of the Depository or a nominee of the Depository, duly executed by
the Company and authenticated by the Trustee as provided in this
Indenture.  Except as set forth in this
Section 2.1(a), beneficial ownership interests in the Temporary Regulation
S Global Note shall be held only through the Euroclear System (“Euroclear”) and
Clearstream Banking, S.A. (“Clearstream”) (as indirect participants in the
Depository) and shall not be exchangeable for interests in the Rule 144A Global
Note, a permanent Regulation S global note in fully registered form (the
“Permanent Regulation S Global Note”, and together with the Temporary
Regulation S Global Note, the “Regulation S Global Note”) or any other Note

 

3

 

prior to the expiration of the Distribution
Compliance Period and then, after the expiration of the Distribution Compliance
Period, may be exchanged for interests in a Rule 144A Global Note or the
Permanent Regulation S Global Note only upon certification in the form
attached hereto as Exhibit 3 or otherwise in a form reasonably
satisfactory to the Trustee that beneficial ownership interests in such
Temporary Regulation S Global Note are owned either by non-U.S. persons or U.S.
persons who purchased such interests in a transaction that is exempt from the registration
requirements under the Securities Act.

 

Prior
to the expiration of the Distribution Compliance Period, beneficial interests
in Temporary Regulation S Global Notes may be exchanged for interests in
Rule 144A Global Notes if (1) such exchange occurs in connection with
a transfer of Notes in compliance with Rule 144A and (2) the
transferor of the beneficial interest in the Temporary Regulation S Global
Note first delivers to the Trustee a written certificate (in a form substantially
similar to that attached hereto as Exhibit 2) to the effect that the
beneficial interest in the Temporary Regulation S Global Note is being
transferred (a) to a Person who the transferor reasonably believes to be a QIB
that is purchasing for its own account or the account of a QIB in a transaction
meeting the requirements of Rule 144A, and (b) in accordance with all
applicable securities laws of the States of the United States and other
jurisdictions.  

 

Beneficial
interests in a Rule 144A Global Note may be transferred to a Person who
takes delivery in the form of an interest in a Regulation S Global Note,
whether before or after the expiration of the Distribution Compliance Period,
only if the transferor first delivers to the Trustee a written certificate (in
a form substantially similar to that attached hereto as Exhibit 2) to the
effect that such transfer is being made in accordance with Rule 903 or 904
of Regulation S or Rule 144 (if applicable).

 

The
Rule 144A Global Note, the Temporary Regulation S Global Note and the
Permanent Regulation S Global Note are collectively referred to herein as
“Global Notes”.  The aggregate principal
amount of the Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depository or its
nominee as hereinafter provided. 

 

(b)           Book-Entry Provisions.  This
Section 2.1(b) shall apply only to a Global Note deposited with or on
behalf of the Depository.

 

The
Company shall execute and the Trustee shall, in accordance with this Section 2.1(b),
authenticate and deliver initially one or more Global Notes that (a) shall
be registered in the name of the Depository or the nominee of the Depository
and (b) shall be delivered by the Trustee to the Depository or pursuant to
the Depository’s instructions or held by the Trustee as custodian for the
Depository.

 

Members
of, or participants in, the Depository (“Agent Members”) shall have no rights
under this Indenture with respect to any Global Note held on their behalf by
the Depository or by the Trustee as the custodian of the Depository or under
such Global Note, and the Company, the Trustee and any agent of the Company or
the Trustee

 

4

 

shall be entitled to treat the Depository as
the absolute owner of such Global Note for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices of such Depository
governing the exercise of the rights of a holder of a beneficial interest in
any Global Note.

 

(c)           Certificated Notes. 
Except as provided in this Section 2.1 or Section 2.3 or 2.4,
owners of beneficial interests in Global Notes shall not be entitled to receive
physical delivery of Certificated Notes.

 

2.2           Authentication; PIK Interest.  The Trustee shall upon receipt
of a Company Order specified in Section 202 of the Indenture authenticate
and deliver:  (1) on the Issue Date,
an aggregate principal amount of $700,000,000 9%/93⁄4% Senior Notes Due
2015, (2) any Additional Notes for an original issue in an aggregate principal
amount specified in the written order of the Company pursuant to
Section 202 of the Indenture, (3) any PIK Notes issued in payment of PIK
Interest in an aggregate principal amount specified in the written order of the
Company pursuant to Section 301 of the Indenture and (4) Exchange Notes or Private Exchange Notes for
issue only in a Registered Exchange Offer or a Private Exchange, respectively,
pursuant to a Registration Rights Agreement, for a like principal amount of
Initial Notes, in each case upon a Company Order signed by two Officers or by
an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company.  Such Company Order shall
specify the amount of the Notes to be authenticated and the date on which the
original issue of Notes is to be authenticated and, in the case of any issuance
of Additional Notes pursuant to Section 312 of the Indenture, shall
certify that such issuance is in compliance with Section 1011 of the
Indenture.  On any Interest Payment Date
on which the Company pays PIK Interest with respect to a Global Note, the
Trustee shall increase the principal amount of such Global Note by an amount
equal to the interest payable, rounded up to the nearest $1,000, for the
relevant Interest Period on the principal amount of such Global Note as of the
relevant Record Date for such Interest Payment Date, to the credit of the
Holders on such Record Date, pro rata in accordance with their interests, and
an adjustment shall be made on the books and records of the Trustee (if it is
then the Notes Custodian for such Global Note) with respect to such Global
Note, by the Trustee or the Notes Custodian, to reflect such increase.

 

2.3           Transfer and Exchange.

 

(a)           Transfer and Exchange of Certificated Notes.  When
Certificated Notes are presented to the Note Registrar with a request:

 

(x)            to register the transfer of such Certificated
Notes; or

 

(y)           to exchange such Certificated Notes for an
equal principal amount of Certificated Notes of other authorized denominations,

 

5

 

the
Note Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however, that the Certificated
Notes surrendered for transfer or exchange:

 

(i)            shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the Company
and the Note Registrar, duly executed by the Holder thereof or its attorney
duly authorized in writing; and

 

(ii)           if such Certificated Notes are required to
bear a restricted notes legend, they are being transferred or exchanged
pursuant to an effective registration statement under the Securities Act,
pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are
accompanied by the following additional information and documents, as
applicable:

 

(A)          if such Certificated Notes are being
delivered to the Note Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such Holder to that effect;
or

 

(B)           if such Certificated Notes are being
transferred to the Company, a certification to that effect; or

 

(C)           if such Certificated Notes are being
transferred (x) pursuant to an exemption from registration in accordance
with Rule 144A, Regulation S or Rule 144 under the Securities
Act; or (y) in reliance upon another exemption from the requirements of the
Securities Act: (i) a certification to that effect (in the form set forth
on the reverse of the Note) and (ii) if the Company so requests, an Opinion of
Counsel or other evidence reasonably satisfactory to it as to the compliance
with the restrictions set forth in the legend set forth in
Section 2.3(e)(i).

 

(b)           Restrictions on Transfer of a Certificated
Note for a Beneficial Interest in a Global Note. 
A Certificated Note may not be exchanged for a beneficial interest
in a Rule 144A Global Note or a Permanent Regulation S Global Note except
upon satisfaction of the requirements set forth below.  Upon receipt by the Trustee of a Certificated
Note, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Trustee, together with:

 

(i)            certification, in a form substantially
similar to that attached hereto as Exhibit 2, that such Certificated Note
is either (A) being transferred to a QIB in accordance with Rule 144A or
(B) being transferred after expiration of the Distribution Compliance
Period by a Person who initially purchased such Note in reliance on Regulation
S to a buyer who elects to hold its interest in such Note in the form of a
beneficial interest in the Permanent Regulation S Global Note; and

 

(ii)           written instructions directing the Trustee to
make, or to direct the Notes Custodian to make, an adjustment on its books and
records with respect to such Rule 144A Global Note (in the case of a

 

6

 

transfer
pursuant to clause (b)(i)(A)) or Permanent Regulation S Global Note
(in the case of a transfer pursuant to clause (b)(i)(B)) to reflect an
increase in the aggregate principal amount of the Notes represented by the
Rule 144A Global Note or Permanent Regulation S Global Note, as
applicable, such instructions to contain information regarding the Depository
account to be credited with such increase, 

 

then
the Trustee shall cancel such Certificated Note and cause, or direct the Notes
Custodian to cause, in accordance with the standing instructions and procedures
existing between the Depository and the Notes Custodian, the aggregate
principal amount of Notes represented by the Rule 144A Global Note or Permanent
Regulation S Global Note, as applicable, to be increased by the aggregate
principal amount of the Certificated Note to be exchanged and shall credit or
cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Rule 144A Global Note or
Permanent Regulation S Global Note, as applicable, equal to the principal
amount of the Certificated Note so canceled. 
If no Rule 144A Global Notes or Permanent Regulation S Global
Notes, as applicable, are then outstanding, the Company shall issue and the
Trustee shall authenticate, upon receipt of a Company Order, a new Rule 144A
Global Note or Permanent Regulation S Global Note, as applicable, in the appropriate
principal amount.

 

(c)           Transfer and Exchange of Global Notes.

 

(i)            The transfer and exchange of Global Notes or
beneficial interests therein shall be effected through the Depository, in
accordance with this Indenture (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Depository therefor.  A transferor of a beneficial interest in a
Global Note shall deliver to the Note Registrar a written order given in
accordance with the Depository’s procedures containing information regarding
the participant account of the Depository to be credited with a beneficial
interest in the Global Note.  The Note
Registrar shall, in accordance with such instructions instruct the Depository
to credit to the account of the Person specified in such instructions a
beneficial interest in the Global Note and to debit the account of the Person
making the transfer the beneficial interest in the Global Note being
transferred.

 

(ii)           If the proposed transfer is a transfer of a
beneficial interest in one Global Note to a beneficial interest in another
Global Note, the Note Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Global Note to which such
interest is being transferred in an amount equal to the principal amount of the
interest to be so transferred, and the Note Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal amount
of the Global Note from which such interest is being transferred.

 

7

 

(iii)          Notwithstanding any other provisions of this
Appendix (other than the provisions set forth in Section 2.4), a Global
Note may not be transferred as a whole except by the Depository to a nominee of
the Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.

 

(iv)          In the event that Global Note is exchanged
for Certificated Notes to Section 2.4 of this Appendix, prior to the
consummation of a Registered Exchange Offer or the effectiveness of a Shelf
Registration Statement with respect to such Notes, such Notes may be exchanged
only in accordance with such procedures as are substantially consistent with
the provisions of this Section 2.3 (including the certification
requirements set forth on the reverse of the Initial Notes (as set forth in
Exhibit 2, hereto) intended to ensure that such transfers comply with
Rule 144A, Regulation S or another applicable exemption under the
Securities Act, as the case may be) and such other procedures as may from time
to time be adopted by the Company.

 

(d)           Restrictions on Transfer of Temporary
Regulation S Global Notes.  During the Distribution Compliance Period,
beneficial ownership interests in Temporary Regulation S Global Notes may only
be sold, pledged or transferred in accordance with the Applicable Procedures
and only (i) to the Company, (ii) in an offshore transaction in
accordance with Regulation S (other than a transaction resulting in an
exchange for an interest in a Permanent Regulation S Global Note),
(iii) pursuant to an effective registration statement under the Securities
Act, in each case in accordance with any applicable securities laws of any
State of the United States.

 

(e)           Legend.

 

(i)            Except as permitted by the following
paragraphs (ii), (iii) and (iv), each Note certificate evidencing the
Global Notes (and all Notes issued in exchange therefor or in substitution
thereof), in the case of Notes offered otherwise than in reliance on
Regulation S shall bear a legend in substantially the following form:

 

THIS
NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM.  EACH PURCHASER OF THIS NOTE
IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION
FROM THE

 

8

 

PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

 

THE
HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS
NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO
THE COMPANY, (II) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT
TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.

 

Each
certificate evidencing a Note offered in reliance on Regulation S shall, in
addition to the foregoing, bear a legend in substantially the following form:

 

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

 

Each
Certificated Note shall also bear the following additional legend:

 

IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE NOTE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER

 

9

 

INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.

 

(ii)           Upon any sale or transfer of a Transfer
Restricted Note (including any Transfer Restricted Note represented by a Global
Note) pursuant to Rule 144 under the Securities Act, the Note Registrar shall
permit the transferee thereof to exchange such Transfer Restricted Note for a
certificated Note that does not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted Note, if the transferor
thereof certifies in writing to the Note Registrar that such sale or transfer
was made in reliance on Rule 144 (such certification to be in the form set
forth on the reverse of the Note).

 

(iii)          After a transfer of any Initial Notes or
Private Exchange Notes pursuant to and during the period of the effectiveness
of a Shelf Registration Statement with respect to such Initial Notes or Private
Exchange Notes, as the case may be, all requirements pertaining to legends on
such Initial Note or such Private Exchange Note shall cease to apply, the
requirements requiring any such Initial Note or such Private Exchange Note
issued to certain Holders be issued in global form shall cease to apply, and a
certificated Initial Note or Private Exchange Note or an Initial Note or
Private Exchange Note in global form, in each case without restrictive transfer
legends, shall be available to the transferee of the Holder of such Initial
Notes or Private Exchange Notes upon exchange of such transferring Holder’s
certificated Initial Note or Private Exchange Note or directions to transfer
such Holder’s interest in the Global Note, as applicable.

 

(iv)          Upon the consummation of a Registered
Exchange Offer with respect to the Initial Notes, all requirements pertaining
to such Initial Notes that Initial Notes issued to certain Holders be issued in
global form shall still apply with respect to Holders of such Initial Notes
that do not exchange their Initial Notes, and Exchange Notes in certificated or
global form, in each case without the restricted notes legend set forth in
Exhibit 1 hereto shall be available to Holders that exchange such Initial
Notes in such Registered Exchange Offer.

 

(v)           Upon the consummation of a Private Exchange
with respect to the Initial Notes, all requirements pertaining to such Initial
Notes that Initial Notes issued to certain Holders be issued in global form
shall still apply with respect to Holders of such Initial Notes that do not
exchange their Initial Notes, and Private Exchange Notes in global form with
the global notes legend and the applicable restricted notes legend set forth in
Exhibit 1 hereto shall be available to Holders that exchange such Initial
Notes in such Private Exchange.

 

10

 

(f)            Cancellation or Adjustment of Global Note.  At
such time as all beneficial interests in a Global Note have been exchanged for
Certificated Notes, redeemed, purchased or canceled, such Global Note shall be
returned to the Depository for cancellation or retained and canceled by the
Trustee.  At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for
certificated Notes, redeemed, purchased or canceled, the principal amount of
Notes represented by such Global Note shall be reduced and an adjustment shall
be made on the books and records of the Trustee (if it is then the Notes
Custodian for such Global Note) with respect to such Global Note, by the
Trustee or the Notes Custodian, to reflect such reduction.

 

(g)           No Obligation of the Trustee.

 

(i)            The Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Note, a member of, or a participant
in the Depository or other Person with respect to the accuracy of the records
of the Depository or its nominee or of any participant or member thereof, with
respect to any ownership interest in the Notes or with respect to the delivery
to any participant, member, beneficial owner or other Person (other than the
Depository) of any notice (including any notice of redemption) or the payment
of any amount, under or with respect to such Notes.  All notices and communications to be given to
the Holders and all payments to be made to Holders under the Notes shall be
given or made only to or upon the order of the registered Holders (which shall
be the Depository or its nominee in the case of a Global Note).  The rights of beneficial owners in any Global
Note shall be exercised only through the Depository subject to the applicable
rules and procedures of the Depository. 
The Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its members, participants
and any beneficial owners.

 

(ii)           The Trustee shall have no obligation or duty
to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Note (including any transfers between or
among Depository participants, members or beneficial owners in any Global Note)
other than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

 

2.4           Certificated Notes.

 

(a)           A Global Note deposited with the Depository
or with the Trustee as Notes Custodian for the Depository pursuant to
Section 2.1 shall be transferred to the beneficial owners thereof in the
form of Certificated Notes in an aggregate principal

 

11

 

amount equal to the principal amount of such
Global Note, in exchange for such Global Note, only if such transfer complies
with Section 2.3 hereof and (i) the Depository notifies the Company
that it is unwilling or unable to continue as depository for such Global Note
and the Depository fails to appoint a successor depository or if at any time
such depository ceases to be a “clearing agency” registered under the Exchange
Act, in either case, and a successor depository is not appointed by the Company
within 90 days of such notice, or (ii) a Default has occurred and is
continuing or (iii) the Company, in its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Certificated Notes under
this Indenture (although Temporary Regulation S Global Notes at the Company’s
election pursuant to this clause may not be exchanged for Certificated Notes
prior to (a) the expiration of the Distribution Compliance Period and (b) the
receipt of any certificates required under the provisions of Regulation S).

 

(b)           Any Global Note that is transferable to the
beneficial owners thereof pursuant to this Section 2.4 shall be
surrendered by the Depository to the Trustee located at its principal corporate
trust office to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Note, an equal aggregate principal
amount of Certificated Notes of authorized denominations.  Any portion of a Global Note transferred
pursuant to this Section 2.4 shall be executed, authenticated and
delivered only in denominations of $2,000 principal amount and any integral
multiple of $1,000 in excess thereof and registered in such names as the
Depository shall direct.  Any Certificated
Note delivered in exchange for an interest in the Transfer Restricted Note
shall, except as otherwise provided by Section 2.3(e) hereof, bear the
applicable restricted notes legend and certificated notes legend set forth in
Exhibit 1 hereto.

 

(c)           Subject to the provisions of
Section 2.4(b) hereof, the registered Holder of a Global Note shall be
entitled to grant proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent Members, to take any
action which a Holder is entitled to take under this Indenture or the Notes.

 

(d)           In the event of the occurrence of one of the
events specified in Section 2.4(a) hereof, the Company shall promptly make
available to the Trustee a reasonable supply of Certificated Notes in
definitive, fully registered form without interest coupons.  In the event that such Certificated Notes are
not issued, the Company expressly acknowledges, with respect to the right of
any Holder to pursue a remedy pursuant to this Indenture, including pursuant to
Section 507, the right of any beneficial owner of Notes to pursue such remedy
with respect to the portion of the Global Note that represents such beneficial
owner’s Notes as if such Certificated Notes had been issued. 

 

12

 

EXHIBIT
1

to Rule 144A / Regulation S Appendix

 

[FORM OF FACE OF INITIAL NOTE]

[Global Notes Legend]

 

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

 

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

 

[[FOR
REGULATION S GLOBAL NOTE ONLY] UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT OR
COMPLETION OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED
STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE
OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]

 

[Restricted Notes Legend for Notes offered otherwise

than in Reliance on Regulation S]

 

THIS
NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM.  EACH PURCHASER OF THIS NOTE
IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.

 

THE
HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS
NOTE MAY BE OFFERED, RESOLD, PLEDGED OR

 

 

OTHERWISE TRANSFERRED, ONLY (I) TO THE
COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.

 

[Restricted Notes Legend for Notes Offered in Reliance on Regulation S]

 

THIS
NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ALL APPLICABLE STATE SECURITIES LAWS. 
TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER
THE SECURITIES ACT.

 

[Temporary Regulation S Global Note Legend]

 

EXCEPT
AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S
GLOBAL NOTE WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE PERMANENT
REGULATION S GLOBAL NOTE OR ANY OTHER NOTE REPRESENTING AN INTEREST IN THE
NOTES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS
ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAY DISTRIBUTION COMPLIANCE
PERIOD” (WITHIN THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER THE
SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY
SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY
NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION
THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT.  DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE
PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S
GLOBAL NOTE MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED (I) TO THE COMPANY,
(II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH
RULE 904 OF REGULATION S

 

2

 

UNDER THE SECURITIES ACT, OR (III) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES.  HOLDERS
OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE WILL NOTIFY ANY
PURCHASER OF THIS NOTE OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN
APPLICABLE.

 

AFTER
THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD BENEFICIAL INTERESTS IN
THIS TEMPORARY REGULATION S GLOBAL NOTE MAY BE EXCHANGED FOR INTERESTS IN
A RULE 144A GLOBAL NOTE ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION
WITH A TRANSFER OF THE NOTES IN COMPLIANCE WITH RULE 144A AND (2) THE
TRANSFEROR OF THE REGULATION S GLOBAL NOTE FIRST DELIVERS TO THE TRUSTEE A
WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT
THAT THE REGULATION S GLOBAL NOTE IS BEING TRANSFERRED (A) TO A PERSON WHO
THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A, (B) TO A PERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT
OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

 

BENEFICIAL
INTERESTS IN A RULE 144A GLOBAL NOTE MAY BE TRANSFERRED TO A PERSON WHO TAKES
DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL NOTE, WHETHER
BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD,
ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN
THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS
BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR
RULE 144 (IF AVAILABLE).

 

[Certificated Notes Legend]

 

IN
CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE NOTE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.

 

3

 

	
  No. 

  	
   

  	
   

  	
   

  	
  $

  	
   

  

 

9%/93⁄4% Senior Notes Due 2015

 

The
Neiman Marcus Group, Inc., a Delaware corporation, promises to pay to _________, or registered assigns, the principal sum of
__________ Dollars on October_15,
2015.

 

Interest
Payment Dates:  January 15,
April 15, July 15 and October  15.

 

Record
Dates:  January 1, April 1,
July 1 and October 1.

 

Additional
provisions of this Note are set forth on the other side of this Note.

 

Dated:

 

4

 

	
   

  	
  THE NEIMAN MARCUS GROUP, INC.

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  TRUSTEE’S CERTIFICATE OF

  AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION, as
  Trustee

  certifies that this is one of the Notes

  referred to in the Indenture.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
    Authorized
  Signatory

  	
   

  

 

5

 

[FORM OF REVERSE SIDE OF INITIAL NOTE]

9%/93⁄4% Senior Note Due 2015

 

Capitalized
terms used herein but not defined herein shall have the meanings given to such
terms in the Indenture.

 

1.             Principal and Interest.

 

The
Neiman Marcus Group, Inc. (the “Company”) shall pay the principal of this Note
on October 15, 2015.

 

The
Company promises to pay interest and Additional Interest, if any, on the
principal amount of this Note on each Interest Payment Date, as set forth
below, at the rate set forth below (subject to adjustment as provided below).

 

The
Company shall pay interest with respect to the first Interest Period entirely
in cash. For any Interest Period thereafter through the Interest Period ending
October 14, 2010, the Company may, at its option, elect to pay interest on
the Notes:

 

(a)           entirely in cash (“Cash Interest”) or

 

(b)           entirely by increasing the principal amount
of the Outstanding Notes or by issuing PIK Notes (“PIK Interest”).

 

The
Company must elect the form of interest payment with respect to each Interest
Period by delivering a notice to the Trustee at or prior to the beginning of
such Interest Period. The Trustee shall promptly deliver a corresponding notice
to the Holders. In the absence of such an election, interest on the Notes shall
be payable entirely in cash. From and after the Interest Period commencing
October 15, 2010, the Company shall make all interest payments on the
Notes entirely in cash.

 

Cash
Interest on the Notes shall accrue at the rate of 9%  per annum and be payable in cash. PIK
Interest on the Notes shall accrue at the rate of 93⁄4% per annum.

 

Interest,
and Additional Interest, if any, shall be payable quarterly (to the Holders of
the Notes at the close of business on January 1, April 1, July 1
or October 1 immediately preceding the Interest Payment Date) on each
Interest Payment Date, commencing January 15, 2006.

 

The
Holder of this Note is entitled to the benefits of the Exchange and
Registration Rights Agreement, dated October 6, 2005, among the Company,
Holdings, the Subsidiary Guarantors and the Initial Purchasers named therein
(the “Registration Rights Agreement”), including with respect to Additional
Interest.

 

Interest
on this Note shall accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from October 6, 2005; provided that, if there is no existing
Default in the payment of interest and if this Note is authenticated between a
Regular Record Date referred to on the face hereof and the next

 

6

 

succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date.  Interest shall be computed on the basis of a
360-day year of twelve 30-day months.

 

The
Company shall pay interest and Additional Interest if any, on overdue principal
and premium, if any, and interest on overdue installments of interest, to the
extent lawful, at a rate per annum equal to the rate of interest applicable to
the Notes.

 

2.             Method of Payment.

 

The
Company shall pay interest (except defaulted interest) on the principal amount
of the Notes on each January 15, April 15, July 15 and
October 15 to the Persons who are Holders (as reflected in the Note
Register at the close of business on January 1, April 1, July 1
and October 1 immediately preceding the Interest Payment Date), in each
case, even if the Note is transferred or exchanged after such Regular Record
Date, except as provided in Section 306(b) with respect to Defaulted Interest; provided that, with respect to the payment
of principal, the Company shall make payment to the Holder that surrenders this
Note to any Paying Agent on or after October 15, 2015.

 

PIK
Interest shall be payable by increasing the principal amount of this global
Note by an amount equal to the amount of PIK Interest for the applicable
Interest Period (rounded up to the nearest $1,000).  Following an increase in the principal amount
of the outstanding global Notes as a result of a PIK Payment, this global Note
shall bear interest on such increased principal amount from and after the date
of such PIK Payment, and shall be governed by, and subject to the terms,
provisions and conditions of, the Indenture and shall have the same rights and
benefits as the Notes issued on the Issue Date. 

 

The
Company shall pay principal (premium, if any) and Cash Interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts.  However, the Company
may pay principal (premium, if any) and Cash Interest by its check payable in
such money.  The Company may pay Cash
Interest on the Notes either (a) by mailing a check for such interest to a
Holder’s registered address (as reflected in the Note Register) or (b) by
wire transfer to an account located in the United States maintained by the
payee.  If a payment date is a date other
than a Business Day at a place of payment, payment may be made at that place on
the next succeeding day that is a Business Day and no interest shall accrue for
the intervening period.

 

3.             Paying Agent and Note Registrar.

 

Initially,
Wells Fargo Bank, National Association (the “Trustee”) shall act as Paying
Agent and Note Registrar.  The Company
may change any Paying Agent or Note Registrar upon written notice thereto and
without notice to the Holders.  The
Company, any Subsidiary or any Affiliate of any of them may act as Paying
Agent, Note Registrar or co-registrar.

 

7

 

4.             Indenture.

 

The
Company issued the Notes under a Senior Indenture dated as of October 6, 2005
(the “Indenture”), among the Company, Holdings, the Subsidiary Guarantors and
the Trustee.  The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. 
The Notes are subject to all such terms, and Holders are referred to the
Indenture and the Trust Indenture Act for a statement of all such terms.  To the extent permitted by applicable law, in
the event of any inconsistency between the terms of this Note and the terms of
the Indenture, the terms of the Indenture shall control.

 

The
Notes are unsecured senior obligations of the Company.  The Indenture does not limit the aggregate
principal amount of the Notes.  Subject
to the conditions set forth in the Indenture, the Company may issue Additional
Notes.

 

5.             Redemption.

 

At
any time prior to October 15, 2010, the Company may redeem all or a part
of the Notes, upon not less than 30 nor more than 60 days’ prior notice at a
redemption price equal to 100% of the principal amount of Notes redeemed plus
the Applicable Premium as of, and accrued and unpaid interest and Additional
Interest, if any, to the Redemption Date, subject to the rights of Holders on
the relevant record date to receive interest due on the relevant Interest
Payment Date.

 

On
and after October 15, 2010, the Company may redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days’ prior notice to each
Holder at the Redemption Prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest thereon and Additional
Interest, if any, to the applicable Redemption Date, subject to the right of
Holders on the relevant record date to receive interest due on the relevant
Interest Payment Date, if redeemed during the twelve-month period
beginning on October 15 of each of the years indicated below:

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2010

  	
   

  	
  104.500

  	
  %

  
	
  2011

  	
   

  	
  103.000

  	
  %

  
	
  2012

  	
   

  	
  101.500

  	
  %

  
	
  2013 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

In
addition, until October 15, 2008, the Company may, at its option, redeem
up to 35% of the aggregate principal amount of Notes issued under the Indenture
at a redemption price equal to 109.000%% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable Redemption Date, subject to the right of Holders on the
relevant record date to receive interest due on the relevant Interest Payment
Date, with the net cash proceeds of one or more Equity Offerings of the Company
or any direct or indirect parent of the Company to the extent such net cash
proceeds are contributed to the Company; provided
that at least 50% of the sum of the aggregate principal amount of Notes
originally issued under the

 

8

 

Indenture remains Outstanding immediately
after the occurrence of each such redemption; provided,
further, that each such redemption occurs within 90 days of the
date of closing of each such Equity Offering. 

 

6.             Repurchase upon a Change of Control and Asset
Sales.

 

Upon
the occurrence of (a) a Change of Control, the Holders shall have the
right to require that the Company purchase such Holder’s outstanding Notes, in
whole or in part, at a purchase price of 101% of the principal amount thereof,
plus accrued and unpaid interest and Additional Interest, if any, to the date
of purchase and (b) Asset Sales, the Company may be obligated to make
offers to purchase Notes and Senior Indebtedness of the Company with a portion
of the Net Proceeds of such Asset Sales at a redemption price of 100% of the
principal amount thereof plus accrued and unpaid interest and Additional
Interest, if any, to the date of purchase.

 

7.             Denominations; Transfer; Exchange.

 

The
Notes are in registered form without coupons in denominations of $2,000
principal amount and integral multiples of $1,000.  A Holder may transfer or exchange Notes in
accordance with the Indenture.  The Note
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the
Indenture.  The Note Registrar need not
register the transfer or exchange of a Note or portion of a Note selected for
redemption (except, in the case of a Note to be redeemed in part, the portion
of the Note not to be redeemed) or any Note or portion of a Note for a period
of 15 days before a selection of Notes to be redeemed or 15 days before an
interest payment date.

 

8.             Persons Deemed Owners.

 

A
registered Holder may be treated as the owner of a Note for all purposes.

 

9.             Unclaimed Money.

 

Subject
to any laws relating to abandoned property, if money for the payment of
principal (premium, if any) or interest remains unclaimed for two years, the
Trustee and the Paying Agent shall pay the money back to the Company at its
request or (if then held by the Company) shall be discharged from such trust.  After that, Holders entitled to the money
must look to the Company for payment and all liability of the Trustee and such
Paying Agent with respect to such money, and all liability of the Company as
trustee thereof, shall cease.

 

9

 

10.           Discharge and Defeasance Prior to Redemption
or Maturity.

 

Subject
to satisfaction of conditions set forth in the Indenture, the Company at any
time may terminate some or all of its obligations under the Notes and the
Indenture if the Company irrevocably deposits with the Trustee cash or
Government Securities or a combination thereof sufficient for the payment of
the then outstanding principal of and interest on the Notes to Redemption or
Stated Maturity, as the case may be.

 

11.           Amendment; Supplement; Waiver.

 

Subject
to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
aggregate principal amount of the Outstanding Notes, including consents obtained
in connection with a purchase of, or tender offer or exchange offer for, the
Notes, and any existing Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes.  Without notice to or the consent of any
Holder, the parties thereto may amend or supplement the Indenture or the Notes
to, among other things, cure any ambiguity, omission, mistake, defect or
inconsistency and make any change that does not adversely affect the legal
rights of any Holder.

 

12.           Restrictive Covenants.

 

The
Indenture contains certain covenants, including covenants with respect to the
following matters: (i) Restricted Payments; (ii) incurrence of
Indebtedness and issuance of Disqualified Stock and Preferred Stock; (iii)
Liens; (iv) transactions with Affiliates; (v) dividend and other
payment restrictions affecting Restricted Subsidiaries; (vi) guarantees of
Indebtedness by Restricted Subsidiaries; (vii) changes to the terms of
certain Subordinated Indebtedness; (viii) merger, consolidation or sale of all
or substantially all assets; (ix) purchase of Notes upon a Change in
Control; (x) sale and lease-back transactions; and (xi) disposition of
proceeds of Asset Sales.  Within 120 days
(or the successor time period then in effect under the rules and regulations of
the Exchange Act) after the end of each fiscal year, the Company must report to
the Trustee on compliance with such limitations.

 

13.           Successor Persons.

 

When
a successor Person or other entity assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor Person shall be
released from those obligations, subject to certain exceptions.

 

14.           Remedies for Events of Default.

 

If
an Event of Default, as defined in the Indenture, occurs and is continuing, the
Trustee or the Holders of at least 30% in principal amount of the Outstanding
Notes may declare all Outstanding Notes to be immediately due and payable.  If an Event of Default arising from certain
events of bankruptcy or insolvency

 

10

 

with respect to the Company or any
Significant Subsidiary occurs and is continuing, the Notes automatically become
immediately due and payable.  Subject to
the provisions of the Indenture relating to the duties of the Trustee, in case
an Event of Default occurs and is continuing, the Trustee shall be under no
obligation to exercise any rights or powers under the Indenture at the request
or direction of any of the Holders unless such Holders have offered to the
Trustee reasonable indemnity or security against any loss, liability or
expense.  Subject to certain
restrictions, the Holders of a majority in principal amount of the Outstanding
Notes are given the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee. 
The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder of a Note or that would involve the Trustee
in personal liability.

 

15.           Guarantees.

 

The
Company’s obligations under the Notes are fully, irrevocably and
unconditionally guaranteed on an unsecured senior basis, to the extent set
forth in the Indenture, by Holdings and each of the Subsidiary Guarantors.

 

16.           Trustee Dealings with Company.

 

The
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may make loans to, accept deposits
from, perform services for, and otherwise deal with, the Company and its
Affiliates as if it were not the Trustee.

 

17.           Authentication.

 

This
Note shall not be valid until the Trustee signs the certificate of
authentication on the other side of this Note.

 

18.           Abbreviations.

 

Customary
abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts
to Minors Act).

 

19.           Abbreviations.

 

Pursuant
to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Holders. 
No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.

 

11

 

20.           Holders’ Compliance with the Registration
Rights Agreement.

 

Each
Holder of a Note, by acceptance hereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, including the obligations of
the Holders with respect to a registration and the indemnification of the
Company to the extent provided therein.

 

21.           Governing Law.

 

THIS SECURITY AND INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

The
Company shall furnish to any Holder upon written request and without charge a
copy of the Indenture.  Requests may be
made to The Neiman Marcus Group, Inc., 1618 Main Street, Dallas, Texas 75201,
Attention: General Counsel.

 

12

 

EXHIBIT 2

to Rule 144A / Regulation S Appendix

 

ASSIGNMENT/TRANSFER FORM

 

To
assign and transfer this Note, fill in the form below:

 

I
or we assign and transfer this Note to

 

(Print
or type assignee’s name, address and zip code)

 

(Insert
assignee’s soc. sec. or tax I.D. No.)

 

and
irrevocably appoint _________________ agent to transfer this Note on the books
of the Company.  The agent may substitute
another to act for him.

 

 

	
  Date:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  	
   

  

 

 

 

Sign
exactly as your name appears on the other side of this Note.

 

In
connection with any transfer of any of the Notes evidenced by this certificate
occurring prior to the expiration of the period referred to in Rule 144(k)
under the Securities Act after the later of the date of original issuance
of such Notes and the last date, if any, on which such Notes were owned by the
Company or any Affiliate of the Company, the undersigned confirms that such
Notes are being transferred in accordance with its terms:

 

CHECK
ONE BOX BELOW

 

to the Company; or

 

(1)           pursuant to an effective registration statement under the Securities
Act of 1933, as amended; or

 

(2)                                  inside the United States to a “qualified
institutional buyer” (as defined in Rule 144A under the Securities Act of
1933) that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933, as amended; or

 

(3)                                  outside the United States in an offshore
transaction within the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of 1933, as amended; or

 

 

(4)                                  pursuant to the exemption from registration
provided by Rule 144 under the Securities Act of 1933, as amended.

 

Unless
one of the boxes is checked, the Trustee shall refuse to register any of the
Notes evidenced by this certificate in the name of any person other than the
registered holder thereof; provided, however,
that if box (4) is checked, the Trustee shall be entitled to require, prior to
registering any such transfer of the Notes, such legal opinions, certifications
and other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act of 1933, as
amended, such as the exemption provided by Rule 144 under such Act.

 

 

	
   

  	
   

  
	
  Signature

  

 

Signature
Guarantee:

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Signature
  must be guaranteed

  	
   

  	
  Signature

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

 

2

 

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

 

The
undersigned represents and warrants that it is purchasing this Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a “qualified institutional
buyer” within the meaning of Rule 144A under the Securities Act of 1933,
as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned’s foregoing representations in order
to claim the exemption from registration provided by Rule 144A.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Notice:
  To be executed by

  an executive officer

  	
   

  

 

3

 

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The following increases or decreases in this Global Note have been
made:

 

	
  Date of Exchange

  or payment of 

  PIK Interest

  	
   

  	
  Amount of decrease in

  Principal amount of this

  Global Note

  	
   

  	
  Amount of increase in

  Principal amount of this

  Global Note

  	
   

  	
  Principal amount of this

  Global Note following such

  decrease or increase

  	
   

  	
  Signature of authorized

  officer of Trustee or Notes

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

4

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If
you want to elect to have this Note purchased by the Company pursuant to
Section 1017 or 1018 of the
Indenture, check the box: 

 

If
you want to elect to have only part of this Note purchased by the Company
pursuant to Section 1017 or 1018 of the Indenture, state the amount in
principal amount:  $

 

	
  Dated:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears on

  the other side of this Note.)

  

 

	
  Signature
  Guarantee:

  	
   

  	
   

  
	
   

  	
  (Signature must be guaranteed)

  	
   

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

 

5

 

EXHIBIT
3

to Rule 144A / Regulation S Appendix

 

FORM OF NON-U.S. BENEFICIAL OWNERSHIP

CERTIFICATION BY EURO CLEAR OR CLEARSTREAM LUXEMBOURG

 

 

[Date]

 

 

Wells
Fargo Bank, N.A.

 

 

Re:                               9%/93⁄4%  Senior Notes due 2015
(the “Notes”) of The Neiman Marcus Group, Inc. (the “Company”)

 

Reference
is hereby made to the Senior Indenture, dated as of October 6, 2005 (as amended
and supplemented from time to time, the “Indenture”), among the Company,
the Guarantors named therein and Wells Fargo Bank, N.A., as Trustee.  Capitalized terms used but not defined herein
shall have the meanings given them in the Indenture.

 

This
is to certify with respect to $________ principal amount of the Notes that,
except as set forth below, we have received in writing, by tested telex or by
electronic transmission, from member organizations appearing in our records as
persons being entitled to a portion of such principal amount (our “Member
Organizations”) certifications with respect to such portion, that such portion
is beneficially owned by (a) non-U.S. person(s) or (b) U.S. person(s) who
purchased the portion beneficially owned by such U.S. person(s) in transactions
that did not require registration under the Securities Act of 1933, as amended
(the “Act”).  As used in this paragraph
the term “U.S. person” has the meaning given to it by Regulation S under the
Act.

 

We
further certify:

 

(i)
that we are not making available herewith for exchange (or, if relevant,
exercise of any rights or collection of any interest) any portion of the
Regulation S Temporary Global Note excepted in such certifications; and 

 

(ii)
that as of the date hereof we have not received any notification from any of
our Member Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, exercise of any rights or collection of any
interest) are no longer true and cannot be relied upon as the date hereof.

 

We
understand that this certification is required in connection with certain
securities laws of the United States.  In
connection therewith, if administrative or legal proceedings are commenced or
threatened in connection with which this certification is or would be relevant,
we irrevocably authorize you or the Company to produce this certification to
any interested party in such proceedings.

 

 

Dated:
__________, 20   

 

	
   

  	
  Yours
  faithfully,

  
	
   

  	
  [Euroclear
  or Clearstream Luxembourg]

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  

 

2

 

EXHIBIT A

 

[FORM OF FACE OF EXCHANGE NOTE

OR PRIVATE EXCHANGE NOTE] */**/

 

*/
[If the Note is to be issued in global form add the Global Notes Legend from
Exhibit 1 to Appendix A and the attachment from such Exhibit 1 captioned “[TO
BE ATTACHED TO GLOBAL NOTES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL
NOTE.”

 

**/
[If the Note is a Private Exchange Note issued in a Private Exchange to an
Initial Purchaser holding an unsold portion of its initial allotment, add the
Restricted Notes Legend from Exhibit 1 to Appendix A and replace the Assignment
Form included in this Exhibit A with the Assignment Form included in such
Exhibit 1.]

 

 

	
  No.
  

  	
   

  	
   

  	
   

  	
  $

  	
   

  

 

9%/93⁄4% Senior Notes Due 2015

 

The
Neiman Marcus Group, Inc., a Delaware corporation, promises to pay to ________,
or registered assigns, the principal sum of                      
Dollars on October 15, 2015.

 

Interest
Payment Dates:  January 15,
April 15, July 15 and October 15.

 

Record
Dates:  January 1, April 1,
July 1 and October 1.

 

Additional
provisions of this Note are set forth on the other side of this Note.

 

Dated:

 

 

	
   

  	
  THE NEIMAN MARCUS GROUP, INC.

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Name:

  
	
   

  	
   

  	
    Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  TRUSTEE’S CERTIFICATE OF

  AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION, as
  Trustee

  certifies that this is one of the Notes

  referred to in the Indenture.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
    Authorized
  Signatory

  	
   

  

 

2

 

[FORM OF REVERSE SIDE OF EXCHANGE NOTE

OR PRIVATE EXCHANGE NOTE]

 

9%/93⁄4% Senior Note Due 2015

 

Capitalized
terms used herein but not defined herein shall have the meanings given to such
terms in the Indenture.

 

1.             Principal and Interest.

 

The
Neiman Marcus Group, Inc. (the “Company”) shall pay the principal of this Note
on October 15, 2015.

 

The
Company promises to pay interest and Additional Interest, if any, on the
principal amount of this Note on each Interest Payment Date, as set forth
below, at the rate set forth below (subject to adjustment as provided below).

 

The
Company shall pay interest with respect to the first Interest Period entirely
in cash. For any Interest Period thereafter through the Interest Period ending
October 14, 2010, the Company may, at its option, elect to pay interest on
the Notes:

 

(a)           entirely in cash (“Cash Interest”) or

 

(b)           entirely by increasing the principal amount
of the Outstanding Notes or by issuing PIK Notes (“PIK Interest”).

 

The
Company must elect the form of interest payment with respect to each Interest
Period by delivering a notice to the Trustee at or prior to the beginning of
such Interest Period. The Trustee shall promptly deliver a corresponding notice
to the Holders. In the absence of such an election, interest on the Notes shall
be payable entirely in cash. From and after the Interest Period commencing
October 15, 2010, the Company shall make all interest payments on the
Notes entirely in cash.

 

Cash
Interest on the Notes shall accrue at the rate of 9%  per annum and be payable in cash. PIK
Interest on the Notes shall accrue at the rate of 93⁄4% per annum.

 

Interest,
and Additional Interest, if any, shall be payable quarterly (to the Holders of
the Notes at the close of business on January 1, April 1, July 1
or October 1 immediately preceding the Interest Payment Date) on each
Interest Payment Date, commencing January 15, 2006.

 

[The
Holder of this Note is entitled to the benefits of the Exchange and
Registration Rights Agreement, dated October 6, 2005, among the Company,
Holdings,

 

3

 

the Subsidiary Guarantors and the Initial
Purchasers named therein (the “Registration Rights Agreement”), including with
respect to Additional Interest.](1)

 

Interest,
including Additional Interest, if any, on this Note shall accrue from the most
recent date to which interest has been paid on this Note or the Note
surrendered in exchange herefor or, if no interest has been paid, from
October 6, 2005; provided that,
if there is no existing Default in the payment of interest and if this Note is
authenticated between a Regular Record Date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date. 
Interest shall be computed on the basis of a 360-day year of twelve
30-day months.

 

The
Company shall pay interest and Additional Interest if any, on overdue principal
and premium, if any, and interest on overdue installments of interest, to the
extent lawful, at a rate per annum equal to the rate of interest applicable to
the Notes.

 

2.             Method of Payment.

 

The
Company shall pay interest (except defaulted interest) on the principal amount
of the Notes on each January 15, April 15, July 15 and
October 15 to the Persons who are Holders (as reflected in the Note
Register at the close of business on January 1, April 1, July 1
and October 1 immediately preceding the Interest Payment Date), in each
case, even if the Note is transferred or exchanged after such Regular Record
Date, except as provided in Section 306(b) with respect to defaulted interest; provided that, with respect to the payment
of principal, the Company shall make payment to the Holder that surrenders this
Note to any Paying Agent on or after October 15, 2015.

 

PIK
Interest shall be payable by increasing the principal amount of this global
Note by an amount equal to the amount of PIK Interest for the applicable
Interest Period (rounded up to the nearest $1,000).  Following an increase in the principal amount
of the outstanding global Notes as a result of a PIK Payment, this global Note
shall bear interest on such increased principal amount from and after the date
of such PIK Payment, and shall be governed by, and subject to the terms,
provisions and conditions of, the Indenture and shall have the same rights and
benefits as the Notes issued on the Issue Date.

 

The
Company shall pay principal (premium, if any) and Cash Interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts.  However, the Company
may pay principal (premium, if any) and Cash Interest by its check payable in
such money.  The Company may pay Cash
Interest on the Notes either (a) by mailing a check for such interest to a
Holder’s registered address (as reflected in the Note Register) or (b) by
wire transfer to an account

 

(1) Insert if
at the date of issuance of the Exchange Note or Private Exchange Note (as the
case may be) any Registration Default has occurred with respect to the related
Initial Notes during the interest period in which such date of issuance occurs.

 

4

 

located in the United States maintained by
the payee.  If a payment date is a date
other than a Business Day at a place of payment, payment may be made at that
place on the next succeeding day that is a Business Day and no interest shall
accrue for the intervening period.

 

3.             Paying Agent and Note Registrar.

 

Initially,
Wells Fargo Bank, National Association (the “Trustee”) shall act as Paying
Agent and Note Registrar.  The Company
may change any Paying Agent or Note Registrar upon written notice thereto and
without notice to the Holders.  The
Company, any Subsidiary or any Affiliate of any of them may act as Paying
Agent, Note Registrar or co-registrar.

 

4.             Indenture.

 

The
Company issued the Notes under a Senior Indenture dated as of October 6, 2005
(the “Indenture”), among the Company, Holdings, the Subsidiary Guarantors and
the Trustee.  The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. 
The Notes are subject to all such terms, and Holders are referred to the
Indenture and the Trust Indenture Act for a statement of all such terms.  To the extent permitted by applicable law, in
the event of any inconsistency between the terms of this Note and the terms of
the Indenture, the terms of the Indenture shall control.

 

The
Notes are unsecured senior obligations of the Company.  The Indenture does not limit the aggregate
principal amount of the Notes.  Subject
to the conditions set forth in the Indenture, the Company may issue Additional
Notes.

 

5.             Redemption.

 

At
any time prior to October 15, 2010, the Company may redeem all or a part
of the Notes, upon not less than 30 nor more than 60 days’ prior notice at a
redemption price equal to 100% of the principal amount of Notes redeemed plus
the Applicable Premium as of, and accrued and unpaid interest and Additional
Interest, if any, to the Redemption Date, subject to the rights of Holders on
the relevant record date to receive interest due on the relevant Interest
Payment Date.

 

On
and after October 15, 2010, the Company may redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days’ prior notice to each
Holder at the Redemption Prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest thereon and Additional
Interest, if any, to the applicable Redemption Date, subject to the right of
Holders on the relevant record date to receive interest due on the relevant
Interest Payment Date, if redeemed during the twelve-month period
beginning on October 15 of each of the years indicated below:

 

5

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2010

  	
   

  	
  104.500

  	
  %

  
	
  2011

  	
   

  	
  103.000

  	
  %

  
	
  2012

  	
   

  	
  101.500

  	
  %

  
	
  2013 and
  thereafter

  	
   

  	
  100.000

  	
  %

  

 

In
addition, until October 15, 2008, the Company may, at its option, redeem
up to 35% of the aggregate principal amount of Notes issued under the Indenture
at a redemption price equal to 109.000% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon and Additional Interest, if
any, to the applicable Redemption Date, subject to the right of Holders on the
relevant record date to receive interest due on the relevant Interest Payment
Date, with the net cash proceeds of one or more Equity Offerings of the Company
or any direct or indirect parent of the Company to the extent such net cash
proceeds are contributed to the Company; provided
that at least 50% of the sum of the aggregate principal amount of
Notes originally issued under the Indenture remains Outstanding immediately
after the occurrence of each such redemption; provided,
further, that each such redemption occurs within 90 days of the
date of closing of each such Equity Offering. 

 

6.             Repurchase upon a Change of Control and Asset
Sales.

 

Upon
the occurrence of (a) a Change of Control, the Holders shall have the right
to require that the Company purchase such Holder’s outstanding Notes, in whole
or in part, at a purchase price of 101% of the principal amount thereof, plus
accrued and unpaid interest and Additional Interest, if any, to the date of
purchase and (b) Asset Sales, the Company may be obligated to make offers
to purchase Notes and Senior Indebtedness of the Company with a portion of the
Net Proceeds of such Asset Sales at a redemption price of 100% of the principal
amount thereof plus accrued and unpaid interest and Additional Interest, if
any, to the date of purchase.

 

7.             Denominations; Transfer; Exchange.

 

The
Notes are in registered form without coupons in denominations of $2,000
principal amount and integral multiples of $1,000.  A Holder may transfer or exchange Notes in
accordance with the Indenture.  The Note
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
Holder to pay any taxes and fees required by law or permitted by the
Indenture.  The Note Registrar need not
register the transfer or exchange of a Note or portion of a Note selected for
redemption (except, in the case of a Note to be redeemed in part, the portion
of the Note not to be redeemed) or any Note or portion of a Note for a period
of 15 days before a selection of Notes to be redeemed or 15 days before an
interest payment date.

 

8.             Persons Deemed Owners.

 

A
registered Holder may be treated as the owner of a Note for all purposes.

 

6

 

9.             Unclaimed Money.

 

Subject
to any laws relating to abandoned property, if money for the payment of
principal (premium, if any) or interest remains unclaimed for two years, the
Trustee and the Paying Agent shall pay the money back to the Company at its
request or (if then held by the Company) shall be discharged from such
trust.  After that, Holders entitled to
the money must look to the Company for payment and all liability of the Trustee
and such Paying Agent with respect to such money and all liability of the
Company as trustee thereof shall cease.

 

10.           Discharge and Defeasance Prior to Redemption
or Maturity.

 

Subject
to satisfaction of conditions set forth in the Indenture, the Company at any
time may terminate some or all of its obligations under the Notes and the
Indenture, if the Company irrevocably deposits with the Trustee cash or
Government Securities or a combination thereof sufficient for the payment of
the then outstanding principal of and interest on the Notes to Redemption or
Stated Maturity, as the case may be.

 

11.           Amendment; Supplement; Waiver.

 

Subject
to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
aggregate principal amount of the Outstanding Notes, including consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, the Notes, and any existing Default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in aggregate principal amount of the Outstanding Notes.  Without notice to or the consent of any
Holder, the parties thereto may amend or supplement the Indenture or the Notes
to, among other things, cure any ambiguity, omission, mistake, defect or
inconsistency and make any change that does not adversely affect the legal
rights of any Holder.

 

12.           Restrictive Covenants.

 

The
Indenture contains certain covenants, including covenants with respect to the
following matters: (i) Restricted Payments; (ii) incurrence of Indebtedness and
issuance of Disqualified Stock and Preferred Stock; (iii) Liens;
(iv) transactions with Affiliates; (v) dividend and other payment
restrictions affecting Restricted Subsidiaries; (vi) guarantees of
Indebtedness by Restricted Subsidiaries; (vii) changes to the terms of certain
Subordinated Indebtedness; (viii) merger, consolidation or sale of all or
substantially all assets; (ix) purchase of Notes upon a Change in Control;
(x) sale and lease-back transactions and (xi) disposition of proceeds of
Asset Sales.  Within 120 days (or the
successor time period then in effect under the rules and regulations of the
Exchange Act) after the end of each fiscal year, the Company must report to the
Trustee on compliance with such limitations.

 

7

 

13.           Successor Persons.

 

When
a successor Person or other entity assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor Person shall be
released from those obligations, subject to certain exceptions.

 

14.           Remedies for Events of Default.

 

If
an Event of Default, as defined in the Indenture, occurs and is continuing, the
Trustee or the Holders of at least 30% in principal amount of the Outstanding
Notes may declare all Outstanding Notes to be immediately due and payable.  If an Event of Default arising from certain
events of bankruptcy or insolvency with respect to the Company or any
Significant Subsidiary occurs and is continuing, the Notes automatically become
immediately due and payable.  Subject to
the provisions of the Indenture relating to the duties of the Trustee, in case
an Event of Default occurs and is continuing, the Trustee shall be under no
obligation to exercise any rights or powers under the Indenture at the request
or direction of any of the Holders unless such Holders have offered to the
Trustee reasonable indemnity or security against any loss, liability or
expense.  Subject to certain
restrictions, the Holders of a majority in principal amount of the Outstanding
Notes are given the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee. 
The Trustee, however, may refuse to follow any direction that conflicts
with law or the Indenture or that the Trustee determines is unduly prejudicial
to the rights of any other Holder of a Note or that would involve the Trustee
in personal liability.

 

15.           Guarantees.

 

The
Company’s obligations under the Notes are fully, irrevocably and
unconditionally guaranteed on an unsecured senior basis, to the extent set
forth in the Indenture, by Holdings and each of the Subsidiary Guarantors.

 

16.           Trustee Dealings with Company.

 

The
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Notes and may make loans to, accept deposits
from, perform services for, and otherwise deal with, the Company and its
Affiliates as if it were not the Trustee.

 

17.           Authentication.

 

This
Note shall not be valid until the Trustee signs the certificate of
authentication on the other side of this Note.

 

18.           Abbreviations.

 

Customary
abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts
to Minors Act).

 

8

 

19.           CUSIP Numbers.

 

Pursuant
to a recommendation promulgated by the Committee on Uniform Security
Identification Procedures, the Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Holders. 
No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.

 

20.           Holders’ Compliance with the Registration
Rights Agreement.

 

Each
Holder of a Note, by acceptance hereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, including the obligations of
the Holders with respect to a registration and the indemnification of the
Company to the extent provided therein.

 

21.           Governing Law.

 

THIS SECURITY AND INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

The
Company shall furnish to any Holder upon written request and without charge a
copy of the Indenture.  Requests may be
made to The Neiman Marcus Group, Inc., 1618 Main Street, Dallas, Texas 75201,
Attention: General Counsel.

 

9

 

ASSIGNMENT/TRANSFER FORM

 

To
assign and transfer this Note, fill in the form below:

 

I
or we assign and transfer this Note to

 

(Print
or type assignee’s name, address and zip code)

 

(Insert
assignee’s soc. sec. or tax I.D. No.)

 

and
irrevocably appoint                                 
agent to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

 

 

 

	
  Date:

  	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  

 

 

 

 

Sign
exactly as your name appears on the other side of this Note.

 

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If
you want to elect to have this Note purchased by the Company pursuant to
Section 1017 or 1018 of the
Indenture, check the box:  

 

  If you want to elect to have only part of
this Note purchased by the Company pursuant to Section 1017 or 1018 of the
Indenture, state the amount in principal amount:  $

 

 

	
  Dated:

  	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
  (Sign
  exactly as your name appears

  on the other side of this Note.)

  

 

	
  Signature
  Guarantee:

  	
   

  	
   

  
	
   

  	
  (Signature must be guaranteed)

  	
   

  

 

Signatures
must be guaranteed by an “eligible guarantor institution” meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program (“STAMP”) or
such other “signature guarantee program” as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.

 

 

EXHIBIT
B

 

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

 

SUPPLEMENTAL
INDENTURE (this “Supplemental Indenture”), dated as of ___________, 200__,
among                              
(the “Guaranteeing Subsidiary”), a subsidiary of The Neiman Marcus Group, Inc.
(or its permitted successor), a Delaware corporation (the “Company”), the
Company, Newton Acquisition, Inc. (“Holdings”) the other Subsidiary Guarantors
(as defined in the Indenture referred to herein) and Wells Fargo Bank, National
Association, as trustee under the Indenture referred to below (the “Trustee”).

 

W I T N E S S E T H

 

WHEREAS,
the Company has heretofore executed and delivered to the Trustee a senior
unsecured indenture (the “Indenture”), dated as of October 6, 2005 providing
for the issuance of 9%/93⁄4% Senior Notes Due 2015 (the “Notes”);

 

WHEREAS,
the Indenture provides that under certain circumstances the Guaranteeing
Subsidiary shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee
all of the Company’s Obligations under the Notes and the Indenture on the terms
and conditions set forth herein (the “Guarantee”); and

 

WHEREAS,
pursuant to Section 901 of the Indenture, the Trustee is authorized to execute
and deliver this Supplemental Indenture.

 

NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guaranteeing
Subsidiary and the Trustee mutually covenant and agree for the equal and
ratable benefit of the Holders of the Notes as follows:

 

1.             CAPITALIZED TERMS.  Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.

 

2.             AGREEMENT TO GUARANTEE.  The Guaranteeing Subsidiary hereby agrees to
provide an unconditional Guarantee on the terms and subject to the conditions
set forth in the Note Guarantee and in the Indenture including but not limited
to Article 12 thereof.

 

3.             NO RECOURSE AGAINST OTHERS.  No past, present or future director, officer,
employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as
such, shall have any liability for any obligations of the Company or any
Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or
this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. 
Each Holder of the Notes by accepting a Note waives and releases all
such liability.  The waiver and release
are part of the consideration for issuance of the Notes.  Such waiver may not be effective to waive
liabilities under the

 

 

federal securities laws and it is the view of
the SEC that such a waiver is against public policy.

 

4.             GOVERNING LAW.  THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

5.             COUNTERPARTS. 
The parties may sign any number of copies of this Supplemental
Indenture.  Each signed copy shall be an
original, but all of them together represent the same agreement.

 

6.             EFFECT OF HEADINGS.  The Section headings herein are for
convenience only and shall not affect the construction hereof.

 

7.             THE TRUSTEE. 
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplemental Indenture or for or
in respect of the recitals contained herein, all of which recitals are made
solely by the Guaranteeing Subsidiary and the Company.

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to
be duly executed and attested, all as of the date first above written.

 

Dated:
____________, 20___

 

	
   

  	
  [GUARANTEEING
  SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  NEIMAN MARCUS GROUP,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  NEWTON
  ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  [Existing
  Guarantors]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK,

  NATIONAL ASSOCIATION, as

  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

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