Document:

Exhibit 10.3

 

Execution
Copy

 

Newton Acquisition, Inc.

 

September 30, 2005

 

Re:  Opportunity to Acquire Shares

 

Dear Neiman Marcus
Executive,

 

As you know, The Neiman Marcus Group, Inc. (“NMG”)
is in the process of undergoing a change of control, and following the change
of control, 100% of its outstanding shares will be owned by an entity called
Newton Acquisition, Inc. (“Newco”). 
This transaction is pursuant to an Agreement and Plan of Merger, dated
as of May 1, 2005, by and among Newco, Newton Acquisition Merger Sub, Inc.
and NMG (the “Merger Agreement”). 
Although a delay is possible, we expect that the closing of the
transaction will occur on October 6, 2005 (the “Closing”).

 

We are
pleased to offer you the opportunity to invest in shares of common stock of
Newco (the “Shares”) on the terms and conditions set out below.  As further described below, to the extent
that you own shares of NMG as a capital asset, you are being given the
opportunity to invest on a tax-deferred basis by “rolling over” a portion of
these shares (any such shares being rolled over, the “Rollover Shares”).  In addition, you are being offered the
opportunity to make a cash contribution as set forth in Section 3 and the
Acceptance Form (your “Cash Contribution”).

 

1.             Merger
Consideration; Rollover Shares.  As a
result of the transactions contemplated by the Merger Agreement, absent an
election to contribute or “rollover” the Rollover Shares as contemplated in
this agreement (this “Agreement”), you would be entitled, with respect
to your Rollover Shares, to the “Merger Consideration” (as defined in the
Merger Agreement) for each such Rollover Share (the aggregate such amount that
you would be entitled to receive with respect to your Rollover Shares, the “Rollover
Merger Consideration”).  As a
technical matter, the Rollover Merger Consideration that is payable to you in
the absence of a rollover election would be distributed by NMG.  By completing the Acceptance Form below,
you agree to, and instruct Newco and NMG to use their reasonable efforts to,
roll over your Rollover Shares into the Shares in lieu of receiving the
Rollover Merger Consideration in cash. 
Upon your instruction, this rollover will occur as set forth below in “Sale
and Purchase of Shares; Rollover Mechanics”, and will ultimately result in your
Rollover Shares being contributed to Newco in exchange for the Shares.

 

2.             Sale
and Purchase of Shares; Rollover Mechanics. 
By completing and returning the Acceptance Form below, you agree
to, immediately prior to the Closing, contribute your Rollover Shares to Newco
and agree to forego any Rollover Merger Consideration (and any Merger
Consideration you are using to satisfy your Cash Contribution) to which you
would otherwise have been entitled absent an election to invest in the Shares.  The Rollover Shares so contributed will be
canceled and retired without any conversion thereof or payment or

 

 

distribution thereon, as
set forth in Section 2.1(b) of the Merger Agreement. In exchange for
the Rollover Shares and your Cash Contribution, you will receive such number of
Shares having an aggregate value equal to the amount of your investment as
indicated on the Acceptance Form.  You
will be the holder of record of the Shares as of the Closing, whether or not
Newco issues physical certificates to you. 
This offer is conditioned upon the occurrence of the Closing.  If the Closing does not occur, this Agreement
will be canceled and will be of no force and effect.

 

3.             Form of
Consideration.  If you choose to
invest in the Shares, (i) you must invest a minimum of $50,000, and (ii) you
must first satisfy your investment of the Rollover Shares by contributing all
NMG shares that you purchased from NMG on October 29, 2004 under the NMG
1997 Stock Incentive Plan for $60.83 (the “10/29 Rollover Shares”), if
you hold any such shares.  Thereafter,
any additional investment of the Rollover Shares may be satisfied by rolling
over other NMG shares that you hold as a capital asset (e.g., shares you
acquired on the market or shares you acquired by exercising stock options, but
not including restricted stock or stock units), if any, or by making your Cash
Contribution.  Your Cash Contribution
will automatically be deducted from your after-tax merger proceeds (e.g., from
any cash payment of the Merger Consideration to which you may be entitled with
respect to equity or equity-based interests other than those being rolled over
pursuant to this Agreement), provided that if such proceeds are insufficient,
any shortfall must be received by wire transfer by the close of business on the
day before the Closing (wire information will be provided to you).   With respect to the 10/29 Rollover Shares,
you hereby authorize NMG to take such action as may be necessary to cause these
shares to be rolled over.  Delivery of any
other Rollover Shares will occur as follows: (x) with respect to Rollover
Shares for which physical certificates were delivered to you, by delivering the
physical certificates that were so issued; and (y) with respect to Rollover
Shares you hold through a brokerage account, by having the brokerage firm by
which such Rollover Shares are held transfer these Rollover Shares to an
account established in Newco’s name (the “Newco Account”) (transfer
information will be provided to you).  The Rollover Shares must be credited to the Newco
Account before 12:00 p.m., Wednesday, October 5, 2005,
which means that you should instruct your broker to initiate the transfer by
12:00 p.m. on Tuesday, October 5, 2005.

 

4.             Acceptance
and Closing; Conditions.  You may
accept this offer and the terms of this Agreement by completing and returning
the Acceptance Form below, in which case the closing of the acquisition of
the Shares will occur immediately after the Closing.  This offer is conditioned upon the occurrence
of the Closing.  If the Closing does not
occur on or before October 17, 2005 (the “Closing Deadline”), this
Agreement will be canceled and you will have no rights with respect hereto and
any Rollover Shares that you have transferred or cash payment that you have
made pursuant to Section 3 will be returned to you; provided, that
if Newco determines on or before the Closing Deadline and in good faith that
the Closing is likely to occur on or before October 31, 2005, the Closing
Deadline shall automatically be extended to October 31, 2005.

 

5.             Limitation.  Newco, in its discretion, may limit the
number of Shares that you may purchase, and therefore may choose not to accept
the full amount of your investment election. 
Rollover Shares not so accepted pursuant to the preceding sentence will
be treated in accordance with the provisions of the Merger Agreement.

 

2

 

6.             Vesting.  Your Shares when issued will be fully vested.

 

7.             Stockholders’
Agreement.  By completing and returning
the Acceptance Form below, you agree to become a party to the Management
Stockholders’ Agreement, a draft of which is attached hereto as Annex A, as may
be amended from time to time in accordance with its terms (the “Stockholders’
Agreement”) and you will be subject to the terms and conditions thereof
with respect to your Shares; provided that the Shares shall not be
subject to the call right in Section 3(b). 
Newco agrees that it will, and that it will cause the Majority Holders
(as defined below) to, also become a party to the Stockholders’ Agreement.

 

8.             Tax
Reporting.  It is intended that your
contribution of the Rollover Shares, if any, shall be treated as a tax-free
transfer under Section 351 of the Internal Revenue Code of 1986, as
amended (the “Code”).

 

All discussions of U.S. federal tax
considerations in this document have been written to support the marketing of
the Shares.  Such discussions were not
intended or written to be used, and cannot be used by any taxpayer, for the
purpose of avoiding U.S. federal tax penalties. 
You should consult your own tax advisers in determining the tax
consequences of the rollover and of holding the Shares, including the
application to your particular situation of the U.S. federal tax considerations
discussed herein, as well as the application of state, local, foreign, or other
tax laws.

 

9.             Representations;
Acknowledgements.  By signing below and completing and returning
the Acceptance Form, you hereby represent and warrant to Newco and NMG that:

 

(i)            you have the requisite power, authority and
capacity to execute this Agreement and to deliver or cause to be delivered the
Rollover Shares, to perform your obligations under this Agreement and to
consummate the transactions contemplated hereby;

 

(ii)           the Acceptance Form has been duly and
validly executed and delivered by you and constitutes your legal, valid and
binding obligation, enforceable against you in accordance with its terms,
except to the extent that such validly binding effect and enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium and
other laws relating to or affecting creditors’ rights generally;

 

(iii)          the Shares are being acquired for your own
account, for investment purposes only and not with a view to or in connection
with any distribution, reoffer, resale, public offering or other disposition
thereof not in compliance with the Securities Act of 1933 (the “Securities
Act”), as may be amended from time to time, or any applicable United States
federal or state securities laws or regulations;

 

(iv)          you are an “accredited investor”, as defined
in Rule 501(a) under the Securities Act, which means you are:

 

a.     A person whose individual net worth, or joint
net worth with your spouse, exceeds $1,000,000;         OR

 

3

 

b.     A person whose income exceeded $200,000 in
each of the two most recent years, or joint income with your spouse exceeded
$300,000 in each of those years, and you have a reasonable expectation of
reaching the same income level in this year;

 

(v)           you possess such expertise, knowledge, and
sophistication in financial and business matters generally, and in the type of
transaction in which NMG and Newco propose to engage in particular;

 

(vi)          you have had access to all of the information
and individuals with respect to the Shares and your investment that you deem
necessary to make a complete evaluation thereof;

 

(vii)         you have had an opportunity to consult an
independent tax and legal advisor and your decision to acquire the interest for
investment has been based solely upon your evaluation;

 

(viii)        you are aware that the Internal Revenue
Service or other relevant taxing authority may take a position regarding the
rollover contemplated in this Agreement and/or the tax classification of Newco
and the Shares contrary to that intended by Newco as provided in this Agreement
and you shall be solely responsible for any and all tax or other liabilities
that may result from the IRS’s or other relevant taxing authority’s position; and

 

(ix)           you are aware that the Stockholders’
Agreement provides significant restrictions on your ability to dispose of the
Shares.

 

By electing to contribute the Rollover Shares pursuant to
this Agreement, you acknowledge that you are instructing Newco and its
affiliates to distribute to you, following the Closing, Shares in Newco instead
of cash, as described above, and you hereby acknowledge that you do not have,
and will not assert that you have, any claim against Newco, the Majority
Holders (as defined below) or their respective affiliates to receive the Merger
Consideration or any other payment in exchange for the Rollover Shares, except
as contemplated herein.  You further
acknowledge that any tax bonus to make up for the differential between short-term
and long-term capital gains rates that otherwise would be paid to you will not
be so paid on the 10/29 Rollover Shares.

 

The “Majority Holders”
shall mean, collectively or individually, TPG Partners
III, L.P., TPG Partners IV, L.P., Warburg Pincus Private Equity VIII,
L.P., Warburg Pincus Netherlands
Private Equity VIII I, C.V. and Warburg Pincus Germany Private Equity VIII K.G and their respective successors and assigns.

 

10.           Other
NMG Interests.  You acknowledge that
any other equity or equity-based interests that you hold in NMG that you do not
elect to roll over, or which are not accepted for rollover for any reason
pursuant to this Agreement, will be treated in accordance with the Merger
Agreement.

 

11.           Governing
Law.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
any choice of law or conflict of law provision or rule that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.

 

4

 

12.           Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.

 

*              *              *              *              *

 

[Signature Page Follows]

 

5

 

Please
sign your name on the space provided below and please indicate whether and how
you would like to invest in Newco by completing and executing the Acceptance Form attached
to the end of this Agreement.  Please
return an executed copy of this Agreement and the Acceptance Form in
original form or by  FAX no later than 1:00 p.m.
(Central Daylight Time) on Monday, October 3, 2005 to the attention of
Marita O’Dea, The Neiman Marcus Group,
1618 Main Street Dallas, TX 75201. The fax number
is 214-743-7605.  (If you fax your
election form on Monday, the original should be delivered to Marita O’Dea no
later than Wednesday, October 5, 2005).

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Newton
  Acquisition, Inc.

  
	
   

  	
  By:

  	
  David Spuria

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
  Agreed to and
  Accepted by:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  
	
   

  	
   

  
	
  Please print
  your name and address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By execution
  below, NMG and its respective affiliates agree, if so directed by you, to use
  reasonable efforts to effect a rollover pursuant to this Agreement as a
  tax-free distribution under section 351 of the Code, unless otherwise
  required pursuant to a final determination, as defined in Section 1313
  of the Code:

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  
	
   for The
  Neiman Marcus Group, Inc.

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
												

 

S-1Exhibit 10.4

 

EXECUTION COPY

 

 

 

CREDIT AGREEMENT

 

Dated as of
October 6, 2005

 

Among

 

THE FINANCIAL
INSTITUTIONS PARTY HERETO

 

as the Lenders

 

and

 

DEUTSCHE BANK
TRUST COMPANY AMERICAS

 

as Administrative
Agent and Collateral Agent,

 

and

 

NEWTON ACQUISITION,
INC.,

 

and

 

NEWTON ACQUISITION
MERGER SUB, INC. (to be merged with and into The Neiman Marcus Group, Inc.)

 

and

 

The subsidiaries
of The Neiman Marcus Group, Inc. from time to time party hereto

 

 

CREDIT SUISSE

DEUTSCHE BANK SECURITIES INC.

as Joint Lead Arrangers

 

BANC OF AMERICA
SECURITIES LLC

GOLDMAN SACHS CREDIT PARTNERS L.P.

as Co-Arrangers

 

CREDIT SUISSE

DEUTSCHE BANK SECURITIES INC.

BANC OF AMERICA SECURITIES LLC

GOLDMAN SACHS CREDIT PARTNERS L.P.

as Joint Bookrunners

 

CREDIT SUISSE

BANC OF AMERICA SECURITIES LLC

GOLDMAN SACHS CREDIT PARTNERS L.P.

as Co-Syndication Agents

 

and

 

GENERAL ELECTRIC
CAPITAL CORPORATION

as Documentation Agent

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  I

  
	
   

  	
   

  
	
  Definitions

  
	
   

  	
   

  
	
  SECTION 1.01. Defined Terms

  	
   

  
	
  SECTION
  1.02. Classification of Loans and Borrowings

  	
   

  
	
  SECTION 1.03. Terms Generally

  	
   

  
	
  SECTION 1.04.
  Accounting Terms; GAAP

  	
   

  
	
  SECTION
  1.05. Effectuation of Transactions

  	
   

  
	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  
	
  The Credits

  
	
   

  	
   

  
	
  SECTION 2.01. Commitments

  	
   

  
	
  SECTION 2.02. Loans
  and Borrowings

  	
   

  
	
  SECTION 2.03.
  Requests for Borrowings

  	
   

  
	
  SECTION 2.04.
  Protective Advances

  	
   

  
	
  SECTION 2.05. Swingline Loans

  	
   

  
	
  SECTION 2.06. Letters of
  Credit

  	
   

  
	
  SECTION 2.07.
  Funding of Borrowings

  	
   

  
	
  SECTION 2.08.
  Type; Interest Elections

  	
   

  
	
  SECTION
  2.09. Termination and Reduction of Commitments

  	
   

  
	
  SECTION
  2.10. Repayment of Loans; Evidence of Debt

  	
   

  
	
  SECTION 2.11.
  Prepayment of Loans

  	
   

  
	
  SECTION 2.12. Fees

  	
   

  
	
  SECTION 2.13. Interest

  	
   

  
	
  SECTION 2.14.
  Alternate Rate of Interest

  	
   

  
	
  SECTION 2.15. Increased
  Costs

  	
   

  
	
  SECTION 2.16. Break
  Funding Payments

  	
   

  
	
  SECTION 2.17. Taxes

  	
   

  
	
  SECTION
  2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs

  	
   

  
	
  SECTION
  2.19. Mitigation Obligations; Replacement of Lenders

  	
   

  
	
  SECTION 2.20. Illegality

  	
   

  
	
  SECTION 2.21. Cash Receipts

  	
   

  
	
  SECTION
  2.22. Reserves; Change in Reserves

  	
   

  
	
  SECTION 2.23. Increase
  in Commitments

  	
   

  
	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  
	
  Representations and
  Warranties

  
	
   

  	
   

  
	
  SECTION 3.01.
  Organization; Powers

  	
   

  
	
  SECTION
  3.02. Authorization; Enforceability

  	
   

  

 

 

	
  SECTION
  3.03. Governmental Approvals; No Conflicts

  	
   

  
	
  SECTION
  3.04. Financial Condition; No Material Adverse Change

  	
   

  
	
  SECTION 3.05. Properties

  	
   

  
	
  SECTION
  3.06. Litigation and Environmental Matters

  	
   

  
	
  SECTION
  3.07. Compliance with Laws and Agreements; Licenses and Permits

  	
   

  
	
  SECTION
  3.08. Investment and Holding Company Status

  	
   

  
	
  SECTION 3.09. Taxes

  	
   

  
	
  SECTION 3.10. ERISA

  	
   

  
	
  SECTION 3.11. Disclosure

  	
   

  
	
  SECTION 3.12. Material
  Agreements

  	
   

  
	
  SECTION 3.13. Solvency

  	
   

  
	
  SECTION 3.14. Insurance

  	
   

  
	
  SECTION
  3.15. Capitalization and Subsidiaries

  	
   

  
	
  SECTION
  3.16. Security Interest in Collateral

  	
   

  
	
  SECTION 3.17. Labor
  Disputes

  	
   

  
	
  SECTION 3.18.
  Federal Reserve Regulations

  	
   

  
	
  SECTION 3.19. Transaction
  Documents

  	
   

  
	
  SECTION 3.20. Senior
  Indebtedness

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  
	
  Conditions

  
	
   

  	
   

  
	
  SECTION 4.01. Closing Date

  	
   

  
	
  SECTION 4.02. Each Credit
  Event

  	
   

  
	
  SECTION 4.03.
  Holdings’ Right To Cure

  	
   

  
	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  
	
  Affirmative Covenants

  
	
   

  	
   

  
	
  SECTION
  5.01. Financial Statements; Borrowing Base and Other Information

  	
   

  
	
  SECTION 5.02.
  Notices of Material Events

  	
   

  
	
  SECTION
  5.03. Existence; Conduct of Business

  	
   

  
	
  SECTION 5.04.
  Payment of Obligations

  	
   

  
	
  SECTION 5.05.
  Maintenance of Properties

  	
   

  
	
  SECTION
  5.06. Books and Records; Inspection Rights; Appraisals; Field Examinations

  	
   

  
	
  SECTION
  5.07. HSBC Agreement and Permitted Replacement Credit Card Program

  	
   

  
	
  SECTION 5.08.
  Compliance with Laws

  	
   

  
	
  SECTION 5.09. Use of Proceeds

  	
   

  
	
  SECTION 5.10. Insurance

  	
   

  
	
  SECTION
  5.11. Additional Collateral; Further Assurances

  	
   

  
	
  SECTION
  5.12. Maintenance of Corporate Separateness

  	
   

  
	
  SECTION 5.13.
  Designation of Subsidiaries

  	
   

  
	
  SECTION 5.14. 2008
  Notes Redemption

  	
   

  

 

 

	
  ARTICLE VI

  
	
   

  	
   

  
	
  Negative Covenants

  
	
   

  	
   

  
	
  SECTION 6.01. Indebtedness

  	
   

  
	
  SECTION 6.02. Liens

  	
   

  
	
  SECTION 6.03. Fundamental
  Changes

  	
   

  
	
  SECTION
  6.04. Investments, Loans, Advances, Guarantees and Acquisitions

  	
   

  
	
  SECTION 6.05. Asset Sales

  	
   

  
	
  SECTION
  6.06. Sale and Lease-Back Transactions

  	
   

  
	
  SECTION 6.07. Swap
  Agreements

  	
   

  
	
  SECTION
  6.08. Restricted Payments; Certain Payments of Indebtedness

  	
   

  
	
  SECTION
  6.09. Transactions with Affiliates

  	
   

  
	
  SECTION 6.10. Restrictive
  Agreements

  	
   

  
	
  SECTION
  6.11. Amendment of Material Documents

  	
   

  
	
  SECTION 6.12. Certain
  Equity Securities

  	
   

  
	
  SECTION
  6.13. Designated Disbursement Account

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  
	
  Events of Default

  
	
   

  	
   

  
	
  SECTION 7.01. Events of
  Default

  	
   

  
	
  SECTION
  7.02. Exclusion of Immaterial Subsidiaries

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  
	
  The Agent

  
	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  	
   

  
	
  Miscellaneous

  
	
   

  	
   

  
	
  SECTION 9.01. Notices

  	
   

  
	
  SECTION 9.02.
  Waivers; Amendments

  	
   

  
	
  SECTION
  9.03. Expenses; Indemnity; Damage Waiver

  	
   

  
	
  SECTION 9.04.
  Successors and Assigns

  	
   

  
	
  SECTION 9.05. Survival

  	
   

  
	
  SECTION
  9.06. Counterparts; Integration; Effectiveness

  	
   

  
	
  SECTION 9.07. Severability

  	
   

  
	
  SECTION 9.08. Right of
  Setoff

  	
   

  
	
  SECTION
  9.09. Governing Law; Jurisdiction; Consent to Service of Process

  	
   

  
	
  SECTION 9.10. WAIVER
  OF JURY TRIAL

  	
   

  
	
  SECTION 9.11. Headings

  	
   

  
	
  SECTION 9.12.
  Confidentiality

  	
   

  
	
  SECTION
  9.13. Several Obligations; Nonreliance; Violation of Law

  	
   

  
	
  SECTION 9.14. USA PATRIOT
  Act

  	
   

  
	
  SECTION 9.15. Disclosure

  	
   

  
	
  SECTION 9.16.
  Appointment for Perfection

  	
   

  

 

 

	
  SECTION 9.17.
  Interest Rate Limitation

  	
   

  
	
  SECTION 9.18.
  Effectiveness of the Merger

  	
   

  
	
  SECTION 9.19.
  INTERCREDITOR AGREEMENT

  	
   

  
	
   

  	
   

  
	
  ARTICLE X

  
	
   

  	
   

  
	
  Loan
  Guaranty

  
	
   

  	
   

  
	
  SECTION 10.01. Guaranty

  	
   

  
	
  SECTION 10.02.
  Guaranty of Payment

  	
   

  
	
  SECTION
  10.03. No Discharge or Diminishment of Loan Guaranty

  	
   

  
	
  SECTION 10.04. Defenses
  Waived

  	
   

  
	
  SECTION 10.05. Rights
  of Subrogation

  	
   

  
	
  SECTION
  10.06. Reinstatement; Stay of Acceleration

  	
   

  
	
  SECTION 10.07. Information

  	
   

  
	
  SECTION 10.08. Taxes

  	
   

  
	
  SECTION 10.09. Maximum
  Liability

  	
   

  
	
  SECTION 10.10. Contribution

  	
   

  
	
  SECTION 10.11. Liability
  Cumulative

  	
   

  
	
  SECTION
  10.12. Release of Loan Guarantors

  	
   

  

 

 

SCHEDULES:

 

	
  Commitment Schedule

  
	
  Schedule 1.01(a)

  	
  —

  	
  Existing Letters of
  Credit

  	
   

  
	
  Schedule 1.01(b)

  	
  —

  	
  Immaterial Subsidiaries

  	
   

  
	
  Schedule 1.01(c)

  	
  —

  	
  Mortgaged Properties

  	
   

  
	
  Schedule 1.01(d)

  	
  —

  	
  Specified HSBC
  Arrangement Accounts

  	
   

  
	
  Schedule 2.21(a)

  	
  —

  	
  DDAs

  	
   

  
	
  Schedule 2.21(b)

  	
  —

  	
  Credit Card
  Arrangements

  	
   

  
	
  Schedule 2.21(c)

  	
  —

  	
  Blocked Accounts

  	
   

  
	
  Schedule 3.05(a)

  	
  —

  	
  Properties

  	
   

  
	
  Schedule 3.05(g)

  	
  —

  	
  Intellectual Property

  	
   

  
	
  Schedule 3.06

  	
  —

  	
  Disclosed Matters

  	
   

  
	
  Schedule 3.14

  	
  —

  	
  Insurance

  	
   

  
	
  Schedule 3.15

  	
  —

  	
  Capitalization and
  Subsidiaries

  	
   

  
	
  Schedule 3.17

  	
  —

  	
  Labor Disputes

  	
   

  
	
  Schedule 4.01(b)

  	
  —

  	
  Local Counsel

  	
   

  
	
  Schedule 6.01

  	
  —

  	
  Existing Indebtedness

  	
   

  
	
  Schedule 6.02

  	
  —

  	
  Existing Liens

  	
   

  
	
  Schedule 6.04

  	
  —

  	
  Existing Investments

  	
   

  
	
  Schedule 6.05

  	
  —

  	
  Specified Asset Sales

  	
   

  
	
  Schedule 6.09

  	
  —

  	
  Transactions with
  Affiliates

  	
   

  
	
  Schedule 6.10

  	
  —

  	
  Existing Restrictions

  	
   

  
	
  Schedule 9.01

  	
  —

  	
  Borrower’s Website for
  Electronic Delivery

  	
   

  

 

 

EXHIBITS:

 

	
  Exhibit A — Form of
  Assignment and Assumption

  	
   

  
	
  Exhibit B — Form of
  Borrowing Base Certificate

  	
   

  
	
  Exhibit C — Form of
  Compliance Certificate

  	
   

  
	
  Exhibit D — Joinder
  Agreement

  	
   

  
	
  Exhibit E — Form of
  Letter of Credit Request

  	
   

  
	
  Exhibit F — Form of
  Borrowing Request

  	
   

  
	
  Exhibit G — Form of
  Promissory Note

  	
   

  

 

 

CREDIT AGREEMENT dated as
of October 6, 2005 (this “Agreement”), among NEWTON ACQUISITION
MERGER SUB, INC. (“Merger Sub” and, prior to the Merger (as defined
below), the “Borrower”), a Delaware corporation to be merged with and
into THE NEIMAN MARCUS GROUP, INC., a Delaware corporation (“Neiman Marcus”
and, after the Merger, the “Borrower”), NEWTON ACQUISITION, INC., a
Delaware corporation (“Holdings”), each subsidiary of Neiman Marcus from
time to time party hereto, the Lenders (as defined in Article I) and
DEUTSCHE BANK TRUST COMPANY AMERICAS, as administrative agent and collateral
agent for the Lenders hereunder (in such capacities, the “Agent”).

 

Pursuant to or in
connection with the Merger Agreement (such term and each other capitalized term
used but not defined in this introductory statement having the meaning given it
in Article I), (a) Merger Sub will merge (the “Merger”) with
and into Neiman Marcus, with (i) the outstanding capital stock of Neiman
Marcus being converted into (and certain outstanding options to purchase, and
outstanding stock unit awards representing the right to receive, shares of
capital stock of Neiman Marcus being canceled in exchange for) the right to
receive an aggregate amount of approximately $5,110,800,000 in cash (the “Merger
Consideration”), subject to dissenters’ rights, (ii) Neiman Marcus
surviving as a wholly owned subsidiary of Holdings and (iii) Neiman Marcus
assuming by operation of law all of the Obligations of Merger Sub under this
Agreement and the other Loan Documents, (b) the Borrower will obtain the
Senior Secured Term Loan Facility in an initial aggregate principal amount of
$1,975,000,000, (c) the Borrower will issue, in a public offering or in a
Rule 144A or other private placement, (i) $700,000,000 aggregate principal
amount of its Senior Notes and (ii) $500,000,000 aggregate principal
amount of its Senior Subordinated Notes, (d) the Equity Contribution will
be made, (e) the Existing Bank Debt Refinancing will be effected,
(f) the 2008 Notes Call for Redemption will be effected, (g) the 2028
Debentures and the 2008 Notes will be secured by the Pari Passu Liens and
(h) the Transaction Costs will be paid.

 

In connection with the
foregoing, (a) the Borrower has requested the Lenders to extend credit in the
form of Revolving Loans at any time and from time to time during the
Availability Period, in an aggregate principal amount at any time outstanding
not in excess of $600,000,000, (b) the Borrower has requested the Swingline
Lender to extend credit, at any time and from time to time during the Availability
Period, in the form of Swingline Loans, in an aggregate principal amount at any
time outstanding not in excess of $25,000,000 and (c) the Borrower has
requested the Issuing Banks to issue Letters of Credit, in an aggregate face
amount at any time outstanding not in excess of $150,000,000, to support
payment obligations incurred in the ordinary course of business by the Borrower
and its subsidiaries. The proceeds of the Revolving Loans and the Swingline
Loans are to be used solely (a) with respect to the Initial Revolving
Borrowing, to finance, in part, the Transactions and the redemption after the
Closing Date of the 2008 Notes (to the extent permitted in accordance with the
definition of the term “Permitted Initial Revolving Borrowing Purposes”) and
for the other Permitted Initial Revolving Borrowing Purposes and (b) with
respect to all other borrowings thereof, for general corporate purposes.

 

The Lenders and the
Swingline Lender are willing to extend such credit to the Borrower, and the
Issuing Banks are willing to issue Letters of Credit for the account of the
Borrower, in each case on the terms and subject to the conditions set forth
herein.  Accordingly, the parties hereto
agree as follows:

 

 

ARTICLE I

 

Definitions

 

SECTION 1.01. Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

 

“ABR”, when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.

 

“Account” has the
meaning assigned to such term in the Security Agreement.

 

“Account Debtor”
means any Person obligated on an Account.

 

“ACH” means
automated clearing house transfers.

 

“Additional Commitment
Lender” has the meaning set forth in Section 2.23(a).

 

“Adjusted LIBOR Rate”
means, for any Interest Period, the rate obtained by dividing (a) the LIBOR
Rate for such Interest Period by (b) a percentage equal to 1 minus the
stated maximum rate (stated as a decimal) of all reserves, if any, required to
be maintained against “Eurocurrency liabilities” as specified in Regulation D
(including any marginal, emergency, special or supplemental reserves).

 

“Adjustment Date”
means the first day of each January, April, July and October, as applicable.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Agent.

 

“Affiliate” means,
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

 

“Agent” has the
meaning assigned to such term in the preamble to this Agreement.

 

“Alternate Base Rate”
means, for any day, a rate per annum equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1⁄2 of 1%. 
Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.

 

“Applicable Percentage”
means, with respect to any Lender, (a) with respect to Revolving Loans, LC
Exposure or Swingline Loans, a percentage equal to a fraction the numerator of
which is such Lender’s Commitment and the denominator of which is the aggregate
Commitment of all Revolving Lenders (if the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon such Lender’s
share of the aggregate Revolving Exposures at that time) and (b) with respect
to Protective Advances, a percentage based upon its share of the unused
Commitments.

 

“Applicable Rate”
means, for any day, with respect to any ABR Loan or LIBOR Rate Loan, the
applicable rate per annum set forth below under the caption “ABR Spread” or “LIBOR
Rate

 

2

 

Spread”, as the
case may be, based upon the Average Historical Excess Availability as of the most
recent Adjustment Date, provided that until the first Adjustment Date
occurring at least one full fiscal quarter after the Closing Date, the “Applicable
Rate” shall be the applicable rate per annum set forth below in
Category 1:

 

	
  Average
  Historical Excess Availability

  	
   

  	
  ABR Spread

  	
   

  	
  LIBOR Rate

  Spread

  	
   

  
	
  Category
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average
  Historical Excess Availability less than or equal to $200,000,000

  	
   

  	
  0.00

  	
  %

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Category
  2

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average
  Historical Excess Availability greater than $200,000,000, but less than or
  equal to $300,000,000

  	
   

  	
  0.00

  	
  %

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Category
  3

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average
  Historical Excess Availability greater than $300,000,000

  	
   

  	
  0.00

  	
  %

  	
  1.25

  	
  %

  

 

The Applicable Rate shall
be adjusted quarterly on a prospective basis on each Adjustment Date based upon
the Average Historical Excess Availability in accordance with the table above; provided
that if an Event of Default shall have occurred and be continuing at the time
any reduction in the Applicable Rate would otherwise be implemented, no such
reduction shall be implemented until the date on which such Event of Default
shall have been cured or waived.

 

“Approved Fund”
means any Person (other than an natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course and that is administered or managed by (1) a
Lender, (2) an Affiliate of a Lender or (3) an entity or an Affiliate
of an entity that administers, advises or manages a Lender.

 

“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an assignee (with the consent of any party whose consent is required by
Section 9.04), and accepted by the Agent, in the form of Exhibit A
or any other form approved by the Agent.

 

“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 then borne by
the Loans, 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 Capital Lease Obligation, the amount of Indebtedness
represented thereby will be determined in accordance with the definition of “Capital
Lease Obligation”.

 

“Available Commitment”
means, at any time, the Commitment then in effect minus
the Revolving Exposure of all Revolving Lenders at such time.

 

“Availability Period”
means the period from and including the Closing Date to but excluding the
earlier of the Maturity Date and the date of termination of the Commitments.

 

“Availability Reserves”
means, without duplication of any other Reserves or items that are otherwise
addressed or excluded through eligibility criteria, such reserves as the Agent,
from time to time determines in its Permitted Discretion, as being appropriate
to reflect any impediments to the

 

3

 

realization upon
the Collateral consisting of Eligible Inventory included in the Borrowing Base
(including claims that the Agent reasonably determines will need to be
satisfied in connection with the realization upon such Collateral).

 

“Average Historical
Excess Availability” means, at any Adjustment Date, the average daily
Excess Availability for the three-month period immediately preceding such
Adjustment Date (with the Borrowing Base for any such day used to determine “Excess
Availability” calculated by reference to the most recent Borrowing Base
Certificate delivered to the Agent on or prior to such day pursuant to
Section 5.01(h)).

 

“Average Revolving
Loan Utilization” means, at any Adjustment Date, the average daily
aggregate Revolving Exposure (excluding any Revolving Exposure resulting from
any outstanding Swingline Loans) for the three-month period immediately
preceding such Adjustment Date, divided by the aggregate Commitments at such
time.

 

“Banking Services”
means each and any of the following bank services provided to any Loan Party at
the written request of such Loan Party by the Agent, any Lender or any of their
Affiliates: (a) commercial credit cards, (b) stored value cards and (c)
treasury management services (including, without limitation, controlled
disbursement, ACH transactions, return items and interstate depository network
services).

 

“Banking Services
Obligations” of the Loan Parties means any and all obligations of the Loan
Parties, whether absolute or contingent and however and whenever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

 

“Banking Services
Reserves” means all Reserves which the Agent from time to time after the
occurrence and during the continuance of a Liquidity Event establishes in its
Permitted Discretion as being appropriate to reflect reasonably anticipated
liabilities and obligations of the Loan Parties in respect of Banking Services
then provided or outstanding.

 

“Blocked Account
Agreement” has the meaning assigned to such term in Section 2.21(c).

 

“Blocked Accounts”
has the meaning assigned to such term in Section 2.21(c).

 

“Board” means the
Board of Governors of the Federal Reserve System of the United States of
America.

 

“Borrower” has the
meaning assigned to such term in the preamble to this Agreement.

 

“Borrowing” means
any (a) Revolving Loans of the same Type made, converted or continued on the
same date and, in the case of LIBOR Rate Loans, as to which a single Interest
Period is in effect, (b) Swingline Loan or (c) Protective Advance.

 

“Borrowing Base”
means, at any time, (a) the lesser of (i) 80% of Eligible Inventory
(net of Inventory Reserves), valued at the lower of Cost and market value, and
(ii) 85% of Net Orderly Liquidation Value of Eligible Inventory (net of
Inventory Reserves not already reflected in the determination of Net Orderly
Liquidation Value), minus
(b) without duplication, the then amount of all Availability Reserves and other
Reserves as the Agent may at any time and from time to time in the exercise of
its Permitted Discretion establish.  The
Borrowing Base at any time shall be determined by

 

4

 

reference to the
most recent Borrowing Base Certificate delivered to the Agent pursuant to
Section 5.01(h).

 

“Borrowing Base
Certificate” means a certificate, signed and certified as accurate and
complete by a Financial Officer of the Borrower, in substantially the form of Exhibit
B or another form which is acceptable to the Agent in its reasonable
discretion.

 

“Borrowing Request”
means a request by the Borrower for a Borrowing in accordance with
Section 2.03 and substantially in the form attached hereto as
Exhibit F, or such other form as shall be approved by the Agent.

 

“Business Day”
means any day that is not a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to remain closed; provided
that, when used in connection with a LIBOR Rate Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.

 

“Capital Expenditures”
means, for any period, without duplication, (a) any expenditure for any purchase
or other acquisition of any asset which would be classified as a fixed or
capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP, less (b) any expenditure
which is contractually required to be, and is, reimbursed to the Loan Parties
in cash by a third party (including landlords and developers) during such
period of calculation.

 

“Capital Lease
Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP, and the amount of such obligations shall be
the amount thereof accounted for as a liability determined in accordance with
GAAP.

 

A “Change in Control”
shall be deemed to have occurred if (a) prior to a Qualified Public
Offering, the Permitted Holders (i) shall fail to have the right, directly or
indirectly, by voting power, contract or otherwise, to elect or designate for
election at least a majority of the Board of Directors of Holdings or (ii)
shall fail to own, directly or indirectly, beneficially and of record, shares
of Holdings in an amount equal to more than fifty percent (50%) of the amount
of shares owned, directly or indirectly, by the Permitted Holders, beneficially
and of record, as of the Closing Date and such ownership by the Permitted
Holders shall not represent the largest single block of voting securities of
Holdings held, directly or indirectly, by any Person or related group for
purposes of Section 13(d) of the Exchange Act, (b) after a Qualified
Public Offering, any “person” or “group” (within the meaning of Rule 13d-5
of the Exchange Act but excluding any employee benefit plan of such person and
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan), other than the Permitted
Holders, shall “beneficially own” (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, shares representing more than 35% of the
aggregate ordinary voting power represented by the issued and outstanding
Equity Interests of Holdings and the percentage of the aggregate ordinary
voting power represented by such Equity Interests beneficially owed by such
person or group exceeds the percentage of the aggregate ordinary voting power
represented by Equity Interests of Holdings then beneficially owned, directly
or indirectly, by the Permitted Holders, unless (i) the Permitted Holders have,
at such time, the right or the ability, directly or indirectly, by voting
power, contract or otherwise to elect or designate for election at least a
majority of the Board of Directors of Holdings or (ii) during any period of
twelve (12) consecutive months, a majority of the seats (other than vacant
seats) on the board of directors of Holdings (or the Borrower existing after a
Qualified Public Offering of the Borrower) shall be occupied by persons who
were (x) members of the board of directors of Holdings on the Closing Date
after giving effect to the Merger or nominated by the board of directors

 

5

 

of Holdings (or of
the Borrower after a Qualified Public Offering of the Borrower) or by one or
more Permitted Holders or Persons nominated by one or more Permitted Holders or
(y) appointed by directors so nominated, (c) any change in control (or
similar event, however denominated) with respect to Holdings or the Borrower
shall occur under and as defined in the New Notes, the Senior Secured Term Loan
Facility, the 2028 Debentures or any other Subordinated Indebtedness of
Holdings or its Subsidiaries constituting Material Indebtedness, or (d) at
any time prior to a Qualified Public Offering of the Borrower, Holdings shall
cease to beneficially own, directly or indirectly, 100% of the issued and
outstanding Equity Interests of the Borrower.

 

“Change in Law” means
(a) the adoption of any law, rule or regulation after the date of this
Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such Lender or by
such Lender’s or such Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement (other
than any such request, guideline or directive to comply with any law, rule or
regulation that was in effect on the date of this Agreement).

 

“Class”, when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are Revolving Loans, Swingline Loans or
Protective Advances.

 

“Closing Date”
means the date on which the conditions specified in Section 4.01 are satisfied
(or waived in accordance with Section 9.02).

 

“Code” means the
Internal Revenue Code of 1986, as amended from time to time.

 

“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, and their respective Affiliates.

 

“Collateral” means
any and all property owned, leased or operated by a Person subject to a
security interest or Lien under the Collateral Documents and any and all other
property of any Loan Party, now existing or hereafter acquired, that may at any
time be or become subject to a security interest or Lien in favor of Agent, on
behalf of itself and the Lenders, to secure the Secured Obligations; provided,
however, that Collateral shall not at any time include any Margin Stock.

 

“Collateral Access
Agreement” has the meaning assigned to such term in the Security Agreement.

 

“Collateral Documents”
means, collectively, the Security Agreement, the Mortgages and any other documents
granting a Lien upon the Collateral as security for payment of the Secured
Obligations.

 

“Commitment”
means, with respect to each Lender, the commitment of such Lender to make
Revolving Loans and to acquire participations in Protective Advances, Letters
of Credit and Swingline Loans hereunder, expressed as an amount representing
the maximum possible aggregate amount of such Lender’s Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.09 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s
Commitment is set forth on the Commitment Schedule, or in the Assignment
and Assumption pursuant to

 

6

 

which such Lender
shall have assumed its Commitment, as applicable.  The initial aggregate amount of the Lenders’
Commitments is $600,000,000.

 

“Commitment Fee Rate”
means (a) for any day from the Closing Date until the first Adjustment Date
occurring at least one full fiscal quarter after the Closing Date, a rate equal
to 0.375% per annum, and (b) for any day thereafter, the applicable rate per
annum set forth below based upon the Average Revolving Loan Utilization as of
the most recent Adjustment Date:

 

	
  Average
  Revolving Loan Utilization

  	
   

  	
  Commitment Fee Rate

  	
   

  
	
  Less than 50%

  	
   

  	
  .375

  	
  %

  
	
  Greater than or equal
  to 50%

  	
   

  	
  .25

  	
  %

  

 

The Commitment Fee Rate
shall be adjusted quarterly on a prospective basis on each Adjustment Date
based upon the Average Revolving Loan Utilization in accordance with the table
above; provided that if an Event of Default shall have occurred and be
continuing at the time any reduction in the Commitment Fee Rate would otherwise
be implemented, no such reduction shall be implemented until the date on which
such Event of Default shall have been cured or waived.

 

“Commitment Increase”
has the meaning set forth in Section 2.23(a).

 

“Commitment Increase
Date” has the meaning set forth in Section 2.23(c).

 

“Commitment Schedule”
means the Schedule attached hereto identified as such.

 

“Consolidated Secured
Debt Ratio” as of any date of determination means the ratio of
(a) Consolidated Total Indebtedness of the Borrower and its 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 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
reasonably satisfactory to the Agent (it being acknowledged by the Agent that
such adjustments as are consistent with the pro forma adjustment provisions set
forth in the definition of “Fixed Charge Coverage Ratio” in the indentures
governing the New Notes shall be satisfactory to it).

 

“Consolidated Total
Indebtedness” means, as at any date of determination, an amount equal to
the sum of (a) the aggregate amount of all outstanding Indebtedness of the
Borrower and its Subsidiaries on a
consolidated basis consisting of Indebtedness for borrowed money, obligations
in respect of Capital 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 any undrawn letters of credit issued in the ordinary course of
business) and (b) the aggregate amount of all outstanding
Disqualified Equity Interests of the Borrower and all Disqualified Equity
Interests and preferred stock of the Subsidiaries (excluding items eliminated
in consolidation), with the amount of such Disqualified Equity Interests 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 of this definition, the “Maximum
Fixed Repurchase Price” of any Disqualified Equity Interests or preferred
stock that does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Equity Interests or preferred
stock as if such Disqualified Equity Interests or

 

7

 

preferred stock
were purchased on any date on which Consolidated Total Indebtedness shall be
required to be determined pursuant to this Agreement, and if such price is
based upon, or measured by, the fair market value of such Disqualified Equity
Interests or preferred stock, such fair market value shall be determined
reasonably and in good faith by the Borrower.

 

“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

“Cost” means the
cost of purchases of Inventory determined according to the accounting policies
used in the preparation of the Borrower’s audited financial statements
(pursuant to which the retail method of accounting is utilized for
substantially all merchandise Inventories).

 

“Credit Card
Notification” has the meaning assigned to such term in Section 2.21(c).

 

“Customer Credit
Liabilities” means, at any time, the aggregate remaining balance at such
time of (a) outstanding gift certificates and gift cards of the Borrower
entitling the holder thereof to use all or a portion of the certificate or gift
card to pay all or a portion of the purchase price for any Inventory, (b)
outstanding merchandise credits of the Borrower, net of any dormancy reserves
maintained by the Borrower on its books and records in the ordinary course of
business consistent with past practices and (c) liabilities associated with the
Borrower’s InCircle customer rewards program.

 

“Customer Credit
Liabilities Reserve” means, as of any date, an amount equal to 50% of the
Customer Credit Liabilities as reflected in the Borrower’s books and records.

 

“Customer Deposits”
means, at any time, the aggregate balance at such time of outstanding customer
deposits of the Borrower, net of any dormancy reserves maintained by the
Borrower on its books and records in the ordinary course of business consistent
with past practices.

 

“Customer Deposits
Reserve” means, as of any date, an amount equal to 100% of the Customer
Deposits as reflected in the Borrower’s books and records.

 

“DBTCA” means
Deutsche Bank Trust Company Americas, a New York banking corporation, acting in
its individual capacity, and its successors and assigns.

 

“DBTCA Account”
has the meaning assigned to such term in Section 2.21(d).

 

“DDA Notification”
has the meaning assigned to such term in Section 2.21(c).

 

“DDAs” means any
checking or other demand deposit account maintained by the Loan Parties; provided
that references herein to DDAs shall be deemed not to refer to any Specified
Segregated Account.  All funds in such
DDAs shall be conclusively presumed to be Collateral and proceeds of Collateral
and the Agent and the Lenders shall have no duty to inquire as to the source of
the amounts on deposit in the DDAs, subject to the Security Agreement and the
Intercreditor Agreement.

 

“Default” means
any event or condition which constitutes an Event of Default or which upon
notice, lapse of time or both would, unless cured or waived, become an Event of
Default.

 

“Defaulting Lender”
means any Revolving Lender that has (a) defaulted in its obligation to
make a Revolving Loan or to fund its participation in a Letter of Credit,
Swingline Loan or Protective Advance required to be made or funded by it
hereunder, (b) notified the Agent or a Loan Party in writing

 

8

 

that it does not
intend to satisfy any such obligation or (c) become insolvent or the
assets or management of which has been taken over by any Governmental
Authority.

 

“Derivative
Transaction” means (a) an interest-rate transaction, including an
interest-rate swap, basis swap, forward rate agreement, interest rate option
(including a cap, collar, and floor), and any other instrument linked to
interest rates that gives rise to similar credit risks (including when-issued
securities and forward deposits accepted), (b) an exchange-rate transaction,
including a cross-currency interest-rate swap, a forward foreign-exchange
contract, a currency option, and any other instrument linked to exchange rates
that gives rise to similar credit risks, (c) an equity derivative transaction,
including an equity-linked swap, an equity-linked option, a forward
equity-linked contract, and any other instrument linked to equities that gives
rise to similar credit risk and (d) a commodity (including precious metal)
derivative transaction, including a commodity-linked swap, a commodity-linked
option, a forward commodity-linked contract, and any other instrument linked to
commodities that gives rise to similar credit risks; provided that no
phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or its subsidiaries shall be a Derivative
Transaction.

 

“Designated
Disbursement Account” has the meaning assigned to such term in Section 2.21(d).

 

“Disclosed Matters”
means the actions, suits and proceedings and the environmental matters
disclosed in Schedule 3.06.

 

“Disqualified Equity
Interests” means any Equity Interest which, by its terms (or by the terms
of any security or other Equity Interests into which it is convertible or for
which it is exchangeable), or upon the happening of any event or condition
(a) matures or is mandatorily redeemable (other than solely for Qualified
Equity Interests), pursuant to a sinking fund obligation or otherwise (except
as a result of a change in control or asset sale so long as any right of the
holders thereof upon the occurrence of a change in control or asset sale event
shall be subject to the prior repayment in full of the Loans and all other
Obligations that are then accrued and payable and the termination of the
Commitments), (b) is redeemable at the option of the holder thereof (other
than solely for Qualified Equity Interests), in whole or in part (except as a
result of a change in control or asset sale so long as any right of the holders
thereof upon the occurrence of a change in control or asset sale event shall be
subject to the prior repayment in full of the Loans and all other Obligations
that are then accrued and payable and the termination of the Commitments),
(c) requires the payment of any cash dividend or any other scheduled cash
payment constituting a return of capital, in each case, prior to the date that
is ninety-one (91) days after the earlier of the Maturity Date and the date the
Loans are no longer outstanding and the Commitments have expired or been
terminated or (d) is or becomes convertible into or exchangeable for
Indebtedness or any other Equity Interests that would constitute Disqualified
Equity Interests, in each case, prior to the date that is ninety-one
(91) days after the earlier of the Maturity Date and the date the Loans
are no longer outstanding and the Commitments have expired or been terminated; provided
that if such Equity Interest is issued to any plan for the benefit of employees
of the Borrower or its subsidiaries or by any such plan to such employees, such
Equity Interest shall not constitute Disqualified Equity Interest solely
because it may be required to be repurchased by the Borrower or its
subsidiaries in order to satisfy applicable statutory or regulatory
obligations.

 

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

 

“Dollars” or “$”
refers to lawful money of the United States of America.

 

9

 

“Domestic Subsidiaries”
means all Subsidiaries incorporated or organized under the laws of the United
States of America, any State thereof or the District Columbia.

 

“EBITDA” means,
for any period, Net Income for such period plus
(a) without duplication and to the extent deducted in determining Net
Income for such period, the sum of (i) Interest Expense for such period,
(ii) income tax expense for such period net of any tax refunds, (iii) all amounts attributable to
depreciation and amortization expense for such period, (iv) any
extraordinary, non-recurring or unusual charges for such period, (v) any
other non-cash charges for such period (but excluding any non-cash charge in
respect of an item that was included in Net Income in a prior period and any non-cash
charge that relates to the write-down or write-off of inventory), (vi) any
charges or expenses related to the Transactions, (vii) payments made
pursuant to Section 6.09(h) and (viii) facilities closure, severance
and other restructuring expenses as shall be reasonably approved by the Agent, minus (b) without duplication
and to the extent included in Net Income, (i) any cash payments made
during such period in respect of non-cash charges described in
clause (a)(iv) or (a)(v) taken in a prior period and (ii) any extraordinary,
non-recurring or unusual gains and any non-cash items of income for such
period, all calculated for the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.

 

“Eligible Assignee”
means (i) a Lender, (ii) a commercial bank, insurance company, or company
engaged in the business of making commercial loans or a commercial finance
company, which Person, together with its Affiliates, has a combined capital and
surplus in excess of $1,000,000,000, (iii) any Affiliate of a Lender under
common control with such Lender or (iv) an Approved Fund of a Lender, provided
that in any event, “Eligible Assignee” shall not include (v) any natural person
(which for this purpose shall not include Credit Suisse or any of its branches
or Affiliates engaged in the business of making commercial loans), (w) any
Defaulting Lender, (x) Holdings or the Borrower or any Affiliate thereof, (y)
any Sponsor or any of their respective Affiliates or (z) any “creditor”, as
defined in Regulation T, or “foreign branch of a broker-dealer”, within the
meaning of Regulation X; provided, however, that upon the
occurrence of an Event of Default, no Person (other than a Lender) shall be an “Eligible
Assignee” if the assignment of any Commitment to such Person would cause such
Person to have Commitments in excess of twenty-five percent (25%) of the then
outstanding total aggregate Commitments.

 

“Eligible Inventory”
means, at any time, all Inventory of the Borrower and the other Loan Parties; provided,
however, that Eligible Inventory shall not include any Inventory:

 

(a)           which
is not subject to a first priority (subject to Permitted Encumbrances arising
by operation of law) perfected Lien in favor of the Agent;

 

(b)           which
is subject to any Lien other than (i) a Lien in favor of the Agent,
(ii) a Second Priority Lien, (iii) a Permitted Encumbrance arising by
operation of law or (iv) a Landlord Lien as to which a Landlord Lien
Reserve applies;

 

(c)           which
is slow moving (other than Inventory located at a clearance center that has
been appropriately priced consistent with the Loan Parties’ customary
practices), obsolete, unmerchantable, defective, used or unfit for sale;

 

(d)           which
does not conform in all material respects to the representations and warranties
contained in this Agreement or the Security Agreement;

 

(e)           which
is not owned only by one or more Loan Parties;

 

10

 

(f)            which
is not finished goods or which constitutes work-in-process, raw materials,
packaging and shipping material, supplies, samples, prototypes, displays or
display items, bill-and-hold goods, goods that are returned or marked for
return (but not held for resale) or repossessed, or which constitutes goods
held on consignment or goods which are not of a type held for sale in the
ordinary course of business;

 

(g)           which
is not located in the U.S. or is in transit with a common carrier from vendors
or suppliers;

 

(h)           which
is located at any location (other than a retail store or clearance center)
leased by a Loan Party, unless (i) the lessor has delivered to the Agent a
Collateral Access Agreement as to such location or (ii) a Reserve for
rent, charges, and other amounts due or to become due with respect to such
location has been established by the Agent in its Permitted Discretion;

 

(i)            which
is located in any third party warehouse or is in the possession of a bailee
(other than a third party processor) and is not evidenced by a Document, unless
(i) such warehouseman or bailee has delivered to the Agent a Collateral
Access Agreement and such other documentation as the Agent may reasonably
require or (ii) an appropriate Reserve has been established by the Agent
in its Permitted Discretion;

 

(j)            which
is being processed offsite at a third party location or outside processor, or
is in-transit to or from said third party location or outside processor;

 

(k)           which
is the subject of a consignment by the Borrower as consignor;

 

(l)            which
is reported in the Borrower’s books and records as part of the Borrower’s “Epicure”
division or, without duplication of the foregoing, is perishable, to the extent
the book value of such Inventory exceeds $5,000,000;

 

(m)          which
contains or bears any intellectual property rights licensed to any Loan Party
by any Person other than a Loan Party unless the Agent is reasonably satisfied
that it may sell or otherwise dispose of such Inventory without (i) infringing
the rights of such licensor, (ii) violating any contract with such licensor, or
(iii) incurring any liability with respect to payment of royalties other than
royalties incurred pursuant to sale of such Inventory under the current
licensing agreement relating thereto;

 

(n)           which
is not reflected in a current retail stock ledger report of the Borrower or any
of its Subsidiaries (except as to goods received but not recorded in the retail
stock ledger during the last three (3) days of a month); or

 

(o)           which
is acquired in connection with a Permitted Acquisition to the extent the Agent
shall not have received a Report in respect of such Inventory, which Report
shows results reasonably satisfactory to the Agent.

 

“Environmental Laws”
means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material or to health and safety
matters.

 

11

 

“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

 

“Equity Contribution”
means the contribution by the Sponsors, the Co-Investors, the Management
Stockholders and certain other Persons investing through Newton Co-Invest I LLC
or Newton Co-Invest II LLC, in an aggregate amount of not less than 25% of the
total consolidated capitalization of Holdings on the Closing Date, after giving
pro forma effect to the consummation of the Transactions and the redemption
after the Closing Date of the 2008 Notes, in cash to Holdings (or any direct or
indirect parent thereof) as common equity and/or preferred equity having terms
reasonably satisfactory to the Joint Lead Arrangers, and the cash contribution
by Holdings (or any direct or indirect parent thereof) of the amount so
received to Merger Sub (or if by a direct or indirect parent of Holdings, by
such parent to Holdings and by Holdings to Merger Sub) in respect of Holdings’
common equity and/or preferred equity in Merger Sub having terms reasonably
satisfactory to the Joint Lead Arrangers or in exchange for the issuance to
Holdings of Equity Interests of Merger Sub.

 

“Equity Interests”
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity interest.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with
the Borrower, is treated as a single employer under Section 414(b) or (c)
of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of
the Code, is treated as a single employer under Section 414 of the Code.

 

“ERISA Event”
means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of
ERISA with respect to the termination of any Plan; (e) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice of an intent to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the
Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is insolvent or in reorganization, within the meaning of
Title IV of ERISA.

 

“Event of Default”
has the meaning assigned to such term in Article VII.

 

12

 

“Excess Availability”
means, at any time, an amount equal to (a) the lesser of the aggregate
total Commitments at such time and the Borrowing Base at such time (as
determined by reference to the most recent Borrowing Base Certificate delivered
to the Agent pursuant to Section 5.01(h)), minus
(b) the aggregate Revolving Exposures of all Revolving Lenders at such
time.

 

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

 

“Excluded Taxes”
means, with respect to the Agent, any Lender, any Issuing Bank or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower or any other Loan Party hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, (b) any branch profits taxes
imposed by the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower or any other Loan Party is located and
(c) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.19(b)), any withholding tax that
is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office)
or is attributable to such Foreign Lender’s failure to comply with
Section 2.17(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower or any
other Loan Party with respect to such withholding tax pursuant to
Section 2.17(a).

 

“Existing Bank Debt
Refinancing” means the payment in full of all amounts, if any, due or owing
under the Existing Credit Agreement, the termination of all commitments
thereunder and the release and discharge of all guarantees thereof (if any) and
all security therefor (if any).

 

“Existing Credit
Agreement” means the $350,000,000 Credit Agreement dated June 9, 2004
among Neiman Marcus, the lenders party thereto, Bank of America, N.A., as
syndication agent, Wachovia Bank, N.A., Wells Fargo Bank National Association
and BNP Paribas, as documentation agents, and JPMorgan Chase Bank, as
administrative agent.

 

“Existing Letter of
Credit” means any letter of credit previously issued for the account of the
Borrower or any other Loan Party by a Lender or an Affiliate of a Lender that
is (a) outstanding on the Closing Date and (b) listed on Schedule 1.01(a).

 

“Federal Funds
Effective Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
that is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Agent from three Federal funds brokers of recognized standing selected by
it.

 

“Fee Letter” means
that certain Amended and Restated Fee Letter dated as of May 26, 2005, by
and among the Borrower, the Agent, Deutsche Bank AG Cayman Islands Branch,
Deutsche Bank Securities Inc., Credit Suisse, Bank of America, N.A., Banc of
America Bridge LLC, Banc of America Securities LLC and Goldman Sachs Credit
Partners L.P.

 

“Financial Officer”
means the chief financial officer, treasurer or controller of the Borrower.

 

13

 

“Fixed Charges”
means, with reference to any period, without duplication, the sum of
(a) cash Interest Expense, plus
(b) the aggregate amount of scheduled principal payments in respect of
long-term Indebtedness of the Borrower and the Subsidiaries made during such
period (other than payments made by the Borrower or any Subsidiary to the
Borrower or a Subsidiary), plus
(c) expense for taxes paid in cash, plus (d) dividends or
distributions paid in cash, plus
(e) Restricted Debt Payments, plus
(f) scheduled Capital Lease Obligation payments, all calculated for such
period for the Borrower and its Subsidiaries on a consolidated basis.

 

“Fixed Charge Coverage
Ratio” means, the ratio, determined as of the end of each fiscal quarter of
the Borrower for the most-recently ended four fiscal quarters, of
(a) EBITDA minus the
unfinanced portion of Capital Expenditures, excluding (i) any Capital
Expenditure made with proceeds applied within twelve (12) months of receipt of
(x) any casualty insurance, condemnation or eminent domain or (y) any
sale of assets (other than Inventory) or (ii) any portion of the purchase
price for a Permitted Acquisition which is classified as a fixed or capital
asset on a consolidated balance sheet of the Borrower and its Subsidiaries
prepared in accordance with GAAP, to (b) Fixed Charges, all calculated for
the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP.  For purposes of calculating the Fixed
Charge Coverage Ratio with respect to measurement periods that include periods
prior to the Closing Date, for those components of such ratio set forth below,
the amounts thereof for the fiscal quarters set forth below shall be deemed to
be the amounts thereof set forth below:

 

	
  Fiscal

  Quarter Ending

  	
   

  	
  Interest Expense

  	
   

  	
  Taxes

  	
   

  	
  Unfinanced

  Capital

  Expenditures

  	
   

  
	
  January 31, 2005

  	
   

  	
  $

  	
  66,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  33,000,000

  	
   

  
	
  April 30, 2005

  	
   

  	
  $

  	
  66,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  33,000,000

  	
   

  
	
  July 30, 2005

  	
   

  	
  $

  	
  66,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  33,000,000

  	
   

  
	
  October 31, 2005

  	
   

  	
  $

  	
  66,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  33,000,000

  	
   

  
																	

 

“Foreign Lender”
means a person that is not a “United States person” within the meaning of
Section 7701(a)(30) of the Code.

 

“Foreign Subsidiary”
means any Subsidiary that is not a Domestic Subsidiary.

 

“Funding Account”
has the meaning assigned to such term in Section 4.01(i).

 

“GAAP” means
generally accepted accounting principles in the United States of America in
effect and applicable to that accounting period in respect of which reference
to GAAP is being made, subject to the provisions of Section 1.04.

 

“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guarantee” of or
by any Person (the “Guarantor”) means any obligation, contingent or
otherwise, of the Guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other monetary obligation of any other Person
(the “Primary Obligor”) in any manner, whether directly or indirectly,
and including any obligation of the Guarantor, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other monetary obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof,

 

14

 

(b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other monetary obligation of the payment
thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the Primary Obligor so as to
enable the Primary Obligor to pay such Indebtedness or other monetary
obligation or (d) as an account party in respect of any letter of credit or letter
of guaranty issued to support such Indebtedness or monetary obligation; provided,
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business, or customary and reasonable
indemnity obligations in effect on the Closing Date or entered into in
connection with any acquisition or disposition of assets permitted under this
Agreement (other than such obligations with respect to Indebtedness). The
amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith.

 

“Guaranteed
Obligations” has the meaning assigned to such term in Section 10.01.

 

“Hazardous Materials”  means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

 

“Holdings” has the
meaning assigned to such term in the preamble to this Agreement.

 

“HSBC Agreements”
means the Purchase, Sale and Servicing Transfer Agreement dated as of June 8,
2005, among HSBC Bank Nevada, N.A., HSBC Finance Corporation (together with
their Affiliates, “HSBC”), Neiman Marcus and Bergdorf Goodman, Inc., and
all material agreements and instruments entered into in connection therewith,
including the Credit Card Program Agreement and the related Services Agreement,
in each case, as amended from time to time in accordance with the terms of this
Agreement.

 

“HSBC Arrangements”
means the private label credit card program between the Borrower and HSBC
pursuant to the terms of the HSBC Agreements.

 

“Immaterial Subsidiary”
means, at any date of determination, any Subsidiary designated as such in
writing by the Borrower to the Agent and that (i) contributed 2.5% or less
of EBITDA for the period of four fiscal quarters most recently ended more than
forty-five (45) days prior to the date of determination, (ii) had
consolidated assets representing 2.5% or less of the consolidated total assets
of the Borrower and the Subsidiaries on the last day of the most recent fiscal
quarter ended more than forty-five (45) days prior to the date of determination
and (iii) did not own any Inventory with an aggregate value of more than
$5,000,000.  The Immaterial Subsidiaries
as of the Closing Date are listed on Schedule 1.01(b).

 

“Indebtedness” of
any Person means (in each case, whether such obligation is with full or limited
recourse), without duplication, (a) any obligation of such Person for
borrowed money, (b) any obligation of such Person evidenced by a bond,
debenture, note or other similar instrument, (c) any obligation of such
Person to pay the deferred purchase price of property or services, except
(i) accrued expenses and trade accounts payable that arise in the ordinary
course of business and (ii) any earn-out obligation until such obligation
becomes a liability on the balance sheet of such Person in accordance with
GAAP, (d) all Capital Lease Obligations and Synthetic Lease Obligations of
such Person, (e) all Obligations of such Person in respect of Disqualified
Equity Interests, (f) any obligation of such Person (whether or not contingent)
to any other Person in respect of a letter of credit or other Guarantee issued
by such other Person, (g) any Swap Obligation, except that if any Swap
Agreement relating to such Swap

 

15

 

Obligation
provides for the netting of amounts payable by and to such Person thereunder or
if any such agreement provides for the simultaneous payment of amounts by and
to such Person, then in each such case, the amount of such obligation shall be
the net amount thereof, (h) any Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) a Lien on any asset 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 determined by such Person in
good faith and the amount of such Indebtedness of others so secured) and
(i) any Indebtedness of others Guaranteed by such Person.  For all purposes hereof, the Indebtedness of
any Person shall exclude purchase price holdbacks arising in the ordinary
course of business in respect of a portion of the purchase price of an asset to
satisfy warranties or other unperformed obligations of the seller of such asset
(other than earn-out obligations).

 

“Indemnified Taxes”
means Taxes other than Excluded Taxes.

 

“Information” has
the meaning set forth in Section 3.11(a).

 

“Information
Memorandum” means the Confidential Information Memorandum dated September
2005, relating to the Borrower and the Transactions.

 

“Initial Revolving
Borrowing” means one or more borrowings of Revolving Loans or issuances or
deemed issuances of Letters of Credit on the Closing Date in an amount not to
exceed the aggregate amount specified or referred to in the definition of the
term “Permitted Initial Revolving Borrowing Purposes”.

 

“Intercreditor
Agreement” means the Lien Subordination and Intercreditor Agreement dated
as of the date hereof, among Holdings, the Borrower, the Subsidiaries party
from time to time thereto, the Agent and the Term Loan Agent (as defined in the
Intercreditor Agreement).

 

“Interest Election
Request” means a request by the Borrower to convert or continue a Borrowing
in accordance with Section 2.07.

 

“Interest Expense”
means, with reference to any period, total interest expense (including that
attributable to Capital Lease Obligations and Synthetic Lease Obligations and
the interest portion of any deferred payment obligation, but excluding
amortization of deferred financing costs and amortization of original issue
discount on any Indebtedness) of the Borrower and its Subsidiaries for such
period with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries (including all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers’ acceptance financing and net
costs under Swap Agreements in respect of interest rates to the extent such net
costs are allocable to such period in accordance with GAAP), calculated on a
consolidated basis for the Borrower and its Subsidiaries for such period in
accordance with GAAP; provided that there shall be excluded therefrom
any Interest Expense of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries.

 

“Interest Payment Date”
means (a) with respect to any ABR Loan (other than a Swingline Loan), the
first Business Day of each January, April, July and October and the Maturity
Date, (b) with respect to any LIBOR Rate Loan, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the
case of a LIBOR Rate Borrowing with an Interest Period of more than three
months’ duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months’ duration after the first day of such
Interest Period (or if such day is not a Business Day, the next succeeding
Business Day), and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.

 

16

 

“Interest Period”
means (a) with respect to any LIBOR Rate Borrowing, the period commencing
on the date of such Borrowing and ending on the numerically corresponding day
in the calendar month that is one, two, three or six months (or, to the
extent available to each Lender, nine or twelve months) thereafter, as the
Borrower may elect; provided, that (i) if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day and (ii) any Interest Period that commences
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period.  For purposes hereof,
the date of a Borrowing initially shall be the date on which such Borrowing is
made and thereafter shall be the effective date of the most recent conversion
or continuation of such Borrowing.

 

“Inventory” has
the meaning assigned to such term in the Security Agreement.

 

“Inventory Reserves”
means (a) such reserves as may be established from time to time by the Agent,
in its Permitted Discretion, with respect to changes in the determination of
the saleability, at retail, of the Eligible Inventory or which reflect such
other factors as negatively affect the market value of the Eligible Inventory
and (b) Shrink Reserves.

 

“Issuing Bank”
means each of Deutsche Bank Trust Company Americas and Credit Suisse and any
other Lender which at the request of the Borrower and with the consent of the
Agent (not to be unreasonably withheld) agrees to become an Issuing Bank and,
solely with respect to any Existing Letter of Credit (and any amendment,
renewal or extension thereof in accordance with this Agreement), the Lender or
Affiliate of a Lender that issued such Existing Letter of Credit.  Each Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing
Bank (including but not limited to, with respect to Deutsche Bank Trust Company
Americas, Deutsche Bank AG New York Branch), in which case the term “Issuing
Bank” shall include any such Affiliate with respect to Letters of Credit issued
by such Affiliate.  Notwithstanding the
foregoing, no “creditor”, as defined in Regulation T, or “foreign branch
of a broker-dealer”, within the meaning of Regulation X, may be an Issuing
Bank.

 

“Joinder Agreement”
has the meaning assigned to such term in Section 5.11.

 

“Joint Lead Arrangers”
means Credit Suisse and Deutsche Bank Securities Inc.

 

“Landlord Lien”
means any Lien of a landlord on the Borrower’s or any Subsidiary’s property,
granted by statute.

 

“Landlord Lien Reserve”
means an amount equal to up to two months’ rent for all of the Loan Parties’ leased
locations where Eligible Inventory is located in each Landlord Lien State,
other than leased locations with respect to which the Agent shall have received
a landlord’s waiver or subordination of lien in form reasonably satisfactory to
the Agent.

 

“Landlord Lien State”
means (i) each of Washington, Virginia and Pennsylvania and (ii) such
other state(s) that the Agent determines after the Closing Date and notifies
the Borrower thereof, that, as a result of a change in law (or in the
interpretation or application thereof by any Governmental Authority) occurring
after the Closing Date a landlord’s claim for rent has priority by operation of
law over the Lien of the Agent in any of the Collateral consisting of Eligible
Inventory.

 

“LC Collateral Account”
has the meaning assigned to such term in Section 2.06(j).

 

17

 

“LC Disbursement”
means a payment made by an Issuing Bank pursuant to a drawing on a Letter of
Credit.

 

“LC Exposure”
means, at any time of determination, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on
behalf of the Borrower or any other Loan Party at such time, less (c) the
amount then on deposit in the LC Collateral Account.  The LC Exposure of any Revolving Lender at
any time shall be its Applicable Percentage of the total LC Exposure at such
time.

 

“Lenders” means
the Persons listed on the Commitment Schedule and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption.  Unless the context
otherwise requires, the term “Lenders” includes the Swingline Lender.

 

“Letter of Credit”
means any standby or commercial letter of credit issued (or, in the case of an
Existing Letter of Credit, deemed to be issued) pursuant to this Agreement.

 

“Letter of Credit
Request” has the meaning assigned to such term in Section 2.06(b).

 

“LIBOR Rate”
means, with respect to any Interest Period, (a) the rate per annum for
Dollar deposits approximately equal to the principal amount of the LIBOR Rate
Loans for which the LIBOR Rate is being determined and with maturities
comparable to the Interest Period for which such LIBOR Rate would apply, which
appears on the Telerate Page 3750 at approximately 11:00 a.m., London
time, on the day that is two (2) Business Days prior to the first day of such
Interest Period and (b) if no such rate so appears on the Telerate
Page 3750, an interest rate per annum equal to the rate (rounded upward to
the nearest whole multiple of 1/16 of 1% per annum, if such rate is not such a
multiple) of the offered quotation, if any, to first class banks in the London
(U.K.) interbank market by the Agent for Dollar deposits of amounts in
immediately available funds comparable to the principal amount of the LIBOR
Rate Loans for which the LIBOR Rate is being determined with maturities
comparable to the Interest Period for which such LIBOR Rate will apply as of
approximately 10:00 a.m. two (2) Business Days prior to the commencement of
such Interest Period.  The term “Telerate
Page 3750” shall mean the display designated as Page 3750 on the Telerate
Services (or such other page as may replace such page on such service for the
purpose of displaying a comparable rate).

 

“Lien” means, with
respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.

 

“Liquidity Event”
means the determination by the Agent that Excess Availability on any day is less
than $60,000,000, provided that the Agent has notified the Borrower
thereof.  For purposes of Section 2.21
only, the occurrence of a Liquidity Event shall be deemed continuing
notwithstanding that Excess Availability may thereafter exceed the amount set
forth in the preceding sentence unless and until Excess Availability exceeds
$60,000,000 for thirty (30) consecutive days, in which event a Liquidity Event
shall no longer be deemed to be continuing for purposes of Section 2.21; provided
that a Liquidity Event may not be cured as contemplated by this sentence more
than two times in any four-fiscal-quarter period.

 

18

 

“Loan Documents”
means this Agreement, any promissory notes issued pursuant to the Agreement,
any Letters of Credit or Letter of Credit applications, the Collateral
Documents and the Intercreditor Agreement. Any reference in this Agreement or
any other Loan Document to a Loan Document shall include all appendices,
exhibits or schedules thereto, and all amendments, restatements, supplements or
other modifications thereto.

 

“Loan Guarantor”
means each Loan Party (other than the Borrower).

 

“Loan Guaranty”
means Article X of this Agreement.

 

“Loan Parties”
means Holdings, the Borrower, each Domestic Subsidiary (other than
(i) subject to compliance with Section 5.11, any Domestic Subsidiary that
is an Immaterial Subsidiary and (ii) any Unrestricted Subsidiary), and any
other Person who becomes a party to this Agreement as a Loan Party pursuant to
a Joinder Agreement, and their respective successors and assigns.

 

“Loans” means the
loans and advances made by the Lenders pursuant to this Agreement, including
Swingline Loans and Protective Advances.

 

“Management Services
Agreement” means the agreement among Holdings, the Borrower and the
Sponsors dated as of October 6, 2005, as amended from time to time in
accordance with the terms hereof, pursuant to which the Sponsors agree to
provide certain advisory services to Holdings and the Borrower in exchange for
certain fees.

 

“Management
Stockholders” means the management officers or employees of the Borrower or
its Subsidiaries who are investors in Holdings or any direct or indirect parent
thereof on the Closing Date.

 

“Margin Stock”
shall have the meaning assigned to such term in Regulation U.

 

“Material Adverse
Effect” means a material adverse effect on (a) the business, assets,
operations or financial condition of the Borrower and the Subsidiaries taken as
a whole, (b) the ability of the Borrower and the other Loan Parties (taken
as a whole) to perform their obligations under the Loan Documents or (c) the
rights of, or remedies available to the Agent, the Issuing Banks or the Lenders
under, the Loan Documents.

 

“Material Indebtedness”
means Indebtedness (other than the Loans and Letters of Credit), or obligations
in respect of one or more Swap Agreements, of any one or more of the Borrower
and its Subsidiaries in an aggregate principal amount exceeding
$50,000,000.  For purposes of determining
Material Indebtedness, the “obligations” of the Borrower or any Subsidiary in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower or such Subsidiary
would be required to pay if such Swap Agreement were terminated at such time.

 

“Maturity Date”
means October 6, 2010 or any earlier date on which the Commitments are reduced
to zero or otherwise terminated pursuant to the terms hereof.

 

“Maximum Liability”
has the meaning assigned to such term in Section 10.09.

 

“Merger” has the
meaning assigned to such term in the introductory statement to this Agreement.

 

19

 

“Merger Agreement”
means the Agreement and Plan of Merger dated as of May 1, 2005, among Holdings,
Merger Sub and Neiman Marcus, as amended from time to time.

 

“Merger Consideration”
has the meaning assigned to such term in the introductory statement to this
Agreement.

 

“Merger Sub” has
the meaning assigned to such term in the preamble to this Agreement.

 

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

 

“Mortgaged Properties”
means, initially, the owned real properties and leasehold and subleasehold
interests of the Loan Parties specified on Schedule 1.01(c), and
shall include each other parcel of real property and improvements thereto with
respect to which a Mortgage is granted pursuant to Section 5.11.

 

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

 

“Multiemployer Plan”
means a multiemployer plan as defined in Section 3(37) or 4001(a)(3) of
ERISA.

 

“Neiman Marcus”
has the meaning assigned to such term in the preamble to this Agreement.

 

“Net Income”
means, for any period, the consolidated net income (or loss) of the Borrower
and its Subsidiaries, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded (a) the income (or deficit)
of any Person accrued prior to the date it becomes a Subsidiary of the Borrower
or is merged into or consolidated with the Borrower or any of its Subsidiaries,
(b) the income (or deficit) of any Person (other than a Subsidiary of the
Borrower) in which the Borrower or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received in
cash by the Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary.

 

“Net Orderly
Liquidation Value” means, with respect to Inventory of any Person, the
orderly liquidation value thereof, net of all costs of liquidation thereof, as
based upon the most recent Inventory appraisal conducted in accordance with
this Agreement and expressed as a percentage of Cost of such Inventory.

 

“New Note Documents”
means, collectively, the Senior Note Documents and the Senior Subordinated Note
Documents.

 

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

 

“Non-Consenting Lender” has the meaning
assigned to such term in Section 9.02(d).

 

“Non-Paying Guarantor” has the meaning assigned
to such term in Section 10.10.

 

20

 

“Obligated Party” has the meaning assigned to
such term in Section 10.02.

 

“Obligations”
means all unpaid principal of and accrued and unpaid interest on the Loans, all
LC Exposure, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Loan Parties to the Lenders or to any
Lender, the Agent, the Issuing Bank or any indemnified party arising under the
Loan Documents.

 

“Other Information”
has the meaning assigned to such term in Section 3.11(b).

 

“Other Taxes”
means any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement.

 

“Pari Passu Liens”
means any Lien on the Collateral granted for the benefit of the holders of the
2028 Debentures and the holders of the 2008 Notes, in each case that is
required by the terms of the indenture applicable thereto as a result of the
grant of security interests pursuant to any Loan Document, the Term Loan
Security Documents or otherwise.

 

“Participant” has
the meaning assigned to such term in Section 9.04.

 

“Paying Guarantor” has the meaning assigned to
such term in Section 10.11.

 

“Payment Conditions”
means, at any time of determination, that (a) no Default or Event of
Default then exists or would arise as a result of the making of the subject
Specified Payment, (b) Excess Availability shall be not less than
$75,000,000 immediately after giving effect to the making of such Specified
Payment, (c) if the aggregate amount of Specified Payments is greater than
$50,000,000 (after giving effect to the then proposed Specified Payment) in the
thirty day period preceding (and including) the date of the proposed payment,
prior to making the proposed Specified Payment or any further Specified
Payments, the Borrower shall have delivered projections to the Agent reasonably
satisfactory to the Agent demonstrating that Projected Average Excess
Availability on the last day of each fiscal month during the six-month period
immediately succeeding any such Specified Payment shall be not less than
$75,000,000 and (d) the Fixed Charge Coverage Ratio as of the end of the
most recently ended four fiscal quarter period shall be greater than or equal
to 1:10 to 1:00 after giving pro forma effect to such Specified Payment as if
such Specified Payment (if applicable to such calculation) had been made as of
the first day of such period; provided that, if Excess Availability at
the time of determination (after giving pro forma effect to any Borrowings made
in connection with such Specified Payment) is greater than $100,000,000,
clauses (d) and (e) of the definition of Fixed Charges shall not be
included in Fixed Charges for purposes of calculating the Fixed Charge Coverage
Ratio for purposes of this clause (d).

 

“PBGC” means the
Pension Benefit Guaranty Corporation referred to and defined in ERISA and any
successor entity performing similar functions.

 

“Perfection
Certificate” shall mean a certificate in the form of Exhibit I to
the Security Agreement or any other form approved by the Agent.

 

“Permitted Acquisition”
means the acquisition by the Borrower or any Subsidiary of all or substantially
all the assets or businesses of a Person or of assets constituting a business
unit, line of business or division of such Person or not less than 100% (or
such lesser percentage that, when combined with the percentage of Equity
Interests owned by the Borrower or such Subsidiary prior to such acquisition,
would equal 100%) of the Equity Interests (other than directors’ qualifying
shares) of a Person; provided that (i) both before and after giving
effect to such acquisition, no Event of Default or

 

21

 

Default shall have
occurred and be continuing; (ii) the acquired assets, division or Person
is in a substantially similar line of business as that conducted by the
Borrower and the Subsidiaries during the then current and most recent fiscal
year or businesses reasonably related or ancillary thereto; (iii) the
Payment Conditions shall have been satisfied; and (iv) the Borrower and
the Subsidiaries shall comply, and (if applicable) shall cause the acquired
Person to comply, with the applicable provisions of Section 5.11 and the
Collateral Documents.

 

“Permitted Cure
Security” shall mean any Qualified Equity Interest of Holdings.

 

“Permitted Discretion”
means the Agent’s commercially reasonable judgment, exercised in good faith in
accordance with customary business practices for comparable asset-based lending
transactions in the retail industry, as to any factor which the Agent
reasonably determines:  (a) will or
reasonably could be expected to adversely affect in any material respect the
value of any Eligible Inventory, the enforceability or priority of the Agent’s
Liens thereon or the amount which the Agent, the Lenders or any Issuing Bank
would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in the liquidation of such Eligible Inventory or (b)
evidences that any collateral report or financial information delivered to the
Agent by any Person on behalf of the Borrower is incomplete, inaccurate or
misleading in any material respect.  In
exercising such judgment, the Agent may consider, without duplication, such
factors already included in or tested by the definition of Eligible Inventory,
as well as any of the following: (i) changes after the Closing Date in any
material respect in demand for, pricing of, or product mix of Inventory; (ii)
changes after the Closing Date in any material respect in any concentration of
risk with respect to the Inventory; and (iii) any other factors arising after
the Closing Date that change in any material respect the credit risk of lending
to the Borrower on the security of the Inventory.

 

“Permitted
Encumbrances” means:

 

(a) Liens for
taxes, assessments or governmental charges which are not overdue for a period
of more than thirty (30) days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person in accordance with
GAAP;

 

(b) statutory
Liens of landlords, carriers, warehousemen, mechanics, materialmen, repairmen,
construction contractors or other like Liens arising in the ordinary course of
business which secure amounts not overdue for a period of more than thirty (30)
days, or if more than thirty (30) days overdue, are unfiled and no other action
has been taken to enforce such Lien or which are being contested in good faith
and by appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person in accordance with
GAAP;

 

(c) leases,
subleases, space leases, licenses or sublicenses, in each case in the ordinary
course of business and which do not interfere in any material respect with the
business of Holdings, the Borrower and its Subsidiaries;

 

(d) pledges and
deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security or similar laws
or regulations; and pledges and deposits in the ordinary course of business
securing liability for reimbursement or indemnification obligations to
(including obligations in respect of letters of credit or bank guarantees for
the benefit of) insurance carriers providing property, casualty or liability
insurance to Holdings, the Borrower or any Subsidiary;

 

22

 

(e) deposits to
secure the performance of bids, trade contracts, government contracts, leases,
statutory obligations, surety, stay, customs and appeal bonds, performance
bonds and other obligations of a like nature (including those to secure health,
safety and environmental obligations), in each case incurred in the ordinary
course of business;

 

(f) Liens in
respect of judgments that do not constitute an Event of Default under
Section 7.01(j); and

 

(g) easements,
zoning restrictions, rights-of-way, restrictions, encroachments and similar
encumbrances and minor title defects on real property imposed by law or arising
in the ordinary course of business, and any other liens scheduled as exceptions
on any of the Title Insurance Policies, which do not in the aggregate
materially interfere with the ordinary conduct of business of the Borrower or
any Subsidiary, and any other Liens “insured over” by the Title Insurance
Company;

 

provided
that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.

 

“Permitted Holders”
means the Sponsors, Management Stockholders and the Co-Investors.

 

“Permitted Initial Revolving
Borrowing Purposes” means (a) one or more Borrowings of Revolving
Loans (i) up to an amount equal to the excess, if any of (x) the
working capital of the Borrower on the Closing Date estimated in good faith by
the Borrower over (y) the working capital of Neiman Marcus as of
July 30, 2005, with the amount calculated pursuant to this clause (i)
to be determined in good faith by the Borrower and reasonably acceptable to the
Joint Lead Arrangers, and (ii) up to an additional amount and for such
purposes notified by the Borrower to the Joint Lead Arrangers prior to the
Closing Date as shall be approved by the Joint Lead Arrangers, and (b) the
issuance of Letters of Credit in replacement of, or as backstop for, letters of
credit of the Borrower or its Subsidiaries outstanding on the Closing Date
(including any deemed issuance with respect to Existing Letters of Credit
pursuant to Section 2.06).

 

“Permitted Investments”
shall mean (a) securities issued or unconditionally guaranteed by the United
States government or any agency or instrumentality thereof, in each case having
maturities of not more than 24 months from the date of acquisition thereof; (b)
securities issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof or any
political subdivision of any such state or any public instrumentality thereof
having maturities of not more than 24 months from the date of acquisition
thereof and, at the time of acquisition, having an investment grade rating
generally obtainable from either S&P or Moody’s (or, if at any time neither
S&P nor Moody’s shall be rating such obligations, then from another
nationally recognized rating service); (c) commercial paper issued by any
Lender or any bank holding company owning any Lender; (d) commercial paper
maturing no more than 12 months after the date of creation thereof and, at
the time of acquisition, having a rating of at least A-2 or P-2 from either
S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be
rating such obligations, an equivalent rating from another nationally
recognized rating service); (e) domestic and Eurodollar certificates of
deposit or bankers’ acceptances maturing no more than two years after the date
of acquisition thereof issued by any Lender or any other bank having combined
capital and surplus of not less than $250,000,000 in the case of domestic banks
and $100,000,000 (or the dollar equivalent thereof) in the case of foreign
banks; (f) repurchase agreements with a term of not more than 30 days for
underlying securities of the type described in clauses (a), (b) and (e) above
entered into with any bank meeting the qualifications specified in clause (e)
above or securities dealers of recognized national standing; (g) marketable
short-term money market and similar securities having a rating of at least A-2
or P-2 from either S&P or Moody’s (or, if at any time neither

 

23

 

S&P nor Moody’s
shall be rating such obligations, an equivalent rating from another nationally
recognized rating service); (h) shares of investment companies that are
registered under the Investment Company Act of 1940 and invest solely in one or
more of the types of securities described in clauses (a) through (g) above; and
(i) in the case of investments by any Foreign Subsidiary or investments
made in a country outside the United States of America, other customarily
utilized high-quality investments in the country where such Foreign Subsidiary
is located or in which such investment is made.

 

“Permitted Replacement
Credit Card Program” means any private label credit card program or similar
arrangement substantially similar in all material respects to the HSBC
Arrangements, with such modifications as the Agent shall have consented to in
writing prior to the effectiveness thereof (such consent not to be unreasonably
withheld or delayed), which, after notice to the Agent in accordance with
Section 5.07, is entered into by the Borrower or any of its Subsidiaries on
commercially reasonable terms generally available at that time (as determined
in good faith by the Borrower), or is in effect with respect to any Person that
becomes a Subsidiary after the date hereof in connection with a Permitted
Acquisition and is not created in contemplation of or in connection therewith, provided
that if such program grants a security interest in any assets other than those
certain Accounts, receivables, or transferor interest or other similar residual
interests subject to such program or arrangement, including a security interest
in any returned goods, and the grant of such security interest could reasonably
be expected to be detrimental in any material respect to the rights and
interests of the Lenders under the Loan Documents, as determined by the Agent
in its reasonable discretion, such program shall not be considered a Permitted
Replacement Credit Card Program unless and until the Agent and the third party
with whom the program is created have entered into an intercreditor agreement
reasonably satisfactory to the Agent with respect to the priority and
enforcement of such security interests.

 

“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.

 

“Plan”  means any employee pension benefit plan
(other than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Borrower or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer”
as defined in Section 3(5) of ERISA.

 

“Prime Rate” means
the rate of interest publicly announced by Deutsche Bank Trust Company Americas
in New York City from time to time as its Prime Rate.

 

“Projected Average
Excess Availability” means the projected average Excess Availability for
each month during any six-month period as determined in good faith by the
Borrower and certified by a Financial Officer.

 

“Projections”
means the projections of the Borrower and the Subsidiaries included in the
Information Memorandum and any other projections and any forward-looking
statements of such entities furnished to the Lenders or the Agent by or on
behalf of Holdings, the Borrower or any of the Subsidiaries prior to the
Closing Date.

 

“Protective Advance”
has the meaning assigned to such term in Section 2.04.

 

“Qualified Equity
Interests” means any Equity Interests that are not Disqualified Equity
Interests.

 

“Qualified Public
Offering” means the initial underwritten public offering of common Equity
Interests of Holdings or any direct or indirect parent of Holdings or the
Borrower pursuant to an

 

24

 

effective
registration statement filed with the SEC in accordance with the Securities Act
(other than a registration statement on Form S-8 or any successor form).

 

“Real Estate”
means all of the Borrower’s and its Subsidiaries’ now or hereafter owned or
leased estates in real property, including all fee, leasehold and future
interests, together with all of the Borrower’s and its Subsidiaries’ now or
hereafter owned or leased interests in the improvements thereon, the fixtures
attached thereto and the easements appurtenant thereto.

 

“Register” has the
meaning assigned to such term in Section 9.04.

 

“Regulation T”
means Regulation T of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof, and any successor
provision thereto.

 

“Regulation U”
means Regulation U of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof, and any successor
provision thereto.

 

“Regulation X”
means Regulation X of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof, and any successor
provision thereto.

 

“Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, trustees, employees, agents and advisors of
such Person and such Person’s Affiliates.

 

“Report” means
reports prepared by the Agent or another Person showing the results of
appraisals, field examinations or audits pertaining to the Loan Parties’ assets
from information furnished by or on behalf of the Loan Parties, after the Agent
has exercised its rights of inspection pursuant to this Agreement, which
Reports may be distributed to the Lenders by the Agent, subject to the
provisions of Section 9.12.

 

“Required Lenders”
means, at any time, Lenders having Revolving Exposure and unused Commitments
representing more than 50% of the sum of the total Revolving Exposure and
unused Commitments at such time; provided that the Revolving Exposure
and unused Commitments of any Defaulting Lender shall be disregarded in the
determination of the Required Lenders at any time.

 

“Requirement of Law”
means, as to any Person, the Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

 

“Reserves” means
all (if any) Inventory Reserves and Availability Reserves (including Banking
Services Reserves, Landlord Lien Reserves, Customer Credit Liability Reserves,
Customer Deposits Reserves and reserves for Secured Swap Obligations) and any
and all other reserves which the Agent deems necessary in its Permitted
Discretion to maintain with respect to Eligible Inventory that have been
established in accordance with Section 2.22.

 

“Responsible Officer”
of any Person means the chief executive officer, the president, any vice
president, the chief operating officer or any Financial Officer of such Person
and any other officer or similar official thereof responsible for the
administration of the obligations of such Person in respect of this Agreement, and,
as to any document delivered on the Closing Date (but subject to the express
requirements set forth in Article IV), shall include any secretary or
assistant secretary of a Loan Party.

 

25

 

Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

 

“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any Equity Interests in Holdings, the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in Holdings or the Borrower or any option, warrant or other
right to acquire any such Equity Interests in Holdings or the Borrower.

 

“Revolving Exposure”
means, with respect to any Lender at any time, the sum of the outstanding
principal amount of such Lender’s Revolving Loans and its LC Exposure and an
amount equal to its Applicable Percentage of the aggregate principal amounts of
Swingline Loans and Protective Advances outstanding at such time.

 

“Revolving Lender”
means, as of any date of determination, a Lender with a Commitment or, if the
Commitments have terminated or expired, a Lender with Revolving Exposure.

 

“Revolving Loan”
means a Loan made pursuant to Section 2.01(a).

 

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

 

“Sale and Lease-Back
Transaction” has the meaning assigned to such term in Section 6.06.

 

“SEC” means the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any or all of its functions.

 

“Second Priority Lien”
means any Lien on any asset of any Loan Party that is granted under the Term
Loan Security Documents and that, pursuant and subject to the provisions of the
Intercreditor Agreement, is junior in priority to the Liens of the Agent in the
Collateral.

 

“Secured Obligations”
means all Obligations, together with all (i) Banking Services Obligations
and (ii) all Secured Swap Obligations.

 

“Secured Swap
Obligations” means all Swap Obligations owing to the Agent, a Joint Lead
Arranger or a co-arranger, a Lender or any Affiliate of any of the foregoing
and with respect to which, at or prior to the time that the Swap Agreement
relating to such Swap Obligation is entered into, the Borrower (or other Loan
Party) and the Lender or other Person referred to above in this definition (or
Affiliate) party thereto (except in the case of the Agent) shall have delivered
written notice to the Agent that such a transaction has been entered into and
that it constitutes a Secured Swap Obligation entitled to the benefits of the
Collateral Documents and the Intercreditor Agreement.

 

“Secured Parties”
has the meaning assigned to such term in the Security Agreement.

 

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

 

26

 

“Security Agreement”
means that certain Pledge and Security Agreement, dated as of the date hereof,
between the Loan Parties and the Agent, for the benefit of the Agent and the
Lenders.

 

“Senior Note Documents”
means the indenture under which the Senior Notes are issued and all other
instruments, agreements and other documents evidencing the Senior Notes or
providing for any Guarantee or other right in respect thereof.

 

“Senior Notes”
means the Borrower’s 9%/93⁄4% Senior Notes due 2015, in an initial aggregate
principal amount of $700,000,000.

 

“Senior Secured Term
Facility Credit Agreement” means the Credit Agreement dated as of the date
hereof, among Holdings, the Borrower, the subsidiaries of the Borrower from
time to time party thereto, Credit Suisse, as administrative agent and
collateral agent, and the lenders from time to time party thereto.

 

“Senior Secured Term
Loan Facility” means the $1,975,000,000 initial aggregate principal amount
senior secured term loan facility provided for under the Senior Secured Term
Facility Credit Agreement.

 

“Senior Subordinated
Notes” means the Borrower’s 103/8% Senior
Subordinated Notes due 2015, in an initial aggregate principal amount of
$500,000,000.

 

“Senior Subordinated
Note Documents” means the indenture under which the Senior Subordinated
Notes are issued and all other instruments, agreements and other documents
evidencing the Senior Subordinated Notes or providing for any Guarantee or
other right in respect thereof.

 

“Shrink” means
Inventory identified by the Borrower as lost, misplaced, or stolen.

 

“Shrink Reserve”
means an amount reasonably estimated by the Agent to be equal to that amount
which is required in order that the Shrink reflected in current retail stock
ledger of the Borrower and its Subsidiaries would be reasonably equivalent to
the Shrink calculated as part of the Borrower’s most recent physical inventory
(it being understood and agreed that no Shrink Reserve established by the Agent
shall be duplicative of any Shrink as so reflected in the current retail stock
ledger of the Borrower and its Subsidiaries or estimated by the Borrower for
purposes of computing the Borrowing Base other than at month’s end).

 

“Specified Payment”
means (a) any Permitted Acquisition, (b) any investment, loan or
advance pursuant to Section 6.04(v), (c) any Restricted Payment
pursuant to Section 6.08(a)(x) and (d) any Restricted Debt Payment
pursuant to Section 6.08(b)(ix).

 

“Specified Segregated
Accounts” means (a) those segregated checking or other demand deposit
accounts which the Borrower designates to the Agent as such in writing, into
which (i) funds from the sale of Inventory held by the Borrower or any of
its subsidiaries on a consignment basis, (ii) funds from the sale of
Inventory relating to a leased department within one of the Borrower’s or any
of its subsidiaries’ retail stores, in the case of each of clause (i) and
(ii), which Inventory is not owned by a Loan Party (and would not be reflected
on a consolidated balance sheet of the Borrower and its Subsidiaries prepared
in accordance with GAAP) or (iii) in-store payments in respect of private
label credit cards subject to the HSBC Arrangements or any Permitted
Replacement Credit Card Program are made, (b) the accounts in respect of
which other payments in respect of private label credit cards subject to the
HSBC Arrangements or any Permitted Replacement Credit Card Program are made,
which accounts in respect of the HSBC Arrangements are identified on Schedule 1.01(d)
and which accounts in

 

27

 

respect of the
HSBC Arrangements are owned by the Borrower but controlled by HSBC and the
ownership of which is anticipated to be transferred to HSBC in the first or
second calendar quarter of 2006 and (c) the segregated account into which the
estimated amount of the redemption payment related to the 2008 Notes Call for
Redemption is deposited.

 

“Sponsors” means
Texas Pacific Group and Warburg Pincus LLC and their respective Affiliates but
not including, however, any portfolio companies of any of the foregoing.

 

“Subordinated
Indebtedness” of a Person means any Indebtedness of such Person the payment
of which is subordinated to payment of the Secured Obligations on terms and
conditions no less favorable to the Agent and the Lenders than those contained
in the Senior Subordinated Note Documents.

 

“subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or,
in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is,
as of such date, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.

 

“Subsidiary”
means, unless the context otherwise requires, a subsidiary of the
Borrower.  Notwithstanding the foregoing
(and except for purposes of Sections 3.06, 3.09, 3.10, 3.15, 5.04, 5.08, and
the definition of Unrestricted Subsidiary contained herein), an Unrestricted
Subsidiary shall be deemed not to be a Subsidiary of the Borrower or any of its
Subsidiaries for purposes of this Agreement.

 

“Super Majority
Lenders” means, at any time, Lenders having Revolving Exposure and unused
Commitments representing more than 66-2/3% of the sum of
the total Revolving Exposure and unused Commitments at such time; provided
that the Revolving Exposure and unused Commitments of any Defaulting Lender
shall be disregarded in the determination of the Super Majority Lenders at any
time.

 

“Swap Agreement” means any agreement with respect to any
Derivative Transaction between the Borrower or any Subsidiary and any other
Person.

 

“Swap Obligations”
of a Person means any and all obligations of such Person, whether absolute or
contingent and however and whenever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor), under (a) any and all Swap Agreements, and (b) any and all
cancellations, buy backs, reversals, terminations or assignments of any Swap
Agreement transaction.

 

“Swingline Lender”
means Deutsche Bank Trust Company Americas, in its capacity as lender of
Swingline Loans hereunder.

 

“Swingline Loan”
means a Loan made pursuant to Section 2.05.

 

“Synthetic Lease”
means, as to any Person, any lease (including leases that may be terminated by
the lessee at any time) of any property (whether real, personal or mixed) (a)
that is accounted for as an operating lease under GAAP and (b) in respect of
which the lessee retains or obtains ownership of the property so leased for
U.S. Federal income tax purposes, other than any such lease under which such
person is the lessor.

 

28

 

“Synthetic Lease
Obligations” means, as to any Person, an amount equal to the capitalized
amount of the remaining lease payments under any Synthetic Lease that would
appear on a balance sheet of such person in accordance with GAAP if such
obligations were accounted for as Capital Lease Obligations.

 

“Taxes” means any
and all present or future taxes, levies, imposts, duties, deductions, charges
or withholdings imposed by any Governmental Authority.

 

“Term Loan Pari Passu
Lien Obligations” means any Indebtedness constituting debt securities
incurred pursuant to an indenture with an institutional trustee or loans
incurred in the bank credit market (including institutional investor
participation therein), which Indebtedness is secured with Liens that rank pari
passu with the Liens securing the Indebtedness under the Senior Secured Term
Loan Facility outstanding on the Closing Date.

 

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

 

“Title Insurance
Company” means the title insurance company providing the Title Insurance
Policies.

 

“Title Insurance
Policies” means the lender’s title insurance policies issued to Agent with
respect to the Mortgaged Properties.

 

“Transaction Costs”
means fees and expenses payable or otherwise borne by Holdings, the Borrower
and its subsidiaries in connection with the Transactions and the transactions
contemplated thereby (including redemption or other premiums payable in
connection with the redemption after the Closing Date of the 2008 Notes in
accordance with Section 5.14).

 

“Transactions” means,
collectively, (a) the execution, delivery and performance by Holdings and
Merger Sub of the Merger Agreement and the consummation of the transactions
contemplated thereby, (b) the execution, delivery and performance by the
Loan Parties of the Loan Documents to which they are a party and the making of
the Borrowings hereunder, (c) the execution, delivery and performance by
Holdings, the Borrower and the Subsidiaries party thereto of the New Note
Documents and the issuance of the New Notes, (d) the execution, delivery
and performance of the Senior Secured Term Facility Credit Agreement and all
other instruments, agreements and other documents evidencing or governing the
Senior Secured Term Loan Facility or providing for any Guarantee or other right
in respect thereof and the making of borrowings thereunder, (e) the
execution, delivery and performance by all parties thereto of the Intercreditor
Agreement, (f) the Existing Bank Debt Refinancing, (g) the 2008 Notes Call
for Redemption, (h) the granting of Pari Passu Liens, (i) the making of
the Equity Contribution (j) the entering into of the HSBC Arrangements and
(k) the payment of the Transaction Costs.

 

“2008 Notes” means
the 6.65% Senior Unsecured Notes due 2008 of Neiman Marcus outstanding on the
Closing Date.

 

“2008 Notes Call for
Redemption” means the call for redemption of, and the deposit into a
segregated account of the estimated amount of the redemption payment related
to, all outstanding 2008 Notes in accordance with the indenture governing the
2008 Notes and applicable law, and the securing of the 2008 Notes by the Pari
Passu Liens on the Closing Date.

 

29

 

“2028 Debentures”
means the 7.125% Senior Debentures due 2028 of Neiman Marcus outstanding on the
Closing Date.

 

“Type”, when used
in reference to any Loan or Borrowing, refers to whether the rate of interest
on such Loan, or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted LIBOR Rate or the Alternate Base Rate.

 

“UCC” means the
Uniform Commercial Code as in effect from time to time in the State of New York
or any other state the laws of which are required to be applied in connection
with the issue of perfection of security interests.

 

“Unliquidated
Obligations” means, at any time, any Secured Obligations (or portion
thereof) that are contingent in nature or unliquidated at such time, including
any Secured Obligation that is: (i) an obligation to reimburse a bank for
drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations; but excluding unripened or contingent obligations related
to indemnification under Section 9.03 for which no written demand has been
made.

 

“Unrestricted
Subsidiary” means (a) Neiman Marcus Funding Corporation, Gurwitch Products
LLC, Kate Spade LLC and their respective subsidiaries and (b) any Subsidiary of
the Borrower that is acquired or created after the Closing Date and designated
by the Borrower as an Unrestricted Subsidiary hereunder by written notice to
the Agent in accordance with Section 5.13.

 

“USA PATRIOT Act”
means The Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L.
No. 107-56 (signed into law October 26, 2001)), as amended or modified from
time to time.

 

“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.

 

SECTION 1.02. Classification of Loans and
Borrowings.  For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving
Loan”) or by Type (e.g., a “LIBOR Rate Loan”) or by Class and Type (e.g.,
a “LIBOR Rate Revolving Loan”). 
Borrowings also may be classified and referred to by Class (e.g.,
a “Revolving Borrowing”) or by Type (e.g., a “LIBOR Rate Borrowing”) or
by Class and Type (e.g., a “LIBOR Rate Revolving Borrowing”).

 

SECTION 1.03. Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and

 

30

 

“property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

 

SECTION 1.04. Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Borrower notifies the Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective until
such notice shall have been withdrawn or such provision amended in accordance
herewith.

 

SECTION 1.05. Effectuation of Transactions.  Each of the representations and warranties of
the Loan Parties contained in this Agreement (and all corresponding definitions)
are made after giving effect to the Transactions, unless the context otherwise
requires.  References to the Transactions
in Sections 3.02 and 3.03 shall be deemed not to include the Transactions
described in clause (j) of the definition of the term “Transactions” set forth
in Section 1.01.

 

ARTICLE II

 

The Credits

 

SECTION 2.01. Commitments.  Subject to the terms and conditions set forth
herein, each Lender agrees, severally and not jointly, to make Revolving Loans
to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (i) such Lender’s Revolving
Exposure exceeding such Lender’s Commitment or (ii) the total Revolving
Exposures exceeding the lesser of (x) the sum of the total Commitments and (y)
the Borrowing Base (subject to the Agent’s authority, in its sole discretion,
to make Protective Advances pursuant to the terms of Section 2.04).  Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, repay and
reborrow Revolving Loans.

 

SECTION 2.02. Loans and Borrowings.  (a)  Each Loan (other than a
Swingline Loan or a Protective Advance) shall be made as part of a Borrowing
consisting of Loans of the same Class and Type made by the Lenders ratably in
accordance with their respective Commitments of the applicable Class.  Any Protective Advance and any Swingline Loan
shall be made in accordance with the procedures set forth in Section 2.04
and 2.05, respectively.

 

(b) Subject to
Section 2.14, each Borrowing shall be comprised entirely of ABR Loans or
LIBOR Rate Loans as the Borrower may request in accordance herewith.  Each Swingline Loan and each Protective
Advance shall be an ABR Loan.  Each
Lender at its option may make any LIBOR Rate Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided
that (i) any exercise of such option shall not affect the obligation of
the Borrower to repay such Loan in accordance with the terms of this Agreement,
(ii) in exercising such option, such Lender shall use reasonable efforts
to minimize any increase in the Adjusted LIBOR Rate or increased costs to the
Borrower resulting therefrom (which obligation of such Lender shall not require
it to take, or refrain from taking, actions that it determines would result in
increased costs for which it will not be compensated hereunder or that it
otherwise determines would be disadvantageous to it and in the event of such
request for costs for which compensation is provided under this Agreement, the
provisions of Section 2.15 shall

 

31

 

apply) and (iii) such branch or Affiliate of such
Lender would not be included in clause (z) of the first proviso to the
definition of the term “Eligible Assignee” set forth in Section 1.01.

 

(c) At the commencement
of each Interest Period for any LIBOR Rate Borrowing, such Borrowing shall
comprise an aggregate principal amount that is an integral multiple of
$1,000,000 and not less than $5,000,000. 
Each ABR Borrowing when made shall be in a minimum principal amount of
$1,000,000; provided that an ABR Borrowing may be made in a lesser
aggregate amount that is equal to the entire unused balance of the total
Commitments or that is required to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.06(e).  Borrowings of more than one Type and Class
may be outstanding at the same time; provided that there shall not at
any time be more than a total of ten different Interest Periods in effect for
LIBOR Rate Borrowings at any time outstanding.

 

(d) Notwithstanding any
other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.

 

SECTION 2.03. Requests for Borrowings.  To request a Borrowing, the Borrower shall
notify the Agent of such request either in writing by delivery of a Borrowing
Request (by hand or facsimile) signed by the Borrower or by telephone
(a) in the case of a LIBOR Rate Borrowing, not later than 11:00 a.m., New
York City time, three (3) Business Days (or, in the case of a LIBOR Rate
Borrowing to be made on the Closing Date, two (2) Business Days) before the
date of the proposed Borrowing or (b) in the case of an ABR Borrowing
(including any such notice of an ABR Borrowing to finance the reimbursement of
an LC Disbursement as contemplated by Section 2.06(e)), not later than
10:00 a.m., New York City time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or facsimile to
the Agent of a written Borrowing Request signed by the Borrower.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with
Section 2.01:

 

(i) the aggregate amount
of the requested Borrowing.

 

(ii) the date of such
Borrowing, which shall be a Business Day;

 

(iii) whether such
Borrowing is to be an ABR Borrowing or a LIBOR Rate Borrowing;

 

(iv) in the case of a
LIBOR Rate Borrowing, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Interest
Period”; and

 

(v) the location and
number of the Borrower’s account to which funds are to be disbursed.

 

If no election as to the
Type of Borrowing is specified, then the requested Borrowing shall be an ABR
Borrowing.  If no Interest Period is
specified with respect to any requested LIBOR Rate Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month’s
duration.  Promptly following receipt of
a Borrowing Request in accordance with this Section, the Agent shall advise
each Lender of the details thereof and of the amount of such Lender’s Loan to
be made as part of the requested Borrowing.

 

SECTION 2.04. Protective Advances.  (a) 
Subject to the limitations set forth below (and notwithstanding anything
to the contrary in Section 4.02), the Agent is authorized by the Borrower
and the Lenders, from time to time in the Agent’s sole discretion (but shall
have absolutely no obligation to), to make Loans to the Borrower, on behalf of
all Lenders at any time that any condition precedent set forth

 

32

 

in Section 4.02 has not been satisfied or waived,
which the Agent, in its Permitted Discretion, deems necessary or desirable
(x) to preserve or protect the Collateral, or any portion thereof,
(y) to enhance the likelihood of, or maximize the amount of, repayment of
the Loans and other Obligations, or (z) to pay any other amount chargeable
to or required to be paid by the Borrower pursuant to the terms of this
Agreement, including payments of reimbursable expenses (including costs, fees,
and expenses as described in Section 9.03) and other sums payable under
the Loan Documents (each such Loan, a “Protective Advance”). Any
Protective Advance may be made in a principal amount that would cause the
aggregate Revolving Exposure to exceed the Borrowing Base, provided that
no Protective Advance may be made to the extent that, after giving effect to
such Protective Advance (together with the outstanding principal amount of any
outstanding Protective Advances), the aggregate principal amount of Protective
Advances outstanding hereunder would exceed five percent (5%) of the Borrowing
Base as determined on the date of such proposed Protective Advance; and provided
further that, the aggregate amount of outstanding Protective Advances
plus the aggregate Revolving Exposure shall not exceed the aggregate total
Commitments. No Protective Advance may remain outstanding for more than
forty-five (45) days without the consent of the Required Lenders. Protective
Advances may be made even if the conditions precedent set forth in Section 4.02
have not been satisfied or waived.  Each
Protective Advance shall be secured by the Liens in favor of the Agent in and
to the Collateral and shall constitute Obligations hereunder.  The Agent’s authorization to make Protective
Advances may be revoked at any time by the Required Lenders.  Any such revocation must be in writing and
shall become effective prospectively upon the Agent’s receipt thereof.  The making of a Protective Advance on any one
occasion shall not obligate the Agent to make any Protective Advance on any
other occasion.  At any time that the
conditions precedent set forth in Section 4.02 have been satisfied or waived,
the Agent may request the Revolving Lenders to make a Revolving Loan to repay a
Protective Advance.  At any other time,
the Agent may require the Lenders to fund their risk participations described
in Section 2.04(b).

 

(b) Upon the making of a
Protective Advance by the Agent (whether
before or after the occurrence of a Default), each Lender shall be deemed,
without further action by any party hereto, unconditionally and irrevocably to
have purchased from the Agent without recourse or warranty, an undivided
interest and participation in such Protective Advance in proportion to its
Applicable Percentage.  From and after
the date, if any, on which any Lender is required to fund its participation in
any Protective Advance purchased hereunder, the Agent shall promptly distribute
to such Lender, such Lender’s Applicable Percentage of all payments of principal
and interest and all proceeds of Collateral received by the Agent in respect of
such Protective Advance.

 

SECTION 2.05. Swingline Loans.  (a) 
Subject to the terms and conditions set forth herein, the Swingline
Lender agrees to make Swingline Loans to the Borrower from time to time during
the Availability Period, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of
outstanding Swingline Loans exceeding $25,000,000 or (ii) the total Revolving
Exposures exceeding the lesser of the total Commitments and the Borrowing Base;
provided that the Swingline Lender shall not be required to make a
Swingline Loan to refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Swingline Loans.  To request a
Swingline Loan, the Borrower shall notify the Agent of such request by
telephone (confirmed by facsimile), not later than 12:00 p.m. (noon), New York
City time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and
shall specify the requested date (which shall be a Business Day) and amount of
the requested Swingline Loan.  The Agent
will promptly advise the Swingline Lender of any such notice received from the
Borrower.  The Swingline Lender shall
make each Swingline Loan available to the Borrower by means of a credit to the
Funding Account or otherwise in accordance with the instructions of the
Borrower (including, in the case of a Swingline Loan made to finance the
reimbursement of an LC Disbursement as provided in Section 2.06(e), by
remittance to the applicable Issuing Bank, and in the

 

33

 

case of repayment of another Loan or fees or expenses
as provided by Section 2.18(c), by remittance to the Agent to be distributed to
the Lenders) on the requested date of such Swingline Loan.

 

(b) The Swingline Lender
may by written notice given to the Agent not later than 1:00 p.m., New York
City time, on any Business Day require the Revolving Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans
outstanding.  Such notice shall specify
the aggregate amount of Swingline Loans in which Revolving Lenders will
participate.  Promptly upon receipt of
such notice, the Agent will give notice thereof to each Revolving Lender,
specifying in such notice such Lender’s Applicable Percentage of such Swingline
Loan or Loans.  Each Revolving Lender
hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to the Agent, for the account of the Swingline Lender,
such Lender’s Applicable Percentage of such Swingline Loan or Loans.  Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations in Swingline Loans pursuant to
this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.  Each Revolving Lender shall
comply with its obligation under this paragraph by wire transfer of immediately
available funds, in the same manner as provided in Section 2.07 with
respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the Agent
shall promptly pay to the Swingline Lender the amounts so received by it from
the Revolving Lenders.  The Agent shall
notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a
Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale
of participations therein shall be promptly remitted to the Agent; any such
amounts received by the Agent shall be promptly remitted by the Agent to the
Revolving Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear; provided
that any such payment so remitted shall be repaid to the Swingline Lender or to
the Agent, as applicable, if and to the extent such payment is required to be
refunded to the Borrower for any reason. 
The purchase of participations in a Swingline Loan pursuant to this
paragraph shall not relieve the Borrower of any default in the payment thereof.

 

SECTION 2.06. Letters of Credit.  (a)  General.  On and after the Closing Date, each Existing
Letter of Credit shall be deemed to be a Letter of Credit issued hereunder for
all purposes of this Agreement and the other Loan Documents and for purposes
hereof will be deemed to have been issued on the Closing Date.  Subject to the terms and conditions set forth
herein, (i) each Issuing Bank agrees, in reliance upon the agreements of
the other Revolving Lenders set forth in this Section 2.06, (A) from
time to time on any Business Day during the period from the Closing Date to but
not including the 30th day prior to the Maturity Date, upon the request of the
Borrower, to issue Letters of Credit denominated in Dollars only and issued on
sight basis only for the account of the Borrower (or any Subsidiary of the
Borrower so long as the Borrower is a joint and several co-applicant, and
references to “the Borrower” in this Section 2.06 shall be deemed to
include reference to such Subsidiary) and to amend or renew Letters of Credit
previously issued by it, in accordance with Section 2.06(b), and
(B) to honor drafts under the Letters of Credit, and (ii) the
Revolving Lenders severally agree to participate in the Letters of Credit
issued pursuant to Section 2.06(d). 
Subject to the terms and conditions hereof, the Borrower’s ability to
obtain Letters of Credit shall be fully revolving, and accordingly the Borrower
may, during the foregoing period, obtain Letters of Credit to replace Letters
of Credit that have expired or that have been drawn upon and reimbursed.

 

(b) Notice of
Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of

 

34

 

Credit), the Borrower shall hand deliver or facsimile
(or transmit by electronic communication, if arrangements for doing so have
been approved by the applicable Issuing Bank) to the applicable Issuing Bank
and the Agent, at least two (2) Business Days in advance of the requested
date of issuance (or such shorter period as is acceptable to the applicable Issuing
Bank), a request to issue in the form of Exhibit E attached hereto
(each a “Letter of Credit Request”). 
To request an amendment, extension or renewal of a Letter of Credit, the
Borrower shall submit such a request on its letterhead, addressed to the
applicable Issuing Bank (with a copy to the Agent) at least two (2) Business
Days in advance of the requested date of amendment, extension or renewal,
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the proposed date (which shall be a Business Day) and other details
of the amendment, extension or renewal. Requests for issuance, amendment,
renewal or extension must be accompanied by such other information as shall be
necessary to issue, amend, renew or extend such Letter of Credit.  If requested by the applicable Issuing Bank,
the Borrower also shall submit a letter of credit application on such Issuing
Bank’s standard form in connection with any request for a Letter of
Credit.  In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the
applicable Issuing Bank relating to any Letter of Credit, the terms and
conditions of this Agreement shall control. A Letter of Credit shall be issued,
amended, renewed or extended only with the approval of the Agent and if (and on
issuance, amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure shall not
exceed $150,000,000 and (ii) the total Revolving Exposures shall not
exceed the lesser of the total Commitments and the Borrowing Base.  Promptly after the delivery of any Letter of
Credit or any amendment to a Letter of Credit to an advising bank with respect
thereto or to the beneficiary thereof, the applicable Issuing Bank will also
deliver to the Borrower and the Agent a true and complete copy of such Letter
of Credit or amendment. Upon receipt of such Letter of Credit or amendment, the
Agent shall notify the Revolving Lenders, in writing, of such Letter of Credit
or amendment, and if so requested by a Revolving Lender the Agent will provide
such Revolving Lender with copies of such Letter of Credit or amendment. With
respect to commercial Letters of Credit, each Issuing Bank shall on the first
Business Day of each week submit to the Agent, by facsimile, a report detailing
the daily aggregate total of commercial Letters of Credit for the previous
calendar week.

 

(c) Expiration Date.  Each standby Letter of Credit shall expire
not later than the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit and (ii) the date that is five (5)
Business Days prior to the Maturity Date; provided that any standby
Letter of Credit may provide for the automatic extension thereof for any number
of additional periods each of up to one year in duration (none of which, in any
event, shall extend beyond the date referred to in clause (ii) of this
paragraph (c)). Each commercial Letter of Credit shall expire on the
earlier of (i) 180 days after the date of the issuance of such Letter of Credit
and (ii) the date that is thirty (30) days prior to the Maturity Date.

 

(d) Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the applicable Issuing Bank or the Revolving
Lenders, the applicable Issuing Bank hereby grants to each Revolving Lender,
and each Revolving Lender hereby acquires from such Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable
Percentage of the aggregate amount available to be drawn under such Letter of
Credit.  In consideration and in
furtherance of the foregoing, each Revolving Lender hereby absolutely and
unconditionally agrees to pay to the Agent, for the account of the applicable
Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made
by such Issuing Bank and not reimbursed by the Borrower on the date due as
provided in paragraph (e) of this Section, or of any reimbursement payment
required to be refunded to the Borrower for any reason.  Each Revolving Lender acknowledges and agrees
that its obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance

 

35

 

whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a
Default or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.

 

(e) Reimbursement.  If the applicable Issuing Bank shall make any
LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Agent (or, in the case of documentary
Letters of Credit, the applicable Issuing Bank) an amount equal to such L/C
Disbursement not later than 12:00 noon, New York City time, on the Business Day
immediately following the date the Borrower receives notice under paragraph (g)
of this Section of such L/C Disbursement; provided that the Borrower
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 or 2.05 that such payment be financed with an ABR
Revolving Borrowing or Swingline Loan in an equivalent amount and, to the
extent so financed, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan.  If the Borrower fails to make such
payment when due, the Agent shall notify each Revolving Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice,
each Revolving Lender shall pay to the Agent its Applicable Percentage of the
payment then due from the Borrower, in the same manner as provided in
Section 2.07 with respect to Loans made by such Lender (and
Section 2.07 shall apply, mutatis  mutandis, to the payment
obligations of the Revolving Lenders), and the Agent shall promptly pay to the
applicable Issuing Bank the amounts so received by it from the Revolving
Lenders.  Promptly following receipt by
the Agent of any payment from the Borrower pursuant to this paragraph, the
Agent shall distribute such payment to the applicable Issuing Bank or, to the
extent that Revolving Lenders have made payments pursuant to this paragraph to
reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their
interests may appear.

 

(f) Obligations
Absolute.  The Borrower’s obligation
to reimburse LC Disbursements as provided in paragraph (e) of this Section
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit or this Agreement, or any term or
provision therein, (ii) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
the applicable Issuing Bank under a Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such Letter of
Credit, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrower’s obligations hereunder.  Neither the Agent, the Revolving Lenders nor
any Issuing Bank, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to
any Letter of Credit (including any document required to make a drawing
thereunder), any error in interpretation of technical terms or any consequence
arising from causes beyond the control of such Issuing Bank; provided
that the foregoing shall not be construed to excuse such Issuing Bank from
liability to the Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by such Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. 
The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of applicable Issuing Bank (as
finally determined by a court of competent jurisdiction), such Issuing Bank
shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without
limiting the generality thereof, the parties

 

36

 

agree that, with respect to documents presented which
appear on their face to be in substantial compliance with the terms of a Letter
of Credit, the applicable Issuing Bank may, in its sole discretion, either
accept and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.

 

(g) Disbursement
Procedures.  The applicable Issuing
Bank shall, promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment under a Letter of Credit.  Such Issuing Bank shall promptly notify the
Agent and the Borrower by telephone (confirmed by facsimile) of such demand for
payment and whether such Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such
notice shall not relieve the Borrower of its obligation to reimburse such
Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement.

 

(h) Interim Interest.  If an Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided
that, if the Borrower fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section, then Section 2.13(c) shall apply.  Interest accrued pursuant to this paragraph
shall be for the account of the applicable Issuing Bank, except that interest
accrued on and after the date of payment by any Revolving Lender pursuant to
paragraph (e) of this Section to reimburse such Issuing Bank shall be for the
account of such Lender to the extent of such payment.

 

(i) Replacement of an
Issuing Bank.  An Issuing Bank may be
replaced with the consent of the Agent (not to be unreasonably withheld or
delayed) at any time by written agreement among the Borrower, the Agent, the
replaced Issuing Bank and the successor Issuing Bank.  The Agent shall notify the Revolving Lenders
of any such replacement of an Issuing Bank. 
At the time any such replacement shall become effective, the Borrower
shall pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.12(b).  From
and after the effective date of any such replacement, (i) the successor
Issuing Bank shall have all the rights and obligations of the replaced Issuing
Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term “Issuing Bank” shall be
deemed to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

 

(j) Cash
Collateralization.  If any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, upon such demand, the Borrower shall
deposit, in an account with the Agent, in the name of the Agent and for the
benefit of the Revolving Lenders (the “LC Collateral Account”), an
amount in cash equal to 101.5% of the LC Exposure as of such date; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (g) or (h) of
Article VII.  Such deposit shall be
held by the Agent as collateral for the payment and performance of the Secured
Obligations in accordance with the provisions of this paragraph (j).  The Agent shall have exclusive dominion and
control, including the exclusive right

 

37

 

of withdrawal, over such account and the Borrower
hereby grants the Agent a security interest in the LC Collateral Account.  Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and
sole discretion of the Agent and at the Borrower’s risk and expense, such
deposits shall not bear interest. 
Interest or profits, if any, on such investments shall accumulate in
such account.  Moneys in such account
shall be applied by the Agent to reimburse the applicable Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrower for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Revolving Lenders with LC
Exposure representing greater than 50% of the total LC Exposure), be applied to
satisfy other Secured Obligations.  If
the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (together with all
interest and other earnings with respect thereto, to the extent not applied as
aforesaid) shall be returned promptly to the Borrower but in no event later
than three (3) Business Days after such Event of Default has been cured or
waived.

 

SECTION 2.07. Funding of Borrowings.  (a)  Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds by 12:00 (noon), New York City time, to the
account of the Agent most recently designated by it for such purpose by notice
to the Lenders in an amount equal to such Lender’s Applicable Percentage; provided
that, Swingline Loans shall be made as provided in Section 2.05.  The Agent will make such Loans available to
the Borrower by promptly crediting the amounts so received, in like funds, to
the Funding Account or as otherwise directed by the Borrower; provided
that ABR Revolving Loans made to finance the reimbursement of (i) an LC
Disbursement as provided in Section 2.06(e) shall be remitted by the Agent
to the applicable Issuing Bank and (ii) a Protective Advance shall be
retained by the Agent to be applied as contemplated by Section 2.04 (and
the Agent shall, upon the request of the Borrower, deliver to the Borrower a
reasonably detailed accounting of such application).

 

(b) Unless the Agent
shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Agent such Lender’s
share of such Borrowing, the Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Borrowing available
to the Agent, then the applicable Lender and the Borrower severally agree to
pay to the Agent forthwith on demand (without duplication) such corresponding
amount with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment
to the Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case
of the Borrower, the interest rate applicable to ABR Loans.  If such Lender pays such amount to the Agent,
then such amount shall constitute such Lender’s Loan included in such
Borrowing.  Nothing herein shall be
deemed to relieve any Lender from its obligation to fulfill its Commitment or
to prejudice any rights which the Agent or the Borrower or any Loan Party may
have against any Lender as a result of any default by such Lender hereunder.

 

SECTION 2.08. Type; Interest Elections.  (a)  Each Borrowing initially shall
be of the Type specified in the applicable Borrowing Request and, in the case
of a LIBOR Rate Borrowing, shall have an initial Interest Period as specified
in such Borrowing Request.  Thereafter,
the Borrower may elect to convert such Borrowing to a different Type or to
continue such Borrowing and, in the case of a LIBOR Rate Borrowing, may elect
Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.

 

38

 

This Section shall not apply to Swingline Borrowings
or Protective Advances, which may not be converted or continued.

 

(b) To make an election
pursuant to this Section, the Borrower shall notify the Agent of such election
by telephone by the time that a Borrowing Request would be required under
Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting
from such election to be made on the effective date of such election.  Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery
or facsimile to the Agent of a written Interest Election Request in a form
approved by the Agent and signed by the Borrower.

 

(c) Each telephonic and
written Interest Election Request shall specify the following information in
compliance with Section 2.02:

 

(i) the Borrowing to
which such Interest Election Request applies and, if different options are
being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Borrowing (in which case the information to
be specified pursuant to clauses (iii) and (iv) below shall be specified for
each resulting Borrowing);

 

(ii) the effective date
of the election made pursuant to such Interest Election Request, which shall be
a Business Day;

 

(iii) whether the
resulting Borrowing is to be an ABR Borrowing or a LIBOR Rate Borrowing; and

 

(iv) if the resulting
Borrowing is a LIBOR Rate Borrowing, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.

 

If any such Interest
Election Request requests a LIBOR Rate Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest
Period of one month’s duration.

 

(d) Promptly following
receipt of an Interest Election Request, the Agent shall advise each Lender of
the details thereof and of such Lender’s portion of each resulting Borrowing.

 

(e) If the Borrower fails
to deliver a timely Interest Election Request with respect to a LIBOR Rate
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the Agent, at
the request of the Required Lenders, so notifies the Borrower, then, so long as
an Event of Default is continuing (i) no outstanding Borrowing may be converted
to or continued as a LIBOR Rate Borrowing and (ii) unless repaid, each LIBOR
Rate Borrowing shall be converted to an ABR Borrowing at the end of the
then-current Interest Period applicable thereto.

 

SECTION 2.09. Termination and Reduction
of Commitments. 
(a)  Unless previously terminated, all Commitments shall
terminate on the Maturity Date.

 

(b) Upon delivering the
notice required by Section 2.09(d), the Borrower may at any time terminate
the Commitments upon (i) the payment in full of all outstanding Loans,
together with accrued and unpaid interest thereon, (ii) the cancellation
and return of all outstanding Letters of Credit (or

 

39

 

alternatively, with respect to each such Letter of
Credit, the furnishing to the Agent of a cash deposit (or at the discretion of
the Agent a back up standby letter of credit satisfactory to the Agent) equal
to 101.5% of the LC Exposure as of such date) and (iii) the payment in
full of all accrued and unpaid fees and all reimbursable expenses and other
Obligations then due, together with accrued and unpaid interest thereon.

 

(c) Upon delivering the
notice required by Section 2.09(d), the Borrower may from time to time reduce
the Commitments; provided that (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $1,000,000 and not less
than $5,000,000 and (ii) the Borrower shall not reduce the Commitments if,
after giving effect to any concurrent prepayment of the Revolving Loans in
accordance with Section 2.10, the sum of the Revolving Exposures would exceed
the lesser of the total Commitments and the Borrowing Base.

 

(d) The Borrower shall
notify the Agent of any election to terminate or reduce the Commitments under
paragraph (b) or (c) of this Section at least three (3) Business Days
prior to the effective date of such termination or reduction, specifying such
election and the effective date thereof. 
Promptly following receipt of any notice, the Agent shall advise the
Lenders of the contents thereof.  Each
notice delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by
the Borrower may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the
Borrower (by notice to the Agent on or prior to the specified effective date)
if such condition is not satisfied.  Any
termination or reduction of the Commitments pursuant to this Section 2.09
shall be permanent.  Each reduction of
the Commitments shall be made ratably among the Lenders in accordance with
their respective Commitments.

 

SECTION 2.10. Repayment of Loans; Evidence
of Debt.  (a)  The Borrower
hereby unconditionally promises to pay (i) to the Agent for the account of each
Lender the then unpaid principal amount of each Revolving Loan on the Maturity
Date, (ii) to the Agent the then unpaid amount of each Protective Advance on
the earlier of the Maturity Date and demand by the Agent and (iii) to the
Swingline Lender the then unpaid principal amount of each Swingline Loan on the
Maturity Date; provided that on each date that a Revolving Loan is made
while any Swingline Loan or Protective Advance is outstanding, the Borrower
shall repay all such Swingline Loans and Protective Advances with the proceeds
of such Revolving Loan then outstanding.

 

(b) At all times after
the occurrence and during the continuance of a Liquidity Event and notification
thereof by the Agent to the Borrower (subject to the provisions of Section
2.18(b) and to the terms of the Security Agreement), on each Business Day, at
or before 1:00 p.m., New York City time, the Agent shall apply all immediately
available funds credited to the DBTCA Account, first to pay any fees or
expense reimbursements then due to the Agent, the Issuing Banks and the Lenders
(other than in connection with Banking Services or Secured Swap Obligations),
pro rata, second to pay interest due and payable in respect of any
Revolving Loans (including Swingline Loans) and any Protective Advances that
may be outstanding, pro rata, third to prepay the principal of any
Protective Advances that may be outstanding, pro rata and fourth to
prepay the principal of the Revolving Loans (including Swingline Loans) and to
cash collateralize outstanding LC Exposure, pro rata.

 

(c) Each Lender shall
maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each
Loan made by such Lender, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.

 

(d) The Agent shall
maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the Class and Type thereof and the Interest Period (if any)
applicable thereto,

 

40

 

(ii) the amount of any principal or interest due
and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Agent hereunder
for the account of the Lenders and each Lender’s share thereof.

 

(e) The entries made in
the accounts maintained pursuant to paragraph (c) or (d) of this Section shall
be prima  facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or
the Agent to maintain such accounts or any error therein shall not in any
manner affect the obligation of the Borrower to repay the Loans in accordance
with the terms of this Agreement.

 

(f) Any Lender may
request that Loans made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to such Lender and
its registered assigns and in substantially the form of Exhibit G
hereto.  Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including
after assignment pursuant to Section 9.04) be represented by one or more
promissory notes in such form payable to the payee named therein and its
registered assigns.

 

SECTION 2.11. Prepayment of Loans.  (a)  Upon prior notice in
accordance with paragraph (c) of this Section, the Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part without premium or penalty (but subject to Section 2.16).

 

(b) Except for Protective
Advances permitted under Section 2.04, in the event and on each Business
Day on which the total Revolving Exposure exceeds the lesser of (i) the
aggregate Commitments and (ii) the Borrowing Base, the Borrower shall
prepay the Revolving Loans or Swingline Loans and/or reduce LC Exposure, in an
aggregate amount equal to such excess by taking any of the following actions as
it shall determine at its sole discretion: 
(1) prepayment of Revolving Loans or Swingline Loans or (2) deposit of
cash in the LC Collateral Account.

 

(c) The Borrower shall
notify the Agent (and, in the case of prepayment of a Swingline Loan, the
Swingline Lender) by telephone (confirmed by facsimile) of any prepayment
hereunder (i) in the case of prepayment of a LIBOR Rate Revolving
Borrowing, not later than 11:00 a.m., New York City time, three (3) Business
Days before the date of prepayment, (ii) in the case of prepayment of an
ABR Revolving Borrowing, not later than 10:00 a.m., New York City time, on the
day of prepayment, or (iii) in the case of prepayment of a Swingline Loan,
not later than 12:00 (noon), New York City time, on the date of
prepayment.  Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.09, then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09. 
Promptly following receipt of any such notice relating to a Borrowing,
the Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing
shall be in an amount that would be permitted in the case of an advance of a
Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.

 

SECTION 2.12. Fees.  (a)  The Borrower agrees to pay to
the Agent for the account of each Lender a commitment fee, which shall accrue
at the Commitment Fee Rate on the average daily amount of the Available
Commitment of such Lender during the period from and including the Closing Date
to but excluding the date on which the Lenders’ Commitments terminate; provided
that any commitment fee accrued with respect to the Commitment of a Defaulting
Lender during the period prior to the time such Lender became a Defaulting
Lender and unpaid at such time shall not be payable by the

 

41

 

Borrower so long as such Lender shall be a Defaulting
Lender except to the extent that such commitment fee shall otherwise have been
due and payable by the Borrower prior to such time; and provided further,
that no commitment fee shall accrue on the Commitment of a Defaulting Lender so
long as such Lender shall be a Defaulting Lender.  Accrued commitment fees shall be payable in
arrears on the first Business Day of each January, April, July and October and
on the date on which the Commitments terminate, commencing on the first such
date to occur after the date hereof.  All
commitment fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).  For purposes of
calculating the commitment fees only, no portion of the Commitments shall be
deemed utilized as a result of outstanding Swingline Loans.

 

(b) The Borrower agrees
to pay (i) to the Agent for the account of each Revolving Lender a
participation fee with respect to its participations in Letters of Credit,
which shall accrue at the same Applicable Rate used to determine the interest
rate applicable to LIBOR Rate Revolving Loans on the daily amount of such
Lender’s LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements), during the period from and including the
Closing Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Revolving Lender ceases to
have any LC Exposure, and (ii) to each Issuing Bank, for its own account,
a fronting fee, in respect of each Letter of Credit issued by such Issuing Bank
for the period from the date of issuance of such Letter of Credit through the
expiration date of such Letter of Credit (or if terminated on an earlier date
to the termination date of such Letter of Credit), computed at a rate equal to
a percentage per annum to be agreed upon between the Borrower and such Issuing
Bank of the daily stated amount of such Letter of Credit, as well as such
Issuing Bank’s standard fees with respect to the issuance, amendment, renewal
or extension of any Letter of Credit or processing of drawings thereunder; provided
that no fronting fee payable pursuant to this clause (ii) shall be less
than $500.00 per annum.  Participation
fees and fronting fees accrued through and including the last day of each
March, June, September and December shall be payable on the first Business Day
following such last day, commencing on the first such date to occur after the
Closing Date; provided that all such fees shall be payable on the date
on which the Commitments terminate and any such fees accruing after the date on
which the Commitments terminate shall be payable on demand.  Any other fees payable to any Issuing Bank
pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed.

 

(c) The Borrower agrees
to pay to the Agent, for its own account, the agency fees set forth in the Fee
Letter, as amended, restated, supplemented or otherwise modified from time to
time, or such agency fees as may otherwise be separately agreed upon by the
Borrower and the Agent payable in the amounts and at the times specified
therein or as so otherwise agreed upon.

 

(d) All fees payable
hereunder shall be paid on the dates due, in immediately available funds, to the
Agent (or to the applicable Issuing Bank, in the case of fees payable to it)
for distribution, in the case of commitment fees and participation fees, to the
Lenders.  Fees paid shall not be
refundable under any circumstances.

 

SECTION 2.13. Interest.  (a)  The Loans comprising each
ABR Borrowing (including each Swingline Loan and each Protective Advance)
shall bear interest at the Alternate Base Rate plus the Applicable Rate.

 

(b) The Loans comprising
each LIBOR Rate Borrowing shall bear interest at the Adjusted LIBOR Rate for
the Interest Period in effect for such Borrowing plus the Applicable Rate.

 

(c) Notwithstanding the
foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder is not paid when due, whether at
stated maturity,

 

42

 

upon acceleration or otherwise, such overdue amount
shall bear interest, after as well as before judgment, at a rate per annum
equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

 

(d) Accrued interest on
each Loan shall be payable in arrears on each Interest Payment Date for such
Loan and upon termination of the Commitments; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any LIBOR Rate Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.

 

(e) All interest
hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate at times when the
Alternate Base Rate is based on the Prime Rate shall be computed on the basis
of a year of 365 days (or 366 days in a leap year), and in each case shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).  The applicable
Alternate Base Rate, Adjusted LIBOR Rate or LIBOR Rate shall be determined by
the Agent, and such determination shall be conclusive absent manifest error.

 

SECTION 2.14. Alternate Rate of Interest.  If prior to the commencement of any Interest
Period for a LIBOR Rate Borrowing:

 

(a) the Agent determines
(which determination shall be conclusive absent manifest error) that adequate
and reasonable means do not exist for ascertaining the Adjusted LIBOR Rate or
the LIBOR Rate, as applicable, for such Interest Period; or

 

(b) the Agent is advised
by the Required Lenders that the Adjusted LIBOR Rate or the LIBOR Rate, as
applicable, for such Interest Period will not adequately and fairly reflect the
cost to such Lenders of making or maintaining their Loans included in such
Borrowing for such Interest Period;

 

then the Agent shall
promptly give notice thereof to the Borrower and the Lenders by telephone or
facsimile as promptly as practicable thereafter and, until the Agent notifies
the Borrower and the Lenders that the circumstances giving rise to such notice
no longer exist, (i) any Interest Election Request that requests the conversion
of any Borrowing to, or continuation of any Borrowing as, a LIBOR Rate
Borrowing shall be ineffective and such Borrowing shall be converted to an ABR
Borrowing on the last day of the Interest Period applicable thereof, and (ii) if
any Borrowing Request requests a LIBOR Rate Borrowing, such Borrowing shall be
made as an ABR Borrowing.

 

SECTION 2.15. Increased Costs.  (a)  If
any Change in Law shall:

 

(i) impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBOR
Rate) or Issuing Bank; or

 

(ii) impose on any Lender
or Issuing Bank or the London interbank market any other condition affecting
this Agreement or LIBOR Rate Loans made by such Lender or any Letter of Credit
or participation therein;

 

43

 

and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBOR Rate Loan (or of maintaining its obligation to make any
such Loan) or to increase the cost to such Lender or Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by such Lender or Issuing Bank
hereunder (whether of principal, interest or otherwise), then, following
delivery of the certificate contemplated by paragraph (c) of this Section,
the Borrower will pay to such Lender or Issuing Bank, as applicable, such
additional amount or amounts as will compensate such Lender or Issuing Bank, as
applicable, for such additional costs incurred or reduction suffered (except
for any Taxes, which shall be dealt with exclusively pursuant to Section 2.17).

 

(b) If any Lender or
Issuing Bank determines that any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s or
Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s
holding company, if any, as a consequence of this Agreement or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by such Issuing Bank, to a level below that which such Lender
or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company
could have achieved but for such Change in Law other than due to Taxes, which
shall be dealt with exclusively pursuant to Section 2.17 (taking into
consideration such Lender’s or such Issuing Bank’s policies and the policies of
such Lender’s or such Issuing Bank’s holding company with respect to capital
adequacy), then from time to time following delivery of the certificate
contemplated by paragraph (c) of this Section the Borrower will pay to
such Lender or such Issuing Bank, as applicable, such additional amount or
amounts as will compensate such Lender or such Issuing Bank or such Lender’s or
such Issuing Bank’s holding company for any such reduction suffered.

 

(c) A certificate of a
Lender or an Issuing Bank setting forth the amount or amounts necessary to
compensate such Lender or Issuing Bank or its holding company, as applicable,
as specified in paragraph (a) or (b) of this Section and setting forth in
reasonable detail the manner in which such amount or amounts was determined
shall be delivered to the Borrower and shall be conclusive absent manifest
error.  The Borrower shall pay such
Lender or Issuing Bank, as applicable, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(d) Failure or delay on
the part of any Lender or Issuing Bank to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s or Issuing Bank’s right
to demand such compensation; provided that the Borrower shall not be
required to compensate a Lender or an Issuing Bank pursuant to this Section for
any increased costs or reductions incurred more than 180 days prior to the date
that such Lender or Issuing Bank, as applicable, notifies the Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s or Issuing Bank’s intention to claim compensation therefor; provided
further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 180-day period referred to above shall
be extended to include the period of retroactive effect thereof.

 

SECTION 2.16. Break Funding Payments.  In the event of (a) the payment of any
principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any LIBOR Rate Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any LIBOR Rate Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.09(d) and is revoked in accordance therewith), or
(d) the assignment of any LIBOR Rate Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.19, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such event.  In the case of a LIBOR Rate Loan, such loss,
cost or expense to any Lender shall be deemed to be the amount

 

44

 

determined by such Lender to be the excess, if any, of
(i) the amount of interest which would have accrued on the principal
amount of such Loan had such event not occurred, at the Adjusted LIBOR Rate
that would have been applicable to such Loan, for the period from the date of
such event to the last day of the then current Interest Period therefor (or, in
the case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement
of such period, for dollar deposits of a comparable amount and period from
other banks in the eurodollar market.  A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section and the basis therefor and
setting forth in reasonable detail the manner in which such amount or amounts
was determined shall be delivered to the Borrower and shall be conclusive
absent manifest error.  The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.

 

SECTION 2.17. Taxes.  (a)  Any and all payments by or on
account of any obligation of any Loan Party hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if a Loan Party shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Agent, Lender or
any Issuing Bank (as applicable) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Loan Party shall
make such deductions and (iii) such Loan Party shall timely pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law. If at any time a Loan Party is required by applicable law to
make any deduction or withholding from any sum payable hereunder, such Loan
Party shall promptly notify the relevant Lender, Agent or Issuing Bank upon
becoming aware of the same. In addition, each Lender, Agent or Issuing Bank
shall promptly notify a Loan Party upon becoming aware of any circumstances as
a result of which a Loan Party is or would be required to make any deduction or
withholding from any sum payable hereunder.

 

(b) In addition, the Loan
Parties shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

 

(c) Each Loan Party shall
indemnify the Agent, each Lender and each Issuing Bank, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Agent, such Lender or such Issuing Bank, as applicable, on or
with respect to any payment by or on account of any obligation of such Loan
Party hereunder (including Indemnified Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or an Issuing Bank,
or by the Agent on its own behalf or on behalf of a Lender or an Issuing Bank,
shall be conclusive absent manifest error.

 

(d) As soon as practicable
after any payment of Indemnified Taxes or Other Taxes by a Loan Party to a
Governmental Authority, such Loan Party shall deliver to the Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Agent.

 

(e) Any Foreign Lender
that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which the Borrower is located, or any treaty to
which such jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Borrower (with a copy to the Agent), at the time
or times prescribed by applicable law, such properly completed and

 

45

 

executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate. 
In particular, on or prior to the date which is ten (10) Business Days
after the Closing Date, each Foreign Lender shall deliver to the Borrower (with
a copy to the Agent) two duly signed, properly completed copies of either IRS
Form W-8BEN or any successor thereto (relating to such Foreign Lender and
entitling it to an exemption from, or reduction of, United States withholding
tax on all payments to be made to such Foreign Lender by the Borrower or any
other Loan Party pursuant to this Agreement or any other Loan Document) or IRS
Form W-8ECI or any successor thereto (relating to all payments to be made to
such Foreign Lender by the Borrower or any other Loan Party pursuant to this
Agreement or any other Loan Document) or such other evidence reasonably
satisfactory to the Borrower and the Agent that such Foreign Lender is entitled
to an exemption from, or reduction of, United States withholding tax, including
any exemption pursuant to Section 871(h) or 881(c) of the Code, and in the case
of a Foreign Lender claiming such an exemption under Section 881(c) of the
Code, a certificate that establishes in writing to the Borrower and the Agent
that such Foreign Lender is not (i) a “bank” as defined in Section
881(c)(3)(A) of the Code, (ii) a 10-percent stockholder within the meaning
of Section 871(h)(3)(B) of the Code, or (iii) a controlled foreign
corporation related to the Borrower with the meaning of Section 864(d) of the
Code.  Thereafter and from time to time,
each such Foreign Lender shall (A) promptly submit to the Borrower (with a
copy to the Agent) such additional duly completed and signed copies of one or
more of such forms or certificates (or such successor forms or certificates as
shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States Laws and
regulations to avoid, or such evidence as is reasonably satisfactory to the
Borrower and the Agent of any available exemption from, or reduction of, United
States withholding taxes in respect of all payments to be made to such Foreign
Lender by the Borrower or other Loan Party pursuant to this Agreement, or any
other Loan Document, in each case, (1) on or before the date that any such
form, certificate or other evidence expires or becomes obsolete, (2) after
the occurrence of any event requiring a change in the most recent form,
certificate or evidence previously delivered by it to the Borrower and
(3) from time to time thereafter if reasonably requested by the Borrower
or the Agent, and (B) promptly notify the Borrower and the Administrative
Agent of any change in circumstances which would modify or render invalid any
claimed exemption or reduction.

 

(f) Each Lender, Agent or
Issuing Bank that is a United States person, agrees to complete and deliver to
the Borrower a statement signed by an authorized signatory of the Lender to the
effect that it is a United States person together with a duly completed and
executed copy of Internal Revenue Service Form W-9 or successor form.

 

(g) If the Agent or a Lender determines, in good
faith in its reasonable sole discretion, that it has received a refund of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by a Loan
Party or with respect to which such Loan Party has paid additional amounts
pursuant to this Section 2.17, it shall pay over such refund to such Loan Party
(but only to the extent of indemnity payments made, or additional amounts paid,
by such Loan Party under this Section 2.17 with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the
Agent or such Lender (including any Taxes imposed with respect to such
refund) as is determined by the Agent or such Lender in good faith in its sole
discretion, and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided, that such Loan Party, upon the request of the
Agent or such Lender, agrees to repay as soon as reasonably practicable the
amount paid over to such Loan Party (plus any penalties, interest or other
charges imposed by the relevant Governmental Authority) to the Agent or such
Lender in the event the Agent or such Lender is required to repay such refund
to such Governmental Authority. This Section shall not be construed to require
the Agent or any Lender to make available its tax returns (or any other
information relating to its taxes which it deems confidential) to such Loan
Party or any other Person.

 

46

 

(h) If the Borrower
determines in good faith that a reasonable basis exists for contesting any
Indemnified Taxes or Other Taxes for which additional amounts have been paid
under this Section 2.17, the relevant Lender, Agent or Issuing Bank shall
cooperate with the Borrower in challenging such Indemnified Taxes or Other
Taxes, at the Borrower’s expense, if so requested by the Borrower in writing.

 

SECTION 2.18. Payments Generally; Allocation
of Proceeds; Sharing of Set-offs.  

(a)  Unless otherwise specified, the
Borrower shall make each payment required to be made by it hereunder (whether
of principal, interest, fees or reimbursement of LC Disbursements, or of
amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 12:00
(noon), New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. 
Any amounts received after such time on any date may, in the discretion
of the Agent, be deemed to have been received on the next succeeding Business
Day for purposes of calculating interest thereon.  All such payments shall be made to the Agent
to the applicable account designated to the Borrower by the Agent, except
payments to be made directly to the applicable Issuing Bank or the Swingline
Lender as expressly provided herein and except that payments pursuant to
Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto.  The Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such
extension.  All payments hereunder shall
be made in Dollars.  Any payment required
to be made by the Agent hereunder shall be deemed to have been made by the time
required if the Agent shall, at or before such time, have taken the necessary
steps to make such payment in accordance with the regulations or operating
procedures of the clearing or settlement system used by the Agent to make such
payment.  At all times that full cash
dominion is in effect pursuant to Section 2.21(d), solely for purposes of
determining the amount of Loans available for borrowing purposes, checks and
cash or other immediately available funds from collections of items of payment
and proceeds of any Collateral shall be applied in whole or in part against the
Obligations, on the day of receipt, subject to actual collection.

 

(b) Subject in all
respects to the provisions of the Intercreditor Agreement, all proceeds of
Collateral received by the Agent after an Event of Default has occurred and is
continuing and all or any portion of the Loans shall have been accelerated
hereunder pursuant to Section 7.01, shall upon election by the Agent or at
the direction of the Required Lenders be applied, first, to, ratably,
pay any fees, indemnities, or expense reimbursements then due to the Agent or
any Issuing Bank from the Borrower (other than in connection with Banking
Services or Secured Swap Obligations), second, ratably, to pay any fees
or expense reimbursements then due to the Lenders from the Borrower (other than
in connection with Banking Services or Secured Swap Obligations), third,
to pay interest due and payable in respect of any Revolving Loans (including
any Swingline Loans) and any Protective Advances, ratably, fourth, to
pay the principal of the Protective Advances, fifth, to prepay principal
on the Loans (other than the Protective Advances) and unreimbursed LC
Disbursements, ratably, sixth, to pay an amount to the Agent equal to
101.5% of the LC Exposure on such date, to be held in the LC Collateral Account
as cash collateral for such Obligations, seventh, to pay any amounts
owing with respect to Banking Services and Secured Swap Obligations, ratably, eighth,
to the payment of any other Secured Obligation due to the Agent or any Lender
by the Borrower, ninth, as provided for under the Intercreditor
Agreement, and tenth, to the Borrower or as the Borrower shall direct.

 

(c) If any Lender shall,
by exercising any right of set-off or counterclaim or otherwise, obtain payment
in respect of any principal of or interest on any of its Loans or
participations in LC Disbursements, Swingline Loans or Protective Advances
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans and participations in LC Disbursements, Swingline
Loans or Protective Advances and accrued interest thereon than the proportion
received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value)

 

47

 

participations in the Loans and participations in LC
Disbursements, Swingline Loans and Protective Advances of other Lenders at such
time outstanding to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements, Swingline Loans and Protective
Advances; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements,
Swingline Loans or Protective Advances to any assignee or participant, other
than to the Borrower or any subsidiary or Affiliate thereof (as to which the
provisions of this paragraph shall apply). 
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

 

(d) Unless the Agent
shall have received notice from the Borrower prior to the date on which any
payment is due to the Agent for the account of the Lenders or the applicable
Issuing Bank hereunder that the Borrower will not make such payment, the Agent
may assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders
or the applicable Issuing Bank, as applicable, the amount due.  In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the applicable Issuing
Bank, as applicable, severally agrees to repay to the Agent forthwith on demand
the amount so distributed to such Lender or Issuing Bank with interest thereon,
for each day from and including the date such amount is distributed to it to
but excluding the date of payment to the Agent, at the greater of the Federal
Funds Effective Rate and a rate determined by the Agent in accordance with
banking industry rules on interbank compensation.

 

(e) If any Lender shall
fail to make any payment required to be made by it pursuant to Sections
2.04(b), 2.05(b), 2.06(d) or (e), 2.07(b), 2.18(c) or 9.03(c), then the Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Agent for the account of such Lender to
satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid.

 

SECTION 2.19. Mitigation Obligations; Replacement
of Lenders.  (a)  If any
Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then
such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i)
would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as
applicable, in the future and (ii) would not subject such Lender to any
material unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender in any material respect.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(b) If any Lender
requests compensation under Section 2.15, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.17, or is a Defaulting Lender,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Agent, replace such Lender by requiring such Lender to

 

48

 

assign and delegate (and such Lender shall be obligated
to assign and delegate), without recourse (in accordance with and subject to
the restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the
prior written consent of the Agent and each Issuing Bank, which consent in each
case shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements, Swingline Loans and Protective
Advances, accrued interest thereon, accrued fees and all other amounts payable
to it hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.15 or payments required to be made
pursuant to Section 2.17, such assignment will result in a reduction in
such compensation or payments.  A Lender
(other than a Defaulting Lender) shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply. 
Nothing in this Section 2.19 shall be deemed to prejudice any rights
that the Borrower may have against any Lender that is a Defaulting Lender.

 

SECTION 2.20. Illegality.  If any Lender reasonably determines that any
Change in Law has made it unlawful, or that any Governmental Authority has
asserted after the Closing Date that it is unlawful, for such Lender or its
applicable lending office to make or maintain any LIBOR Rate Loans, then, on
notice thereof by such Lender to the Borrower through the Agent, any
obligations of such Lender to make or continue LIBOR Rate Loans or to convert
ABR Borrowings to LIBOR Rate Borrowings shall be suspended until such Lender
notifies the Agent and the Borrower that the circumstances giving rise to such
determination no longer exist.  Upon
receipt of such notice, the Borrower shall upon demand from such Lender (with a
copy to the Agent), either convert all LIBOR Rate Borrowings of such Lender to
ABR Borrowings, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such LIBOR Rate Borrowings to such
day, or immediately, if such Lender may not lawfully continue to maintain such
Loans.  Upon any such prepayment or
conversion, the Borrower shall also pay accrued interest on the amount so
prepaid or converted.  Each Lender agrees
to designate a different lending office if such designation will avoid the need
for such notice and will not, in the determination of such Lender, otherwise be
disadvantageous to it.

 

SECTION 2.21. Cash Receipts.  (a) 
Annexed hereto as Schedule 2.21(a) is a schedule of all DDAs,
that, to the knowledge of the Responsible Officers of the Loan Parties, are
maintained by the Loan Parties, which Schedule includes, with respect to each
depository (i) the name and address of such depository; (ii) the account
number(s) maintained with such depository; and (iii) a contact person at such
depository.

 

(b) Annexed hereto as Schedule
2.21(b) is a list describing all arrangements to which any Loan Party is a
party with respect to the payment to such Loan Party of the proceeds of all
credit card charges for sales by such Loan Party.

 

(c) Each Loan Party shall
(i) deliver to the Agent notifications in form reasonably satisfactory to
the Agent which have been executed on behalf of such Loan Party and addressed
to such Loan Party’s credit card clearinghouses and processors (each, a “Credit
Card Notification”), (ii) deliver to the Agent notifications executed
on behalf of the Borrower to each depository institution with which any DDA is
maintained in form reasonably satisfactory to the Agent, of the Agent’s
interest in such DDA (each, a “DDA Notification”), (iii) instruct
each depository institution for a DDA to cause all amounts on deposit and
available at the close of each Business Day in such DDA (net of such minimum
balance, not to exceed $15,000, as may be required to be maintained in the
subject DDA by the depository institution at which such DDA is maintained), to
be swept to one of the Loan Parties’ concentration accounts no less

 

49

 

frequently than on a daily basis, such instructions to
be irrevocable unless otherwise agreed to by the Agent; and (iv) within
forty-five (45) days after the Closing Date, with respect to the Loan Parties’
primary concentration account (which is indicated as such on
Schedule 2.21(c)), or one hundred twenty (120) days after the Closing
Date, with respect to each other concentration account of the Loan Parties (in
each case, or such later date approved by the Agent), enter into a blocked
account agreement (each, a “Blocked Account Agreement”), in form
reasonably satisfactory to the Agent, with the Agent and any bank with which
such Loan Party maintains a concentration account into which the DDAs are swept
(collectively, the “Blocked Accounts”), which concentration accounts as
of the Closing Date are listed on Schedule 2.21(c) annexed
hereto.  Each Loan Party agrees that it
will not cause proceeds of such DDAs to be otherwise redirected.

 

(d) Each Credit Card
Notification and Blocked Account Agreement shall require, after the occurrence
and during the continuance of an Event of Default or a Liquidity Event (and
delivery of notice thereof from the Agent to the Borrower and the other parties
to such instrument or agreement), the ACH or wire transfer no less frequently
than once per Business Day (unless the Commitments have been terminated and the
Obligations have been paid in full), of all available cash balances and cash
receipts, including the then contents or then entire ledger balance of each
Blocked Account (net of such minimum balance, not to exceed $15,000 (or, in the
case of the Loan Parties’ primary concentration account, $50,000), as may be
required to be maintained in the subject Blocked Account by the bank at which
such Blocked Account is maintained), to an account maintained by the Agent at
DBTCA (the “DBTCA Account”). 
Subject to the terms of the Security Agreement, all amounts received in
the DBTCA Account shall be applied (and allocated) by the Agent in accordance
with Section 2.10(b); provided, that if the circumstances described
in Section 2.18(b) are applicable, all such amounts shall be applied in
accordance with such Section 2.18(b). 
Each Loan Party agrees that it will not cause any credit card proceeds
or proceeds of any Blocked Account to be otherwise redirected.

 

(e) If, at any time after
the occurrence and during the continuance of an Event of Default or a Liquidity
Event as to which the Agent has notified the Borrower, any cash or cash
equivalents owned by any Loan Party (other than (i) an amount not to
exceed $25,000,000 in the aggregate that is on deposit in a segregated DDA
which the Borrower designates in writing to the Agent as being the “uncontrolled
cash account” (the “Designated Disbursement Account”), which funds shall
not be funded from, or when withdrawn from the Designated Disbursement Account,
shall not be replenished by, funds constituting proceeds of Collateral so long
as such Event of Default or Liquidity Event continues, (ii) de minimus
cash or cash equivalents from time to time inadvertently misapplied by any Loan
Party, (iii) payroll, trust and tax withholding accounts funded in the
ordinary course of business and required by applicable law and (iv) funds
in any Specified Segregated Account) are deposited to any account, or held or
invested in any manner, otherwise than in a Blocked Account subject to a
Blocked Account Agreement (or a DDA which is swept daily to such Blocked
Account), the Agent shall be entitled to require the applicable Loan Party to
close such account and have all funds therein transferred to a Blocked Account,
and to cause all future deposits to be made to a Blocked Account.

 

(f) The Loan Parties may
close DDAs or Blocked Accounts and/or open new DDAs or Blocked Accounts,
subject to the contemporaneous execution and delivery to the Agent of a DDA Notification
or Blocked Account Agreement consistent with the provisions of this Section
2.21 and otherwise reasonably satisfactory to the Agent.  Unless consented to in writing by the Agent,
the Loan Parties shall not enter into any agreements with credit card
processors other than the ones listed on Schedule 2.21(b) unless
contemporaneously therewith, a Credit Card Notification is executed and a copy
thereof is delivered to the Agent.

 

(g) The DBTCA Account
shall at all times be under the sole dominion and control of the Agent.  Each Loan Party hereby acknowledges and
agrees that, except to the extent otherwise provided in

 

50

 

the Security Agreement (i) such Loan Party has no
right of withdrawal from the DBTCA Account, (ii) the funds on deposit in the
DBTCA Account shall at all times continue to be collateral security for all of
the Secured Obligations, and (iii) the funds on deposit in the DBTCA Account
shall be applied as provided in this Agreement and the Intercreditor
Agreement.  In the event that,
notwithstanding the provisions of this Section 2.21, any Loan Party
receives or otherwise has dominion and control of any proceeds or collections
required to be transferred to the DBTCA Account pursuant to Section 2.21(d),
such proceeds and collections shall be held in trust by such Loan Party for the
Agent, shall not be commingled with any of such Loan Party’s other funds or
deposited in any account of such Loan Party and shall promptly be deposited
into the DBTCA Account or dealt with in such other fashion as such Loan Party
may be instructed by the Agent.

 

(h) So long as (i) no
Event of Default has occurred and is continuing, and (ii) no Liquidity Event as
to which the Agent has notified the Borrower has occurred and is continuing,
the Loan Parties may direct, and shall have sole control over, the manner of
disposition of funds in the Blocked Accounts.

 

(i) Any amounts held or
received in the DBTCA Account (including all interest and other earnings with
respect thereto, if any) at any time (x) when all of the Secured
Obligations have been satisfied or (y) all Events of Default and Liquidity
Events have been cured, shall (subject in the case of clause (x) to the
provisions of the Intercreditor Agreement), be remitted to the operating
account of the Borrower.

 

SECTION 2.22. Reserves; Change in Reserves.  The Agent may at any time and from time to
time in the exercise of its Permitted Discretion establish and increase or
decease Reserves; provided that the Agent shall have provided the
Borrower at least ten (10) Business Days prior written notice of any such
establishment or increase; and provided  further, that the Agent
may only establish or increase a Reserve after the date hereof based on an
event, condition or other circumstance arising after the Closing Date or based
on facts not known to the Agent as of the Closing Date.  The amount of any Reserve established by the
Agent shall have a reasonable relationship to the event, condition or other
matter that is the basis for the Reserve. 
Upon delivery of such notice, the Agent shall be available to discuss
the proposed Reserve or increase, and the Borrower may take such action as may
be required so that the event, condition or matter that is the basis for such
Reserve or increase no longer exists, in a manner and to the extent reasonably
satisfactory to the Agent in the exercise of its Permitted Discretion.  In no event shall such notice and opportunity
limit the right of the Agent to establish or change such Reserve, unless the
Agent shall have determined in its Permitted Discretion that the event,
condition or other matter that is the basis for such new Reserve or such change
no longer exists or has otherwise been adequately addressed by the Borrower.  Notwithstanding anything herein to the
contrary, Reserves shall not duplicate eligibility criteria contained in the
definition of “Eligible Inventory” and vice versa, or reserves or criteria
deducted in computing the cost or market value of Eligible Inventory or the Net
Orderly Liquidation Value of Eligible Inventory and vice versa.

 

SECTION 2.23. Increase in Commitments.  (a) So long as no Default or Event of Default
then exists, the Borrower shall have the right at any time, and from time to
time, to request an increase of the aggregate total Commitments to an amount
not to exceed $800,000,000.  Any such
requested increase shall be first made to all existing Lenders on a pro rata
basis.  To the extent that the existing
Lenders decline to increase their Commitments, or decline to increase their
Commitments to the amount requested by the Borrower, the Agent may arrange for
other Persons to become a Lender hereunder and to issue commitments in an
amount equal to the amount of the increase in the aggregate total Commitments
requested by the Borrower and not accepted by the existing Lenders (each such
increase by either means, a “Commitment Increase”, and each such Person
issuing, or Lender increasing, its Commitment, an “Additional Commitment
Lender”); provided,  however,
that (i) no Lender shall be obligated to provide a

 

51

 

Commitment Increase as a result of any such request by
the Borrower, and (ii) any Additional Commitment Lender which is not an
existing Lender shall be an Eligible Assignee and shall be subject to the
approval of the Agent, each Issuing Bank and the Borrower (each such consent
not to be unreasonably withheld).  Each
Commitment Increase shall be in a minimum aggregate amount of at least
$5,000,000 and in integral multiples of $5,000,000 in excess thereof.

 

(b) No Commitment
Increase shall become effective unless and until each of the following
conditions have been satisfied:

 

(i) the Borrower, the
Agent, and any Additional Commitment Lender shall have executed and delivered a
joinder to the Loan Documents in such form as the Agent may reasonably require;

 

(ii) the Borrower shall
have paid such fees and other compensation to the Additional Commitment Lenders
as the Borrower and each such Additional Commitment Lenders may agree;

 

(iii) the Borrower shall
have paid such arrangement fees to the Agent as the Borrower and the Agent may
agree;

 

(iv) the Borrower shall
have delivered to the Agent and the Lenders an opinion or opinions, in form and
substance reasonably satisfactory to the Agent, from counsel to the Borrower
reasonably satisfactory to the Agent (it being agreed that the counsel that
delivers the legal opinions on the Closing Date shall be satisfactory to the
Agent) and dated such date;

 

(v) to the extent requested
by any Additional Commitment Lender, a promissory note will be issued at the
Borrower’s expense, to each such Additional Commitment Lender, to be in
conformity with requirements of Section 2.10 (with appropriate modification) to
the extent necessary to reflect the new Commitment of such Additional
Commitment Lender; and

 

(vi) the Borrower and the
Additional Commitment Lenders shall have delivered such other instruments,
documents and agreements as the Agent may reasonably request.

 

(c) The Agent shall promptly
notify each Lender as to the effectiveness of each Commitment Increase (with
each date of such effectiveness being referred to herein as a “Commitment
Increase Date”), and at such time (i) the aggregate total Commitments
under, and for all purposes of, this Agreement shall be increased by the
aggregate amount of such Commitment Increases (ii) the Commitment Schedule
shall be deemed modified, without further action, to reflect the revised
Commitments of the Lenders, and (iii) this Agreement shall be deemed amended,
without further action, to the extent necessary to reflect such increased
aggregate total Commitments.

 

(d) In connection with
Commitment Increases hereunder, the Lenders and the Borrower agree that,
notwithstanding anything to the contrary in this Agreement, (i) the Borrower
shall, in coordination with the Agent, (A) repay outstanding Loans of certain
Lenders, and obtain Loans from certain other Lenders (including the Additional
Commitment Lenders), or (B) take such other actions as reasonably may be
required by the Agent, in each case to the extent necessary so that all of the
Lenders effectively participate in each of the outstanding Loans pro rata on
the basis of their Applicable Percentages (determined after giving effect to
any increase in the aggregate total Commitments pursuant to this Section 2.23),
and (ii) the Borrower shall pay to the Lenders any costs of the type referred
to in Section 2.16 in connection with any repayment and/or Loans required
pursuant to preceding clause (i).  Without
limiting the obligations of the Borrower provided for in this Section 2.23, the
Agent and the Lenders agree that they will use their commercially reasonable
efforts to attempt to minimize the costs of

 

52

 

the type referred to in Section 2.16 which the
Borrower would otherwise occur in connection with the implementation of an
increase in the aggregate total Commitments.

 

ARTICLE III

 

Representations and Warranties

 

Each Loan Party
represents and warrants to the Lenders that:

 

SECTION 3.01. Organization; Powers.  Each of the Loan Parties and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and authority
to own its property and assets and to carry on its business as now conducted
and, except where the failure to do so, individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect, is qualified
to do business in, and is in good standing in, every jurisdiction where such
qualification is required.

 

SECTION 3.02. Authorization; Enforceability.  The Transactions are within each applicable
Loan Party’s corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action of such Loan Party.  Each Loan Document to which each Loan Party
is a party have been duly executed and delivered by such Loan Party and is a
legal, valid and binding obligation of such Loan Party, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors’ rights generally and to general principles of
equity.

 

SECTION 3.03. Governmental Approvals; No
Conflicts.  The Transactions
(a) do not require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority, except such as have
been obtained or made and are in full force and effect, except for filings
necessary to perfect Liens created pursuant to the Loan Documents and the Term
Loan Security Documents and except for filings in connection with consummating
the Merger and filings as may be required under the Exchange Act and applicable
stock exchange rules in connection therewith, (b) will not violate any
Requirement of Law applicable to any Loan Party or any of its Subsidiaries,
(c) will not violate or result in a default under any indenture, agreement
or other instrument binding upon any Loan Party or any of its Subsidiaries or
its assets, or (except for the Merger Consideration and the 2008 Notes Call for
Redemption) give rise to a right thereunder to require any payment to be made
by any Loan Party or any of its Subsidiaries, and (d) will not result in
the creation or imposition of any Lien on any asset of any Loan Party or any of
its Subsidiaries, except Liens created pursuant to the Loan Documents and the
Term Loan Security Documents; except, in each case other than with respect to
the creation of Liens, to the extent that any such violation, default or right,
or any failure to obtain such consent or approval or to take any such action,
would not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.04. Financial Condition; No Material
Adverse Change.  (a)  The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of earnings, shareholders’ equity and cash flows (i) as of and
for the fiscal years ended July 31, 2004 and July 30, 2005, each reported
on by Deloitte & Touche LLP, independent public accountants, and (ii)
to the extent possible in the exercise of the Borrower’s commercially
reasonable efforts, as of and for each subsequent fiscal month ended at least
thirty (30) days before the Closing Date, certified by its chief financial officer.  Such financial statements present fairly, in
all material respects, the financial position and results of operations and
cash flows of the Borrower and its consolidated Subsidiaries as of such dates
and for such periods in accordance with GAAP, subject to the absence of
footnotes and normal year-end adjustments in the case of the statements
referred to in clause (ii) above.

 

53

 

(b) The Borrower has
heretofore delivered to the Lenders its unaudited pro forma consolidated
balance sheet and related pro forma statements of earnings, shareholder’s
equity and cash flows as of July 30, 2005, prepared giving effect to the
Transactions as if they had occurred, with respect to such balance sheet, on
such date and, with respect to such other financial statements, on the first
day of the 12-month period ending on such date. Such pro forma financial
statements have been prepared in good faith by the Borrower, based on the
assumptions used to prepare the pro forma financial information contained in
the Information Memorandum (which assumptions are believed by the Borrower on
the date hereof and on the Closing Date to be reasonable), are based on the
best information available to the Borrower as of the date of delivery thereof,
accurately reflect all adjustments required to be made to give effect to the
Transactions and present fairly on a pro forma basis the estimated consolidated
financial position of the Borrower and its consolidated Subsidiaries as of such
date and for such period, assuming that the Transactions had actually occurred
at such date or at the beginning of such period, as the case may be.

 

(c) No event, change or
condition has occurred that has had, or would reasonably be expected to have, a
Material Adverse Effect, since July 30, 2005.

 

SECTION 3.05. Properties.  (a)  As of the date of this
Agreement, Schedule 3.05(a) sets forth the address of each parcel of
real property (or each set of parcels that collectively comprise one operating
property) that is owned or leased by each Loan Party, together with a list of
the lessors with respect to all such leased property.  Schedule 3.05(a) also identifies the
principal place of business and chief executive office of each Loan Party.  The books and records of each Loan Party, and
all of their respective chattel paper and records of Accounts, are maintained
exclusively at such locations. There is no location at which any Loan Party has
any Collateral (except for vehicles and Inventory in transit in the ordinary course
of business) other than those locations identified on Schedule 3.05(a).

 

(b) Each of the Borrower
and each of the Subsidiaries has good and insurable fee simple title to, or
valid leasehold interests in, or easements or other limited property interests
in, all its real properties (including all Mortgaged Properties) and has good
and marketable title to its personal property and assets, in each case, except
for defects in title that do not materially interfere with its ability to
conduct its business as currently conducted or to utilize such properties and
assets for their intended purposes and except where the failure to have such
title would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. 
All such properties and assets are free and clear of Liens, other than
Liens (i) permitted by Section 6.02 or (ii) arising by operation of
law (which Liens, in the case of this clause (ii) do not materially
interfere with the ability of Holdings, the Borrower or the relevant Subsidiary
to carry on its business as now conducted or to utilize the affected properties
or assets for their intended purposes).

 

(c) Each of the Borrower
and each of the Subsidiaries has complied with all obligations under all leases
to which it is a party, except where the failure to comply would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect, and all such leases are in full force and effect, except leases in
respect of which the failure to be in full force and effect would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.  Each of the Borrower and
each of the Subsidiaries enjoys peaceful and undisturbed possession under all
such leases, other than leases in respect of which the failure to enjoy
peaceful and undisturbed possession would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

(d) As of the Closing
Date, none of Holdings, the Borrower or any Subsidiary has received any notice
of, nor has any knowledge of, any pending or contemplated condemnation
proceeding affecting any of the Mortgaged Properties or any sale or disposition
thereof in lieu of condemnation.

 

54

 

(e) To the Borrower’s
knowledge, as of the Closing Date, none of the Borrower or any Subsidiary is
obligated under any right of first refusal, option or other contractual right
to sell, assign or otherwise dispose of any Mortgaged Property or any interest
therein.

 

(f) Copies of
certificates of occupancy relating to each Mortgaged Property that the
mortgagor has in its possession have been delivered to the Agent as mortgagee
with respect to each Mortgaged Property.

 

(g) Each of the Borrower
and the Subsidiaries owns or possesses, or is licensed to use, all patents,
trademarks, service marks, trade names and copyrights and all licenses and
rights with respect to the foregoing, necessary for the present conduct of its
business, without any conflict with the rights of others, and free from any
burdensome restrictions on the present conduct of its business, except where
such failure to own, possess or hold pursuant to a license or such conflicts
and restrictions would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect or except as set forth on Schedule 3.05(g).

 

SECTION 3.06. Litigation and Environmental
Matters.  (a)  Other than
the Disclosed Matters, there are no actions, suits or proceedings by or before
any arbitrator or Governmental Authority pending against or, to the knowledge
of any Loan Party, threatened against or affecting the Loan Parties or any of
their Subsidiaries (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect or (ii) that involve any Loan Documents or the Transactions.

 

(b) Except for the
Disclosed Matters or any other matters that, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect
(i) no Loan Party nor any of its Subsidiaries has received notice of any
claim with respect to any Environmental Liability or knows of any basis for any
Environmental Liability and (ii) no Loan Party nor any of its Subsidiaries
(1) has failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any
Environmental Law or (2) has become subject to any Environmental
Liability.

 

(c) Since the date of
this Agreement, there has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.

 

SECTION 3.07. Compliance with Laws and Agreements;
Licenses and Permits.  (a) Each
Loan Party is in compliance with all Requirements of Law applicable to it or
its property and all indentures, agreements and other instruments binding upon
it or its property, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.

 

(b) Each Loan Party and
its Subsidiaries has obtained and holds in full force and effect, all
franchises, licenses, leases, permits, certificates, authorizations,
qualifications, easements, rights of way and other rights and approvals which
are necessary or advisable for the operation of its businesses as presently
conducted and as proposed to be conducted, except where the failure to have so
obtained or hold or to be in force, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.  No Loan Party or any of its Subsidiaries is
in violation of the terms of any such franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of way, right or
approval, except where any such violation, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.

 

55

 

SECTION 3.08. Investment and Holding Company
Status.  No Loan Party is (a) an
“investment company” as defined in, or is required to be registered under, the
Investment Company Act of 1940 or (b) a “holding company” as defined in,
or subject to regulation under, the Public Utility Holding Company Act of 1935.

 

SECTION 3.09. Taxes.  Each Loan Party and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Loan Party or such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with
GAAP or (b) to the extent that the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.

 

SECTION 3.10. ERISA.  No ERISA Event has occurred in the five year
period prior to the date on which this representation is made or deemed made
and is continuing or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected to
occur, would reasonably be expected to result in a Material Adverse
Effect.  Except as would not reasonably
be expected to have a Material Adverse Effect, the present value of all
accumulated benefit obligations under all Plans (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed the fair market value of the assets of such Plans, in the
aggregate.

 

SECTION 3.11. Disclosure.  (a)  All written information (other
than the Projections, the pro forma financial statements and estimates and
information of a general economic nature) concerning Holdings, the Borrower,
the Subsidiaries, the Transactions and any other transactions contemplated
hereby included in the Information Memorandum or otherwise prepared by or on
behalf of the foregoing or their representatives and made available to any
Lenders or the Agent in connection with the Transactions on or before the date
hereof (the “Information”), when taken as a whole, as of the date such
Information was furnished to the Lenders and as of the Closing Date, did not
contain any untrue statement of a material fact as of any such date or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which
such statements were made.

 

(b) The Projections, pro
forma financial statements and estimates and information of a general economic
nature prepared by or on behalf of the Borrower or any of its representatives
and that have been made available to any Lenders or the Agent in connection
with the Transactions on or before the date hereof (the “Other Information”)
(i) have been prepared in good faith based upon assumptions believed by
the Borrower to be reasonable as of the date thereof (it being understood that
actual results may vary materially from the Other Information), and
(ii) as of the Closing Date, have not been modified in any material
respect by the Borrower.

 

SECTION 3.12. Material Agreements.  No Loan Party is in default in any material
respect in the performance, observance or fulfillment of any of its obligations
contained in (i) any material agreement to which it is a party or (ii) any
agreement or instrument to which it is a party evidencing or governing
Indebtedness, except where any such default would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

 

SECTION 3.13. Solvency.  (a)  Immediately after the
consummation of the Transactions to occur on the Closing Date and immediately
following the making of each Loan and after giving effect to the application of
the proceeds of each Loan, (i) the fair value of the assets of the Loan
Parties on a consolidated basis, at a fair valuation, will exceed the debts and
liabilities, direct, subordinated, contingent or otherwise, of the Loan Parties
on a consolidated basis; (ii) the present fair saleable value of

 

56

 

the property of the Loan Parties on a consolidated
basis will be greater than the amount that will be required to pay the probable
liability of the Loan Parties on a consolidated basis, on their debts and other
liabilities, direct, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) the Loan Parties on a
consolidated basis will be able to pay their debts and liabilities, direct,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) the Loan Parties on a consolidated basis
will not have unreasonably small capital with which to conduct the businesses
in which they are engaged as such businesses are now conducted and are proposed
to be conducted following the Closing Date.

 

(b) The Loan Parties do
not intend to incur debts beyond their ability to pay such debts as they
mature, taking into account the timing and amounts of cash to be received by
the Loan Parties and the timing and amounts of cash to be payable by the Loan
Parties on or in respect of their Indebtedness.

 

SECTION 3.14. Insurance.  Schedule 3.14 sets forth a true,
complete and correct description of all insurance maintained by or on behalf of
the Loan Parties and the Subsidiaries as of the Closing Date.  As of the Closing Date, all such insurance is
in full force and effect and all premiums in respect of such insurance have
been duly paid.  The Borrower believes
that the insurance maintained by or on behalf of the Borrower and the
Subsidiaries is adequate and is in accordance with normal industry practice.

 

SECTION 3.15. Capitalization and Subsidiaries.  Schedule 3.15 sets forth (a) a correct
and complete list of the name and relationship to the Borrower of each and all
of the Borrower’s Subsidiaries, (b) a true and complete listing of each class
of each of the Borrower’s authorized Equity Interests, of which all of such
issued shares are validly issued, outstanding, fully paid and non-assessable,
and owned beneficially and of record by the Persons identified on Schedule
3.15, and (c) the type of entity of the Borrower and each of its
Subsidiaries.  All of the issued and
outstanding Equity Interests of the Subsidiaries owned by any Loan Party have
been (to the extent such concepts are relevant with respect to such ownership
interests) duly authorized and issued and are fully paid and non-assessable
free and clear of all Liens (other than Liens created under the Loan Documents
and the Term Loan Security Documents).

 

SECTION 3.16. Security Interest in Collateral.  The provisions of this Agreement and the
other Loan Documents create legal and valid Liens on all the Collateral in
favor of the Agent, for the benefit of the Agent and the Lenders; and upon the
proper filing of UCC financing statements required pursuant to Section 4.01(p)
and any Mortgages with respect to Mortgaged Properties, such Liens constitute
perfected and continuing Liens on the Collateral, securing the Secured
Obligations, enforceable against the applicable Loan Party and all third
parties, and having priority over all other Liens on the Collateral except in
the case of (a) Permitted Encumbrances, to the extent any such Permitted
Encumbrances would have priority over the Liens in favor of the Agent pursuant
to any applicable law, (b) Liens perfected only by possession (including
possession of any certificate of title) to the extent the Agent has not
obtained or does not maintain possession of such Collateral and (c) subject to
and as provided for under the terms of the Intercreditor Agreement and the
Liens granted under the Term Loan Security Documents.

 

SECTION 3.17. Labor Disputes.  As of the Closing Date, except as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect: (a) there are no strikes, lockouts or slowdowns
against any Loan Party pending or, to the knowledge of the Borrower,
threatened, (b) the hours worked by and payments made to employees of the
Loan Parties and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters and (c) all payments due from any Loan Party or
any Subsidiary, on account of wages and employee health and welfare insurance
and other benefits, have been paid or

 

57

 

accrued as a liability on the books of the Loan Party
or such Subsidiary to the extent required by GAAP.  Except (i) as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
or (ii) as set forth on Schedule 3.17, the consummation of the
Transactions will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining
agreement to which Holdings, the Borrower or any of the Subsidiaries (or any
predecessor) is a party or by which Holdings, the Borrower or any of the
Subsidiaries (or any predecessor) is bound.

 

SECTION 3.18. Federal Reserve Regulations.  (a)  On the Closing Date, none of
the Collateral is Margin Stock.

 

(b) None of Holdings, the
Borrower and the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock.

 

(c) No part of the
proceeds of any Loan or any Letter of Credit will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock (other than pursuant to, or in connection with, the
Merger) or to extend credit to others for the purpose of purchasing or carrying
Margin Stock or to refund indebtedness originally incurred for such purpose, or
(ii) for any purpose that entails a violation of, or that is inconsistent
with, the provisions of Regulation T, U or X.

 

SECTION 3.19. Transaction Documents.  Holdings and the Borrower have delivered to
the Agent a complete and correct copy of the Merger Agreement (including all
schedules, exhibits, amendments, supplements and modifications thereto).
Neither Holdings, the Borrower nor any other Loan Party or, to the knowledge of
Holdings, the Borrower or each Loan Party, any other Person party thereto is in
default in the performance or compliance with any material provisions thereof.  Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, all
representations and warranties set forth in the Merger Agreement were true and
correct in all material respects at the time as of which such representations
and warranties were made (or deemed made).

 

SECTION 3.20. Senior Indebtedness.  The Obligations constitute “Senior
Indebtedness” and “Designated Senior Indebtedness” under and as defined in the
Senior Subordinated Note Documents.

 

ARTICLE IV

 

Conditions

 

SECTION 4.01. Closing Date.  The obligations of the Lenders to make Loans
and of any Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

 

(a) Credit Agreement
and Loan Documents.  The Agent (or
its counsel) shall have received (i) from each party hereto either
(A) a counterpart of this Agreement signed on behalf of such party or
(B) written evidence satisfactory to the Agent (which may include
facsimile transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement and (ii) duly executed
copies of the Loan Documents and such other certificates, documents, instruments
and agreements as the Agent shall reasonably request in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
including any promissory notes requested by a Lender pursuant to Section 2.10.

 

58

 

(b) Legal Opinions.  The Agent shall have received, on behalf of
itself, the Lenders and each Issuing Bank on the Closing Date, a favorable
written opinion of (i) Cleary Gottlieb Steen & Hamilton LLP, special
counsel for Holdings and the Borrower, in form and substance reasonably
satisfactory to the Agent and (ii) local or other counsel reasonably
satisfactory to the Agent as specified on Schedule 4.01(b), in each
case (A) dated the Closing Date, (B) addressed to each Issuing Bank
on the Closing Date, the Agent and the Lenders and (C) in form and
substance reasonably satisfactory to the Agent and covering such other matters
relating to the Loan Documents and the Transactions as the Agent shall
reasonably request.

 

(c) Financial Statements
and Projections.  The Lenders shall
have received (i) the financial statements and opinion referred to in
Section 3.04(a) and (b) and (ii)  projections in customary form for
the Borrower and its Subsidiaries on a pro forma basis for completion of the
Transactions for the fiscal years 2006 through 2010 and for each of the twelve
fiscal months of fiscal 2006.

 

(d) Closing
Certificates; Certified Certificate of Incorporation; Good Standing
Certificates.  The Agent shall have
received (i) a certificate of each Loan Party, dated the Closing Date and
executed by its Secretary or Assistant Secretary (or, in the case of NM Nevada
Trust, its Clerk), which shall (A) certify the resolutions of its Board of
Directors, members or other body authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, (B) identify by
name and title and bear the signatures of the Financial Officers and any other
officers of such Loan Party authorized to sign the Loan Documents to which it
is a party, and (C) contain appropriate attachments, including the
certificate or articles of incorporation or organization of each Loan Party
certified by the relevant authority of the jurisdiction of organization of such
Loan Party and a true and correct copy of its by-laws or operating, management
or partnership agreement, and (ii) a good standing certificate for each
Loan Party from its jurisdiction of organization.

 

(e) No Default
Certificate.  The Agent shall have
received a certificate, signed by the chief financial officer of the Borrower,
dated the Closing Date (i) stating that no Default has occurred and is
continuing (other than any Default arising pursuant to Section 7.01(b) with
respect to any of the representations enumerated in clause (ii) below) and (ii)
stating that the representations and warranties contained in Article III
(except, in the case of the Initial Revolving Borrowing on the Closing Date,
the representations contained in Sections 3.04, 3.05, 3.06, 3.07, 3.09, 3.10,
3.11, 3.12, 3.13, 3.14, 3.15, 3.17 and 3.19) are true and correct in all
material respects as of such date.

 

(f) Fees.  The Lenders and the Agent shall have received
all fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable documented fees and expenses of legal
counsel), on or before the Closing Date.

 

(g) Lien and Judgment
Searches.  The Agent shall have
received the results of recent lien and judgment searches in each of the
jurisdictions contemplated by the Perfection Certificate, and such search shall
reveal no material judgments and no liens on any of the assets of the Loan
Parties except for liens permitted by Section 6.02 or discharged on or prior to
the Closing Date pursuant to a pay-off letter or other documentation reasonably
satisfactory to the Agent.

 

(h) Pay-Off Letter.  The Agent shall have received a pay-off
letter reasonably satisfactory to it in respect of the repayment of the
Existing Credit Agreement from the proceeds the Initial Revolving Borrowing,
confirming that all Liens upon any of the property of the Loan Parties
constituting Collateral arising under the Existing Credit Agreement, if any,
will be terminated

 

59

 

concurrently with such
payment and all letters of credit issued or guaranteed as part of such
Indebtedness shall have been cash collateralized or supported by a Letter of
Credit.

 

(i) Funding Account.  The Agent shall have received a notice
setting forth the deposit account of the Borrower (the “Funding Account”)
to which the Agent is authorized by the Borrower to transfer the proceeds of
any Borrowings requested or authorized pursuant to this Agreement.

 

(j) Collateral Access
and Blocked Account Agreements.  The
Loan Parties (i) shall have used commercially reasonable efforts to obtain and
deliver to the Agent each Collateral Access Agreement required to be provided
pursuant to Section 4.12 of the Security Agreement and the Blocked Account
Agreements required to be delivered pursuant to Section 2.21 and (ii) shall
have delivered to the Agent each Credit Card Notification and DDA Notification
required to be provided pursuant to Section 2.21.

 

(k) Solvency.  The Agent shall have received a customary
certificate from the chief financial officer of the Borrower certifying that
Holdings and its Subsidiaries, on a consolidated basis after giving effect to
the Transactions to occur on the Closing Date, are solvent (within the meaning
of Section 3.13).

 

(l) Borrowing Base
Certificate.  The Agent shall have received
prior to the Closing Date a Borrowing Base Certificate which calculates the
Borrowing Base as of the last Business Day of the most recent month ended at
least ten (10) Business Days prior to the Closing Date.

 

(m) Closing Excess
Availability.  After giving effect to
all Borrowings to be made on the Closing Date (other than Revolving Loans made
to fund the amount described in clause (a)(i) of the definition of “Permitted
Initial Revolving Borrowing Purposes”) and the issuance of any Letters of Credit
on the Closing Date, Excess Availability shall be not less than $300,000,000.

 

(n) Equity
Contribution.  The Equity
Contribution shall have been made in full.

 

(o) Pledged Stock;
Stock Powers; Pledged Notes.  The
Agent (or its bailee) shall have received (i) the certificates representing the
shares of Capital Stock pledged pursuant to the Security Agreement, together
with an undated stock power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof and (ii) each promissory note
(if any) pledged to the Agent (or its bailee) pursuant to the Security
Agreement endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank) by the pledgor thereof.

 

(p) Perfection
Certificate; Filings, Registrations and Recordings.  The Agent shall have received a completed
Perfection Certificate dated the Closing Date and signed by a Responsible
Officer of the Borrower, together with all attachments contemplated thereby.  Each document (including any Uniform Commercial
Code financing statement) required by the Collateral Documents or under
law or reasonably requested by the Agent to be filed, registered or recorded in
order to create in favor of the Agent, for the benefit of the Lenders, a
perfected Lien on the Collateral described therein, prior and superior in right
to any other Person (other than with respect to Liens expressly permitted by
Section 6.02), shall be in proper form for filing, registration or
recordation. The Agent, on behalf of the Lenders, shall have a security
interest in the Collateral of the type and priority described in the Collateral
Documents (subject to Liens expressly permitted by Section 6.02 and, subject to
the terms of the Intercreditor Agreement and the Liens granted under the Term
Loan Security Documents).

 

60

 

(q) Mortgages, etc.  The Agent shall have received, with respect
to each Mortgaged Property (subject to the Lien priority set forth in the
Intercreditor Agreement), each of the following, in form and substance
reasonably satisfactory to the Agent:

 

(i)     a Mortgage on
such property;

 

(ii)    evidence that a
counterpart of the Mortgage has been recorded or delivered to the appropriate
title insurance company subject to arrangements reasonably satisfactory to the
Agent for recording promptly following the closing hereunder, in each case, in
the place necessary, in the Agent’s reasonable judgment, to create a valid and
enforceable first priority Lien (subject to the Intercreditor Agreement) in
favor of the Agent for the benefit of itself and the Lenders;

 

(iii)   ALTA
or other mortgagee’s title policy;

 

(iv)   an opinion of
counsel in the state in which such parcel of real property is located in form
and substance and from counsel reasonably satisfactory to the Agent; and

 

(v)    such other
information, documentation, and certifications as may be reasonably required by
the Agent.

 

provided,
that, (i) the amount of debt secured by each Mortgage in any State that imposes
a mortgage tax shall be reasonably limited to an amount less than the
Commitments so as to avoid multiple mortgage tax assessments and
(ii) notwithstanding the foregoing, the conditions set forth in this
clause (q) shall be considered satisfied even if the Borrower does not
deliver such items by the Closing Date, so long as the Borrower has used
commercially reasonable efforts to obtain and deliver such items to Agent by
the Closing Date.

 

(r) Closing Date
Material Adverse Effect.  Since
July 31, 2004 and except as contemplated by the Merger Agreement, there
shall not have been any event, condition, development or occurrence that, has
had, or would reasonably be expected to have, individually or in the aggregate,
any change, circumstance, effect, event or occurrence that would be materially
adverse to the assets, liabilities, business, financial condition or results of
operations of Neiman Marcus and its subsidiaries taken as a whole, other than
any change or effect resulting from (i) changes in general economic
conditions, (ii) general changes or developments in the industries in
which Neiman Marcus and its subsidiaries operate, (iii) the announcement
of the Merger Agreement and the transactions contemplated thereby, including
any termination of, reduction in or similar negative impact on relationships,
contractual or otherwise, with any customers, suppliers, distributors, partners
or employees of Neiman Marcus and its subsidiaries to the extent due to the
announcement and performance of the Merger Agreement or the identity of the parties
to the Merger Agreement, or the performance of the Merger Agreement and the
transactions contemplated thereby, including compliance with the covenants set
forth therein, (iv) any actions required under the Merger Agreement to
obtain any approval or authorization under applicable antitrust or competition
laws for the consummation of the merger contemplated by the Merger Agreement or
(v) changes in any tax laws or regulations or applicable accounting
regulations or principles, unless, in the case of the foregoing clauses (i) and
(ii), such changes referred to therein have a disproportionate effect on Neiman
Marcus and its subsidiaries taken as a whole relative to other participants in
the industries in which Neiman Marcus and its subsidiaries operate.  For the purposes of this clause (r), “industries
in which Neiman Marcus and its subsidiaries operate” means the luxury retail
segments of the apparel, accessories, jewelry, beauty and decorative home
products industries.

 

61

 

(s) Other
Indebtedness.  The 2008 Notes Call
for Redemption and the Existing Bank Debt Refinancing shall have been
effected.  After giving effect to the
Transactions and the other transactions contemplated hereby, Holdings, the
Borrower and the Subsidiaries shall not have any outstanding Indebtedness or
preferred stock other than (a) the Obligations, (b) Indebtedness
under the Senior Secured Term Loan Facility, (c) the New Notes,
(d) the 2028 Debentures, (e) preferred Equity Interests issued in
connection with the Equity Contribution, if any, (f) the 2008 Notes and
(g)  Indebtedness set forth on Schedule 6.01.

 

(t) Insurance.  The Agent shall have received evidence of
insurance coverage in form, scope, and substance reasonably satisfactory to the
Agent and otherwise in compliance with the terms of Section 5.10 and
Section 4.11 of the Security Agreement.

 

(u) Merger.  The Merger shall be consummated substantially
simultaneously with the Initial Revolving Borrowing on the Closing Date, in
accordance with the Merger Agreement (which shall not have been amended or
modified prior to the Closing Date in a manner adverse to the Lenders in any
material respect without the prior written consent of the Joint Lead
Arrangers).

 

(v) Other Financing.  The Borrower shall have received gross cash
proceeds of not less than (i) $1,200,000,000 from the issuance of the New
Notes and (ii) $1,975,000,000 from the borrowings under the Senior Secured
Term Loan Facility.  The terms and
conditions of the New Notes and the Senior Secured Term Loan Facility shall be
reasonably satisfactory to the Agent.

 

(w) Field Examination,
Appraisal.  The Agent shall have
received (i) the results of a completed field examination with respect to
the Collateral to be included in calculating the Borrowing Base and of the
relevant accounting systems, policies and procedures of Holdings and its
Subsidiaries and (ii) an appraisal of the Net Orderly Liquidation Value of
Inventory in form and substance reasonably satisfactory to the Agent.  The Agent shall be reasonably satisfied with
the Borrower’s cash management system.

 

(x) Intercreditor
Agreement.  The Intercreditor
Agreement shall have been duly executed and delivered by each party thereto,
and shall be in full force and effect.

 

(y) PATRIOT Act.  The Agent shall have received all
documentation and other information reasonably requested by it that is required
by regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act.

 

The Agent shall notify
the Borrower and the Lenders of the Closing Date, and such notice shall be
conclusive and binding.  Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of any Issuing
Bank to issue Letters of Credit hereunder shall not become effective unless
each of the foregoing conditions is satisfied (or waived pursuant to Section
9.02) at or prior to 5:00 p.m., New York City time, on the Termination
Date (as defined in the Merger Agreement) (and, in the event such conditions
are not so satisfied or waived, the Commitments shall terminate at such time).

 

SECTION 4.02. Each Credit Event.  The obligation of each Lender to make a Loan
on the occasion of any Borrowing, and of any Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

 

(a) The Agent shall have
received, in the case of a Borrowing, a Borrowing Request as required by
Section 2.03 (or a Borrowing Request shall have been deemed given in
accordance with the last paragraph of Section 2.03) or, in the case of the
issuance of a Letter of Credit, the

 

62

 

applicable Issuing Bank
and the Agent shall have received a notice requesting the issuance of such
Letter of Credit as required by Section 2.06(b) or, in the case of a
Swingline Borrowing, the Swingline Lender and the Agent shall have received a
Swingline Borrowing Request as required by Section 2.05(a).

 

(b) The representations
and warranties (except, in the case of the Initial Revolving Borrowing on the
Closing Date, the representations contained in Sections 3.04, 3.05, 3.06, 3.07,
3.09, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.17 and 3.19) of the Borrower set
forth in this Agreement shall be true and correct in all material respects on
and as of the date of such Borrowing or the date of issuance, amendment,
renewal or extension of such Letter of Credit (other than an amendment,
extension or renewal of a Letter of Credit without any increase in the stated
amount of such Letter of Credit), as applicable, with the same effect as though
made on and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date).

 

(c) At the time of and
immediately after giving effect to such Borrowing or the issuance, amendment,
renewal or extension of such Letter of Credit (other than an amendment,
extension or renewal of a Letter of Credit without any increase in the stated
amount of such Letter of Credit), as applicable, no Event of Default or Default
(other than on the Closing Date at the time of any Initial Revolving Borrowing,
any Event of Default or Default arising pursuant to Section 7.01(b) with
respect to any of the representations enumerated in Section 4.01(e)) shall have
occurred and be continuing.

 

(d) After giving effect
to any Borrowing or the issuance of any Letter of Credit, Excess Availability
shall be not less than zero.

 

(e) If a Liquidity Event
as to which the Agent has notified the Borrower thereof is in effect at the
time of, or would exist after giving effect to, such requested extension of
credit, the Borrower’s pro forma Fixed Charge Coverage Ratio, after giving
effect to such extension of credit, would be not less than 1.1 to 1.0 (the “Liquidity
Event Condition”).

 

Each Borrowing and each
issuance, amendment, renewal or extension of a Letter of Credit shall be deemed
to constitute a representation and warranty by the Borrower on the date thereof
as to the matters specified in paragraphs (b), (c), (d) and (if applicable) (e)
of this Section.

 

SECTION 4.03. Holdings’ Right To Cure.  (a)  Notwithstanding anything to
the contrary contained in Section 4.02(e), in the event that the Borrower fails
to satisfy the Liquidity Event Condition, Holdings shall have the right to
issue Permitted Cure Securities for cash or otherwise receive cash
contributions to the capital of Holdings, and, in each case, to contribute any
such cash to the capital of the Borrower (collectively, the “Cure Right”),
and upon the receipt by the Borrower of such cash (the “Cure Amount”)
pursuant to the exercise by Holdings of such Cure Right the Liquidity Event Condition
shall be recalculated giving effect to the following pro forma adjustments:

 

(i) EBITDA shall be
increased, solely for the purpose of determining whether the Liquidity Event
Condition shall have been satisfied and not for any other purpose under this
Agreement, by an amount equal to the Cure Amount; and

 

(ii) if, after giving
effect to the foregoing recalculations, the Borrower shall satisfy the
Liquidity Event Condition, then the conditions to the applicable requested
extension of credit

 

63

 

shall be deemed
satisfied, provided that all other conditions set forth in Section 4.02
shall have been satisfied in connection therewith.

 

(b) Notwithstanding
anything herein to the contrary, (i) in each four-fiscal-quarter period
there shall be at least two fiscal quarters in which the Cure Right is not
exercised and (ii) for purposes of this Section 4.03, the Cure Amount
shall be no greater than the amount required for purposes of satisfying the
Liquidity Event Condition.

 

ARTICLE V

 

Affirmative Covenants

 

Until the Commitments
have expired or been terminated and the principal of and interest on each Loan
and all fees payable hereunder shall have been paid in full and all Letters of
Credit shall have expired or terminated (or have been cash collateralized
pursuant to Section 2.09(b)) and all LC Disbursements shall have been
reimbursed, each Loan Party executing this Agreement covenants and agrees,
jointly and severally with all of the Loan Parties, with the Lenders that:

 

SECTION 5.01. Financial Statements; Borrowing
Base and Other Information.  The
Borrower will furnish to the Agent (which will promptly furnish such
information to the Lenders):

 

(a) within ninety
(90) days after the end of each fiscal year of the Borrower, its audited
consolidated balance sheet and related statements of earnings, shareholders’
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by Deloitte & Touche LLP or other independent public accountants of
recognized national standing and reasonably acceptable to the Agent (without a “going
concern” or like qualification or exception or exception as to the scope of
such audit) to the effect that such consolidated financial statements present
fairly, in all material respects, the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated
basis in accordance with GAAP;

 

(b) within forty-five
(45) days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower, its consolidated balance sheet and related
statements of earnings, shareholders’ equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly, in all material respects, the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments and the absence of footnotes;

 

(c) within thirty-five
(35) days after the end of each of the first two fiscal months of each fiscal
quarter of the Borrower, its consolidated balance sheet and related statements
of earnings and cash flows as of the end of and for such fiscal month and the
then elapsed portion of the fiscal year, setting forth in each case in
comparative form the figures for (or, in the case of the balance sheet, as of
the end of) the corresponding period or periods of the previous fiscal year,
all certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes;

 

64

 

(d) concurrently with any
delivery of financial statements under clause (a) or (b) or
(c) above, a certificate of a Financial Officer of the Borrower in
substantially the form of Exhibit C (i) certifying that no Event of
Default or Default has occurred and, if an Event of Default or Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth, in the case of the
financial statements delivered under clause (a) or (b), reasonably
detailed calculations of the Borrower’s Fixed Charge Coverage Ratio (whether or
not a Liquidity Event then exists) as of the end of the period to which such
financial statements relate and (iii) certifying, in the case of the financial
statements delivered under clause (a), a list of names of all Immaterial
Subsidiaries (if any), that each Subsidiary set forth on such list individually
qualifies as an Immaterial Subsidiary and that all Domestic Subsidiaries listed
as Immaterial Subsidiaries in the aggregate comprise less than 5% of
consolidated total assets of the Borrower and the Subsidiaries at the end of
the period to which such financial statements relate and represented (on a
contribution basis) less than 5% of EBITDA for the period to which such
financial statements relate;

 

(e) concurrently with any
delivery of financial statements under clause (a) above, a certificate of
the accounting firm that reported on such financial statements stating whether
they obtained knowledge during the course of their examination of such
financial statements of any Default or Event of Default (which certificate may
be limited to the extent required by accounting rules or guidelines);

 

(f) concurrently with any
delivery of consolidated financial statements under clause (a) or (b) above,
the related unaudited consolidating financial statements reflecting the
adjustments necessary to eliminate the accounts of Unrestricted Subsidiaries
(if any) from such consolidated financial statements;

 

(g) within ninety (90)
days after the beginning of each fiscal year, (i) a detailed consolidated
budget of the Borrower and its Subsidiaries by month for such fiscal year
(including a projected consolidated balance sheet and the related consolidated
statements of projected cash flows and projected income, by month) and (ii) an
update of the annual projections provided pursuant to Section 4.01(c),
including in each case a summary of the underlying material assumptions with
respect thereto (collectively, the “Budget”), and, as soon as available,
significant revisions, if any, of such Budget, which Budget or revisions
thereto shall in each case be accompanied by the statement of a Financial
Officer of the Borrower to the effect that, to the best of his knowledge, the
Budget is a reasonable estimate for the period covered thereby;

 

(h) as soon as available
but in any event on or prior to the 10th Business Day of each calendar month
(or more frequently as the Borrower may elect), a Borrowing Base Certificate as
of the close of business on the last day of the immediately preceding calendar
month (or in the case of a voluntary delivery of a Borrowing Base Certificate
at the election of the Borrower, a subsequent date), together with such
supporting information in connection therewith as the Agent may reasonably
request, which may include, without limitation, Inventory reports by category
and location, together with a reconciliation to the corresponding Borrowing
Base Certificate, a reasonably detailed calculation of Eligible Inventory, and
a reconciliation of the Borrower’s Inventory between the amounts shown in the
Borrower’s retail stock ledger and any Inventory reports delivered pursuant to
this clause (h); provided that upon the occurrence and during the
continuance of an Event of Default or if Excess Availability is at any time
less than $75,000,000, the Borrower shall deliver a Borrowing Base Certificate
and such supporting information on Wednesday of each week (or if Wednesday is
not a Business Day, on the next succeeding Business Day), as of the close of
business on the immediately preceding Saturday and provided, further,
that any Borrowing Base Certificate delivered other than with respect to month’s
end may

 

65

 

be based on such
estimates by the Borrower of Shrink and other amounts as the Borrower may deem
necessary;

 

(i) as soon as
practicable upon the reasonable request of the Agent, deliver an updated
Perfection Certificate (or, to the extent such request relates to specified
information contained in the Perfection Certificate, such information)
reflecting all changes since the date of the information most recently received
pursuant to this clause (i) or Section 5.11;

 

(j) promptly after the
same become publicly available, copies of all periodic and other reports, proxy
statements and other materials publicly filed by the Borrower or any Subsidiary
with the SEC, or with any national securities exchange, or, after an initial
public offering of shares of capital stock of the Borrower, distributed by the
Borrower to its shareholders generally, as the case may be;

 

(k) promptly, a copy of
any final “management letter” received from the Borrower’s independent public
accountants to the extent such independent public accountants have consented to
the delivery of such management letter to the Agent upon the request of the
Borrower;

 

(l) promptly following
the Agent’s request therefor, all documentation and other information that the
Agent reasonably requests on its behalf or on behalf of any Lender in order to
comply with its ongoing obligations under applicable “know your customer” and
anti-money laundering rules and regulations, including the USA PATRIOT Act; and

 

(m) as promptly as
reasonably practicable from time to time following the Agent’s request
therefor, such other information regarding the operations, business affairs and
financial condition of Holdings, the Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, as the Agent may reasonably request (on
behalf of itself or any Lender).

 

Notwithstanding the
foregoing, the obligations in clauses (a) and (b) of this Section 5.01 may be
satisfied with respect to financial information of the Borrower and its
Subsidiaries by furnishing (A) the applicable financial statements of Holdings
(or any direct or indirect parent of Holdings) or (B) the Borrower’s or
Holdings’ (or any direct or indirect parent thereof), as applicable, Form 10-K
or 10-Q, as applicable, filed with the SEC; provided that, with respect to each of clauses (A) and (B),
(i) to the extent such information relates to Holdings (or a parent thereof),
such information is accompanied by consolidating information that explains in
reasonable detail the differences between the information relating to Holdings
(or such parent), on the one hand, and the information relating to the Borrower
and its Subsidiaries on a standalone basis, on the other hand and (ii) to the
extent such information is in lieu of information required to be provided under
clause (a) of this Section 5.01, such materials are accompanied by a
report and opinion of Deloitte & Touche LLP or other independent public
accountants of recognized national standing and reasonably acceptable to the
Agent, which report and opinion shall be prepared in accordance with generally
accepted auditing standards and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit.

 

Documents required to be
delivered pursuant to clauses (a), (b) or (j) of this Section 5.01 may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at the
website address listed on Schedule 9.01; or (ii) on which such
documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another
relevant website, if any, to which each Lender and the Agent have access
(whether a commercial, third-party website or whether sponsored by the Agent); provided
that:  (i) upon written request by
the Agent, the Borrower shall deliver paper copies of such documents to the
Agent for further distribution to each Lender until a written request to cease

 

66

 

delivering paper copies is given by the Agent and (ii) the
Borrower shall notify (which may be by facsimile or electronic mail) the Agent
of the posting of any such documents and provide to the Agent by electronic
mail electronic versions (i.e., soft copies) of such documents.  Notwithstanding anything contained herein, in
every instance the Borrower shall be required to provide paper copies of the
compliance certificates required by clause (d) of this Section 5.01
to the Agent.

 

The financial statements
required to be delivered pursuant to clauses (b) and (c) of this
Section 5.01 with respect to the first fiscal quarter after the Closing
Date and each fiscal month prior to the delivery of the financial statements
required to be delivered pursuant to such clause (b) with respect to the
second fiscal quarter after the Closing Date shall not be required to contain
all purchase accounting adjustments relating to the Transactions to the extent
it is not practicable to include any such adjustments in such financial
statements.

 

SECTION 5.02. Notices of Material Events.  The Borrower will furnish to the Agent written
notice of the following promptly after any Responsible Officer of Holdings or
the Borrower obtains knowledge thereof:

 

(a) the occurrence of any
Event of Default or Default;

 

(b) the filing or
commencement of, or any written threat or notice of intention of any person to
file or commence, any action, suit or proceeding, whether at law or in equity
or by or before any Governmental Authority or in arbitration, against Holdings,
the Borrower or any of the Subsidiaries as to which an adverse determination is
reasonably probable and which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect;

 

(c) any loss, damage, or
destruction to the Collateral in the amount of $10,000,000 or more, whether or
not covered by insurance;

 

(d) any and all default
notices received under or with respect to any leased location or public
warehouse where any material Collateral is located;

 

(e) the occurrence of any
ERISA Event that, together with all other ERISA Events that have occurred and
are continuing, would reasonably be expected to have a Material Adverse Effect;
and

 

(f) any other development
that results in, or would reasonably be expected to result in, a Material
Adverse Effect.

 

Each notice delivered
under this Section 5.02 shall be accompanied by a statement of a Responsible
Officer of the Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.

 

SECTION 5.03. Existence; Conduct of Business.  Each Loan Party will, and will cause each
Subsidiary to, do or cause to be done all things reasonably necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, qualifications, licenses, permits, franchises, governmental
authorizations, intellectual property rights, licenses and permits (except as
such would otherwise reasonably expire, be abandoned or permitted to lapse in
the ordinary course of business), necessary or desirable in the normal conduct
of its business, and maintain all requisite authority to conduct its business
in each jurisdiction in which its business is conducted, except (i) other than
with respect to Holdings’ or the Borrower’s existence, to the extent such
failure to do so would not reasonably be expected to have a Material Adverse
Effect or (ii) pursuant to a transaction permitted by Section 6.03.

 

67

 

SECTION 5.04. Payment of Obligations.  Each Loan Party will, and will cause each
Subsidiary to, pay or discharge all material Tax liabilities, before the same
shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings,
(b) such Loan Party or such Subsidiary has set aside on its books adequate
reserves with respect thereto in accordance with GAAP and (c) the failure
to make payment pending such contest would not reasonably be expected to result
in a Material Adverse Effect.

 

SECTION 5.05. Maintenance of Properties.  Each Loan Party will, and will cause each
Subsidiary to (a) at all times maintain and preserve all material property
necessary to the normal conduct of its business in good repair, working order
and condition, ordinary wear and tear excepted and casualty or condemnation
excepted and (b) make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto as necessary in
accordance with prudent industry practice in order that the business carried on
in connection therewith, if any, may be properly conducted at all times,
except, in each case, where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.

 

SECTION 5.06. Books and Records; Inspection
Rights; Appraisals; Field Examinations. 
(a) Each Loan Party will, and will cause each Subsidiary to, (i) keep
proper books of record and account in accordance with GAAP in which full, true
and correct entries are made of all dealings and transactions in relation to
its business and activities and (ii) permit any representatives designated by
the Agent (including employees of the Agent or any consultants, accountants,
lawyers and appraisers retained by the Agent), upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, including environmental assessment reports and Phase I or Phase II
studies, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times during normal
business hours and as often as reasonably requested.

 

(b) At reasonable times
during normal business hours and upon reasonable prior notice that the Agent
requests, independently of or in connection with the visits and inspections
provided for in clause (a) above, the Borrower and the Subsidiaries will grant
access to the Agent (including employees of the Agent or any consultants,
accountants, lawyers and appraisers retained by the Agent) to such Person’s books,
records, accounts and Inventory so that the Agent or an appraiser retained by
the Agent may conduct an Inventory appraisal. 
In addition to, and not in limitation of, the foregoing, at any time and
from time to time the Agent may conduct (or engage third parties to conduct)
such field examinations, verifications and evaluations as the Agent may deem
necessary or appropriate.  All such
appraisals, field examinations and other verifications and evaluations shall be
at the sole expense of the Loan Parties; provided that the Agent shall
provide the Borrower with a reasonably detailed accounting of all such expenses
and provided  further that (i) (A) absent the existence and
continuance of an Event of Default or a Liquidity Event as to which the Agent
has provided notice to the Borrower, the Agent may conduct no more than three
(3) such appraisals in any calendar year at the expense of the Loan Parties and
(B) if Excess Availability is and has been for a period of twelve
consecutive months greater than the lesser of (1) 50% of the Borrowing
Base and (2) $225,000,000 and no Event of Default exists, the Agent may
conduct no more than one (1) such appraisal in any calendar year at the expense
of the Loan Parties, and (ii) (A) absent the existence and continuance of
an Event of Default or a Liquidity Event as to which the Agent has provided
notice to the Borrower, the Agent may conduct no more than three (3) such field
examinations in any calendar year at the expense of the Loan Parties and
(B) if Excess Availability is and has been for a period of twelve
consecutive months greater than the lesser of (1) 50% of the Borrowing
Base and (2) $225,000,000 and no Event of Default exists, the Agent may
conduct no more than one (1) such field examination in any calendar year at the
expense of the Loan Parties.

 

68

 

(c) The Loan Parties
acknowledge that the Agent, after exercising its rights of inspection, may
prepare and distribute to the Lenders certain Reports pertaining to the Loan
Parties’ assets for internal use by the Agent and the Lenders, subject to the
provisions of Section 9.12 hereof.

 

SECTION 5.07. HSBC Agreement and Permitted
Replacement Credit Card Program.  At
least fifteen (15) days prior to the execution by the Borrower or any
Subsidiary of documents evidencing the proposed adoption of any Permitted
Replacement Credit Card Program (or of the consummation of any Permitted
Acquisition of the type referred to in the definition of the term “Permitted
Replacement Credit Card Program”), the Borrower shall deliver or cause to be
delivered notice to the Agent of such adoption, which notice shall include a
copy, in the then-existing form, of any documents to be executed in connection
with such Permitted Replacement Credit Card Program. The Borrower shall deliver
or cause to be delivered to the Agent copies of all such documents delivered in
connection with such Permitted Replacement Credit Card Program within a
reasonable period of time after the execution of such documents, and shall
deliver any Credit Card Notification in connection therewith required under
Section 2.21(f) in accordance with the terms of Section 2.21(f).

 

SECTION 5.08. Compliance with Laws.  Each Loan Party will, and will cause each
Subsidiary to, comply in all material respects with all Requirements of Law
applicable to it or its property, except where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.

 

SECTION 5.09. Use of Proceeds.  The proceeds of the Loans will be used only
for the purposes specified in the introductory statement to this
Agreement.  No part of the proceeds of
any Loan and no Letter of Credit will be used, whether directly or indirectly,
for any purpose that would entail a violation of Regulations T, U or X.

 

SECTION 5.10. Insurance.  Each Loan Party will, and will cause each
Subsidiary to, maintain, with financially sound and reputable insurance
companies (a) insurance in such amounts and against such risks, as are
customarily maintained by similarly situated companies engaged in the same or
similar businesses operating in the same or similar locations (after giving
effect to any self-insurance reasonable and customary for similarly situated
companies) and (b) all insurance required pursuant to the Collateral Documents
(and shall cause the Agent to be listed as a loss payee (together with any
other loss payee in accordance with the Intercreditor Agreement) on property
and casualty policies covering loss or damage to Collateral and as an
additional insured on liability policies). 
The Borrower will furnish to the Agent, upon request, information in
reasonable detail as to the insurance so maintained.

 

SECTION 5.11. Additional Collateral; Further
Assurances.  (a)  Subject
to applicable law, the Borrower and each Subsidiary that is a Loan Party shall
cause (i) each of its Domestic Subsidiaries (other than any Immaterial
Subsidiary (except as otherwise provided in paragraph (e) of this Section
5.11) or Unrestricted Subsidiary) formed or acquired after the date of this
Agreement in accordance with the terms of this Agreement and (ii) any
Domestic Subsidiary that was an Immaterial Subsidiary but, as of the end of the
most recently ended fiscal quarter of the Borrower has ceased to qualify as an
Immaterial Subsidiary, to become a Loan Party as promptly thereafter as
reasonably practicable by executing a Joinder Agreement in substantially the
form set forth as Exhibit D hereto (the “Joinder Agreement”).
Upon execution and delivery thereof, each such Person (i) shall
automatically become a Loan Guarantor hereunder and thereupon shall have all of
the rights, benefits, duties, and obligations in such capacity under the Loan
Documents and (ii) will simultaneously therewith or as soon as practicable
thereafter grant Liens to the Agent, for the benefit of the Agent and the
Lenders in any property (subject to the limitations with respect to Equity
Interests set forth in paragraph (b) of this Section 5.11, the limitations
with respect to real property set forth in paragraph (f) of this
Section 5.11 and any other limitations set forth in the Security
Agreement) of such Loan Party which constitutes

 

69

 

Collateral, on such terms as may be required pursuant
to the terms of the Collateral Documents and in such priority as may be
required pursuant to the terms of the Intercreditor Agreement.

 

(b) The Borrower and each
Subsidiary that is a Loan Party will cause (i) 100% of the issued and
outstanding Equity Interests of each of its Domestic Subsidiaries, other than
any Domestic Subsidiary taxed as a partnership for federal income tax purposes
that holds Equity Interests of a Foreign Subsidiary whose Equity Interests are
pledged pursuant to clause (ii) below, and (ii) 65% of the issued and
outstanding Equity Interests entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity
Interests not entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) in each Foreign Subsidiary directly owned by the Borrower or any
Subsidiary that is a Loan Party to be subject at all times to a first priority
(subject to the Intercreditor Agreement), perfected Lien in favor of the Agent
pursuant to the terms and conditions of the Loan Documents or other security
documents as the Agent shall reasonably request; provided, however
this paragraph (b) shall not require the Borrower or any Subsidiary to grant a
security interest in (i) any Equity Interests of a Subsidiary to the
extent a pledge of such Equity Interests in favor of the Agent or to secure any
debt securities of the Borrower or any Subsidiary that would be entitled to
such a security interest would require separate financial statements of a
Subsidiary to be filed with the SEC (or any other government agency) under
Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act (or
any successor thereto) or any other law, rule or regulation) or (ii) the
Equity Interests of any Unrestricted Subsidiary.

 

(c) Without limiting the
foregoing, each Loan Party will, and will cause each Subsidiary that is a Loan
Party to, execute and deliver, or cause to be executed and delivered, to the
Agent such documents, agreements and instruments, and will take or cause to be
taken such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents and
such other actions or deliveries of the type required by Section 4.01, as
applicable (including the delivery of the items contemplated by Section 4.01(q)
to the extent the Borrower has been unable to deliver such items by the Closing
Date after having used its commercially reasonable efforts to obtain and
deliver such items by the Closing Date)), which may be required by law or which
the Agent may, from time to time, reasonably request to carry out the terms and
conditions of this Agreement and the other Loan Documents and to ensure
perfection and priority of the Liens created or intended to be created by the
Collateral Documents, all at the expense of the Loan Parties.

 

(d) Subject to the
limitations set forth or referred to in this Section 5.11, if any material
assets (including any real property or improvements thereto or any interest therein)
are acquired by the Borrower or any Subsidiary that is a Loan Party after the
Closing Date (other than assets constituting Collateral under the Security
Agreement that become subject to the Lien in favor of the Agent upon
acquisition thereof), the Borrower will notify the Agent and the Lenders
thereof, and, if requested by the Agent or the Required Lenders, the Borrower
will cause such assets to be subjected to a Lien securing the Secured
Obligations and will take, and cause the Loan Parties that are Subsidiaries to
take, such actions as shall be necessary or reasonably requested by the Agent
to grant and perfect such Liens, including actions described in paragraph (c)
of this Section, all at the expense of the Loan Parties.

 

(e) If, at any time and from
time to time after the Closing Date, Subsidiaries that are not Loan Parties
because they are Immaterial Subsidiaries comprise in the aggregate more than 5%
of consolidated total assets as of the end of the most recently ended fiscal
quarter of the Borrower or more than 5% of EBITDA for the period of four
consecutive fiscal quarters as of the end of the most recently ended fiscal
quarter of the Borrower, then the Borrower shall, not later than 45 days after
the date by which financial statements for such quarter are required to be
delivered pursuant to this Agreement, cause one or more such Subsidiaries to
become additional Loan Parties (notwithstanding that such Subsidiaries are,
individually, Immaterial Subsidiaries) such that the foregoing condition ceases
to be true.

 

70

 

(f) Notwithstanding
anything to the contrary in this Section 5.11, real property required to be
mortgaged under this Section 5.11 shall be limited to real property located in
the U.S. that are full-line Neiman Marcus retail stores owned in fee by a Loan
Party or leased by a Loan Party pursuant to a financeable lease or other real
property owned in fee by a Loan Party having a fair market value at the time of
the acquisition thereof of $5,000,000 or more (provided that the cost of
perfecting such Lien is not unreasonable in relation to the benefits to the
Lenders of the security afforded thereby in the Agent’s reasonable judgment
after consultation with the Borrower; provided  further that the
Borrower shall use commercially reasonable efforts to ensure that all leases
entered into after the Closing Date by the Borrower and the other Loan Parties
will be financeable leases).

 

(g) Notwithstanding
anything to the contrary contained herein, the Loan Parties shall not be
required to include as Collateral any Excluded Assets (as defined in the
Security Agreement).

 

SECTION 5.12. Maintenance of Corporate Separateness.  Each Loan Party will, and will cause each
Subsidiary to, satisfy customary corporate or limited liability company
formalities, including the maintenance of corporate and business records.

 

SECTION 5.13. Designation of Subsidiaries.  The board of directors of the Borrower may at
any time after the Closing Date designate any Subsidiary as an Unrestricted
Subsidiary or any Unrestricted Subsidiary as a Subsidiary; provided that
(i) immediately before and after such designation, no Default or Event of
Default shall have occurred and be continuing, (ii) no Subsidiary may be
designated as an Unrestricted Subsidiary if it is a “Restricted Subsidiary” for
the purpose of the New Notes and (iii) no Unrestricted Subsidiary that is
designated as a Subsidiary may be redesignated as an Unrestricted Subsidiary at
any time prior to twelve months after being so designated as a Subsidiary.  The designation of any Subsidiary as an
Unrestricted Subsidiary shall constitute an investment by the Borrower therein
at the date of designation in an amount equal to the net book value of the
Borrower’s investment therein.  The
designation of any Unrestricted Subsidiary as a Subsidiary shall constitute the
incurrence at the time of designation of any Indebtedness or Liens of such
Subsidiary existing at such time.

 

SECTION 5.14. 2008 Notes Redemption.  Within forty (40) days after the Closing
Date, the Borrower shall deposit with the trustee under the indenture governing
the 2008 Notes sufficient funds for the full satisfaction and discharge of the
entire outstanding principal amount of the 2008 Notes.

 

ARTICLE VI

 

Negative Covenants

 

Until the Commitments
have expired or terminated and the principal of and interest on each Loan and
all fees, expenses and other amounts payable under any Loan Document have been
paid in full and all Letters of Credit have expired or terminated (or have been
cash collateralized pursuant to Section 2.09(b)) and all LC Disbursements
shall have been reimbursed, the Loan Parties covenant and agree, jointly and
severally, with the Lenders that:

 

SECTION 6.01. Indebtedness.  No Loan Party will, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

 

(a) Indebtedness created
under the Loan Documents;

 

(b) Indebtedness existing
on the date hereof and set forth in Schedule 6.01;

 

71

 

(c) Indebtedness of the
Borrower to Holdings or any Subsidiary, Indebtedness of any Subsidiary to the
Borrower, Holdings or any other Subsidiary and Indebtedness of Holdings to the
Borrower or any Subsidiary, provided that (i) Indebtedness of any
Subsidiary that is not a Loan Party to the Borrower, Holdings or any Subsidiary
that is a Loan Party shall only be permitted to the extent permitted under
Section 6.04(v) or 6.04(w) and (ii) Indebtedness of the Borrower or
Holdings to any Subsidiary that is not a Loan Party and Indebtedness of any
Subsidiary that is a Loan Party to any Subsidiary that is not a Loan Party
shall be subordinated to the Secured Obligations on terms reasonably
satisfactory to the Agent;

 

(d) Guarantees
(i) by Holdings and the Subsidiaries that are Loan Parties of the
Indebtedness of the Borrower described in clause (k) hereof, so long as
the Guarantee of the Senior Subordinated Notes is subordinated substantially on
terms as set forth in the Senior Subordinated Note Documents, (ii) by
Holdings, the Borrower or any Subsidiary that is a Loan Party of any
Indebtedness of the Borrower or any Subsidiary that is a Loan Party expressly
permitted to be incurred under this Agreement, (iii) by Holdings, the
Borrower or any Subsidiary that is a Loan Party of Indebtedness otherwise
expressly permitted hereunder of any Subsidiary that is not a Loan Party to the
extent such Guarantees are permitted by Section 6.04(v) or 6.04(w); provided
that Guarantees by Holdings, the Borrower or any Subsidiary that is a Loan
Party under this clause (d) of any other Indebtedness of a Person that is
subordinated to other Indebtedness of such Person shall be expressly
subordinated to the Obligations on terms at least as favorable to the Lenders as
the Guarantee of the Senior Subordinated Notes is under the Senior Subordinated
Note Documents, and (iv) by Holdings, the Borrower or any Subsidiary that is a
Loan Party of any real property lease obligations of the Borrower or any
Subsidiary that is a Loan Party;

 

(e) (i) purchase money
Indebtedness (including Capital Lease Obligations and Synthetic Lease
Obligations) incurred exclusively to finance the acquisition, construction,
repair, renovations, replacement or improvement of any fixed or capital assets
(other than Real Estate), and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof; and (ii) Indebtedness incurred for the
construction or acquisition or improvement of, or to finance or to refinance,
any Real Estate owned or acquired by any Loan Party, provided that, in
the case of clauses (i) and (ii) of this clause (e), if requested by the Agent,
the Loan Parties will use commercially reasonable efforts to cause the holder
of such Indebtedness in respect of any Real Estate owned or acquired by any
Loan Party to enter into a Collateral Access Agreement providing for access and
use of the applicable personal property located on such premises following the
occurrence and during the continuance of an Event of Default on terms
reasonably satisfactory to the Agent;

 

(f) Capital Lease
Obligations and Synthetic Lease Obligations incurred by the Borrower or any
Subsidiary in respect of any Sale and Lease-Back Transaction that is permitted
under Section 6.06;

 

(g) Indebtedness which
represents an extension, refinancing, refunding, replacement or renewal of any
of the Indebtedness described in clauses  (b), (e), (f),
(g), (j), (k), (l), (t), (v) and (w)
hereof; provided that, (i) the principal amount (or accreted value,
if applicable) thereof does not exceed the principal amount (or accreted value,
if applicable) of the Indebtedness so extended, refinanced, refunded, replaced
or renewed, except by an amount equal to unpaid accrued interest and premium
(including applicable prepayment penalties) thereon plus fees and expenses
reasonably incurred in connection therewith, (ii) any Liens securing such
Indebtedness are not extended to any additional property of any Loan Party, (iii) no
Loan Party that is not originally obligated with respect to repayment of such
Indebtedness is required to become

 

72

 

obligated with respect
thereto, (iv) other than in respect to Indebtedness referred to in
clause (e)(ii), such extension, refinancing, refunding, replacement or
renewal does not result in a shortening of the average weighted maturity of the
Indebtedness so extended, refinanced, refunded, replaced or renewed,
(v) if the Indebtedness that is extended, refinanced, refunded, replaced
or renewed was subordinated in right of payment to the Secured Obligations,
then the terms and conditions of the extension, refinancing, refunding,
replacement or renewal Indebtedness must include subordination terms and
conditions that are at least as favorable to the Lenders as those that were
applicable to the extended, refinanced, refunded, replaced or renewed
Indebtedness and (vi) with respect to any such extension, refinancing,
refunding, replacement or renewal of the Senior Secured Term Loan Facility or
any Term Loan Pari Passu Lien Obligations, such refinancing Indebtedness, if
secured, is secured only by assets of the Loan Parties that constitute
Collateral for the Obligations pursuant to a security agreement subject to the
Intercreditor Agreement or another intercreditor agreement that is no less
favorable to the Secured Parties than the Intercreditor Agreement;

 

(h) Indebtedness owed to
any Person providing workers’ compensation, health, disability or other
employee benefits or property, casualty or liability insurance, pursuant to
reimbursement or indemnification obligations to such Person, in each case
incurred in the ordinary course of business;

 

(i) Indebtedness of the
Borrower or any Subsidiary in respect of performance bonds, bid bonds, appeal
bonds, surety bonds, performance and completion guarantees and similar
obligations, or obligations in respect of letters of credit, bank guarantees or
similar instruments related thereto, in each case provided in the ordinary
course of business;

 

(j) Indebtedness of any
Person that becomes a Subsidiary after the date hereof and Indebtedness
acquired or assumed in connection with Permitted Acquisitions; provided
that such Indebtedness exists at the time such Person becomes a Subsidiary or
at the time of such Permitted Acquisition and is not created in contemplation
of or in connection therewith;

 

(k) Indebtedness of the
Borrower pursuant to (i) the New Notes in an original aggregate principal
amount that is not in excess of $1,200,000,000 and (ii) the Senior Secured
Term Loan Facility in an aggregate principal amount that is not in excess of
$1,975,000,000;

 

(l) other unsecured
Indebtedness in an aggregate principal amount not exceeding $250,000,000 at any
time outstanding;

 

(m) Swap Obligations
pursuant to Swap Agreements permitted by Section 6.07;

 

(n) Indebtedness
consisting of promissory notes issued by any Loan Party to current or former
officers, directors and employees, their respective estates, spouses or former
spouses to finance the purchase or redemption of Equity Interests of Holdings
(or any direct or indirect parent thereof) or of the Borrower (following a
Qualified Public Offering of the Borrower) permitted by Section 6.08;

 

(o) Indebtedness
constituting indemnification obligations or obligations in respect of purchase
price or other similar adjustments in connection with acquisitions and
dispositions permitted under this Agreement;

 

(p) Indebtedness
consisting of obligations of Holdings, the Borrower or any Subsidiary under
deferred compensation or other similar arrangements incurred by such Person in
connection

 

73

 

with the Transactions and
Permitted Acquisitions or any other investment expressly permitted hereunder;

 

(q) cash management
obligations and other Indebtedness in respect of netting services, overdraft
protections and similar arrangements in each case in connection with deposit
accounts;

 

(r) Indebtedness
consisting of (x) the financing of insurance premiums or (y) take-or-pay
obligations contained in supply arrangements, in each case, in the ordinary
course of business;

 

(s) Indebtedness incurred
by the Borrower or any Subsidiary in respect of letters of credit, bank
guarantees, bankers’ acceptances or similar instruments issued or created in
the ordinary course of business; provided that any such documentary
letter of credit or other similar instrument may be secured only by Liens
attaching to the related documents of title and not the Inventory represented
thereby;

 

(t) unsecured
Indebtedness of Holdings (“Permitted Holdings Debt”) (i) that is not
subject to any Guarantee by the Borrower or any Subsidiary, (ii) that will not
mature prior to the date that is ninety-one (91) days after the Maturity Date,
(iii) that has no scheduled amortization or payments of principal (it being
understood that such Indebtedness may have mandatory prepayment, repurchase or
redemption provisions satisfying the requirements of clause (v) hereof), (iv)
that does not require any payments in cash of interest or other amounts in
respect of the principal thereof prior to the earlier to occur of (A) the date
that is five (5) years from the date of the issuance or incurrence thereof and
(B) the date that is ninety-one (91) days after the Maturity Date, and (v) that
has mandatory prepayment, repurchase or redemption, covenant, default and
remedy provisions customary for senior discount notes of an issuer that is the
parent of a borrower under senior secured credit facilities, and in any event,
with respect to covenant, default and remedy provisions, no more restrictive
than those set forth in the Senior Subordinated Notes Documents taken as a
whole (other than provisions customary for senior discount notes of a holding
company); provided that a certificate of a Responsible Officer delivered
to the Agent at least five (5) Business Days prior to the incurrence of such
Indebtedness, together with a reasonably detailed description of the material
terms and conditions of such Indebtedness or drafts of the documentation
relating thereto, stating that the Borrower has determined in good faith that
such terms and conditions satisfy the foregoing requirement shall be conclusive
evidence that such terms and conditions satisfy the foregoing requirement
unless the Agent notifies the Borrower within such five (5) Business Day period
that it disagrees with such determination (including a reasonable description
of the basis upon which it disagrees); and provided, further, that any such Indebtedness
shall constitute Permitted Holdings Debt only if both before and after giving
effect to the issuance or incurrence thereof, no Event of Default shall have
occurred and be continuing;

 

(u) Indebtedness
supported by a Letter of Credit, in a principal amount not to exceed the face
amount of such Letter of Credit;

 

(v) Subordinated
Indebtedness constituting deferred purchase price of, or incurred to finance,
(i) Permitted Acquisitions or (ii) acquisition of the minority interests in
Kate Spade LLC and/or Gurwitch Products LLC in an amount that is not in excess
of $250,000,000 at any time outstanding; and

 

(w) Term Loan Pari Passu
Lien Obligations; provided that at the time of incurrence and after
giving pro forma effect thereto, the Consolidated Secured Debt Ratio would be
no greater than 3.75 to 1.00.

 

74

 

The accrual of interest
and the accretion or amortization of original issue discount on Indebtedness
and the payment of interest in the form of additional Indebtedness originally
incurred in accordance with this Section 6.01 will not constitute an incurrence
of Indebtedness.

 

SECTION 6.02. Liens.  No Loan Party will, nor will it permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:

 

(a) Liens created
pursuant to any Loan Document;

 

(b) Permitted
Encumbrances;

 

(c) any Lien on any
property or asset of the Borrower or any Subsidiary existing on the date hereof
and set forth in Schedule 6.02 and any replacements, renewals or
extensions thereof; provided that (i) such Lien shall not apply to
any other property or asset of the Borrower or Subsidiary other than
after-acquired property affixed or incorporated thereto and proceeds or
products thereof and (ii) such Lien shall secure only those obligations
which it secures on the date hereof and extensions, renewals, refinancings and
replacements thereof that do not increase the outstanding principal amount thereof
(except to the extent permitted under Section 6.01(g));

 

(d) Liens securing
Indebtedness permitted under Section 6.01(e) or (f); provided that (i) such Liens
(other than with respect to Real Estate) attach concurrently with or within two
hundred and seventy (270) days after the acquisition, repair, replacement,
construction or improvement (as applicable) of the property subject to such
Liens, (ii) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and any accessions thereto and the
proceeds and the products thereof and (iii) with respect to Capital Lease
Obligations and Synthetic Lease Obligations, such Liens do not at any time
extend to or cover any assets (except for accessions to such assets) other than
the assets subject to the applicable capitalized lease or Synthetic Lease; provided that individual financings of property
provided by one lender may be cross collateralized to other financings of
property provided by such lender;

 

(e) Liens on the membership
interests in Gurwitch Products LLC and Kate Spade LLC or other similar Liens
resulting from standard joint venture agreements or stockholder agreements and
other similar agreements applicable to joint ventures;

 

(f) 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;

 

(g) Liens (i) on cash
advances in favor of the seller of any property to be acquired in an investment
permitted pursuant to Sections 6.04 to be applied against the purchase price
for such investment, and (ii) consisting of an agreement to transfer any
property in a disposition permitted under Section 6.05, in each case, solely to
the extent such investment or disposition, as the case may be, would have been
permitted on the date of the creation of such Lien;

 

(h) Liens on property (i)
of any Subsidiary that is not a Loan Party and (ii) that does not constitute
Collateral, which Liens secure Indebtedness of the applicable Subsidiary
permitted under Section 6.01;

 

75

 

(i) Liens in favor of
Holdings, the Borrower or a Subsidiary securing Indebtedness permitted under
Section 6.01, including Liens granted by a Subsidiary that is not a Loan Party
in favor of the Borrower or another Loan Party in respect of Indebtedness owed
by such Subsidiary;

 

(j) any interest or title
of a lessor under leases or secured by a lessor’s interests under leases
entered into by the Borrower or any of the Subsidiaries in the ordinary course
of business;

 

(k) Liens arising out of
conditional sale, title retention, consignment or similar arrangements for sale
of goods entered into by the Borrower or any of the Subsidiaries in the ordinary
course of business or Liens arising by operation of law under Article 2 of the
UCC in favor of a reclaiming seller of goods or buyer of goods;

 

(l) 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;

 

(m) 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
Holdings, the Borrower or any Subsidiary to permit satisfaction of overdraft or
similar obligations incurred in the ordinary course of business of Holdings,
the Borrower and the Subsidiaries or (iii) relating to purchase orders and
other agreements entered into with customers of Holdings, the Borrower or any
Subsidiary in the ordinary course of business;

 

(n) Liens solely on any
cash earnest money deposits made by Holdings, the Borrower or any of the
Subsidiaries in connection with any letter of intent or purchase agreement
permitted hereunder;

 

(o) Liens in respect of
the HSBC Arrangements (or any Permitted Replacement Credit Card Program); provided
that no such Lien shall apply to cash constituting the proceeds of any
Collateral;

 

(p) Liens in respect of
the licensing of patents, copyrights, trademarks, trade names, other
indications of origin, domain names and other forms of intellectual property in
the ordinary course of business;

 

(q) Other Liens (other
than Liens on Inventory) securing obligations incurred in the ordinary course
of business which obligations do not exceed $15,000,000 at any time
outstanding;

 

(r) any Lien existing on
any property or asset (other than Inventory) prior to the acquisition thereof
by the Borrower or any Subsidiary or existing on any property or asset (other
than Inventory) of any Person that becomes a Loan Party after the date hereof
prior to the time such Person becomes a Loan Party; provided that
(i) such Lien is not created in contemplation of or in connection with
such acquisition or such Person becoming a Loan Party, as the case may be,
(ii) such Lien shall not apply to any other property or assets of the Loan
Party (other than proceeds or products thereof) and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Loan Party, as the case may be and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof (except to the extent permitted under
Section 6.01(g));

 

76

 

(s) Liens of a collecting
bank arising in the ordinary course of business under Section 4-208 of the
Uniform Commercial Code in effect in the relevant jurisdiction covering only
the items being collected upon;

 

(t) Liens arising out of
Sale and Lease-Back transactions permitted by Section 6.06;

 

(u) Liens on goods or
inventory the purchase, shipment or storage price of which is financed by a
documentary letter of credit or bankers’ acceptance issued or created for the
account of the Borrower or any of its Subsidiaries; provided that such
Lien secures only the obligations of the Borrower or such Subsidiaries in
respect of such letter of credit to the extent permitted under Section 6.01;

 

(v) Liens arising from
precautionary Uniform Commercial Code financing statements or similar filings
made in respect of operating leases entered into by the Borrower or any of its
Subsidiaries;

 

(w) the Pari Passu Liens
(or any Liens of no greater scope securing any extensions, renewals or
replacements of the 2028 Debentures that do not increase the outstanding
principal amount thereof (except to the extent permitted under
Section 6.01(g)); provided that such Liens do not apply to any
property other than that described in Section 10.6 of the indenture
pursuant to which the 2008 Notes and the 2028 Debentures were issued;

 

(x) Liens granted under
the Term Loan Security Documents (or, in the case of any Term Loan Pari Passu
Obligations, a separate security agreement or agreements substantially similar
in all material respects to the Term Loan Security Documents) and any
extensions and replacements thereof; provided that (i) such Liens
secure only the obligations referred to in the Term Loan Security Documents or
such separate security agreements (and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof (except
to the extent permitted under Section 6.01(g)), (ii) such Liens do
not apply to any asset other than Collateral that is subject to a Lien granted
under a Collateral Document to secure the Secured Obligations and
(iii) all such Liens shall be subject to the terms of, and have the
priorities with respect to the Collateral as set forth in, the Intercreditor
Agreement (or, in the case of any Term Loan Pari Passu Obligations, another
intercreditor agreement that is no less favorable to the Secured Parties than
the Intercreditor Agreement);

 

(y) Liens deemed to exist
in connection with investments in repurchase agreements under
Section 6.04; provided that such Liens do not extend to any assets other than
those assets that are the subject of such repurchase agreements; and

 

(z) ground leases in
respect of Real Property on which facilities owned or leased by the Borrower or
any of its Subsidiaries are located.

 

Notwithstanding the
foregoing, none of the Liens permitted pursuant to this Section 6.02 may at any
time attach to any Loan Party’s Inventory, other than those permitted under
clauses (a), (b), (c), (d) and (e) of the definition of Permitted Encumbrance
and clauses (a), (f), (g), (k), (s), (u), (w), (x) and (z) above.

 

SECTION 6.03. Fundamental Changes.  (a)  No Loan Party will, nor will
it permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or liquidate
or dissolve, except that (x) the Merger may be consummated and (y), if at the
time thereof and immediately after giving effect thereto no Event of Default
shall have occurred and be continuing (i) any Person may merge with or
into the Borrower in a transaction in which the

 

77

 

surviving entity is the Borrower or another Person
organized or existing under the laws of the United States of America, any State
thereof or the District of Columbia and such Person (if not the Borrower)
expressly assumes, in writing, all the obligations the Borrower under the Loan
Documents, in which event such Person will succeed to, and be substituted for,
the Borrower under the Loan Documents, (ii) any Person may merge into any
Subsidiary in a transaction in which the surviving entity is a Subsidiary and,
if any party to such merger is a Subsidiary that is a Loan Party, is or becomes
a Subsidiary that is Loan Party concurrently with such merger, (iii) any
Subsidiary of the Borrower may liquidate or dissolve if the Borrower determines
in good faith that such liquidation or dissolution is in the best interests of
the Borrower and is not materially disadvantageous to the Lenders, (iv) any
Subsidiary may merge with any Person to effect an investment permitted under
Section 6.04 and (v) any merger, dissolution or liquidation may be effected for
the purposes of effecting a transaction permitted by Section 6.05.

 

(b) No Loan Party will,
nor will it permit any of its Subsidiaries to, engage to any material extent in
any material line of business substantially different from those lines of
business conducted by the Borrower and its Subsidiaries on the date of
execution of this Agreement or businesses reasonably related or ancillary
thereto.

 

(c) Holdings will not
engage in any business or operations other than (i) the ownership, direct
or indirect, of all the outstanding shares of capital stock of the Borrower,
(ii) performance of its obligations under and in connection with the Loan
Documents, the New Note Documents, the Senior Secured Term Loan Facility and
the other agreements contemplated hereby and thereby, (iii) actions
incidental to the consummation of the Transactions, (iv) actions required
by law to maintain its existence, (v) any public offering of its common
stock, any other issuance of its Equity Interests and performance of its
obligations under any agreements related thereto, (vi) any transaction
Holdings is permitted to enter into in this Article VI and
(vii) activities incidental to the foregoing.

 

SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions.  No Loan
Party will, nor will it permit any Subsidiary to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a Loan Party and
a wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) all or substantially
all of the property and assets or business of another Person or assets of any
other Person constituting a business unit (whether through purchase of assets,
merger or otherwise), except:

 

(a) Permitted
Investments, subject to a perfected security interest in favor of the Agent for
the benefit of the Lenders;

 

(b) investments in
existence or contemplated on the date of this Agreement and described in Schedule 6.04;
and any modification, replacement, renewal, reinvestment or extension thereof
(provided that the amount of the original investment is not increased except as
otherwise permitted by this Section 6.04), and any investments, loans and
advances existing on the date hereof by the Borrower or any Subsidiary in or to
the Borrower or any other subsidiary of the Borrower;

 

(c) loans or advances to
officers, directors and employees of Holdings, the Borrower and any Subsidiary
(i) for reasonable and customary business related travel, entertainment,
relocation and analogous ordinary business purposes and (ii) in connection with
such Persons’ purchase of Equity Interests of Holdings (or any direct or
indirect parent thereof (provided that the amount of such loans and advances
shall be contributed to the Borrower in cash as common equity));

 

78

 

(d) investments by
Holdings in the Borrower and by the Borrower and the Subsidiaries that are Loan
Parties in Equity Interests in their respective Subsidiaries that are Loan
Parties; provided that any such Equity Interest shall be pledged pursuant to
the Security Agreement (subject to the limitations referred to in
Section 5.11);

 

(e) loans or advances
made by the Borrower to any Subsidiary that is a Loan Party and made by any
Subsidiary that is a Loan Party to the Borrower or any other Subsidiary that is
a Loan Party;

 

(f) Guarantees
constituting Indebtedness permitted by Section 6.01 by Loan Parties of any
Indebtedness of other Loan Parties;

 

(g) investments in the
form of Swap Agreements permitted by Section 6.07;

 

(h) investments of any
Person existing at the time such Person becomes a Subsidiary of the Borrower or
consolidates or merges with the Borrower or any of the Subsidiaries (including
in connection with a Permitted Acquisition) so long as such investments were
not made in contemplation of such Person becoming a Subsidiary or of such
merger;

 

(i) investments received
in connection with the dispositions of assets permitted by Section 6.05;

 

(j) investments
constituting deposits described in clauses (d) and (e) of the definition
of the term “Permitted Encumbrances”;

 

(k) accounts receivable
or notes receivable arising and trade credit granted in the ordinary course of
business and other credits to suppliers or vendors in the ordinary course of
business;

 

(l) (i) Permitted
Acquisitions and (ii) acquisitions of the minority interests in Kate Spade LLC
and/or Gurwitch Products LLC to the extent such acquisitions are financed with
Subordinated Indebtedness permitted under Section 6.01(v);

 

(m) Liens, Indebtedness,
fundamental changes, dispositions and Restricted Payments permitted under
Sections 6.01, 6.02, 6.03, 6.05, 6.06 and 6.08, respectively;

 

(n) the Transactions;

 

(o) investments in the
ordinary course of business consisting of Article 3 endorsements for collection
or deposit and Article 4 customary trade arrangements with customers consistent
with past practices;

 

(p) investments
(including debt obligations and Equity Interests) received in connection with
the bankruptcy or reorganization of suppliers and customers or in settlement or
delinquent obligations of, or other disputes with, customers and suppliers
arising in the ordinary course of business or received upon the foreclosure
with respect to any secured investment or other transfer of title with respect
to any secured investment;

 

(q) loans and advances to
Holdings (or any direct or indirect parent thereof) in lieu of, and not in
excess of the amount of (after giving effect to any other loans, advances or
Restricted Payments in respect thereof), Restricted Payments to the extent
permitted to be made to Holdings in accordance with Section 6.08(a)(v);

 

79

 

(r) (i) advances of
payroll payments to employees in the ordinary course of business and (ii)
investments in Quality Call Care Solutions, Inc. and Willow Bend Beverage
Corporation, in each case to satisfy ordinary course payroll and other
obligations of such company;

 

(s) investments to the
extent that payment for such investments is made solely with Qualified Equity
Interests of Holdings (or the Borrower after a Qualified Public Offering of the
Borrower);

 

(t) investments arising
as a result of the HSBC Arrangements or any Permitted Replacement Credit Card
Program;

 

(u) guarantees by
Holdings, the Borrower or any Subsidiary of leases (other than capitalized
leases) or of other obligations that do not constitute Indebtedness, in each
case entered into in the ordinary course of business;

 

(v) other investments,
loans and advances by the Borrower and the Subsidiaries provided that, at the
time such an investment, loan or advance is made, the Payment Conditions are
satisfied; and

 

(w) other investments,
loans and advances by the Borrower and the Subsidiaries which, together with
any Restricted Payments made pursuant to Section 6.08(a)(xii) and
Restricted Debt Payments made pursuant to Section 6.08(b)(x), do not
exceed $30,000,000 in the aggregate.

 

For purposes of covenant
compliance, the amount of any investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value thereof.

 

SECTION 6.05. Asset Sales.  No Loan Party will, nor will it permit any
Subsidiary to, sell, transfer, lease or otherwise dispose of any asset,
including any Equity Interest owned by it, nor will the Borrower permit any
Subsidiary to issue any additional Equity Interest in such Subsidiary (other
than to the Borrower or another Subsidiary in compliance with
Section 6.04), except:

 

(a) sales, transfers and
dispositions of (i) Inventory and other assets in the ordinary course of
business and (ii) used, obsolete, worn out or surplus equipment or
property in the ordinary course of business, or of property no longer used or
useful in the conduct of the business of the Borrower and its Subsidiaries;

 

(b) sales, transfers and
dispositions to the Borrower or any Subsidiary, provided that any such
sales, transfers or dispositions to a Subsidiary that is not a Loan Party shall
be made in compliance with Section 6.09;

 

(c) sales, transfers and
dispositions of accounts receivable in connection with the compromise,
settlement or collection thereof;

 

(d) sales, transfers and
dispositions of (i) investments permitted by clauses (a), (h), (i), (j)
and (p) of Section 6.04 and (ii) other investments to the extent required
by or made pursuant to customary buy/sell arrangements made in the ordinary
course of business between the parties to agreements related thereto;

 

(e) Sale and Lease-Back
transactions permitted by Section 6.06;

 

80

 

(f) dispositions
resulting from any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Borrower or any Subsidiary;

 

(g) sales, transfers and
other dispositions of Accounts, receivables, and residual interests in
connection with the HSBC Arrangements or any Permitted Replacement Credit Card
Program;

 

(h) sales, transfers and
other dispositions of assets (other than Equity Interests in a Subsidiary
unless all Equity Interests in such Subsidiary owned by a Loan Party are sold)
that are not permitted by any other paragraph of this Section, provided
that the aggregate fair market value of all assets sold, transferred or
otherwise disposed of in reliance upon this paragraph (h) (other than in
respect of the sale, transfer or other disposition of the Borrower’s interest
in any Unrestricted Subsidiary that was an Unrestricted Subsidiary as of the
Closing Date), shall not exceed $50,000,000 during any fiscal year of the
Borrower or $250,000,000 in the aggregate after the Closing Date;

 

(i) sales, transfer and
dispositions of property to the extent that (i) such property is exchanged
for credit against the purchase price of similar replacement property or
(ii) the proceeds of such disposition are promptly applied to the purchase
price of such replacement property;

 

(j) sales, transfers and
dispositions permitted by Sections 6.03 and 6.08 and Liens permitted by
Section 6.02;

 

(k) leases, subleases,
space leases, licenses or sublicenses, in each case in the ordinary course of
business and which do not materially interfere with the business of Holdings,
the Borrower and its Subsidiaries;

 

(l) sales, transfers and
dispositions listed on Schedule 6.05;

 

provided
that all sales, transfers, leases and other dispositions permitted hereby
(other than those permitted by paragraphs (a)(ii), (b), (c), (f), (g),
(i), (j) and (k) above) shall be made for fair value and for at least 75% cash
consideration.  To the extent any
Collateral is disposed of as expressly permitted by this Section 6.05 to any Person
other than Holdings, the Borrower or any Subsidiary, such Collateral shall be
sold free and clear of the Liens created by the Loan Documents, and the Agent
shall be authorized to take any actions deemed appropriate in order to effect
the foregoing.

 

SECTION 6.06. Sale and Lease-Back Transactions.  No Loan Party will, nor will it permit any
Subsidiary to, enter into any arrangement, directly or indirectly, whereby it
shall sell or transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property that it intends to use for substantially the
same purpose or purposes as the property sold or transferred (a “Sale and
Lease-Back Transaction”); provided that a Sale and Lease-Back
Transaction shall be permitted so long as (a) such Sale and Lease-Back
Transaction (i) is made for cash consideration in an amount not less than
the fair value of such property and (ii) is pursuant to a lease on market terms
and (b) the Agent shall have received from the purchaser or transferee a
Collateral Access Agreement on terms and conditions reasonably satisfactory to
the Agent.

 

SECTION 6.07. Swap Agreements.  No Loan Party will, nor will it permit any
Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which such Loan Party has actual
exposure (other than those in respect of Equity

 

81

 

Interests of such Loan Party or any of its
Subsidiaries), and (b) Swap Agreements entered into in order to effectively
cap, collar or exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of such Loan Party or any Subsidiary.

 

SECTION 6.08. Restricted Payments; Certain
Payments of Indebtedness.  (a)  No Loan Party will, nor will it permit any
Subsidiary to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except:

 

(i) each of Holdings and
the Borrower may declare and pay dividends or make other distributions with
respect to its Equity Interests payable solely in additional shares of its
Equity Interests (other than Disqualified Equity Interests not permitted by
Section 6.01);

 

(ii) Subsidiaries may
declare and pay dividends or make other distributions ratably with respect to
their Equity Interests;

 

(iii) the Borrower and
its Subsidiaries may make Restricted Payments to Holdings (and Holdings may
make Restricted Payments to any direct or indirect parent thereof) the proceeds
of which are used to purchase, retire, redeem or otherwise acquire the Equity
Interests of Holdings (or of any such direct or indirect parent of Holdings) or
of the Borrower (following a Qualified Public Offering of the Borrower)
(including related stock appreciation rights or similar securities) held by
then present or former directors, consultants, officers or employees of
Holdings (or of any such direct or indirect parent), the Borrower or any of the
Subsidiaries or by any stock option plan or other benefit plan upon such Person’s
death, disability, retirement or termination of employment or under the terms
of any such plan or any other agreement under which such shares of stock or
related rights were issued; provided that the aggregate amount of such
purchases, redemptions or other acquisitions under this clause (a)(iii) shall
not exceed in any fiscal year $5,000,000 (plus the amount of net proceeds (x)
received by Holdings during such calendar year from sales of Equity Interests
of Holdings to directors, consultants, officers or employees of Holdings, the
Borrower or any Subsidiary in connection with permitted employee compensation
and incentive arrangements and (y) of any key-man life insurance policies
received during such calendar year);

 

(iv) non-cash 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;

 

(v) the Borrower and its
Subsidiaries may make Restricted Payments to Holdings (x) in an amount
(together with loans or advances made pursuant to Section 6.04(n)) not to
exceed $1,500,000 in any fiscal year, to the extent necessary to pay (or allow
any direct or indirect parent of Holdings to pay) its general corporate and
overhead expenses incurred by Holdings (or any direct or indirect parent
thereof) in the ordinary course of business, plus the amount of any reasonable
and customary indemnification claims made by any director or officer of
Holdings (or any direct or indirect parent thereof), (y) to pay franchise
taxes and other fees, taxes and expenses required to maintain its (or any of
its direct or indirect parents’) corporate existence and (z) in an amount
necessary to pay the Tax liabilities of Holdings (or any such direct or
indirect parent) attributable to (or arising as a result of) the operations of
the Borrower and its Subsidiaries; provided, however, that in the
case of clause (z), the amount of such dividends shall not exceed the amount
that the Borrower and its Subsidiaries would be required to pay in respect of
Federal, state and local taxes and any other taxes were the Borrower and the
Subsidiaries to pay such taxes as stand-alone taxpayers;

 

82

 

(vi) Restricted Payments
made on the Closing Date to consummate the Transactions;

 

(vii) to the extent
constituting Restricted Payments, Holdings, the Borrower and its Subsidiaries
may enter into and consummate transactions expressly permitted by any provision
of Section 6.03 or 6.09;

 

(viii) the Borrower and
its Subsidiaries may make Restricted Payments to Holdings to finance any
investment permitted to be made pursuant to Section 6.04 provided that
(A) such Restricted Payment shall be made substantially concurrently with the
closing of such investment and (B) Holdings shall, immediately following the
closing thereof, cause (i) all property acquired (whether assets or Equity
Interests) to be contributed to the Borrower or its Subsidiaries or (ii) the
merger (to the extent permitted in Section 6.03) of the Person formed or
acquired into the Borrower or its Subsidiaries in order to consummate such
Permitted Acquisition;

 

(ix) Holdings may make
Restricted Payments with the proceeds of the issuance of Indebtedness of
Holdings;

 

(x) in addition to the
foregoing Restricted Payments, Holdings and the Borrower may make additional
Restricted Payments provided that, at the time such Restricted Payment is made,
the Payment Conditions are satisfied;

 

(xi) the distribution, as
a dividend or otherwise (and the declaration of such dividend), of shares of
capital stock of, or Indebtedness owed to the Borrower or a Subsidiary by, any
Unrestricted Subsidiary so designated on the date hereof; and

 

(xii) other Restricted
Payments by Holdings and the Borrower which, together with investments, loans
and advances made pursuant to Section 6.04(w) and Restricted Debt Payments
made pursuant to Section 6.08(b)(x), do not exceed $30,000,000 in the
aggregate.

 

(b) No Loan Party will,
nor will it permit any Subsidiary to, make or agree to pay or make, directly or
indirectly, any payment or other distribution (whether in cash, securities or
other property) of or in respect of principal of or interest on any
Indebtedness, or any payment or other distribution (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account
of the purchase, redemption, retirement, acquisition, cancellation or termination
of any Indebtedness (collectively, “Restricted Debt Payments”), except:

 

(i) payment of
Indebtedness created under the Loan Documents;

 

(ii) payment of
Indebtedness in connection with the Transactions, including the redemption
after the Closing Date of the 2008 Notes in accordance with Section 5.14;

 

(iii) payment of
regularly scheduled interest and principal payments as and when due in respect
of any Indebtedness, other than payments in respect of the Subordinated
Indebtedness prohibited by the subordination provisions thereof;

 

(iv) refinancings of
Indebtedness to the extent permitted by Section 6.01;

 

(v) payment of secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness so long as such sale is
permitted by Section 6.05;

 

83

 

(vi) payment of
Indebtedness in exchange for or with proceeds of any substantially
contemporaneous issuance of Qualified Equity Interests or substantially contemporaneous
capital contribution in respect of Qualified Equity Interests of Holdings;

 

(vii) payment of
Indebtedness under the Senior Secured Term Loan Facility or any Term Loan Pari
Passu Obligations (or any extensions, renewals or replacements thereof
permitted under Section 6.01(g) and Section 6.02(x)), with the net
cash proceeds of any sale, transfer or other disposition of any Term Loan First
Lien Collateral (as defined in the Intercreditor Agreement), or, in the case of
any such extensions, renewals or replacements or any Term Loan Pari Passu
Obligations, any property or assets in respect of which the security interest
of the lenders thereunder has priority over the security interest of the Agent,
for the benefit of the Secured Parties, in such property or assets, pursuant to
the Intercreditor Agreement or another intercreditor agreement that is no less
favorable to the Secured Parties than the Intercreditor Agreement;

 

(viii) mandatory
prepayments of Indebtedness under Section 2.09 of the Senior Secured Term
Facility Credit Agreement (or any successor section thereof, or under any
comparable provision in any instrument governing any Term Loan Pari Passu
Obligations or any extension, renewal or replacement thereof or of the Senior
Secured Term Loan Facility, in each case permitted under Section 6.01(g),
pursuant to which mandatory prepayments of Indebtedness thereunder determined
by reference to Excess Cash Flow (as defined in the Senior Secured Term
Facility Credit Agreement or as defined substantially similarly in all material
respects in any such other instrument) are required to be made), in amounts
required under, and in accordance with, the Senior Secured Term Facility Credit
Agreement or such other instrument (in the case of any such other instrument,
in amounts no greater in any material respect than those required under the
Senior Secured Term Facility Credit Agreement);

 

(ix) in addition to the
foregoing Restricted Debt Payments, any Loan Party may make additional
Restricted Debt Payments provided that the Payment Conditions are satisfied (it
being understood and agreed that, if an irrevocable notice or contractual
obligation is given in, made or arises in respect of any Restricted Debt
Payment, the Payment Conditions only need to be satisfied at the time of the
giving of such irrevocable notice or entering into (or effectiveness of) any
such contractual obligation); and

 

(x) other Restricted Debt
Payments which, together with any investments, loans or advances made pursuant
to Section 6.04(w) and Restricted Payments made pursuant to
Section 6.08(a)(xii), do not exceed $30,000,000 in the aggregate.

 

SECTION 6.09. Transactions with Affiliates.  No Loan Party will, nor will it permit any
Subsidiary to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise
engage in any other transactions with, any of its Affiliates, except
(a) transactions that (i) are in the ordinary course of business and
(ii) are on terms and conditions substantially as favorable to such Loan
Party as would be obtainable by such Loan Party at the time in a comparable arm’s-length
transaction from unrelated third parties that are not Affiliates,
(b) transactions between or among the Borrower and any Subsidiary that is
a Loan Party not involving any other Affiliate, (c) any investment
permitted by Sections 6.04, (d) any Indebtedness permitted under
Section 6.01, (e) any Restricted Payment or Restricted Debt Payment
permitted by Section 6.08, (f) the payment of reasonable fees and
out-of-pocket costs to directors of Holdings, the Borrower or any Subsidiary,
and compensation and employee benefit arrangements paid to, and indemnities
provided for the benefit of, directors, officers or employees of Holdings, the
Borrower or its Subsidiaries in the ordinary course of business, (g) any
issuances of securities or other payments, awards or grants in cash,

 

84

 

securities or otherwise pursuant to, or the funding
of, employment agreements, stock options and stock ownership plans approved by
Holdings’ (or its direct or indirect parent company’s) or the Borrower’s board
of directors, (h) the payment of (A) management or monitoring or
similar fees to the Sponsors and Sponsor termination fees and related
indemnities and reasonable expenses, and (B) transaction advisory services
fees with respect to transactions in respect of which the Sponsors provide any
transaction, advisory or other similar services, in each case pursuant to, and
in accordance with, the Management Services Agreement as such agreement is in
effect as of the Closing Date, provided that in each case (x) no Event
of Default has occurred and is continuing or would result after giving effect
to such payment and (y) the Borrower shall have Excess Availability of at least
$60,000,000 after giving effect to such payment, (i) any contribution to
the capital of Holdings (or any direct or indirect parent company thereof) by
the Sponsors or any Affiliate thereof or any purchase of Equity Interests of
Holdings (or any direct or indirect parent company thereof) by the Sponsors or
any Affiliate thereof, (j) the Transactions, (k) payments by Holdings
(and any direct or indirect parent thereof), the Borrower and its Subsidiaries
pursuant to the tax sharing agreements among Holdings (and any such parent
thereof), the Borrower and the Subsidiaries on customary terms to the extent
attributable to the ownership or operation of the Borrower and its
Subsidiaries, (l) transactions pursuant to permitted agreements in
existence on the Closing Date and set forth on Schedule 6.09 or any amendment
thereto to the extent such an amendment is not adverse to the Lenders in any
material respect and (m) payments by the Borrower or any Subsidiary to any
of 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 Borrower
in good faith.

 

SECTION 6.10. Restrictive Agreements.  No Loan Party will, nor will it permit any
Subsidiary to, directly or indirectly, enter into, incur or permit to exist any
agreement or other contractual arrangement to which it is a party or by which
its property is bound that prohibits, restricts or imposes any condition upon
(a) the ability of such Loan Party or any of its Subsidiaries to create,
incur or permit to exist any Lien upon any of its property or assets for the
benefit of the Lenders under the Loan Documents, or (b) the ability of any
Subsidiary that is not a Loan Party to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or
advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness
of the Borrower or any other Subsidiary; provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any Loan Document, (ii) the foregoing shall not apply to restrictions and
conditions (A) existing on the date hereof identified on Schedule 6.10
and (B) to the extent any such restrictions or conditions permitted by clause
(A) is set forth in an agreement evidencing Indebtedness, are set forth in any
agreement evidencing any permitted renewal, extension or refinancing of such
Indebtedness so long as such renewal, extension or refinancing does not expand
the scope of any such restriction or condition, (iii) the foregoing shall
not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) the foregoing shall not apply to
any agreement or other instrument of a Person acquired in a Permitted
Acquisition by a Loan Party in existence at the time of such Permitted
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 a any Person, other than the Person, or the property or
assets of the Person so acquired; (v) clause (a) of the foregoing
shall not apply to restrictions or conditions imposed by any agreement relating
to secured Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness and
(vi) clause (a) of the foregoing shall not apply to (A) customary
provisions in joint venture agreements and other similar agreements applicable
to joint ventures to the extent such joint ventures are permitted hereunder,
(B) customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of the Borrower or any Subsidiary or
(C) customary provisions restricting assignment of any agreement entered
into in the ordinary course of business.

 

85

 

SECTION 6.11. Amendment of Material Documents.  No Loan Party will, nor will it permit any
Subsidiary to, amend, modify or waive any of its rights under (a) the Senior
Note Documents or the Senior Secured Term Facility Credit Agreement (or any
instrument or agreement governing any refinancing Indebtedness in respect
thereof permitted under Section 6.01), (b) the Senior Subordinated Note
Documents or any other agreement relating to any Subordinated Indebtedness,
(c) its certificate of incorporation, by-laws, operating, management or
partnership agreement or other organizational documents (except to the extent
necessary to implement changes thereto disclosed to the Agent prior to the
Closing Date and reasonably satisfactory to the Agent), (d) the HSBC
Agreements or the documents evidencing any Permitted Replacement Credit Card
Program or (e) the Management Services Agreement, to the extent, in the
case of each of the foregoing clauses (a) through (e), any such amendment,
modification or waiver would be adverse to the Lenders in any material respect;
provided that any amendment, modification or waiver of the HSBC
Agreements or any document evidencing any Permitted Replacement Credit Card
Program shall be permitted so long as the Agent shall have consented thereto in
writing prior to the effectiveness thereof (such consent not to be unreasonably
withheld or delayed).

 

SECTION 6.12. Certain Equity Securities.  No Loan Party will, nor will it permit any
Subsidiary to, issue any Equity Interests that are not Qualified Equity
Interests. 

 

SECTION 6.13. Designated Disbursement Account.  After the occurrence and during the
continuance of an Event of Default or Liquidity Event as to which the Agent has
notified the Borrower, the Loan Parties shall not utilize the funds on deposit
in the Designated Disbursement Account for any purposes other than (a) the
payment of operating expenses incurred by the Loan Parties in the ordinary
course of business (including any payment in respect of any Indebtedness of the
Loan Parties otherwise permitted hereunder), and (b) up to $15,000,000 for
such other purposes permitted hereunder as the Loan Parties may deem
appropriate. 

 

ARTICLE VII

 

Events of Default

 

SECTION 7.01. Events of Default.  If any of the following events (“Events of
Default”) shall occur:

 

(a) the Borrower shall
fail to pay (i) any principal of any Loan or any reimbursement obligation
in respect of any LC Disbursement when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise, or (ii) any interest on
any Loan or any fee or any other amount payable under this Agreement or any
other Loan Document within five (5) Business Days after it shall become due and
payable;

 

(b) any representation or
warranty made or deemed made by or on behalf of any Loan Party herein or in any
other Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, Borrowing Base Certificate or other certificate,
financial statement or other document furnished pursuant to or in connection
with this Agreement or any Loan Document, shall prove to have been materially
incorrect when made or deemed made;

 

(c) any Loan Party shall
fail to observe or perform any covenant, condition or agreement contained
(i) in Article VI, (ii) in Section 5.01(h) (after a one (1) Business
Day grace period) or (iii) in any of Section 2.21, 5.02(a), 5.03 (but
only with respect to Holdings’ or the Borrower’s existence), 5.06(b), 5.09 or
5.10 (provided that if (A) any such Default described in this clause

 

86

 

(iii) is of a type that
can be cured within five (5) Business Days and (B) such Default could not
materially adversely impact the Lender’s Liens on the Collateral, such Default
shall not constitute an Event of Default for five (5) Business Days after the
occurrence of such Default so long as the Loan Parties are diligently pursuing
the cure of such Default);

 

(d) any Loan Party shall
fail to observe or perform any covenant, condition or agreement contained in
any Loan Document (other than those specified in clauses (a) and (c) above) and
such default shall continue unremedied for a period of 30 days after notice
thereof from the Agent or the Required Lenders to the Borrower;

 

(e) (i) any Loan Party
shall fail to make any payment beyond the applicable grace period (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise)
with respect to any Material Indebtedness, or (ii) any event or condition
occurs (other than with respect to Material Indebtedness constituting
Derivative Transactions, termination events or equivalent events pursuant to
the terms of the related Swap Agreements in accordance with the terms thereof
and not as a result of any default thereunder by any Loan Party) that results
in any Material Indebtedness becoming due prior to its scheduled maturity or
that enables or permits (with the giving of notice, if required) the holder or
holders of any such Material Indebtedness or any trustee or agent on its or
their behalf to cause any such Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity; provided that this paragraph (e) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness if such sale or
transfer is permitted hereunder and under the documents providing for such
Indebtedness;

 

(f) a Change in Control
shall occur;

 

(g) an involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of a Loan Party
or any Subsidiary of any Loan Party or its debts, or of a substantial part of
its assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Loan Party or any Subsidiary of any Loan Party or for
a substantial part of its assets, and, in any such case of clause (i) or (ii),
such proceeding or petition shall continue undismissed and unstayed for
sixty (60) days or an order or decree approving or ordering any of
the foregoing shall be entered;

 

(h) any Loan Party or any
Subsidiary of any Loan Party shall (i) voluntarily commence any proceeding
or file any petition seeking liquidation, reorganization or other relief under
any Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or petition
described in clause (g) of this Article, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for such Loan Party or Subsidiary of any Loan Party or for
a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors;

 

(i) any Loan Party or any
Subsidiary of any Loan Party shall become unable, admit in writing its
inability or fail generally to pay its debts in excess of the threshold amount
that constitutes Material Indebtedness as they become due;

 

87

 

(j) one or more final
judgments for the payment of money in an aggregate amount in excess of
(i) if Excess Availability is then greater than $100,000,000, $40,000,000,
or (ii) if Excess Availability is then less than or equal to $100,000,000,
$20,000,000 (in each case to the extent not covered by third-party insurance as
to which the insurer has been notified of such judgment and does not deny
coverage), shall be rendered against any Loan Party or any combination of Loan
Parties and the same shall remain undischarged for a period of sixty
(60) consecutive days during which execution shall not be effectively stayed,
satisfied or bonded, or any writ or warrant of attachment or execution or
similar process is issued or levied against all or any material part of the
property of any Loan Party and is not released, vacated, stayed or bonded
within sixty (60) days after its issue or levy;

 

(k) an ERISA Event shall
have occurred that, when taken together with all other ERISA Events that have
occurred and are continuing, would reasonably be expected to result in a
Material Adverse Effect;

 

(l) the Loan Guaranty at
any time after its execution and delivery and for any reason, other than as
expressly permitted hereunder or thereunder, shall fail to remain in full force
or effect, or any action shall be taken by any Loan Party to discontinue or to
assert the invalidity or unenforceability of the Loan Guaranty, or any Loan
Guarantor shall deny or disaffirm in writing that it has any further liability
under the Loan Guaranty to which it is a party;

 

(m) (i) any Collateral
Document after delivery thereof pursuant to the terms of the Loan Documents
shall for any reason, other than pursuant to the terms hereunder or thereunder
(including as a result of a transaction permitted under Section 6.03 or
6.05), fail to create a valid and perfected security interest with the priority
required by the Collateral Documents (subject to the Intercreditor Agreement)
in any Collateral purported to be covered thereby, except to the extent that
any such loss of perfection or priority results from the failure of the Agent
to maintain possession of certificates actually delivered to it representing
securities pledged under the Collateral Documents or to file Uniform Commercial
Code continuation statements and except as to Collateral consisting of real
property to the extent that such losses are covered by a lender’s title
insurance policy and such insurer has been notified and has not denied
coverage, or (ii) any Collateral Document shall fail to remain in full force or
effect or any action shall be taken by any Loan Party to discontinue or to
assert the invalidity or unenforceability of any Collateral Document;

 

(n) any material
provision of any Loan Document at any time after its execution and delivery and
for any reason other than as expressly permitted hereunder or thereunder
(including as a result of a transaction permitted under Section 6.03 or 6.05)
or as a result of the satisfaction in full of the Obligations, ceases to be in
full force and effect, or any Loan Party shall challenge in writing the
validity or enforceability of any Loan Document or any Loan Party shall deny in
writing that it has any further liability or obligation under any Loan Document
(other than as a result of repayment in full of the Obligations and termination
of the Commitments) or purports in writing to revoke or rescind any Loan Document;
or

 

(o) the Obligations shall
cease to constitute senior indebtedness under the subordination provisions of
any document or instrument evidencing any permitted Subordinated Indebtedness
(including the Indebtedness under the Senior Subordinated Notes as evidenced by
the Senior Subordinated Note Documents) or such subordination provision shall
be invalidated or otherwise cease, for any reason, to be valid, binding and
enforceable obligations of the parties thereto;

 

88

 

then, and in every such
event (other than an event with respect to any Loan Party described in
clause (g) or (h) of this Article), and at any time thereafter during the
continuance of such event, the Agent may, and at the request of the Required
Lenders shall, by notice to the Borrower, take any of the following actions, at
the same or different times:  (i) terminate the Commitments, and
thereupon the Commitments shall terminate immediately, (ii) declare the
Loans then outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrower accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower, and (iii) require that
the Borrower deposit in the LC Collateral Account an amount in cash equal to
101.5% of the then outstanding LC Exposure; provided that upon the
occurrence of an event with respect to any Loan Party described in
clause (g) or (h) of this Article, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with
accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower, and the obligation of the Borrower to cash collateralize the
outstanding Letters of Credit as aforesaid shall automatically become
effective, in each case without further act of the Agent or any Lender.  Upon the occurrence and the continuance of an
Event of Default, the Agent may, and at the request of the Required Lenders
shall, exercise any rights and remedies provided to the Agent under the Loan
Documents or at law or equity, including all remedies provided under the UCC.

 

SECTION 7.02. Exclusion of Immaterial Subsidiaries.  Solely for the purposes of determining
whether an Event of Default has occurred under clause (g) or (h) of Section
7.01, any reference in any such paragraph to any Subsidiary shall be deemed not
to include any Immaterial Subsidiary affected by any event or circumstance
referred to in any such paragraph; provided that if it is necessary to
exclude more than one Subsidiary from paragraph (g) or (h) of Section 7.01
pursuant to this Section 7.02 in order to avoid an Event of Default thereunder,
all excluded Subsidiaries shall be considered to be a single consolidated
Subsidiary for purposes of determining whether the condition specified above is
satisfied.

 

ARTICLE VIII

 

The Agent

 

Each of the Lenders and
the Issuing Banks hereby irrevocably appoints the Agent as its agent and
authorizes the Agent to take such actions on its behalf, including execution of
the other Loan Documents, and to exercise such powers as are delegated to the
Agent by the terms of the Loan Documents, together with such actions and powers
as are reasonably incidental thereto.

 

The bank serving as the
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Agent, and such bank and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Loan Parties or any
subsidiary of a Loan Party or other Affiliate thereof as if it were not the
Agent hereunder.

 

The Agent shall not have
any duties or obligations except those expressly set forth in the Loan
Documents.  Without limiting the
generality of the foregoing, (a) the Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Agent shall not have any duty to take any
discretionary action or exercise any discretionary

 

89

 

powers, except discretionary rights and powers expressly contemplated
by the Loan Documents that the Agent is required to exercise in writing as
directed by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth in the Loan Documents, the Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any Loan Party or any of its subsidiaries
that is communicated to or obtained by the bank serving as Agent or any of its
Affiliates in any capacity.  The Agent
shall not be liable for any action taken or not taken by it with the consent or
at the request of the Required Lenders (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in
Section 9.02) or in the absence of its own gross negligence or wilful
misconduct.  The Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to the Agent by the Borrower or a Lender, and the Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection with any Loan Document, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document, (v) the creation, perfection or priority of
Liens on the Collateral or the existence of the Collateral, or (vi) the
satisfaction of any condition set forth in Article IV or elsewhere in any
Loan Document, other than to confirm receipt of items expressly required to be
delivered to the Agent.

 

The Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the
proper Person.  The Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon.  The Agent may consult with
legal counsel (who may be counsel for the Borrower), independent accountants
and other experts selected by it, and shall not be liable for any action taken
or not taken by it in accordance with the advice of any such counsel,
accountants or experts.

 

The Agent may perform any
and all its duties and exercise its rights and powers by or through any one or
more sub-agents appointed by the Agent. 
The Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Agent.

 

Subject to the
appointment and acceptance of a successor Agent as provided in this paragraph,
the Agent may resign at any time by notifying the Lenders, the Issuing Banks
and the Borrower.  Upon any such
resignation, the Required Lenders shall have the right, with the consent (not
to be unreasonably withheld or delayed) of the Borrower, to appoint a
successor; provided that, during the existence and continuation of an
Event of Default, no consent of the Borrower shall be required.  If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within
30 days after the retiring Agent gives notice of its resignation, then the
retiring Agent may, on behalf of the Lenders and the Issuing Banks, appoint a
successor Agent which shall be a commercial bank or an Affiliate of any such
commercial bank reasonably acceptable to the Borrower.  Upon the acceptance of its appointment as
Agent hereunder by a successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the
Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the Agent’s resignation
hereunder, the provisions

 

90

 

of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Agent.

 

Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender also acknowledges
that it will, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.

 

Each Lender hereby agrees
that (a) it has requested a copy of each Report prepared by or on behalf of the
Agent; (b) the Agent (i) makes no representation or warranty, express or
implied, as to the completeness or accuracy of any Report or any of the
information contained therein or any inaccuracy or omission contained in or
relating to a Report and (ii) shall not be liable for any information contained
in any Report; (c) the Reports are not comprehensive audits or examinations,
and that any Person performing any field examination will inspect only specific
information regarding the Loan Parties and will rely significantly upon the
Loan Parties’ books and records, as well as on representations of the Loan
Parties’ personnel and that the Agent undertakes no obligation to update,
correct or supplement the Reports; (d) it will keep all Reports confidential
and strictly for its internal use, not share the Report with any Loan Party or any
other Person except as otherwise permitted pursuant to this Agreement; and (e)
without limiting the generality of any other indemnification provision
contained in this Agreement, it will pay and protect, and indemnify,
defend, and hold the Agent and any such other Person preparing a Report
harmless from and against, the claims, actions, proceedings, damages, costs,
expenses, and other amounts (including reasonable attorneys’ fees) incurred by
the Agent or such other Person as the direct or indirect result of any third
parties who might obtain all or part of any Report through the indemnifying
Lender.

 

The co-arrangers, joint
bookrunners, co-syndication agents and the documentation agent shall not have
any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such.

 

ARTICLE IX

 

Miscellaneous

 

SECTION 9.01. Notices.  (a) 
Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile, as follows:

 

(i) if to any Loan Party,
to the Borrower at:

One Marcus Square

1618 Main Street

Dallas, Texas 75201

Attention: General Counsel

Facsimile No: (214) 743-7611

 

(ii) if to Deutsche Bank
Trust Company Americas, as the Agent, an Issuing Bank or the Swingline Lender,
at:

 

91

 

60 Wall Street

New York, NY 10005

Attention: Marguerite Sutton

Facsimile No: (212) 797-5690

 

(iii) if to Credit
Suisse, as an Issuing Bank, at:

Eleven Madison Avenue

New York, NY 10010

Attention: Agency Group

Facsimile No: (212) 325-8304

 

(iv) if to any other
Lender, to it at its address or facsimile number set forth in its
Administrative Questionnaire.

 

All such notices and
other communications (i) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when
received or (ii) sent by facsimile shall be deemed to have been given when sent
and when receipt has been confirmed by telephone, provided that if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient.

 

(b) Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites)
pursuant to procedures approved by the Agent; provided that the
foregoing shall not apply to notices pursuant to Article II or to compliance
and no Event of Default certificates delivered pursuant to Section 5.01(d)
unless otherwise agreed by the Agent and the applicable Lender.  The Agent or the Borrower (on behalf of the
Loan Parties) may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may
be limited to particular notices or communications. All such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if not given during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been given at the opening of business on the next Business Day for the
recipient, and (ii) posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail
address as described in the foregoing clause (b)(i) of notification that such
notice or communication is available and identifying the website address
therefor.

 

(c) Any party hereto may
change its address or facsimile number for notices and other communications
hereunder by notice to the other parties hereto.

 

SECTION 9.02. Waivers; Amendments.  (a)  No failure or delay by the
Agent, an Issuing Bank or any Lender in exercising any right or power hereunder
or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Agent, the
Issuing Banks and the Lenders hereunder and under any other Loan Document are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which
given.  Without limiting the generality
of the foregoing, to the extent permitted by law, the making of a Loan or
issuance of a Letter of

 

92

 

Credit shall not be construed as a waiver of any
Default, regardless of whether the Agent, any Lender or an Issuing Bank may
have had notice or knowledge of such Default at the time.

 

(b) Neither this
Agreement nor any other Loan Document nor any provision hereof or thereof may
be waived, amended or modified except (i) in the case of this Agreement,
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Required Lenders or, (ii) in the case of any other Loan Document (other
than any such amendment to effectuate any modification thereto expressly
contemplated by the terms of such other Loan Documents), pursuant to an
agreement or agreements in writing entered into by the Agent and the Loan Party
or Loan Parties that are parties thereto, with the consent of the Required
Lenders; provided that no such agreement shall (A) increase the
Commitment of any Lender without the written consent of such Lender; it being
understood that a waiver of any condition precedent set forth in Article IV or
the waiver of any Default, mandatory prepayment or mandatory reduction of the
Commitments, or the making of any Protective Advance, so long as in compliance
with the provisions of Section 2.04, shall not constitute an increase of
any Commitment of any Lender; provided that any change to the second
proviso to the second sentence of Section 2.04(a) shall require the
written consent of each Lender, (B) reduce or forgive the principal amount of
any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
or forgive any interest or fees payable hereunder, without the written consent
of each Lender directly affected thereby, (C) postpone any scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any date for
the payment of any interest, fees or other Obligations payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender directly affected thereby; provided that only the consent of
the Required Lenders shall be necessary to amend the provisions of Section
2.13(c) providing for the default rate of interest, or to waive any obligations
of the Borrower to pay interest at such default rate, (D) change Section
2.18(b) or (c) in a manner that would alter the manner in which payments are
shared, without the written consent of each Lender, (E) increase the advance
rates set forth in the definition of Borrowing Base or make any change to the
definition of “Eligible Inventory” or “Net Orderly Liquidation Value” that
would have the effect of increasing the amount of the Borrowing Base, or reduce
the Dollar amount set forth in the definition of “Liquidity Event”, in each
case without the written consent of the Super Majority Lenders, (F) change any
of the provisions of this Section or the definition of “Required Lenders” or
the definition of “Super Majority Lenders” or any other provision of any Loan
Document specifying the number or percentage of Lenders (or Lenders of any
Class) required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender, (G) release any material Loan Guarantor from its obligation under
its Loan Guaranty (except as otherwise permitted herein or in the other Loan
Documents, including pursuant to Section 6.03, 6.05 or 10.12 hereof), without
the written consent of each Lender, or (H) except as provided in clause (c) or
(d) of this Section or in any Collateral Document, release all or substantially
all of the Collateral, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Agent, any Issuing Bank or the Swingline Lender
hereunder without the prior written consent of the Agent, such Issuing Bank or
the Swingline Lender, as the case may be. 
The Agent may also amend the Commitment Schedule to reflect
assignments entered into pursuant to Section 9.04.  Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitment of such
Lender may not be increased without the consent of such Lender (it being
understood that any Commitment or Loan held or deemed held by any Defaulting
Lender shall be excluded from a vote of the Lenders hereunder requiring any
consent of the Lenders).

 

(c) The Lenders hereby
irrevocably agree that the Liens granted to the Agent by the Loan Parties on
any Collateral shall be automatically released (i) upon the termination of the
Commitments, payment and satisfaction in full in cash of all Secured
Obligations (other than Unliquidated Obligations), the termination, expiration
or, to the extent effected in a manner reasonably acceptable to the relevant

 

93

 

Issuing Banks or as otherwise provided for herein,
cash collateralization or back-stopping of all outstanding Letters of Credit
and the cash collateralization of all Unliquidated Obligations in a manner
satisfactory to the Agent, (ii) upon the sale or other disposition of the
property constituting such Collateral (including as part of or in connection
with any other sale or other disposition permitted hereunder) to any Person other
than another Loan Party, to the extent such sale or other disposition is made
in compliance with the terms of this Agreement (and the Agent may rely
conclusively on a certificate to that effect provided to it by any Loan Party
upon its reasonable request without further inquiry), (iii) to the extent such
Collateral is comprised of property leased to a Loan Party, upon termination or
expiration of such lease, (iv) subject to paragraph (b) of this
Section 9.02, if the release of such Lien is approved, authorized or
ratified in writing by the Required Lenders, (v) to the extent the property
constituting such Collateral is owned by any Loan Guarantor, upon the release
of such Guarantor from its obligations under its Loan Guaranty in accordance
with the provisions of this Agreement, (vi) as required to effect any sale or
other disposition of such Collateral in connection with any exercise of
remedies of the Agent and the Lenders pursuant to the Collateral Documents or
(vii) as required pursuant to the terms of the Intercreditor Agreement; provided
that the Agent may, in its discretion, release the Lien on Collateral valued in
the aggregate not in excess of $5,000,000 during each fiscal year without
consent of any Lender.  Any such
release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Loan Parties in respect of) all interests retained by the Loan Parties,
including the proceeds of any sale, all of which shall continue to constitute
part of the Collateral to the extent required under the provisions of the Loan
Documents.

 

(d) Notwithstanding
anything to the contrary contained in Section 9.02, guarantees, collateral
security documents and related documents executed by Foreign Subsidiaries in
connection with this Agreement may be in a form reasonably determined by the
Agent and may be amended and waived with the consent of the Agent at the
request of the Borrower without the need to obtain the consent of any other
Lenders if such amendment or waiver is delivered in order (i) to comply with
local law or advice of local counsel, (ii) to cure ambiguities or defects or
(iii) to cause such guarantee, collateral security document or other document
to be consistent with this Agreement and the other Loan Documents.

 

(e) If, in connection
with any proposed amendment, waiver or consent requiring the consent of “each
Lender” or “each Lender directly affected thereby”, the consent of the Required
Lenders is obtained, but the consent of other necessary Lenders is not obtained
(any such Lender whose consent is necessary but not obtained being referred to
herein as a “Non-Consenting Lender”), then the Borrower may elect to
replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, concurrently with such replacement, (i) another bank or
other entity which is reasonably satisfactory to the Borrower and the Agent
shall agree, as of such date, to purchase for cash the Loans and other
Obligations due to the Non-Consenting Lender pursuant to an Assignment and
Assumption and to become a Lender for all purposes under this Agreement and to
assume all obligations of the Non-Consenting Lender to be terminated as of such
date and to comply with the requirements of clause (b) of Section 9.04, (ii)
the replacement Lender shall pay the processing and recordation fee referred to
in Section 9.04(b)(ii)(C), if applicable in accordance with the terms of
such Section, (iii) the replacement Lender shall grant its consent with respect
to the applicable proposed amendment, waiver or consent and (iv) the Borrower
shall pay to such Non-Consenting Lender in same day funds on the day of such
replacement (1) all interest, fees and other amounts then accrued but unpaid to
such Non-Consenting Lender by the Borrower hereunder to and including the date
of termination, including, without limitation, payments due to such
Non-Consenting Lender under Sections 2.15 and 2.17, and (2) an amount, if any,
equal to the payment which would have been due to such Lender on the day of
such replacement under Section 2.16 had the Loans of such Non-Consenting Lender
been prepaid on such date rather than sold to the replacement Lender.

 

94

 

SECTION 9.03. Expenses; Indemnity; Damage
Waiver.  (a)  The Borrower
shall pay (i) all reasonable documented out-of-pocket expenses incurred by
the Agent and its Affiliates, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore LLP, counsel for the Agent, in
connection with the syndication and distribution (including, without
limitation, via the internet or through a service such as Intralinks) of the
credit facilities provided for herein, the preparation of the Loan Documents
and related documentation, (ii) all reasonable documented out-of-pocket
expenses incurred by the Agent and its Affiliates, including the reasonable
fees, charges and disbursements of outside legal counsel to the Agent, in
connection with any amendments, modifications or waivers of the provisions of
any Loan Documents (whether or not the transactions contemplated thereby shall
be consummated), (iii) all reasonable documented out-of-pocket expenses
incurred by the Agent, Issuing Banks or the Lenders, including the reasonable
documented fees, charges and disbursements of any counsel for the Agent and for
one law firm retained by the Lenders, in connection with the enforcement,
collection or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made
or Letters of Credit issued hereunder, including all such reasonable documented
out-of-pocket expenses incurred during any workout, restructuring or related
negotiations in respect of such Loans of Letters of Credit, and (iv) subject to
any other provisions of this Agreement, of the Loan Documents or of any
separate agreement entered into by the Borrower and the Agent with respect
thereto, all reasonable documented out-of-pocket expenses incurred by the Agent
in the administration of the Loan Documents. 
Expenses reimbursable by the Borrower under this Section include,
without limiting the generality of the foregoing, subject to any other
applicable provision of any Loan Document, reasonable documented out-of-pocket
costs and expenses incurred in connection with:

 

(i) appraisals;

 

(ii) field examinations
and the preparation of Reports based on the fees charged by a third party
retained by the Agent or (notwithstanding any reference to “out-of-pocket”
above in this Section 9.03) the internally allocated fees for each Person
employed by the Agent with respect to each field examination;

 

(iii) lien and title
searches and title insurance;

 

(iv) taxes, fees and
other charges for recording the Mortgages, filing financing statements and
continuations, and other actions to perfect, protect, and continue the Agent’s
Liens; and

 

(v) forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining the accounts and lock boxes, and costs and expenses of preserving
and protecting the Collateral.

 

Other than to the extent
required to be paid on the Closing Date, all amounts due under this paragraph
(a) shall be payable by the Borrower within ten (10) Business Days of receipt
of an invoice relating thereto and setting forth such expenses in reasonable
detail.

 

(b) The Borrower shall
indemnify the Agent, each Issuing Bank and each Lender, and each Related Party
of any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, penalties, liabilities and related expenses, including the fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of the Loan Documents or any
agreement or instrument contemplated thereby, the performance by the parties
hereto of their respective obligations thereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan
or Letter of Credit or the use of the proceeds therefrom (including any refusal
by an Issuing Bank to honor a demand for payment under a

 

95

 

Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries or to any property owned or operated by
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory and regardless
of whether any Indemnitee is a party thereto (and regardless of whether such
matter is initiated by a third party or by the Borrower, any other Loan Party
or any of their respective Affiliates); provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, penalties, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.

 

(c) To the extent that
the Borrower fails to pay any amount required to be paid by it to the Agent, an
Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Agent, such Issuing Bank or
the Swingline Lender, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, penalty, liability or
related expense, as the case may be, was incurred by or asserted against the
Agent, the Issuing Banks or the Swingline Lender in its capacity as such.

 

(d) To the extent
permitted by applicable law, no party to this Agreement shall assert, and each
hereby waives, any claim against any other party hereto or any Related Party
thereof, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.

 

(e) All amounts due under
this Section shall be paid promptly after written demand therefor.

 

SECTION 9.04. Successors and Assigns.  (a) 
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns permitted
hereby (including any Affiliate of an Issuing Bank that issues any Letter of
Credit), except that (i) the Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section (any attempted assignment or transfer not complying with the terms of
this Section shall be null and void). 
Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of an Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in
paragraph (c) of this Section) and, to the extent expressly contemplated
hereby, the Related Parties of each of the Agent, the Issuing Banks and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b) (i)  Subject to the conditions set forth in
paragraph (b)(ii) below, any Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it) with the prior written consent (such consent not to be unreasonably
withheld or delayed) of:

 

(A) the Borrower, provided that no consent of
the Borrower shall be required for an assignment to another Lender, an
Affiliate of a Lender, an Approved Fund or, if an Event of Default specified in
paragraphs (a), (g) or (h) of Section 7.01 has occurred and is continuing, any

 

96

 

other Eligible Assignee
and provided  further that no consent of the Borrower shall be
required for an assignment during the primary syndication of the Loans to
Persons identified by the Agent to the Borrower on or prior to the Closing Date
and reasonably acceptable to the Borrower;

 

(B) the Agent; and

 

(C) each Issuing Bank.

 

(ii) Assignments shall be subject to the following
additional conditions:

 

(A) except in the case of an assignment to another
Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender’s Commitment or Loans of any
Class, the amount of the Commitment or the principal amount of Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Agent and determined on an aggregate basis in the event of concurrent
assignments to Related Funds (as defined below)) shall not be less than
$1,000,000 unless each of the Borrower and the Agent otherwise consent, provided
that no such consent of the Borrower shall be required if an Event of Default
specified in paragraphs (a), (g) or (h) of Section 7.01 has occurred and is
continuing;

 

(B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement;

 

(C) the parties to each assignment shall execute and
deliver to the Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500 (which fee shall not be payable in the case of
any assignment by any Joint Lead Arranger or any of its Affiliates); and

 

(D) the assignee, if it shall not be a Lender,
shall deliver on or prior to the effective date of such assignment, to the
Agent (1) an Administrative Questionnaire and (2) if applicable, an appropriate
Internal Revenue Service form (such as Form W-8BEN or W-8ECI or any successor
form adopted by the relevant United States taxing authority) as required by
applicable law supporting such assignee’s position that no withholding by any
Borrower or the Agent for United States income tax payable by such assignee in
respect of amounts received by it hereunder is required.

 

The term “Related
Funds” shall mean with respect to any Lender that is an Approved Fund, any
other Approved Fund that is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor.

 

(iii) Subject to acceptance and recording thereof
pursuant to paragraph (b)(iv) of this Section, from and after the
effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03 with
respect to facts and circumstances occurring on or prior to the effective date
of such assignment).  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

 

97

 

(iv) The Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and principal amount of
the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, absent manifest error, and the Borrower, the Agent, the Issuing
Banks and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection
by the Borrower, the Issuing Banks and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.

 

(v) Upon its receipt of a duly completed Assignment
and Assumption executed by an assigning Lender and an assignee, the assignee’s
completed Administrative Questionnaire and tax certifications required by
Section 9.04(b)(ii)(D)(2) (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in
paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register; provided that if either the assigning Lender or the assignee
shall have failed to make any payment required to be made by it pursuant to
Section 2.05, 2.06(d) or (e), 2.07(b), 2.18(c) or 9.03(c), the Agent shall have
no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.

 

(vi) By executing and delivering an Assignment and
Assumption, the assigning Lender thereunder and the assignee thereunder shall
be deemed to confirm to and agree with each other and the other parties hereto
as follows:  (i) such assigning Lender warrants that it is the
legal and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim and that its Commitment, and the outstanding
balances of its Revolving Loans, in each case without giving effect to
assignments thereof which have not become effective, are as set forth in such
Assignment and Assumption, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is an Eligible Assignee, legally authorized to
enter into such Assignment and Assumption; (iv) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most
recent financial statements referred to in Section 3.04(a) or delivered
pursuant to Section 5.01 and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Assumption; (v) such assignee will independently
and without reliance upon the Agent, such assigning Lender or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (vi) such assignee appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent, by the terms hereof, together
with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed
by it as a Lender.

 

(c) (i)  Any Lender may, without the consent of the
Borrower, the Agent, the Issuing Banks or the Swingline Lender, sell
participations to one or more banks or other entities (a “Participant”)

 

98

 

in all or a portion of such Lender’s rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (C) the Borrower, the Agent, the Issuing Banks and
the other Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement
and (D) no such Participant shall be a “creditor” as defined in
Regulation T or a “foreign branch of a broker-dealer” within the meaning
of Regulation X.  Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. 
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and
2.17 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject
to Section 2.18(c) as though it were a Lender.

 

(ii)  A Participant shall not be entitled to
receive any greater payment under Section 2.15 or 2.17 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.17
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 2.17(e) as though it were a Lender.

 

(d) Any Lender may at any
time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Lender, including without
limitation any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(e) Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”)
may grant to a special purpose funding vehicle (an “SPC”), identified as
such in writing from time to time by the Granting Lender to the Agent and the
Borrower, the option to provide to the Borrower all or any part of any Loan
that such Granting Lender would otherwise be obligated to make to the Borrower
pursuant to this Agreement; provided that (i) nothing herein
shall constitute a commitment by any SPC to make any Loan, (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof and (iii) no SPC shall be a “creditor” as
defined in Regulation T or a “foreign branch of a broker-dealer” within
the meaning of Regulation X.  The
making of a Loan by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender.  Each party hereto
hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC
of such option shall increase the costs or expenses or otherwise increase or
change the obligations of the Borrower under this Agreement (including its
obligations under Section 2.15, 2.16 or 2.17), (ii) no SPC shall be liable for
any indemnity or similar payment obligation under this Agreement (all liability
for which shall remain with the Granting Lender) and (iii) the Granting
Lender shall for all purposes including approval of any amendment, waiver or
other modification of any provision of the Loan Documents, remain the Lender of
record hereunder.  In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the

 

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date that is one year and one day after the payment in
full of all outstanding commercial paper or other senior indebtedness of any
SPC, it will not institute against, or join any other Person in instituting
against, such SPC any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under the laws of the United States or any State
thereof.  In addition, notwithstanding
anything to the contrary contained in this Section 9.04, any SPC may
(i) with notice to, but without the prior written consent of, the Borrower
and the Agent and without paying any processing fee therefor, assign all or a
portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by the Borrower and Agent) providing
liquidity and/or credit support to or for the account of such SPC to support
the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC.

 

(f) In the event that any
Lender shall become a Defaulting Lender or S&P, Moody’s and Thompson’s
BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are
insurance companies (or Best’s Insurance Reports, if such insurance company is
not rated by Insurance Watch Ratings Service)) shall downgrade the long-term
certificate deposit ratings of such Lender, and the resulting ratings shall be
below BBB-, Baa3 and C (or BB, in the case of a Lender that is an insurance
company (or B, in the case of an insurance company not rated by InsuranceWatch
Ratings Service)) (or, with respect to any Lender that is not rated by any such
ratings service or provider, the Issuing Banks or the Swingline Lender shall
have reasonably determined that there has occurred a material adverse change in
the financial condition of any such Lender, or a material impairment of the
ability of any such Lender to perform its obligations hereunder, as compared to
such condition or ability as of the date that any such Lender became a Lender)
then an Issuing Bank shall have the right, but not the obligation, at its own
expense, upon notice to such Lender and the Agent, to replace such Lender with
an assignee (in accordance with and subject to the restrictions contained in
paragraph (b) above), and such Lender hereby agrees to transfer and assign
without recourse (in accordance with and subject to the restrictions contained
in paragraph (b) above) all its interests, rights and obligations in
respect of its Commitment to such assignee; provided, however, that
(i) no such assignment shall conflict with any law, rule and regulation or
order of any Governmental Authority and (ii) such Issuing Bank or such
assignee, as the case may be, shall pay to such Lender in immediately available
funds on the date of such assignment the principal of and interest accrued to
the date of payment on the Loans made by such Lender hereunder and all other
amounts accrued for such Lender’s account or owed to it hereunder.

 

SECTION 9.05. Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Agent, an Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any accrued
interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated.  The provisions of Sections 2.15, 2.16, 2.17
and 9.03 and Article VIII shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit
and the Commitments or the termination of this Agreement or any provision
hereof.

 

SECTION 9.06. Counterparts; Integration;
Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This

 

100

 

Agreement, the other Loan Documents and the Fee Letter
and any separate letter agreements with respect to fees payable to the Agent
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the Agent
and when the Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and thereafter
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. 
Delivery of an executed counterpart of a signature page of this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

SECTION 9.07. Severability.  To the extent permitted by law, any provision
of any Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

 

SECTION 9.08. Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
or any Loan Guarantor against any of and all the Secured Obligations held by
such Lender, irrespective of whether or not such Lender shall have made any
demand under the Loan Documents and although such obligations may be
unmatured.  The applicable Lender shall
notify the Borrower and the Agent of such set-off or application, provided
that any failure to give or any delay in giving such notice shall not affect
the validity of any such set-off or application under this Section.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have. NOTWITHSTANDING THE FOREGOING, AT ANY TIME THAT ANY
OF THE SECURED OBLIGATIONS SHALL BE SECURED BY REAL PROPERTY LOCATED IN
CALIFORNIA, NO LENDER SHALL EXERCISE A RIGHT OF SETOFF, LENDER’S LIEN OR
COUNTERCLAIM OR TAKE ANY COURT OR ADMINISTRATIVE ACTION OR INSTITUTE ANY
PROCEEDING TO ENFORCE ANY PROVISION OF THIS AGREEMENT OR ANY LOAN DOCUMENT
UNLESS IT IS TAKEN WITH THE CONSENT OF THE LENDERS REQUIRED BY SECTION 9.02 OF
THIS AGREEMENT, IF SUCH SETOFF OR ACTION OR PROCEEDING WOULD OR MIGHT (PURSUANT
TO SECTIONS 580a, 580b, 580d AND 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE
OR SECTION 2924 OF THE CALIFORNIA CIVIL CODE, IF APPLICABLE, OR OTHERWISE) AFFECT
OR IMPAIR THE VALIDITY, PRIORITY, OR ENFORCEABILITY OF THE LIENS GRANTED TO
AGENT PURSUANT TO THE COLLATERAL DOCUMENTS OR THE ENFORCEABILITY OF THE
OBLIGATIONS HEREUNDER, AND ANY ATTEMPTED EXERCISE BY ANY LENDER OR ANY SUCH
RIGHT WITHOUT OBTAINING SUCH CONSENT OF THE PARTIES AS REQUIRED ABOVE, SHALL BE
NULL AND VOID.  THIS PARAGRAPH SHALL BE
SOLELY FOR THE BENEFIT OF EACH OF THE LENDERS.

 

SECTION 9.09. Governing Law; Jurisdiction;
Consent to Service of Process. 
(a)  THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN
OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.  EACH
LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE
WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS
OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS MOST RECENTLY PUBLISHED AND IN EFFECT, ON THE

 

101

 

DATE SUCH LETTER OF CREDIT WAS ISSUED, BY THE
INTERNATIONAL CHAMBER OF COMMERCE (THE “UNIFORM CUSTOMS”) AND, AS TO MATTERS
NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.

 

(b) Each Loan Party
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any U.S. Federal or New York State court
sitting in the Borough of Manhattan, New York, New York in any action or
proceeding arising out of or relating to any Loan Documents, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement or any other Loan Document shall affect any right that the Agent, any
Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against any Loan Party or
its properties in the courts of any jurisdiction.

 

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

 

(d) To the extent
permitted by law, each party to this Agreement hereby irrevocably waives
personal service of any and all process upon it and agrees that all such
service of process may be made by registered mail (return receipt requested)
directed to it at its address for notices as provided for in
Section 9.01.  Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

 

SECTION 9.10. WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11. Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

SECTION 9.12. Confidentiality.  Each of the Agent, each Issuing Bank and the
each Lender agrees (and each Lender agrees to cause its SPC, if any) to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being

 

102

 

understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory, governmental or administrative authority, (c) to the
extent required by law or by any subpoena or similar legal process, (d) to any
other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, including, without limitation, any SPC, (ii) any pledgee
referred to in Section 9.04(d) or (iii) any actual or prospective counterparty
(or its advisors) to any swap or derivative transaction relating to the Loan
Parties and their obligations, (g) with the consent of the Borrower or
(h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes
available to the Agent, an Issuing Bank or any Lender on a nonconfidential
basis from a source other than the Borrower. 
For the purposes of this Section, “Information” means all
information received from any Loan Party relating to the Loan Parties or their
businesses, the Sponsors or the Transactions other than any such information
that is available to the Agent, any Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by any Loan Party.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

SECTION 9.13. Several Obligations; Nonreliance;
Violation of Law.  The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder
shall not relieve any other Lender from any of its obligations hereunder. Each
Lender hereby represents that (a) it is not relying on or looking to any Margin
Stock for the repayment of the Borrowings provided for herein and acknowledges
that the Collateral shall not include any Margin Stock and (b) it is not
and will not become a “creditor” as defined in Regulation T or a “foreign
branch of a broker-dealer” within the meaning of Regulation X.  Anything contained in this Agreement to the
contrary notwithstanding, neither the Issuing Banks nor any Lender shall be
obligated to extend credit to the Borrower in violation of any Requirement of
Law.

 

SECTION 9.14. USA PATRIOT Act.  Each Lender that is subject to the requirements
of the USA Patriot Act hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act, it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow such
Lender to identify the Borrower in accordance with the USA Patriot Act.

 

SECTION 9.15. Disclosure.  Each Loan Party and each Lender hereby
acknowledges and agrees that the Agent and/or its Affiliates from time to time
may hold investments in, make other loans to or have other relationships with
any of the Loan Parties and their respective Affiliates. In addition, each Loan
Party and each Lender hereby acknowledges that (i) the Agent or its Affiliate
will make a loan to the Borrower under the Senior Secured Term Loan Facility
and (ii) an Affiliate of the Agent will be an initial purchaser of the New
Notes.

 

SECTION 9.16. Appointment for Perfection.  Each Lender hereby appoints each other Lender
as its agent for the purpose of perfecting Liens, for the benefit of the Agent
and the Lenders, in assets which, in accordance with Article 9 of the UCC or
any other applicable law can be perfected only by possession.  Should any Lender (other than the Agent)
obtain possession of any such Collateral, such Lender shall notify the Agent
thereof, and, promptly upon the Agent’s request therefor shall deliver such
Collateral to the Agent or otherwise deal with such Collateral in accordance
with the Agent’s instructions.

 

103

 

SECTION 9.17. Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.

 

SECTION 9.18. Effectiveness of the Merger.  Neiman Marcus shall have no rights or obligations
hereunder until the consummation of the Merger and any representations and
warranties of Neiman Marcus hereunder shall not become effective until such
time.  Upon consummation of the Merger,
Neiman Marcus succeed to all the rights and obligations of Merger Sub as the
Borrower under this Agreement and all representations and warranties of Neiman
Marcus as the Borrower shall become effective as of the date hereof, without
any further action by any Person.

 

SECTION 9.19. INTERCREDITOR AGREEMENT.  REFERENCE
IS MADE TO THE INTERCREDITOR AGREEMENT. 
EACH LENDER HEREUNDER (A) CONSENTS TO THE SUBORDINATION OF LIENS
PROVIDED FOR IN THE INTERCREDITOR AGREEMENT, (B) AGREES THAT IT WILL BE
BOUND BY AND WILL TAKE NO ACTIONS CONTRARY TO THE PROVISIONS OF THE INTERCREDITOR
AGREEMENT AND (C) AUTHORIZES AND INSTRUCTS THE AGENT TO ENTER INTO THE
INTERCREDITOR AGREEMENT AS REVOLVING FACILITY AGENT AND ON BEHALF OF SUCH
LENDER.  THE FOREGOING PROVISIONS ARE
INTENDED AS AN INDUCEMENT TO THE LENDERS UNDER THIS AGREEMENT TO EXTEND CREDIT
AND SUCH LENDERS ARE INTENDED THIRD PARTY BENEFICIARIES OF SUCH PROVISIONS AND
THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.

 

ARTICLE X

 

Loan Guaranty 

 

SECTION 10.01. Guaranty.  Each Loan Guarantor hereby agrees that it is
jointly and severally liable for, and, as primary obligor and not merely as
surety, and absolutely and unconditionally guarantees to the Lenders the prompt
payment when due, whether at stated maturity, upon acceleration or otherwise,
and at all times thereafter, of the Secured Obligations (collectively the “Guaranteed
Obligations”). Each Loan Guarantor further agrees that the Guaranteed
Obligations may be extended or renewed in whole or in part without notice to or
further assent from it, and that it remains bound upon its guarantee
notwithstanding any such extension or renewal.

 

SECTION 10.02. Guaranty of Payment.  This Loan Guaranty is a guaranty of payment
and not of collection. Each Loan Guarantor waives any right to require the
Agent, any Issuing Bank or any Lender to sue the Borrower, any Loan Guarantor,
any other guarantor, or any other Person obligated for all or any part of the
Guaranteed Obligations (each, an “Obligated Party”), or otherwise to
enforce its payment against any collateral securing all or any part of the
Guaranteed Obligations.

 

104

 

SECTION 10.03. No Discharge or Diminishment
of Loan Guaranty. 
(a)  Except as otherwise provided for herein, the obligations
of each Loan Guarantor hereunder are unconditional and absolute and not subject
to any reduction, limitation, impairment or termination for any reason (other
than the indefeasible payment in full in cash of the Guaranteed Obligations),
including:  (i) any claim of waiver,
release, extension, renewal, settlement, surrender, alteration, or compromise
of any of the Guaranteed Obligations, by operation of law or otherwise; (ii)
any change in the corporate existence, structure or ownership of the Borrower
or any other guarantor of or other Person liable for any of the Guaranteed
Obligations; (iii) any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any Obligated Party, or their assets or any resulting
release or discharge of any obligation of any Obligated Party; or (iv) the
existence of any claim, setoff or other rights which any Loan Guarantor may
have at any time against any Obligated Party, the Agent, any Issuing Bank, any
Lender, or any other Person, whether in connection herewith or in any unrelated
transactions.

 

(b) The obligations of
each Loan Guarantor hereunder are not subject to any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of the
invalidity, illegality, or unenforceability of any of the Guaranteed
Obligations or otherwise, or any provision of applicable law or regulation
purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.

 

(c) Further, the
obligations of any Loan Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of the Agent, any Issuing Bank or any
Lender to assert any claim or demand or to enforce any remedy with respect to
all or any part of the Guaranteed Obligations; (ii) any waiver or modification
of or supplement to any provision of any agreement relating to the Guaranteed
Obligations; (iii) any release, non-perfection, or invalidity of any indirect
or direct security for the obligations of the Borrower for all or any part of
the Guaranteed Obligations or any obligations of any other guarantor of or
other Person liable for any of the Guaranteed Obligations; (iv) any action or
failure to act by the Agent, any Issuing Bank or any Lender with respect to any
collateral securing any part of the Guaranteed Obligations; or (v) any default,
failure or delay, willful or otherwise, in the payment or performance of any of
the Guaranteed Obligations, or any other circumstance, act, omission or delay
that might in any manner or to any extent vary the risk of such Loan Guarantor
or that would otherwise operate as a discharge of any Loan Guarantor as a
matter of law or equity (other than the indefeasible payment in full in cash of
the Guaranteed Obligations).

 

SECTION 10.04. Defenses Waived.  To the fullest extent permitted by applicable
law, each Loan Guarantor hereby waives any defense based on or arising out of
any defense of the Borrower or any Loan Guarantor or the unenforceability of
all or any part of the Guaranteed Obligations from any cause, or the cessation
from any cause of the liability of the Borrower or any Loan Guarantor, other
than the indefeasible payment in full in cash of the Guaranteed Obligations.
Without limiting the generality of the foregoing, each Loan Guarantor
irrevocably waives acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against any
Obligated Party, or any other Person. 
The Agent may, at its election, foreclose on any Collateral held by it
by one or more judicial or nonjudicial sales, accept an assignment of any such
Collateral in lieu of foreclosure or otherwise act or fail to act with respect
to any collateral securing all or a part of the Guaranteed Obligations, compromise
or adjust any part of the Guaranteed Obligations, make any other accommodation
with any Obligated Party or exercise any other right or remedy available to it
against any Obligated Party, without affecting or impairing in any way the
liability of such Loan Guarantor under this Loan Guaranty except to the extent
the Guaranteed Obligations have been fully and indefeasibly paid in cash.  To the fullest extent permitted by applicable
law, each Loan Guarantor waives any defense arising out of any such election
even though that election may operate, pursuant to applicable law, to impair or
extinguish any right of reimbursement or subrogation or other right or remedy
of any Loan Guarantor against any Obligated Party or any security.

 

105

 

SECTION 10.05. Rights of Subrogation.  No Loan Guarantor will assert any right,
claim or cause of action, including, without limitation, a claim of
subrogation, contribution or indemnification that it has against any Obligated
Party, or any collateral, until the Loan Parties and the Loan Guarantors have
fully performed all their obligations to the Agent, the Issuing Banks and the
Lenders.

 

SECTION 10.06. Reinstatement; Stay of Acceleration.  If at any time any payment of any portion of
the Guaranteed Obligations is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, or reorganization of the Borrower or
otherwise, each Loan Guarantor’s obligations under this Loan Guaranty with
respect to that payment shall be reinstated at such time as though the payment
had not been made. If acceleration of the time for payment of any of the
Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Lender.

 

SECTION 10.07. Information.  Each Loan Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower’s financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees
that neither the Agent, any Issuing Bank nor any Lender shall have any duty to
advise any Loan Guarantor of information known to it regarding those
circumstances or risks.

 

SECTION 10.08. Taxes. All payments of the Guaranteed
Obligations will be made by each Loan Guarantor free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if any
Loan Guarantor shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Loan Guarantor
shall make such deductions and (iii) such Loan Guarantor shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

SECTION 10.09. Maximum Liability.  The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law,
or any state, Federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of
any Loan Guarantor under this Loan Guaranty would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount
of such Loan Guarantor’s liability under this Loan Guaranty, then,
notwithstanding any other provision of this Loan Guaranty to the contrary, the
amount of such liability shall, without any further action by the Loan
Guarantors or the Lenders, be automatically limited and reduced to the highest
amount that is valid and enforceable as determined in such action or proceeding
(such highest amount determined hereunder being the relevant Loan Guarantor’s “Maximum
Liability”).  This Section with
respect to the Maximum Liability of each Loan Guarantor is intended solely to
preserve the rights of the Lenders to the maximum extent not subject to
avoidance under applicable law, and no Loan Guarantor nor any other Person or
entity shall have any right or claim under this Section with respect to such
Maximum Liability, except to the extent necessary so that the obligations of
any Loan Guarantor hereunder shall not be rendered voidable under applicable
law. Each Loan Guarantor agrees that the Guaranteed Obligations may at any time
and from time to time exceed the Maximum Liability of each Loan Guarantor
without impairing this Loan Guaranty or affecting the rights and remedies of
the Lenders hereunder, provided, that nothing in this sentence shall be
construed to increase any Loan Guarantor’s obligations hereunder beyond its
Maximum Liability.

 

106

 

SECTION 10.10. Contribution.  In the event any Loan Guarantor (a “Paying
Guarantor”) shall make any payment or payments under this Loan Guaranty or
shall suffer any loss as a result of any realization upon any collateral
granted by it to secure its obligations under this Loan Guaranty, each other
Loan Guarantor (each a “Non-Paying Guarantor”) shall contribute to such
Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Guarantor
Percentage” of such payment or payments made, or losses suffered, by such
Paying Guarantor.  For purposes of this
Article X, each Non-Paying Guarantor’s “Guarantor Percentage” with
respect to any such payment or loss by a Paying Guarantor shall be determined
as of the date on which such payment or loss was made by reference to the ratio
of (i) such Non-Paying Guarantor’s Maximum Liability as of such date (without
giving effect to any right to receive, or obligation to make, any contribution
hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been
determined, the aggregate amount of all monies received by such Non-Paying
Guarantor from the Borrower after the date hereof (whether by loan, capital
infusion or by other means) to (ii) the aggregate Maximum Liability of all Loan
Guarantors hereunder (including such Paying Guarantor) as of such date (without
giving effect to any right to receive, or obligation to make, any contribution
hereunder), or to the extent that a Maximum Liability has not been determined
for any Loan Guarantor, the aggregate amount of all monies received by such
Loan Guarantors from the Borrower after the date hereof (whether by loan,
capital infusion or by other means). 
Nothing in this provision shall affect any Loan Guarantor’s several
liability for the entire amount of the Guaranteed Obligations (up to such Loan
Guarantor’s Maximum Liability).  Each of
the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of
the Guaranteed Obligations.  This
provision is for the benefit of both the Agent, the Issuing Banks, the Lenders and
the Loan Guarantors and may be enforced by any one, or more, or all of them in
accordance with the terms hereof.

 

SECTION 10.11. Liability Cumulative.  The liability of each Loan Party as a Loan
Guarantor under this Article X is in addition to and shall be cumulative with
all liabilities of each Loan Party to the Agent, the Issuing Banks and the
Lenders under this Agreement and the other Loan Documents to which such Loan
Party is a party or in respect of any obligations or liabilities of the other
Loan Parties, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.

 

SECTION 10.12. Release of Loan Guarantors.  Notwithstanding anything in
Section 9.02(b) to the contrary (i) a Loan Guarantor that is a
Subsidiary shall automatically be released from its obligations hereunder and
its Loan Guaranty shall be automatically released upon the consummation of any
transaction permitted hereunder as a result of which such Loan Guarantor ceases
to be a Subsidiary of the Borrower and (ii) so long as no Event of Default
has occurred and is continuing, (A) if a Loan Guarantor is or becomes an
Immaterial Subsidiary, and such release would not result in any Immaterial Subsidiary
being required pursuant to Section 5.11(e) to become a Loan Party
hereunder (except to the extent that on and as of the date of such release, one
or more other Immaterial Subsidiaries become Loan Guarantors hereunder and the
provisions of Section 5.11(e) are satisfied upon giving effect to all such
additions and releases) or (B) a Loan Guarantor that is a Subsidiary is
designated as an Unrestricted Subsidiary in accordance with Section 5.13, then,
in the case of each of clauses (A) and (B), such Loan Guarantor shall be
automatically released from its obligations hereunder and its Loan Guaranty
shall be automatically released upon notification thereof from the Borrower to
the Agent.  In connection with any such
release, the Agent shall execute and deliver to any Loan Guarantor that is a
Subsidiary, at such Loan Guarantor’s expense, all documents that such Loan
Guarantor shall reasonably request to evidence termination or release.  Any execution and delivery of documents
pursuant to the preceding sentence of this Section 10.12 shall be without
recourse to or warranty by the Agent.

 

107

 

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

 

	
   

  	
  NEWTON ACQUISITION MERGER SUB, INC.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Kewsong Lee

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Kewsong Lee

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEWTON ACQUISITION,
  INC.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and

  General Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE NEIMAN MARCUS
  GROUP, INC.,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President
  and

  General Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEIMAN MARCUS SPECIAL
  EVENTS, INC.

  	
   

  
	
   

  	
  NEMA BEVERAGE
  CORPORATION

  	
   

  
	
   

  	
  NM FINANCIAL SERVICES,
  INC.

  	
   

  
	
   

  	
  NM KITCHENS, INC.

  	
   

  
	
   

  	
  BERGDORFGOODMAN.COM,
  LLC

  	
   

  
	
   

  	
  BERGDORF GOODMAN, INC.

  	
   

  
	
   

  	
  BERGDORF GRAPHICS, INC.

  	
   

  
	
   

  	
  NEIMAN MARCUS HOLDINGS,
  INC.

  	
   

  
	
   

  	
  NEMA BEVERAGE HOLDING
  CORPORATION

  	
   

  
	
   

  	
  NEMA BEVERAGE PARENT
  CORPORATION

  	
   

  
	
   

  	
  WORTH AVENUE LEASING
  COMPANY

  	
   

  
	
   

  	
  NMGP, LLC,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

108

 

	
   

  	
  NM NEVADA TRUST,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

109

 

	
   

  	
  DEUTSCHE BANK TRUST
  COMPANY AMERICAS,

  individually and as Agent, Issuing Bank and Swingline

  Lender,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Mark E. Funk

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark E. Funk

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Marguerite Sutton

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Marguerite Sutton

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT SUISSE, CAYMAN
  ISLANDS BRANCH, as

  Issuing Bank,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Robert Hetu

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert Hetu

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Vanessa Gomez

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Vanessa Gomez

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

110

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