Neiman Marcus 2006 Annual Report Download - page 126

corporation in the Acquisition, NMG assumed all the obligations of Newton Acquisition Merger Sub, Inc. under the Senior Subordinated
Indenture. The Senior Subordinated Notes mature on October 15, 2015. Interest on the Senior Subordinated Notes is payable in cash
semi-annually in arrears on each April 15 and October 15, commencing April 15, 2006.
The Senior Subordinated Notes are fully and unconditionally guaranteed, on a joint and several unsecured, senior subordinated
basis, by each of NMG's wholly-owned domestic subsidiaries that guarantee NMG's obligations under its Senior Secured Credit Facilities
and by the Company. The Senior Subordinated Notes and the guarantees thereof are NMG's and the guarantors' unsecured, senior
subordinated obligations and rank (i) junior to all of NMG's and the guarantors' existing and future senior indebtedness, including the
Senior Notes and any borrowings under NMG's Senior Secured Credit Facilities, and the guarantees thereof and NMG's 2028 Debentures;
(ii) equally with any of NMG's and the guarantors' future senior subordinated indebtedness; and (iii) senior to any of NMG's and the
guarantors' future subordinated indebtedness. In addition, the Senior Subordinated Notes are structurally subordinated to all existing and
future liabilities, including trade payables, of NMG's subsidiaries that are not providing guarantees.
NMG is not required to make any mandatory redemption or sinking fund payments with respect to the Senior Subordinated
Notes, but, under certain circumstances, NMG may be required to offer to purchase Senior Subordinated Notes as described below. The
Company may from time to time acquire Senior Subordinated Notes by means other than a redemption, whether by tender offer, in open
market purchases, through negotiated transactions or otherwise, in accordance with applicable securities laws.
Except as described below, the Senior Subordinated Notes are not redeemable at NMG's option prior to October 15, 2010. From
and after October 15, 2010, NMG may redeem the Senior Subordinated Notes, in whole or in part, at a redemption price equal to
105.188% of principal amount, declining annually to 100% of principal amount on October 15, 2013, plus accrued and unpaid interest,
and Additional Interest (as defined in the Senior Subordinated Indenture), if any, thereon to the applicable redemption date.
Prior to October 15, 2008, NMG may, at its option, subject to certain conditions, redeem up to 35% of the original aggregate
principal amount of Senior Subordinated Notes at a redemption price equal to 110.375% of the aggregate principal amount thereof, plus
accrued and unpaid interest, and Additional Interest, if any, thereon to the redemption date, with the net cash proceeds of one or more
equity offerings of NMG or any direct or indirect parent of NMG to the extent such net proceeds are contributed to NMG.
At any time prior to October 15, 2010, NMG also may redeem all or a part of the Senior Subordinated Notes at a redemption
price equal to 100% of the principal amount of Senior Subordinated Notes redeemed plus an applicable premium, as provided in the
Senior Subordinated Indenture, and accrued and unpaid interest and Additional Interest, if any, to the redemption date.
Upon the occurrence of a change of control (as defined in the Senior Subordinated Indenture), NMG will make an offer to
purchase all of the Senior Subordinated Notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest, and Additional Interest, if any, to the date of purchase.
The indenture governing the Senior Subordinated Notes contains covenants substantially similar to those applicable to NMG's
Senior Notes described above. The Senior Subordinated Indenture also provides for events of default, which, if any of them occurs, would
permit or require the principal, premium, if any, interest and any other monetary obligations on all outstanding Senior Notes to be due and
payable immediately, subject to certain exceptions.
The fair value of NMG's Senior Subordinated Notes at July 28, 2007 was approximately $528.8 million.
Redemption of 2008 Notes. In May 1998, NMG issued $125.0 million aggregate principal amount of its 2008 Notes. Upon
closing of the Transactions, NMG called its 2008 Notes for redemption pursuant to their terms. On November 7, 2005, NMG used
$134.7 million of reserved cash to redeem its 2008 Notes, which included a call premium of $6.2 million plus accrued interest of
$3.5 million through the redemption date.
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