Neiman Marcus 2008 Annual Report Download - page 113

Table of Contents
capacity under our $600.0 million revolving credit facility. Accordingly, we have elected to pay PIK Interest for the three quarterly
interest periods ending October 14, 2009 and to make such interest payments with the issuance of additional Senior Notes at the PIK
Interest rate of 9.75% instead of paying interest in cash. As a result, the original principal amount of Senior Notes of $700.0 million
increased by $17.1 million on April 14, 2009 and $17.4 million on July 14, 2009.
Prior to the beginning of each eligible interest period in the future, we will evaluate whether to continue utilizing this PIK
feature, taking into account market conditions and other relevant factors at that time. After October 15, 2010, we are required to make
all interest payments on the Senior Notes entirely in cash.
The Senior Notes are fully and unconditionally guaranteed, on a joint and several unsecured, senior 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 Notes and the guarantees thereof are NMG's and the guarantors' unsecured, senior obligations and rank (i) equal in the
right of payment with all of NMG's and the guarantors' existing and future senior indebtedness, including any borrowings under
NMG's Senior Secured Credit Facilities and the guarantees thereof and NMG's 2028 Debentures; and (ii) senior to all of NMG's and
its guarantors' existing and future subordinated indebtedness, including the Senior Subordinated Notes due 2015 and the guarantees
thereof. The Senior Notes also are effectively junior in priority to NMG's and its guarantors' obligations under all secured
indebtedness, including NMG's Senior Secured Credit Facilities, the 2028 Debentures, and any other secured obligations of NMG, in
each case, to the extent of the value of the assets securing such obligations. In addition, the Senior 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 Notes, but
under certain circumstances, NMG may be required to offer to purchase Senior Notes as described below. NMG may from time to
time acquire Senior 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 Notes are not redeemable at NMG's option prior to October 15, 2010. From and after
October 15, 2010, NMG may redeem the Senior Notes, in whole or in part, at a redemption price equal to 104.5% of principal amount,
declining annually to 100% of the principal amount on October 15, 2013, plus accrued and unpaid interest, and Additional Interest (as
defined in the Senior Indenture), if any, thereon to the applicable redemption date.
At any time prior to October 15, 2010, NMG may redeem all or a part of the Senior Notes at a redemption price equal to
100% of the principal amount of Senior Notes redeemed plus an applicable premium, as provided in the Senior 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 Indenture), each holder of the Senior Notes has the right
to require NMG to repurchase some or all of such holder's Senior 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 Notes contains covenants that limit NMG's ability and certain of its subsidiaries' ability
to:
• incur additional indebtedness;
• pay dividends on NMG's capital stock or redeem, repurchase or retire NMG's capital stock or subordinated
indebtedness;
• make investments;
• create restrictions on the payment of dividends or other amounts to NMG from its restricted subsidiaries that are not
guarantors of the notes;
• engage in transactions with NMG's affiliates;
• sell assets, including capital stock of NMG's subsidiaries;
• consolidate or merge;
• create liens; and
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