Neiman Marcus 2008 Annual Report Download - page 691

SCHEDULE 7.3(c)
Primary Servicer Defaults
I. Primary Servicer Default. It shall be a "Primary Servicer Default" if either of the events set forth below shall occur and be
continuing and remain unremedied prior to the expiration of the specified period:
(a) Significant Failure. If Primary Servicer (i) is more than [***] below the target for any Starred SLA in any Fiscal
Month, (ii) fails to meet any individual Starred SLA in two (2) consecutive Fiscal Months or (iii) fails to meet any Starred SLA four
(4) times in any twelve (12) Fiscal Month period (including multiple breaches of the same and individual breaches of different Starred
SLAs) (each, a "Significant Failure").
(b) Regulatory Failure. If Primary Servicer fails to meet an SLA designated as a regulatory-based SLA on Schedule
7.3(a) (a "Regulatory SLA") and such failure results in a breach by Primary Servicer of Applicable Law (such failure, a "Regulatory
Failure").
II. Remedies.
(a) In the event of a Significant Failure, Primary Servicer shall: (A) promptly report to NMG the reasons for the Starred
SLA failure(s); (B) within thirty (30) days of such Significant Failure, propose a remediation plan for taking such action as Primary
Servicer deems necessary to correct and prevent recurrence of such failure(s); and (C) subject to NMG's agreement, implement the
remediation plan as soon as practicable. However, under no circumstances shall the time period between NMG's agreement to the
remediation plan and completion of such plan exceed two (2) months.
(b) If Primary Servicer has an additional failure of any of the same Starred SLA(s) ("Subsequent Failure") during the
twelve (12) Fiscal Months following the occurrence of any Significant Failure, Primary Servicer shall pay NMG Two Hundred
Thousand Dollars [***], within fifteen (15) days of the end of such Fiscal Month, for each such Subsequent Failure.
(c) Upon the occurrence of the second Subsequent Failure and each additional Subsequent Failure of the same Starred
SLA during the twenty four (24) Fiscal Months following a Significant Failure or upon the occurrence of a Regulatory Failure,
Primary Servicer shall pay NMG Five Hundred Thousand Dollars [***], within fifteen (15) days of the end of such Fiscal Month, per
each additional Subsequent Failure.
(d) Upon the occurrence of (i) the third and each additional Subsequent Failure of the same Starred SLA during the
twenty four (24) Fiscal Months following a Significant Failure or (ii) a second Regulatory Failure of the same Regulatory SLA, NMG
shall, in addition to payment as provided in paragraph (c) above, have the right to terminate the Program Agreement by providing
thirty (30) days prior written notice to Bank, in which event the parties shall have the rights set forth in Article XVII; provided,
however, that prior to NMG electing to terminate the Program Agreement, the Management Committee shall meet to discuss the
occurrence of the Subsequent Failure and shall determine whether such SLA should be modified. If the Management Committee
determines that such SLA shall be modified, then NMG shall not be entitled to terminate the Program Agreement as a result of the
Subsequent Failure discussed at the meeting of the