Neiman Marcus 2008 Annual Report Download - page 778

set forth in Schedule 1.1 (f) of the Program Agreement, as amended via the Sixth Amendment to the Program Agreement,
dated as of July 17, 2007 ("Sixth Amendment"), shall continue to apply. For the avoidance of doubt, the High Collar and Low
Collar meanings from the Sixth Amendment shall apply during the High/Low Collar Review Period.
7. Schedule 4.6(c) of the Agreement is amended as follows:
(a) by deleting the "Collections" (Net Write-Off Percentages to Credit Sales) target from such Schedule; and
(b) by adding the following paragraph at the end of paragraph (A) thereof:
"Notwithstanding the foregoing provisions of this Schedule, in the event that the Rolling 12 Net Write-Off Ratio for any two
consecutive calendar months is greater than [***], then the Risk Management Targets set forth in this Schedule 4.6(c) shall
be suspended. Once the Rolling 12 Net Write-Off Ratio for a calendar month is below [***], the Risk Management Targets
set forth in this Schedule 4.6(c) shall be automatically reinstated (however, if the Roiling 12 Net Write-Off Ratio range is
between [***]to [***]for [***]consecutive calendar months, the Parties shall meet to discuss reinstatement of the Risk
Management Targets, timing of such and whether to readjust such Risk Management Targets further), and HSBC shall have
[***] days to achieve such Risk Management Targets, as they may be adjusted, after such reinstatement. If the Risk
Management Targets have not been met by the end of such [***]-day period, the NMG Companies shall have the right to
terminate the Agreement pursuant to Section 15.2(h) thereof."
8. The attached Schedule 7.1 (e) replaces in its entirety Schedule 7.1 (c) to the Agreement.
9. The following new Section 7.1 (d) shall be added at the end of Section 7.1:
"(d) On each "Report Date" reflected on Schedule 7.1 (d), Bank will deliver to NMG a calculation of (i) the Risk
Adjusted Margin, the Net Write-Off Ratio, Variable Break-Even Margin and each component of each of the foregoing
(including, in the case of Gross Financing Income, separately reported amounts in respect of finance charges, late fees and
fee waivers), in each case calculated as if the Reference Period were the period indicated as such in such Schedule and (ii) the
dollar amount that would be payable by Bank to NMG (or by NMG to Bank) pursuant to each of Section 9.1(a)(vii) (A) and
(B) and 9.1(a)(viii) if such payment were due in respect of the reported period. Such calculations shall be in such form and
shall reflect such detail with respect to each of the foregoing items, and each component thereof) as shall be mutually agreed
upon by the Parties. The financial information set .forth in such reports from HSBC is derived from its General Ledger (GL)
and/or its supporting financial accounting subsystems.
10. The following shall be added as new Sections 9,1 (a) (vii), (viii) and (ix) of the Agreement:
"(vii) Bank will pay to NMG the following amounts in respect of the RAM Measurement Period, with interim
annual payments in respect of the total amount payable (calculated on an estimated basis based on the relevant Reference
Period) being reflected on and paid pursuant to each Year-End Settlement Sheet, and with the final payment in respect of the
full RAM Measurement Period being due and payable on [***]:
(A) [***] of the product of (1) the amount, if any, by which the Risk Adjusted Margin exceeds [***] times (2) the
Average Gross receivables Amount; provided, however, that, in calculating any payment in respect of the total amount owing
by Bank pursuant to this clause (A), there shall be deducted from such payment the net amount previously paid by Bank
pursuant to this clause (A) (after adding all previous interim payments and deducting all previous interim refunds paid by
NMG to Bank pursuant to the following sentence of this clause (A)). In the event that the amount owing by Bank to NMG
pursuant to this clause (A) is less than the net amount already paid by Bank to NMG pursuant to this clause (A) (after
applying this sentence), NMG shall refund to Bank the excess of the net amount previously paid by Bank over the total
amount payable by Bank in respect of the RAM Measurement Period (or the relevant Reference Period, as applicable). For
the avoidance of doubt, in no event shall the total payments by NMG pursuant to this clause (A) exceed the total amounts
received by it from Bank pursuant to this clause (A); and
(B) [***] of the amount, if any, by which the Variable Break-Even Margin exceeds zero; provided, however, that,
in calculating any payment in respect of the total amount owing by Bank