Neiman Marcus 2009 Annual Report Download - page 111

Table of Contents
and (ii) the borrowing base and (b) $60 million, NMG will be required to maintain a pro forma ratio of consolidated EBITDA to
consolidated Fixed Charges (as such terms are defined in the credit agreement) of at least 1.1 to 1.0. On July 31, 2010, NMG had no
borrowings outstanding under this facility, $31.1 million of outstanding letters of credit and $508.9 million of unused borrowing
availability.
The Asset-Based Revolving Credit Facility provides that NMG has the right at any time to request up to $300 million of
additional revolving facility commitments and/or incremental term loans; provided that the aggregate amount of loan commitments
under the Asset-Based Revolving Credit Facility may not exceed $800 million. However, the lenders are under no obligation to
provide any such additional commitments or loans, and any increase in commitments or incremental term loans will be subject to
customary conditions precedent. If NMG were to request any such additional commitments and the existing lenders or new lenders
were to agree to provide such commitments, the Asset-Based Revolving Credit Facility size could be increased to up to $800 million,
but NMG's ability to borrow would still be limited by the amount of the borrowing base. Incremental term loans may be exchanged
by NMG for any of NMG's existing senior notes and senior subordinated notes, or the cash proceeds of any incremental term loans
may be used to repurchase any of such notes, but neither the incremental term loans nor the proceeds thereof may be used for any
other purpose.
Borrowings under the Asset-Based Revolving Credit Facility bear interest at a rate per annum equal to, at NMG's option,
either (a) a base rate determined by reference to the highest of (i) a defined prime rate, (ii) the federal funds effective rate plus 1/2 of
1% or (iii) a one-month LIBOR rate plus 1% or (b) a LIBOR rate, subject to certain adjustments, in each case plus an applicable
margin. The applicable margin is up to 3.50% with respect to base rate borrowings and up to 4.50% with respect to LIBOR
borrowings, provided that until October 1, 2010, the applicable margin will be 3.25% with respect to base rate borrowings and 4.25%
with respect to LIBOR borrowings. The applicable margin is subject to adjustment based on the historical availability under the
Asset-Based Revolving Credit Facility. In addition, NMG is required to pay a commitment fee in respect of unused commitments of
(a) 0.750% per annum during any applicable period in which the average revolving loan utilization is 50% or more or (b) 1% per
annum during any applicable period in which the average revolving loan utilization is less than 50%. NMG must also pay customary
letter of credit fees and agency fees.
If at any time the aggregate amount of outstanding revolving loans, unreimbursed letter of credit drawings and undrawn
letters of credit under the Asset-Based Revolving Credit Facility exceeds the lesser of (a) the commitment amount and (b) the
borrowing base (including as a result of reductions to the borrowing base that would result from certain non-ordinary course sales of
inventory with a value in excess of $25 million, if applicable), NMG will be required to repay outstanding loans or cash collateralize
letters of credit in an aggregate amount equal to such excess, with no reduction of the commitment amount. In addition, if at any time
the aggregate amount of outstanding revolving loans and incremental term loans, unreimbursed letter of credit drawings and undrawn
letters of credit under the Asset-Based Revolving Credit Facility exceeds the reported value of inventory owned by the borrowers and
guarantors, NMG will be required to eliminate such excess within the earlier of 30 days from such occurrence or 5 business days from
the first date on or after such occurrence at which excess availability is less than $75 million. If (a) the amount available under the
Asset-Based Revolving Credit Facility is less than the greater of (i) 20% of the lesser of (A) the aggregate revolving commitments and
(B) the borrowing base and (ii) $75 million or (b) an event of default has occurred, NMG will be required to repay outstanding loans
and cash collateralize letters of credit with the cash NMG would then be required to deposit daily in a collection account maintained
with the agent under the Asset-Based Revolving Credit Facility.
NMG may voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans at any time
without premium or penalty other than customary "breakage" costs with respect to LIBOR loans. There is no scheduled amortization
under the Asset-Based Revolving Credit Facility; the principal amount of the revolving loans outstanding thereunder will be due and
payable in full on January 15, 2013.
All obligations under the Asset-Based Revolving Credit Facility are guaranteed by the Company and certain of NMG's
existing and future domestic subsidiaries. As of July 31, 2010, there were no assets or liabilities held by non-guarantor subsidiaries.
All obligations under NMG's Asset-Based Revolving Credit Facility, and the guarantees of those obligations, are secured, subject to
certain significant exceptions, by substantially all of the assets of the Company, NMG and the subsidiaries that have guaranteed the
Asset-Based Revolving Credit Facility (subsidiary guarantors), including:
• a first-priority security interest in personal property consisting of inventory and related accounts, cash, deposit accounts, all
payments received by NMG or the subsidiary guarantors from credit card clearinghouses and processors or otherwise in
respect of all credit card charges for sales of inventory by NMG and the subsidiary guarantors, certain related assets and
proceeds of the foregoing;
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