Neiman Marcus 2010 Annual Report Download - page 114

Table of Contents
outstanding 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 a limited period of time. If the amount available under the Asset-
Based Revolving Credit Facility is less than the greater of (i) 12.5% of the lesser of (A) the aggregate revolving commitments and
(B) the borrowing base and (ii) $60 million, NMG will be required to repay outstanding loans and, if an event of default has occurred,
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 May 17, 2016, unless extended, or if earlier, the maturity date of the Senior Secured Term Loan Facility and the
Senior Subordinated Notes (subject to certain exceptions).
All obligations under the Asset-Based Revolving Credit Facility are guaranteed by the Company and certain of NMG's
existing and future domestic subsidiaries (principally, Bergdorf Goodman, Inc. through which NMG conducts the operations of its
Bergdorf Goodman stores and NM Nevada Trust which holds legal title to certain real property and intangible assets used by NMG in
conducting its operations). Currently, NMG conducts no operations through subsidiaries that do not guarantee the Asset-Based
Revolving Credit Facility. 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;
• a second-priority pledge of 100% of NMG's capital stock and certain of the capital stock held by NMG, the Company or any
subsidiary guarantor (which pledge, in the case of any foreign subsidiary is limited to 100% of the non-voting stock (if any)
and 65% of the voting stock of such foreign subsidiary); and
• a second-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of NMG, the
Company and each subsidiary guarantor, including a significant portion of NMG's owned and leased real property (which
currently consists of approximately half of NMG's full-line retail stores) and equipment.
Capital stock and other securities of a subsidiary of NMG that are owned by NMG or any subsidiary guarantor will not
constitute collateral under NMG's Asset-Based Revolving Credit Facility to the extent that such securities cannot secure NMG's 2028
Debentures or other secured public debt obligations without requiring the preparation and filing of separate financial statements of
such subsidiary in accordance with applicable Securities and Exchange Commission's rules. As a result, the collateral under NMG's
Asset-Based Revolving Credit Facility will include shares of capital stock or other securities of subsidiaries of NMG or any subsidiary
guarantor only to the extent that the applicable value of such securities (on a subsidiary-by-subsidiary basis) is less than 20% of the
aggregate principal amount of the 2028 Debentures or other secured public debt obligations of NMG. The Asset-Based Revolving
Credit Facility contains a number of covenants that, among other things and subject to certain significant exceptions, restrict its ability
and the ability of its subsidiaries to:
• incur additional indebtedness;
• pay dividends on NMG's capital stock or redeem, repurchase or retire NMG's capital stock or indebtedness;
• make investments, loans, advances and acquisitions;
• create restrictions on the payment of dividends or other amounts to NMG from its subsidiaries that are not guarantors;
• engage in transactions with NMG's affiliates;
• sell assets, including capital stock of NMG's subsidiaries;
• consolidate or merge;
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