Neiman Marcus 2014 Annual Report Download - page 127

Table of Contents
previously incurred in connection with the initial issuance of the Senior Secured Term Loan Facility, allocable to lenders that no longer participate in the
Senior Secured Term Loan Facility subsequent to the refinancing. The loss on debt extinguishment was recorded in the third quarter of fiscal year 2014 as a
component of interest expense.
At August 1, 2015, borrowings under the Senior Secured Term Loan Facility bore interest at a rate per annum equal to, at our option, either (a) a base
rate determined by reference to the highest of (1) the prime rate of Credit Suisse AG (the administrative agent), (2) the federal funds effective rate plus ½ of
1.00% and (3) the adjusted one-month LIBOR plus 1.00%, or (b) an adjusted LIBOR (for a period equal to the relevant interest period, and in any event,
never less than 1.00%), subject to certain adjustments, in each case plus an applicable margin. The applicable margin is up to 2.25% with respect to base rate
borrowings and up to 3.25% with respect to LIBOR borrowings. The applicable margin is subject to adjustment based on our senior secured first lien net
leverage ratio. The applicable margin with respect to outstanding LIBOR borrowings was 3.25% at August 1, 2015. The interest rate on the outstanding
borrowings pursuant to the Senior Secured Term Loan Facility was 4.25% at August 1, 2015.
Subject to certain exceptions and reinvestment rights, the Senior Secured Term Loan Facility requires that 100% of the net cash proceeds from
certain asset sales and debt issuances and 50% (which percentage will be reduced to 25% if our senior secured first lien net leverage ratio, as defined in the
credit agreement governing the Senior Secured Term Loan Facility, is equal to or less than 4.0 to 1.0 but greater than 3.5 to 1.0 and will be reduced to 0% if
our senior secured first lien net leverage ratio is equal to or less than 3.5 to 1.0) from excess cash flow, as defined in the credit agreement governing the Senior
Secured Term Loan Facility, for each of our fiscal years (commencing with the period ended July 26, 2015) must be used to prepay outstanding term loans
under the Senior Secured Term Loan Facility at 100% of the principal amount to be prepaid, plus accrued and unpaid interest. We were not required to prepay
any outstanding term loans pursuant to the annual excess cash flow requirements for fiscal years 2015 and 2014.
We may repay all or any portion of the Senior Secured Term Loan Facility at any time, subject to redeployment costs in the case of prepayment of
LIBOR borrowings other than the last day of the relevant interest period. The Senior Secured Term Loan Facility amortizes in equal quarterly installments in
an amount equal to 1.00% per annum of the principal amount outstanding as of the Refinancing Amendment, less certain voluntary or mandatory
prepayments, with the remaining balance due at final maturity.
The Senior Secured Term Loan Facility is guaranteed by Holdings and each of our current and future subsidiary guarantors other than
(a) unrestricted subsidiaries, (b) certain immaterial subsidiaries, (c) foreign subsidiaries and any domestic subsidiary of a foreign subsidiary, (d) certain
holding companies of foreign subsidiaries, (e) captive insurance subsidiaries, not for profit subsidiaries, or a subsidiary which is a special purpose entity for
securitization transactions or like special purposes and (f) any subsidiary that is prohibited by applicable law or contractual obligation from acting as a
guarantor or which would require governmental approval to provide a guarantee. At August 1, 2015, the assets of non-guarantor subsidiaries, primarily NMG
Germany GmbH (through which we conduct the operations of MyTheresa), were $269.0 million, or 3.0% of consolidated total assets. All obligations under
the Senior Secured Term Loan Facility, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the assets of
Holdings, the Company and the subsidiary guarantors, including:
• a first-priority pledge of 100% of the Company's capital stock and certain of the capital stock held by the Company, Holdings 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);
• a first-priority security interest in, and mortgages on, substantially all other tangible and intangible assets of the Company, Holdings and each
subsidiary guarantor, including a significant portion of the Company’s owned real property and equipment, but excluding, among other things,
the collateral described in the following bullet point; and
• a second-priority security interest in personal property consisting of inventory and related accounts, cash, deposit accounts, all payments
received by the Company or the subsidiary guarantors from credit card clearinghouses and processors or otherwise in respect of all credit card
charges for sales of inventory by the Company and the subsidiary guarantors, certain related assets and proceeds of the foregoing.
Capital stock and other securities of a subsidiary of the Company that are owned by the Company or any subsidiary guarantor will not constitute
collateral under the Senior Secured Term Loan Facility to the extent that such securities cannot secure the 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 SEC rules. As a
result, the collateral under the Senior
F-24