Neiman Marcus 2014 Annual Report Download - page 96

Table of Contents
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Upon completion of the Acquisition, Parent entered into the Stockholders Agreement, dated as of October 25, 2013, among Parent and each of its
stockholders (the Stockholders Agreement). Pursuant to the terms of the Stockholders Agreement, each of our Sponsors has the right to designate three
members of the Parent Board and to jointly designate two independent members of the Parent Board, in each case for so long as they or their respective
affiliates own at least 25% of the shares of Class A Common Stock that they owned as of the closing of the Acquisition. The Stockholders Agreement also
provides for the election of thethen current chief executive officer of Parent to the Parent Board and, to the extent permitted by applicable laws and
regulations and subject to certain exceptions, for equal representation on the boards of directors of our subsidiaries with respect to directors designated by our
Sponsors and the appointment of at least one of the directors designated by each Sponsor to each committee of the Parent Board.
In addition, certain significant corporate actions require either (i) the approval of a majority of directors on the Parent Board, including at least one
director designated by each of our Sponsors, or (ii) the approval of our Sponsors, in each case subject to the requirement that the applicable Sponsor and its
affiliates own at least 10% of the then outstanding shares of Class A Common Stock. These actions include the incurrence of additional indebtedness over
$10 million in the aggregate outstanding at any time (subject to certain exceptions), the issuance or sale of any of our capital stock over $25 million in the
aggregate (subject to certain exceptions), the sale, transfer or acquisition of any assets with a value of over $10 million outside the ordinary course of
business, the declaration or payment of dividends (subject to certain exceptions), entering into any merger, reorganization or recapitalization (subject to
certain exceptions), amendments to Parent’s charter or bylaws, approval of our annual budget and other similar actions.
The Stockholders Agreement also contains significant transfer restrictions and certain rights of first offer, tag‑along rights and drag‑along rights. In
addition, the Stockholders Agreement contains registration rights that, among other things, require Parent to register common stock held by the stockholders
who are parties to the Stockholders Agreement if Parent registers for sale, either for its own account or for the account of others, shares of its common stock,
subject to certain exceptions.
Under the Stockholders Agreement, certain affiliate transactions, including certain affiliate transactions between us, on the one hand, and our
Sponsors or any of their respective affiliates, on the other hand, require either the approval of (i) a majority of disinterested directors or (ii) the holders of a
majority of the shares of Class A Common Stock held by certain institutional stockholders who are parties to the Stockholders Agreement.
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Upon completion of the Acquisition, NMG and Parent entered into management services agreements, dated as of October 25, 2013, among NMG,
Parent and affiliates of our Sponsors (the Management Services Agreements). Under each of the Management Services Agreements, affiliates of our Sponsors
provide NMG and Parent with certain management and financial services. In exchange for such services, NMG and Parent have agreed to reimburse affiliates
of our Sponsors for certain expenses and provide customary indemnification. For fiscal year 2015, $340,434 was reimbursed to affiliates of Ares and $60,149
was reimbursed to affiliates of CPPIB.
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Upon the closing of the Acquisition, we entered into the Senior Secured Term Loan Facility, under which various funds affiliated with Ares, one of
our Sponsors, are lenders. As of August 1, 2015, these affiliated funds had term loans in the amount of $76.4 million. In fiscal year 2015, an aggregate of
$1.0 million in principal and $4.4 million in interest was paid to affiliates of Ares in respect of amounts borrowed under the Senior Secured Term Loan
Facility, the largest amount of principal on terms loans held by affiliates of Ares during this period was $105.0 million and interest on these borrowings
accrued at a weighted average rate of 4.25% per year. As of August 1, 2015, borrowings under the Senior Secured Term Loan Facility accrued interest at a rate
of 4.25% per year.
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Though not formally considered by the Parent Board because we are not a listed issuer, we have evaluated the independence of the members of the
Parent Board using the independence standards of the New York Stock Exchange. We
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