Neiman Marcus 2013 Annual Report Download - page 116

Table of Contents
Asset-Based Revolving Credit Facility. On October 25, 2013, we entered into a credit agreement and related security and other agreements for a
senior secured Asset-Based Revolving Credit Facility providing for a maximum committed borrowing capacity of $800.0 million. The Asset-Based
Revolving Credit Facility matures on October 25, 2018. On August 2, 2014, we had no borrowings outstanding under this facility, no outstanding letters of
credit and $720.0 million of unused borrowing availability.
Availability under the Asset-Based Revolving Credit Facility is subject to a borrowing base. The Asset-Based Revolving Credit Facility includes
borrowing capacity available for letters of credit (up to $150.0 million, with any such issuance of letters of credit reducing the amount available under the
Asset-Based Revolving Credit Facility on a dollar for dollar basis) and for borrowings on same-day notice. The borrowing base is equal to at any time the
sum of (a) 90% of the net orderly liquidation value of eligible inventory, net of certain reserves, plus (b) 90% of the amounts owed by credit card processors
in respect of eligible credit card accounts constituting proceeds from the sale or disposition of inventory, less certain reserves, plus (c) 100% of segregated
cash held in a restricted deposit account. We must at all times maintain excess availability of at least the greater of (a) 10% of the lesser of (1) the aggregate
revolving commitments and (2) the borrowing base and (b) $50.0 million, but we are not required to maintain a fixed charge coverage ratio unless excess
availability is below such levels.
The Asset-Based Revolving Credit Facility permits us to increase commitments under the Asset-Based Revolving Credit Facility or add one or more
incremental term loans to the Asset-Based Revolving Credit Facility by an amount not to exceed $300.0 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 we were to request any such additional commitments and the existing lenders or new lenders were to agree to provide such
commitments, the size of the Asset-Based Revolving Credit Facility could be increased to up to $1,100.0 million, but our ability to borrow would still be
limited by the amount of the borrowing base. The cash proceeds of any incremental term loans may be used for working capital and general corporate
purposes.
At August 2, 2014, borrowings under the Asset-Based Revolving Credit 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 Deutsche Bank AG New York Branch (the administrative agent), 2) the federal funds
effective rate plus ½ of 1.00% or 3) the adjusted one-month LIBOR plus 1.00% or (b) LIBOR, subject to certain adjustments, in each case plus an applicable
margin. The applicable margin is up to 0.75% with respect to base rate borrowings and up to 1.75% with respect to LIBOR borrowings. The applicable
margin is subject to adjustment based on the historical excess availability under the Asset-Based Revolving Credit Facility. In addition, we are required to
pay a commitment fee in respect of unused commitments 0.25% per annum. We 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, we 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. If the amount
available under the Asset-Based Revolving Credit Facility is less than the greater of (a) 10% of the lesser of (1) the aggregate revolving commitments and (2)
the borrowing base and (b) $50.0 million, funds held in a collection account maintained with the agent would be applied to repay certain loans and, if an
event of default has occurred, cash collateralize letters of credit. We would then be required to make daily deposits in the collection account maintained with
the agent under the Asset-Based Revolving Credit Facility.
We 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 October 25, 2018, unless extended.
Our Asset-Based Revolving Credit Facility is guaranteed by Holdings and each of our current and future direct and indirect wholly owned
subsidiaries (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 (unless such approval has been
received). Currently, we do not conduct any material operations through subsidiaries that do not guarantee the Asset-Based Revolving Credit Facility. All
obligations under the 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 Holdings, the Company and the subsidiary guarantors, including:
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