Neiman Marcus 2005 Annual Report Download - page 145

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(m) "Option" shall mean any option to purchase Common Stock granted on November 29, 2005 under the Incentive
Plan, and each additional option granted under the Incentive Plan thereafter if and to the extent determined by the Committee in its
discretion after consultation with the Chief Executive Officer of the Company.
(n) "Participant" shall mean each Eligible Employee who is either employed as of the Payment Event or was
terminated without Cause within the six-month period immediately preceding the Payment Event.
(o) "Participant Holdings" shall mean the sum of (A) the aggregate number of Shares held by all Participants (or their
Permitted Transferees) employed by the Employer as of the Payment Event as a result of the previous exercise of Options, (B) the
aggregate number of Shares underlying outstanding vested and unvested Options held by all Participants (or their Permitted
Transferees) employed by the Employer as of the Payment Date, (C) the aggregate number of Shares held on the date of termination
by all Participants (or their Permitted Transferees) whose employment was terminated without Cause within the six-month period
immediately preceding the Payment Event as a result of the previous exercise of Options and (D) the aggregate number of Shares
underlying vested Options held on the date of termination by all Participants (or their Permitted Transferees) whose employment was
terminated without Cause within the six-month period immediately preceding the Payment Event.
(p) "Payment Event" shall mean the earlier to occur of a Change of Control or an Initial Public Offering, subject to
the provisions of Section 4.
(q) "Permitted Transferee" shall mean the meaning set forth in the Incentive Plan.
(r) "Pro Rata Portion" shall mean, as of the Payment Event:
(i) In the case of a Participant employed with the Employer on the Payment Event, the portion of the Bonus
Pool that bears the same ratio as the sum of the Shares underlying outstanding vested and unvested Options held by such Participant
(or his Permitted Transferees) plus any Shares held by such Participant (or his Permitted Transferees) as a result of the previous
exercise of Options bears to the Participant Holdings; and
(ii) In the case of a Participant whose employment was terminated without Cause within the six-month period
immediately preceding the Payment Event, the portion of the Bonus Pool that bears the same ratio as the sum of the Shares underlying
the vested Options held by such Participant (or his Permitted Transferees) on the date of termination plus any Shares held by the
Participant (or his Permitted Transferees) on the date of termination as a result of the previous exercise of Options bears to the
Participant Holdings.
(s) "Shares" shall mean shares of Common Stock.
Section 3. Administration.
This Plan shall be administered by the Committee, which shall have full discretion to administer this Plan, including but not
limited to discretion (A) to determine all questions related to a Participant's entitlement to receive the Cash Bonus, (B) to interpret and
construe any provision of this Plan, and (C) to adopt, amend, or rescind any rules and regulations for the operation and administration
of this Plan. Decisions of the Committee shall be final and binding for all purposes. None of the Company, the Employer, the
Committee, nor any member of the Committee, shall be liable to any party for any action, omission, or determination relating to this
Plan. This Plan shall be administered at the expense of the Company.
Section 4. Cash Bonuses.
(a) Subject to the terms of this Plan, upon the occurrence of the Payment Event, each Participant shall be entitled to a
Cash Bonus, provided that the internal rate of return to the Majority Stockholder in respect of their direct and indirect investment in
the Company is positive. The Majority Stockholder's internal rate of return shall be calculated in the case of an Initial Public Offering
as if the Majority Stockholder sold all of its direct and indirect equity interests in the Company at a per share price equal to the Initial
Public Offering price or, in the case of a
2