Neiman Marcus 2008 Annual Report Download - page 225

(ii) Upon the occurrence of the earlier of a Change in Control or an Initial Public Offering, the
Executive will be entitled to a cash bonus equal to $3,080,911, provided that no such bonus will be paid unless
(A) the Executive remains employed with NMG through the earlier of (x) the date of the Change in Control, (y) the
Initial Public Offering or (z) the fourth anniversary of the Effective Date, and (B) the internal rate of return to the
Majority Stockholder (as defined in the Stockholders' Agreement) in respect of their direct and indirect investment
in Parent 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 Parent at a per
share price equal to the Initial Public Offering price or, in the case of a Change in Control, based on the value of its
equity interests implied by the transaction giving rise to the Change of Control, and in each case, taking into account
all investments made directly or indirectly in Parent, all management and transaction fees paid by Parent or its
subsidiaries to the Majority Stockholder and all expenses incurred by the Majority Stockholder in connection with
the investment. If the Executive's employment hereunder terminates for other than Cause prior to the bonus
payment becoming due as described above and, subsequent to such termination, a Change in Control or Initial
Public Offering occurs in which the Majority Stockholder recognizes a positive internal rate of return determined in
accordance with the foregoing provisions, the Executive will be entitled to a payment equal to the product of
$3,080,911 and the percentage determined as follows: (1) if the termination of employment is pursuant to Paragraph
6(a) or 6(b), 100%; (2) if the termination of employment is by the Executive pursuant to Paragraph 6(e), 25%
multiplied by the number of full years (and not fractions thereof) from the Effective Date to the Employment
Termination Date; and (3) if the termination is by the Executive pursuant to Paragraph 6(d) or by NMG pursuant to
Paragraph 6(e), the sum (not to exceed 100%) of 25% multiplied by the number of full years and fractions thereof
from the Effective Date to the Employment Termination Date and 25%.
(iii) In the event Parent declares and pays an extraordinary dividend while the Executive's Newco
Options (as defined in that certain Letter Agreement, dated October 4, 2005, by and among NMG, Parent and
Executive, the "Letter Agreement") are outstanding, the Parent shall pay Executive a cash bonus equal to the amount
that he would have received if he owned the shares underlying the then-outstanding Newco Options (other than any
Newco Options for which the Company has an effective and exercisable call right pursuant to the Letter Agreement)
pursuant to such dividend payment, provided such bonus payment complies with Section 409A of the Internal
Revenue Code of 1986 and does not result in any adverse tax treatment in respect of the Newco Options. In the
event it is determined that such payment does not comply with Section 409A or it adversely effects the Newco
Options, the parties hereto shall use their reasonable efforts and take reasonable actions necessary to put the
Executive in the same position he would have been in if the payment was permitted under Section 409A to the
extent reasonably practicable.
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