Neiman Marcus 2003 Annual Report Download - page 319

during the third year it may be exercised as to not more than 40% of the total number of shares covered thereby, less the number of
shares previously purchased thereunder; during the fourth year it may be exercised as to not more than 60% of the total number of
shares covered thereby, less the number of shares previously purchased thereunder; during the fifth year it may be exercised as to not
more than 80% of the total number of shares covered thereby, less the number of shares previously purchased thereunder; and during
the sixth year and thereafter the Option may be exercised as to all or any of the shares covered thereby, less the number of shares
previously purchased thereunder, but it shall not be exercisable after the expiration of 10 years and one day from the date hereof.
3. METHOD OF EXERCISE. Stock purchased under the Option shall at the time of exercise be paid for in full. The Option
may be exercised from time to time by written notice to the Corporation stating the number of shares with respect to which the Option
is being exercised, and the time of the delivery thereof, which time shall be at least 15 days after the giving of such notice unless an
earlier date shall have been mutually agreed upon. At the time specified in such notice, the Corporation shall, without transfer or issue
tax to the Optionee (or other person entitled to exercise the Option), deliver to the Optionee (or other person entitled to exercise the
Option) at the main office of the Corporation, or such other place as shall be mutually acceptable, a certificate or certificates for such
shares out of theretofore authorized but unissued shares or reacquired shares of its common stock, as the Corporation may elect,
against payment of the Option price in full for the number of shares to be delivered by certified or bank cashier's check or the
equivalent thereof acceptable to the Corporation (including, but not limited to, shares of capital stock of the Corporation); provided,
however, that the time of such delivery may be postponed by the Corporation for such period as may be required for it with reasonable
diligence to comply with any applicable listing requirements of any national securities exchange. If the Optionee (or other person
entitled to exercise the Option) fails to accept delivery of and pay for all or any part of the number of shares specified in such notice
upon tender of delivery thereof, his or her right to exercise the Option with respect to such undelivered shares may be terminated by
the Committee.
4. TERMINATION OF EMPLOYMENT; RETIREMENT. (a) Subject to the last paragraph of this Section 4(a), the
Optionee or the Optionee's Permitted Transferee (as defined in Section 11) or Transferees, if any, may, at any time within three
months after the date of termination of the Optionee's employment with the Corporation and its subsidiaries for any reason, but not
later than the date of expiration of the Option, exercise the Option to the extent the Optionee was entitled to do so on the date of
termination; provided that the Optionee shall not be deemed to be so entitled on the date of termination, if the Committee shall find
that the Optionee's employment was terminated because of any activity on the Optionee's part in competition with, or detrimental to,
the Corporation or its subsidiaries, or that the Optionee terminated such employment of the Optionee's own volition in order to
engage, or because the Optionee had engaged, in any such activity. If the Option or any portion of the Option is not so exercised, or if
the Optionee shall be deemed not to be entitled to exercise it, the Option
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