Neiman Marcus 2008 Annual Report Download - page 250

(d) the number of Shares underlying each Newco Option shall be as set forth in Schedule I; and
(e) at least 10 days prior to the termination or expiration of any Newco Option for any reason, if there is not a Public
Market (as defined in the Stockholders' Agreement) for the Shares, Newco will permit you to exercise any such vested Newco Options
through net-physical settlement (i.e., by delivery of Shares net of the number of Shares having a Fair Market Value (as defined in the
Stockholders' Agreement, defined below) equal to the applicable exercise price and applicable withholding taxes at the minimum
statutory rate), unless (i) Newco's independent auditors determine that net-physical settlement of any such Newco Options would
produce less-favorable accounting consequences for Newco or its affiliates than if you paid the exercise price for any such vested
Newco Options in cash (other than those that would have an immaterial effect) or (ii) Newco receives advice from counsel, in
accordance with Section 10 below, that such net-physical exercise would result in a penalty under Section 409A of the Internal
Revenue Code of 1986, as amended (the "Code"). If, in accordance with this paragraph, you are entitled to exercise Newco Options
through net-physical exercise, Fair Market Value will be determined as set forth in the Stockholders' Agreement, including any right
to an Outside Appraisal (as defined therein).
4. Acceptance and Closing; Conditions. You may accept this offer and the terms of this Agreement by completing and
returning the Acceptance Form below, in which case the closing of the acquisition of your Newco Equity will occur immediately after
the Closing. This offer is conditioned upon the occurrence of the Closing. If the Closing does not occur on or before October 17,
2005 (the "Closing Deadline"), this Agreement will be canceled and you will have no rights with respect hereto and any Rollover
Shares that you have transferred or cash payment that you have made pursuant to Section 3 will be returned to you; provided, that if
Newco determines on or before the Closing Deadline and in good faith that the Closing is likely to occur on or before October 31,
2005, the Closing Deadline shall automatically be extended to October 31, 2005.
5. Limitation. Newco, in its discretion, may limit the number of Shares that you may purchase, and therefore may choose not to
accept the full amount of your investment election with respect to your Rollover Shares. Rollover Shares not so accepted pursuant to
the preceding sentence will be treated in accordance with the provisions of the Merger Agreement.
6. Vesting. Your Shares when issued will be fully vested.
7. Stockholders' Agreement; Certain Other Agreements.
(a) By completing and returning the Acceptance Form below, you agree to become a party to the Management
Stockholders' Agreement, a copy of which is attached hereto as Annex A, as may be amended from time to time in accordance with its
terms (the "Stockholders' Agreement") and you will be subject to the terms and conditions thereof with respect to your Shares;
provided that the Shares shall not be subject to the call right in Section 3(b). Newco agrees that it will, and that it will cause the
Majority Stockholder (as defined below) to, also become a party to the Stockholders' Agreement.
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