Neiman Marcus 2008 Annual Report Download - page 81

Table of Contents
entitled to jointly nominate additional directors. The rights of TPG Capital, L.P. and Warburg Pincus to nominate directors are subject
to their ownership percentages in Newton Holding, LLC remaining above a specified percentage of their initial ownership percentage.
Each of the Sponsors has the right to have at least one of its directors sit on each committee of the Board of Directors, to the extent
permitted by applicable laws and regulations.
The Sponsors have assigned the right to appoint one of our directors to investment funds that are affiliates of Credit Suisse
Securities (USA) LLC and the right to appoint one of our directors to investment funds associated with Leonard Green Partners.
For purposes of any board action, each director nominated by TPG Capital, L.P. or Warburg Pincus has three votes and each
of the other directors (including any jointly nominated directors and the directors nominated by investment funds that are affiliates of
Credit Suisse Securities (USA) LLC and Leonard Green Partners) has one vote. Certain major decisions of the board of directors of
Newton Holding, LLC require the approval of each of TPG Capital, L.P. and Warburg Pincus and certain other decisions of the board
of directors of Newton Holding, LLC require the approval of a specified number of directors designated by each of TPG Capital, L.P.
and Warburg Pincus, in each case subject to the requirement that their respective ownership percentage in Newton Holding, LLC
remains above a specified percentage of their initial ownership percentage.
Registration Rights Agreement
The Sponsor Funds and the Co-Investors entered into a registration rights agreement with us upon completion of the
Acquisition. Pursuant to this agreement, the Sponsor Funds can cause us to register their interests in NMG under the Securities Act
and to maintain a shelf registration statement effective with respect to such interests. The Sponsor Funds and the Co-Investors are also
entitled to participate on a pro rata basis in any registration of our equity interests under the Securities Act that we may undertake.
Management Services Agreement
In connection with the Acquisition, we entered into a management services agreement with affiliates of the Sponsors
pursuant to which affiliates of one of the Sponsors received on the closing date of the Acquisition a transaction fee of $25 million in
cash in connection with the Acquisition. Affiliates of the other Sponsor waived any cash transaction fee in connection with the
Acquisition. In addition, pursuant to such agreement, and in exchange for consulting and management advisory services that will be
provided to us by the Sponsors and their affiliates, affiliates of the Sponsors will receive an aggregate annual management fee equal to
the lesser of (i) 0.25% of consolidated annual revenue and (ii) $10 million. Also, affiliates of the Sponsors are entitled to receive
reimbursement for out-of-pocket expenses incurred by them or their affiliates in connection with the provision of services pursuant to
the agreement. The management services agreement also provides that affiliates of the Sponsors may receive fees in connection with
certain subsequent financing and acquisition or disposition transactions. The management services agreement includes customary
exculpation and indemnification provisions in favor of the Sponsors and their affiliates.
Certain Charter and Bylaws Provisions
Our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions limiting
directors' obligations in respect of corporate opportunities. In addition, our amended and restated certificate of incorporation provides
that Section 203 of the Delaware General Corporation Law will not apply to the Company. Section 203 restricts "business
combinations" between a corporation and "interested stockholders," generally defined as stockholders owning 15% or more of the
voting stock of a corporation.
Management Stockholders' Agreement
Subject to the Management Stockholders' Agreement, certain members of management, including Burton M. Tansky, Karen
W. Katz, James E. Skinner, James J. Gold, and Gerald A. Barnes along with 22 other members of management, elected to invest in the
Company by contributing cash or equity interests in NMG, or a combination of both, to the Company prior to the merger and
receiving equity interests in the Company in exchange therefor immediately after completion of the merger pursuant to rollover
agreements with NMG and the Company entered into prior to the effectiveness of the merger. The aggregate amount of this
investment was approximately $25.6 million. The Management Stockholders' Agreement creates certain rights and restrictions on
these equity interests, including transfer restrictions and tag-along, drag-along, put, call, and registration rights in certain
circumstances.
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