Neiman Marcus 2005 Annual Report Download - page 65

Employment Contracts and Termination of Employment and Change-in-Control Arrangements
The Neiman Marcus Group, Inc. has entered into employment agreements with Burton M. Tansky and Karen W. Katz. The
employment agreement with Mr. Tansky provides that he will act as our Chief Executive Officer until October 2008. Thereafter,
under the terms of the agreement and until October 2011, he will act as chairman of the Board and shall have such duties as are
customary for the position. This agreement may be terminated by either party on three months notice, subject to severance obligations
in the event of termination under certain circumstances (as described below).
During the period he serves as chairman, Mr. Tansky will be entitled to 75% of the base compensation he earned as Chief
Executive Officer. Mr. Tansky will, under certain circumstances, be entitled to severance similar to that provided in his change of
control termination protection agreement summarized below once the two-year period of that agreement has ended, except that (i) the
severance multiple after (a) a change of control subsequent to the change of control that occurred upon completion of the Transactions
or (b) the third anniversary of the completion of the Transactions will be two times rather than three times; and (ii) upon a subsequent
change of control, Mr. Tansky will be permitted to terminate his employment with The Neiman Marcus Group, Inc. within a thirty-day
period commencing on the six-month anniversary of the subsequent change of control and receive severance under his agreements.
The employment agreement with Ms. Katz provides that she will act as Chief Executive Officer and President of Neiman
Marcus Stores, a division of The Neiman Marcus Group, Inc., until October 2010, subject to automatic one-year renewals of the term
if neither party submits a notice of termination at least three months prior to the end of the then-current term. This agreement may be
terminated by either party on three months' notice, subject to severance obligations in the event Ms. Katz is terminated by The Neiman
Marcus Group, Inc. without cause, she terminates her employment with The Neiman Marcus Group, Inc. for good reason, or The
Neiman Marcus Group, Inc. delivers a notice of non-renewal of the employment agreement's term.
Once the two-year period under the change of control termination protection agreement summarized below has ended, Ms.
Katz will be entitled to lump sum severance in the event of a termination as described above equal to (i) her target bonus, pro rated to
her length of service in the year of termination; and (ii) two times her annual base salary plus bonus. Ms. Katz will also be entitled to
receive medical, dental and life insurance benefits for a two-year period following a severance triggering termination and may be
entitled to an unreduced SERP benefit in the event Ms. Katz experiences a severance triggering termination before age 65.
Each of the Named Executive Officers is a party to a change of control termination protection agreement. Under each of the
change of control termination protection agreements, upon a change of control (which includes completion of the merger as part of the
Transactions), any time periods, conditions or contingencies relating to the exercise or realization of, or lapse of restrictions under, any
outstanding equity incentive award would be automatically accelerated or waived other than any grants made in connections with the
Transactions. In addition, if the Named Executive Officer's employment is terminated by The Neiman Marcus Group, Inc. without
"cause" or by the Named Executive Officer for "good reason" (which includes in most cases, among other things, a reduction in the
Named Executive Officer's base salary or total bonus, a relocation greater than 50 miles from the Named Executive Officer's current
principal place of business or a diminution in the Named Executive Officer's title or primary reporting relationship or substantial
diminution in duties or responsibilities (other than solely as a result of our ceasing to be a publicly held corporation), as those terms
are defined in the agreement, within two years following, or in some cases before (an "anticipatory termination"), a change of control,
the Named Executive Officer will be entitled to receive a lump sum amount equal to (a) the sum of two times, or in the case of Mr.
Tansky, three times, (1) the officer's annual base salary and (2) his or her annual target bonus for the year of the termination, (b) a pro
rata target bonus (provided that if the Named Executive Officer's employment terminates after more than 75% of our fiscal year has
elapsed, the Named Executive Officer may be entitled to a pro rata portion of the actual bonus to which he or she would have been
entitled if such actual bonus would have been greater than the target bonus; for purposes of calculating the actual bonus it is assumed
that all qualitative and subjective performance criteria were achieved) and (c) in the case of an anticipatory termination, an amount
equal to the base salary from the date of termination through the date of the change of control and any bonus for the most recently
completed fiscal year if not previously paid due to the anticipatory termination. Payments to Mr. Tansky and Ms. Katz under their
change of control termination protection agreements are in lieu of any severance provided for in their employment agreements.
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