Neiman Marcus 2006 Annual Report Download - page 76

not a change of control resignation, an amount equal to three times the sum of (i) base salary and (ii) the target bonus in effect on the
termination date, or (C) if such termination occurs during the Chairman term or is a change of control resignation, an amount equal to
two times the sum of (i) base salary and (ii) the target bonus in effect on the termination date; provided, however, that Mr. Tansky
shall be required to repay this payment if he violates certain of the restrictive covenants or if he is found to have engaged in certain
acts of wrongdoing, all as further described in the agreement. In the event that following a termination of Mr. Tansky's employment
by us without cause or a resignation by Mr. Tansky for good reason, after October 6, 2009 but prior to October 6, 2010, a change of
control or initial public offering occurs in which certain of our investors recognizes a positive internal rate of return, Mr. Tansky will
be entitled to a payment equal to the product of (i) $3,080,911 and (ii) the sum (not to exceed 100%) of (A) 25% multiplied by the
number of full years and fractions thereof from the effective date of the agreement to the employment termination date and (B) 25%.
If Mr. Tansky's employment terminates before the end of the term due to death or inability to perform (as defined in the
employment agreement), we will pay him or his estate, as applicable (i) any unpaid salary through the date of termination or
resignation and any bonus payable for the preceding fiscal year that has otherwise not already been paid, (ii) any accrued but unused
vacation days, (iii) any reimbursement for business travel and other expenses to which he is entitled, and (iv) 85% of base salary
multiplied by a fraction, the numerator of which is the number of days during the fiscal year up to the termination date and the
denominator of which is 365. In the event that following a termination of Mr. Tansky's employment due to death or inability to
perform, a change of control or initial public offering occurs in which certain of our investors recognizes a positive internal rate of
return, Mr. Tansky will be entitled to a payment equal to $3,080,911.
Pursuant to the agreement, depending on the circumstances of the termination of Mr. Tansky's employment, he may also be
entitled to up to three years of continuing coverage under our group health, dental and life insurance plans and certain retiree medical
coverages.
Mr. Tansky's agreement also contains a tax gross-up provision whereby if, in the event of a change in control following the
existence of a public market for the Company's stock, he incurs any excise tax by reason of his receipt of any payment that constitutes
an excess parachute payment as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), he will
receive a gross-up payment in an amount that would place him in the same after-tax position that he would have been in if no excise
tax had applied. However, under certain conditions, rather than receive a gross-up payment, the payments payable to him will be
reduced so that no excise tax is imposed.
Pursuant to the agreement, Mr. Tansky received a grant of options to purchase 16,349.1797 shares of the Company's common
stock, which vest in accordance with the terms of the agreement over the first four anniversaries of the date of grant. The agreement
provides for the accelerated vesting of these options upon (i) a change of control or (ii) the termination of Mr. Tansky's employment
before the end of the term due to death or inability to perform. In addition, in the event that we terminate Mr. Tansky's employment
without cause or if he resigns for good reason, the agreement provides that the options will vest as to (i) the number of shares that
would have become vested on the next anniversary of the grant date, plus (ii) if the termination date occurs prior to the third
anniversary of the grant date, the number of shares that would have vested on the next anniversary of the grant date, multiplied by a
fraction, the numerator of which is the number of days from the preceding anniversary of the grant date and the denominator of which
is 365.
Mr. Tansky's agreement also contains obligations on his part regarding non-competition and non-solicitation of employees
during employment following the termination of his employment for any reason, confidential information and non-disparagement of
the Company and its business. The non-competition agreement generally prohibits Mr. Tansky during his employment and for a
period of three years from termination from becoming a director, officer, employee or consultant for any competing business that
owns or operates a luxury specialty retail store located in the geographic areas of the Company's operations. The agreement also
requires that he disclose and assign to the Company any trademarks or inventions developed by him which relate to his employment
by the Company or to the Company's business.
Employment Agreement with Ms. Katz
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. Pursuant to the
agreement, her base salary shall not be less than $760,000. Ms. Katz's agreement also provides that she will participate in the
Company's annual bonus plan. The actual amounts will be determined according to the terms of the annual bonus program and will be
payable at the discretion of the Board of Directors. However, Ms. Katz's agreement provides that her target bonus may not be reduced
below 65% of her base salary. In addition, the agreement provides that during the term, Ms. Katz shall continue to accrue benefits
under the SERP, provided that (i) the SERP shall not be amended
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