Neiman Marcus 2007 Annual Report Download - page 71

Table of Contents
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).
If we terminate Ms. Katz's employment without cause or if she resigns for good reason or following her receipt of a notice of
non-renewal from the Company relating to the employment term, she will receive (i) an amount of annual incentive pay equal to a
prorated portion of her target bonus amount for the year in which the employment termination date occurs, and (ii) a lump sum equal
to two times the sum of her base salary and target bonus, at the level in effect as of the employment termination date; provided, however, that Ms. Katz
shall be required to repay this payment if she violates certain restrictive covenants in her agreement or if she is found to have engaged
in certain acts of wrongdoing, all as further described in the agreement. Ms. Katz is also entitled to continuation of certain benefits for
a two-year period following a termination of her employment for any reason as set forth more fully in her employment agreement.
If Ms. Katz's employment terminates before the end of the term due to her death or disability, we will pay her or her estate, as
applicable, (i) any unpaid salary through the date of termination 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 she is entitled, and (iv) an amount of annual incentive pay equal to a prorated portion of her target bonus amount for the year in
which the employment termination date occurs.
Ms. Katz'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, she incurs any excise tax by reason of her receipt of any payment that
constitutes an excess parachute payment as defined in Section 280G of the Code, she will receive a gross-up payment in an amount
that would place her in the same after-tax position that she 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 her will be reduced so that no excise tax is imposed.
Ms. Katz's agreement also contains obligations on her part regarding non-competition and non-solicitation of employees
following the termination of her employment for any reason, confidential information and non-disparagement of the Company and its
business. The non-competition agreement generally prohibits Ms. Katz during employment and for a period of one year 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 she disclose and
assign to the Company any trademarks or inventions developed by her which relate to her employment by the Company or to the
Company's business.
Confidentiality, Non-Competition and Termination Benefits Agreements
Each of the named executive officers and certain other officers, except for Mr. Tansky, are party to a confidentiality, non-
competition and termination benefits agreement that will provide for severance benefits if the employment of the affected individual is
terminated by the Company other than in the event of death, disability or termination for cause. These agreements provide for a
severance payment equal to one and one-half annual base salary payable over an eighteen month period, and reimbursement for
COBRA premiums for the same period. Each confidentiality, non-competition and termination benefits agreement contains restrictive covenants as a
condition to receipt of any payments payable thereunder.
Cash Incentive Plan
Following the consummation of the Acquisition, the Neiman Marcus, Inc. Cash Incentive Plan (referred to as the Cash
Incentive Plan) was adopted to aid in the retention of certain key executives, including the named executive officers. The Cash
Incentive Plan provides for the creation of a $14 million cash bonus pool to be shared by the participants based on the number of stock
options that were granted to each such participant pursuant to the Management Incentive Plan. Each participant in the Cash Incentive
Plan will be entitled to a cash bonus upon the earlier to occur of a change of control or an initial public offering, provided that the
internal rate of return to certain of our investors is positive. If the internal rate of return to certain of our investors is not positive, no amounts will be
paid under the Cash Incentive pool.
Based on the foregoing, each of the named executive officers would be entitled to receive the following percentages of the
remaining cash bonus pool on August 2, 2008, assuming there was a change in control or an initial public offering on that date, and
the rate of return to the Sponsors was positive:
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