Neiman Marcus 2008 Annual Report Download - page 71

Table of Contents
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 Compensation Committee. 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 or terminated in any way that adversely affects her, and
(ii) after she has reached the 25-year maximum set forth in the SERP, she shall be entitled to an additional one year of credit for each
full year of service thereafter. In addition, if (i) during the term, her employment is terminated by the Company for any reason other
than death, disability, or cause (as defined in the employment agreement), (ii) during the term, she terminates her employment for
good reason (as defined in the employment agreement), or (iii) her employment terminates upon expiration of the term following the
provision by the Company of a notice of non-renewal, and, in any such case, on the date of such termination she has not yet reached
age 65, her SERP benefit shall not be reduced according to the terms of the SERP solely by reason of her failure to reach age 65 as of
the termination date.
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 (A) 6 times the monthly COBRA premium applicable to Ms. Katz plus (B) 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
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