EXHIBIT 10.1

 

NEIMAN MARCUS, INC. CASH INCENTIVE PLAN
(Effective November 29, 2005, as amended and restated as of October 1, 2012)

 

Section 1.  Purpose.

 

The purpose of this Neiman Marcus, Inc. Cash Incentive Plan (this “Plan”) is to
aid Neiman Marcus, Inc. (f/k/a Newton Acquisition, Inc.) and its affiliates (the
“Company”) in providing a corporate benefit to key professionals of The Neiman
Marcus Group, Inc. and its affiliates (the “Employer”) to align their interests
and motivations with the commercial goals of the Company.

 

Section 2.  Certain Definitions.

 

(a)  “Bonus Pool” shall mean $14 million, less the amount payable, if any, to
Burton M. Tansky pursuant to Section 5(c)(ii) of his employment agreement with
the Company, entered into on or about October 6, 2005, as amended from time to
time in accordance with the terms thereof (including, without limitation,
pursuant to the Director Services Agreement, amended as of October 31, 2011).

 

(b)  “Cash Bonus” shall mean, with respect to a Participant, such Participant’s
Pro Rata Portion of the Bonus Pool.

 

(c)  “Cause” shall have the meaning set forth in the Management Stockholders’
Agreement.

 

(d)  “Change of Control” shall have the meaning set forth in the Management
Stockholders’ Agreement.

 

(e)  “Committee” means the Board of Directors of the Company or any committee
the Board of Directors may designate from among its members to administer this
Plan.

 

(f)  “Common Stock” means the common stock of the Company, par value US$0.01 per
share.

 

(g)  “Eligible Employee” means each individual other than Burton M. Tansky who
has been granted an Option.  The Eligible Employee(s) shall be set forth on
Schedule A hereto, which Schedule A shall be updated from time to time as the
Committee shall deem necessary and appropriate to reflect the Eligible
Employee(s) who may become entitled to a Cash Bonus.

 

(h)  “Employer” has the meaning set forth in the preamble to this Plan.

 

(i)  “Incentive Plan” means the Company’s Management Equity Incentive Plan.

 

(j)  “Initial Public Offering” shall have the meaning set forth in the Incentive
Plan.

 

(k)  “Majority Stockholder” shall have the meaning set forth in the Management
Stockholders’ Agreement.

 

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(l)  “Management Stockholders’ Agreement” shall mean the Management
Stockholders’ Agreement, dated as of October 6, 2005, by and among the Company,
the Majority Stockholder, and the Management Stockholders (as defined therein).

 

(m)  “Option” shall mean any option to purchase Common Stock granted on
November 29, 2005 under the Incentive Plan, and each additional option (or
portion thereof) granted under the Incentive Plan thereafter if and to the
extent determined by the Committee in its discretion after consultation with the
Chief Executive Officer of the Company.  The Options shall be set forth on
Schedule A hereto, which Schedule A shall be updated from time to time as the
Committee shall deem necessary and appropriate to reflect the Options to be
included for purposes of calculating the Cash Bonus to which an Eligible
Employee may become entitled.

 

(n)  “Participant” shall mean each Eligible Employee who is either employed as
of the Payment Event or was terminated without Cause within the six-month period
immediately preceding the Payment Event.

 

(o)  “Participant Holdings” shall mean, except as otherwise set forth on
Schedule A hereto, the sum of (A) the aggregate number of Shares held by all
Participants (or their Permitted Transferees) employed by the Employer as of the
Payment Event as a result of the previous exercise of Options, (B) the aggregate
number of Shares underlying outstanding vested and unvested Options held by all
Participants (or their Permitted Transferees) employed by the Employer as of the
Payment Date, (C) the aggregate number of Shares held on the date of termination
by all Participants (or their Permitted Transferees) whose employment was
terminated without Cause within the six-month period immediately preceding the
Payment Event as a result of the previous exercise of Options and (D) the
aggregate number of Shares underlying vested Options held on the date of
termination by all Participants (or their Permitted Transferees) whose
employment was terminated without Cause within the six-month period immediately
preceding the Payment Event.

 

(p)  “Payment Event” shall mean the earlier to occur of a Change of Control or
an Initial Public Offering, subject to the provisions of Section 4.

 

(q)  “Permitted Transferee” shall have the meaning set forth in the Incentive
Plan.

 

(r)  “Pro Rata Portion” shall mean, except as otherwise set forth on Schedule A
hereto, as of the Payment Event:

 

(i)    In the case of a Participant employed with the Employer on the Payment
Event, the portion of the Bonus Pool that bears the same ratio as the sum of the
Shares underlying outstanding vested and unvested Options held by such
Participant (or his Permitted Transferees) plus any Shares held by such
Participant (or his Permitted Transferees) as a result of the previous exercise
of Options bears to the Participant Holdings; and

 

(ii)  In the case of a Participant whose employment was terminated without Cause
within the six-month period immediately preceding the Payment Event, the portion
of the Bonus Pool that bears the same ratio as the sum of the Shares underlying
the vested Options held by such Participant (or his Permitted Transferees) on
the date of termination plus any Shares held by the Participant (or his
Permitted Transferees) on the date of termination as a result of the previous
exercise of Options bears to the Participant Holdings.

 

(s)  “Shares” shall mean shares of Common Stock.

 

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Section 3.  Administration.

 

This Plan shall be administered by the Committee, which shall have full
discretion to administer this Plan, including but not limited to discretion
(A) to determine all questions related to a Participant’s entitlement to receive
the Cash Bonus, (B) to interpret and construe any provision of this Plan, and
(C) to adopt, amend, or rescind any rules and regulations for the operation and
administration of this Plan.  Decisions of the Committee shall be final and
binding for all purposes.  None of the Company, the Employer, the Committee, or
any member of the Committee, shall be liable to any party for any action,
omission, or determination relating to this Plan.  This Plan shall be
administered at the expense of the Company.

 

Section 4.  Cash Bonuses.

 

(a)           Subject to the terms of this Plan, upon the occurrence of the
Payment Event, each Participant shall be entitled to a Cash Bonus, provided that
the internal rate of return to the Majority Stockholder in respect of their
direct and indirect investment in the Company is positive.  The Majority
Stockholder’s internal rate of return shall be calculated in the case of an
Initial Public Offering as if the Majority Stockholder sold all of its direct
and indirect equity interests in the Company at a per share price equal to the
Initial Public Offering price or, in the case of a Change of Control, based on
the value of its equity interests implied by the transaction giving rise to the
Change of Control, and in each case, taking into account all investments made
directly or indirectly in the Company, all management and transaction fees paid
by the Company or its subsidiaries to the Majority Stockholder and all expenses
incurred by the Majority Stockholder in connection with the investment.

 

(b)           In no event shall a Participant be entitled to receive a Cash
Bonus (A) prior to the Payment Event and (B) unless and until the Committee in
its sole discretion determines that the conditions set forth in
Section 4(a) above have been satisfied with respect to such Participant.

 

Section 5.  Payment.

 

(a)           The Company shall pay each Participant the Cash Bonus as soon as
administratively practical following, but in all cases within two and a half
months of, a Payment Event.

 

(b)           The Company shall deduct from all payments and distributions under
this Plan any required federal, state, or local government tax withholdings.

 

(c)           The Company may, if the Committee in its sole discretion shall so
determine, offset any amounts that a Participant may owe to the Company or the
Employer against any distribution of the Cash Bonus that would otherwise have
been made to the Participant.

 

Section 6.  General Provisions.

 

(a)  No Right to Continued Employment.  Nothing contained in this Plan shall
confer upon the Participant any right with respect to the continuation of his or
her employment by the Employer, or interfere in any way with the right of the
Employer at any time to terminate such employment or to increase or decrease the
compensation of the employee or Participant.  No person other than the
Participants shall have any claim or right to participate in this Plan.  Any
conditional grant by the Company to any Participant of any Cash Bonus
contemplated herein shall neither require the Company to make any additional
grant to such Participant or any other Participant or other person at any time
nor preclude the Company from making subsequent grants to such Participant or
any other Participant or other person at any time.

 

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(b)  Participation in Other Plans.  Nothing in this Plan shall be deemed to
entitle a Participant to participate in, nor prohibit nor restrict any
Participant participation in, any other plan, program, or arrangement maintained
by the Company or the Employer.

 

(c)  Amendment; Termination.  The Company may at any time, in its sole
discretion, terminate or amend this Plan, provided that any such termination or
amendment shall not impair or adversely affect an Eligible Employee’s rights
under this Plan without such Eligible Employee’s written consent.

 

(d)  Section 409A.  The intent of the Company and the Employer is that the
payments and benefits under this Plan be exempt from Section 409A of the Code
and the regulations and guidance promulgated thereunder, and to the maximum
extent permitted, the Plan shall be interpreted accordingly.  Notwithstanding
any provision herein to the contrary, the Committee may, in its sole discretion,
change the form and timing of any distribution or otherwise modify the terms of
this Plan in order to comply with applicable law, including, without limitation,
in order to avoid adverse tax treatment to any Participant under Section 409A of
the Code; provided that the Committee shall use commercially reasonable efforts
to put the Participants in the same position as they would have been in but for
the application of this Section 6(d).

 

(e)  Unfunded Status of Plan.  The Company shall not have any obligation to
establish any separate fund or trust or other segregation of assets to provide
for payments under this Plan.  To the extent any person acquires any rights to
receive payments hereunder from the Company, such rights shall be no greater
than those of an unsecured creditor.

 

(f)  Governing Provisions.  The provisions of this Plan shall govern in all
respects the allocation, distribution, and nature of the Cash Bonuses, and shall
supersede all prior written agreements and negotiations and oral understandings
regarding such Cash Bonuses, if any.

 

(g)  Governing Law.  This Plan and the rights of all persons under this Plan
shall be construed and administered in accordance with the laws of the State of
Delaware, without regard to its conflict of law principles.

 

(h)  Effective Date.  This Plan is effective as of November 29, 2005, as amended
and restated as of October 1, 2012.

 

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