Exhibit 10.30

 

THE NEIMAN MARCUS GROUP, INC.

 

KEY EMPLOYEE DEFERRED COMPENSATION PLAN

 

(Amended and Restated Effective January 1, 2008)

 

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TABLE OF CONTENTS

 

ARTICLE 1. INTRODUCTION

1

 

 

1.1

Purpose of Plan

1

1.2

Status of Plan

1

 

 

 

ARTICLE 2. DEFINITIONS

1

 

 

2.1

“Account”

1

2.2

“Affiliate”

1

2.3

“Base Pay”

1

2.4

“Bonus”

2

2.5

“Cause”

2

2.6

“Change in Control”

3

2.7

“Code”

5

2.8

“Committee”

5

2.9

“Company”

5

2.10

“Compensation”

5

2.11

“Effective Date”

5

2.12

“Elective Deferral”

5

2.13

“Eligible Employee”

5

2.14

“Employer”

6

2.15

“ERISA”

6

2.16

“Fiscal Year”

6

2.17

“Matching Deferral”

6

2.18

“Maximum 401(k) Plan Deferral”

6

2.19

“Maximum 401(k) Plan Match”

6

2.20

“Participant”

7

2.21

“Plan”

7

2.22

“Plan Year”

7

2.23

“Retirement”

7

2.24

“Retirement Savings Plan”

7

2.25

“Savings Plan”

7

2.26

“Separation from Service”

7

2.27

“Year of Service”

10

 

 

 

ARTICLE 3. PARTICIPATION

11

 

 

3.1

Commencement of Participation

11

3.2

Continued Participation

11

 

 

 

ARTICLE 4. DEFERRALS AND CREDITS

11

 

 

4.1

Elective Deferrals

11

4.2

Matching Deferrals

15

 

 

 

ARTICLE 5. ACCOUNTS; INTEREST; PAYMENT; VESTING

15

 

 

5.1

Accounts

15

 

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5.2

Interest

16

5.3

Payments

16

5.4

Vesting

16

 

 

 

ARTICLE 6. PAYMENTS

17

 

 

6.1

Election of Time and Form of Payment

17

6.2

Retirement and Other Separation from Service

19

6.3

Death

19

6.4

Change in Control

19

6.5

Hardship Distributions

20

6.6

Changes in Time and Form of Payment

21

6.7

Withholding

22

6.8

Specified Employees

22

6.9

409A Income Inclusion

22

 

 

 

ARTICLE 7. COMMITTEE

23

 

 

7.1

Plan Administration and Interpretation

23

7.2

Powers, Duties, Procedures, Etc.

23

7.3

Information

24

7.4

Indemnification of Committee

24

7.5

Claims Procedure

25

 

 

 

ARTICLE 8. AMENDMENT AND TERMINATION

26

 

 

8.1

Amendments

26

8.2

Termination of Plan

26

8.3

Existing Rights

26

 

 

 

ARTICLE 9. MISCELLANEOUS

27

 

 

9.1

No Funding; Source of Payments

27

9.2

Nonassignability; Domestic Relations Order

27

9.3

Limitation of Participants’ Rights

27

9.4

Participants Bound

28

9.5

Receipt and Release

28

9.6

Governing Law

28

9.7

No Guarantee of Tax Consequences

28

9.8

Adoption by Other Employers

29

9.9

Headings and Subheadings

29

 

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THE NEIMAN MARCUS GROUP, INC.
KEY EMPLOYEE DEFERRED COMPENSATION PLAN

 

(Amended and Restated Effective January 1, 2008)

 

ARTICLE 1.  INTRODUCTION

 

1.1           Purpose of Plan.  The Employers adopted The Neiman Marcus
Group, Inc. Key Employee Deferred Compensation Plan (the “Plan”) effective
January 1, 2006 as a nonqualified deferred compensation arrangement to provide a
means by which certain eligible employees may defer Compensation.  The Plan is
being amended and restated effective as of January 1, 2008 to make changes
designed to bring the Plan into compliance with Code Section 409A and to make
certain other changes.

 

1.2           Status of Plan.  The Plan is intended to be “a plan which is
unfunded and is maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees” within the meaning of Sections 201(2) and 301(a)(3) of ERISA and is
intended to comply with the requirements of Code Section 409A, and shall be
interpreted and administered in a manner consistent with those intentions.

 

ARTICLE 2.  DEFINITIONS

 

Wherever used herein, the following terms have the meanings set forth below,
unless a different meaning is clearly required by the context:

 

2.1           “Account” means, for each Participant, the account established for
his or her benefit under Section 5.1.

 

2.2           “Affiliate” means any corporation or organization that together
with an Employer is treated as a single employer under Section 414(b) or (c) of
the Code.

 

2.3           “Base Pay” means the base salary payable by an Employer to an
employee, including amounts that would have been payable to the employee as base
salary but for an

 

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election under Section 125 of the Code, a deferral election under the Savings
Plan or the Retirement Savings Plan, or a deferral election under this Plan.

 

2.4           “Bonus” means an annual cash bonus payable by an Employer to an
employee, including any portion of such a bonus that would have been payable to
the employee but for an election under Section 125 of the Code, a deferral
election under the Savings Plan or the Retirement Savings Plan, or a deferral
election under this Plan, provided, however, that the Committee has designated
such amount as a “Bonus” eligible for an Elective Deferral under this Plan prior
to the deadline for making such election.  Notwithstanding the preceding
sentence, the term “Bonus” shall not include any amount arising from, or paid
under or in connection with a long-term incentive program, or a stock
appreciation right, stock option, restricted stock or stock unit, or other
equity-based incentive award, plan or arrangement.  A “Fiscal Year Bonus” means
any Bonus that satisfies the requirements to be fiscal year compensation within
the meaning of Treasury Regulation Section 1.409A-2(a)(6).  A “Performance
Bonus” means any Bonus that satisfies the requirements to be performance-based
compensation within the meaning of Treasury Regulation Section 1.409A-1(e).

 

2.5           “Cause” means:

 

(a)  the willful and continued failure by the Participant to substantially
perform duties consistent with the Participant’s position with the Employer
(other than any such failure resulting from incapacity due to physical or mental
illness), after a demand for substantial performance is delivered to the
Participant, and the Participant has failed to resume substantial performance of
his or her duties on a continuous basis within 14 days of receiving such demand;

 

(b)           the willful engaging by the Participant in conduct that is
demonstrably and materially injurious to an Employer, monetarily or otherwise;
or

 

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(c)           the Participant’s commission of a felony, commission of a
misdemeanor involving assets of an Employer, or violation of an Employer’s
merchandise discount policy.

 

For purposes of this definition, no act, or failure to act, on the Participant’s
part shall be deemed “willful” unless done, or omitted to be done, by the
Participant not in good faith and without reasonable belief that his or her
action or omission was in the best interest of the Employer.

 

2.6           “Change in Control” shall be deemed to have taken place for
purposes of the Plan upon the occurrence of any of the following events after
the Effective Date: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company on a consolidated basis to any Person or group of
related persons for purposes of Section 13(d) of the Securities Exchange Act of
1934 (a “Group”), together with any CIC Affiliates thereof other than to a
Majority Stockholder; (ii) the approval by the holders of the outstanding voting
power of the Company of any plan or proposal for the liquidation or dissolution
of the Company; (iii) (A) any Person or Group (other than the Majority
Stockholder) shall become the beneficial owner (within the meaning of
Section 13(d) of the Exchange Act), directly or indirectly, of Common Stock
representing more than 40% of the aggregate outstanding voting power of the
Company and such Person or Group actually has the power to vote such Common
Stock in any such election and (B) the Majority Stockholder beneficially owns
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934),
directly or indirectly, in the aggregate a lesser percentage of the voting power
of the Company than such other Person or Group; (iv) the replacement of a
majority of the Board of Directors of the Company over a two-year period from
the directors who constituted the Board of Directors of the Company at the
beginning of such period, and such replacement shall not have been approved by a
vote of at least a majority of the Board of Directors of the Company then still
in

 

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office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved or who were nominated by, or designees of, a Majority
Stockholder; or (v) consummation of a merger or consolidation of the Company
with another entity in which holders of the Common Stock of the Company
immediately prior to the consummation of the transaction hold, directly or
indirectly, immediately following the consummation of the transaction, less than
50% of the common equity interest in the surviving corporation in such
transaction and the Majority Stockholder does not hold a sufficient amount of
voting power (or similar securities) to elect a majority of the surviving
entity’s board of directors.

 

For purposes of this Section 2.6 only, the following terms shall have the
following meanings:

 

(a)           “CIC Affiliate” shall mean, with respect to any entity, any other
corporation, organization, association, partnership, sole proprietorship or
other type of entity, whether incorporated or unincorporated, directly or
indirectly controlling or controlled by or under direct or indirect common
control with such entity.

 

(b)           “Common Stock” shall mean the common stock of the Company, $0.01
par value per share.

 

(c)           “Company” shall mean Neiman Marcus, Inc. or The Neiman Marcus
Group, Inc.

 

(d)           “Majority Stockholder” shall mean, collectively or individually as
the context requires, Newton Holding, LLC, TPG Newton III, LLC, TPG Partners IV,
L.P., TPG Newton Co-Invest I, LLC, Warburg Pincus Private Equity VIII, L.P.,
Warburg Pincus Netherlands Private Equity VIII C.V. I, Warburg Pincus Germany
Private Equity VIII K.G , Warburg Pincus Private Equity IX, L.P and/or their
respective CIC Affiliates.

 

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(e)           “Person” shall mean an individual, partnership, corporation,
limited liability company, unincorporated organization, trust or joint venture,
or a governmental agency or political subdivision thereof.

 

2.7           “Code” means the Internal Revenue Code of 1986, as amended from
time to time.  Reference to any section or subsection of the Code includes
reference to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection.  Similarly,
reference to any Treasury Regulation includes reference to any succeeding
provisions of any regulation or other applicable guidance that amends,
supplements or replaces such regulation.

 

2.8           “Committee” means The Neiman Marcus Group, Inc. Employee Benefits
Committee or any successor committee appointed by the Board of Directors of The
Neiman Marcus Group, Inc. or its delegate.

 

2.9           “Company” means The Neiman Marcus Group, Inc., a Delaware
corporation, and any successor, including a successor to all or substantially
all of the Company’s assets or business which assumes the obligations of the
Company with regard to the Plan.

 

2.10         “Compensation” means Base Pay and any Bonus payable by an Employer
to an employee.

 

2.11         “Effective Date” means January 1, 2006.

 

2.12         “Elective Deferral” means the portion of Compensation which is
deferred by a Participant under Section 4.1.

 

2.13         “ELIGIBLE EMPLOYEE”           MEANS EACH EMPLOYEE OF AN EMPLOYER
WHO WAS ELIGIBLE TO PARTICIPATE IN THE PLAN AS OF JANUARY 1, 2007.  NO OTHER
PERSONS SHALL BECOME ELIGIBLE EMPLOYEES AND IN THE EVENT OF AN ELIGIBLE
EMPLOYEE’S SEPARATION FROM SERVICE AFTER JANUARY 1, 2007, SUCH ELIGIBLE EMPLOYEE
SHALL NOT AGAIN BECOME AN ELIGIBLE EMPLOYEE HEREUNDER.  THE COMMITTEE IN

 

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ITS DISCRETION MAY WITHDRAW AN EMPLOYEE’S STATUS AS AN ELIGIBLE EMPLOYEE AT ANY
TIME AND FOR ANY REASON EFFECTIVE WITH RESPECT TO ANY SUBSEQUENT PLAN YEAR.

 

2.14         “Employer” means the Company and any Affiliate that adopts the Plan
with the consent of the Company as provided in Section 9.8.

 

2.15         “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended from time to time.  Reference to any section or subsection of ERISA
includes reference to any comparable or succeeding provisions of any legislation
which amends, supplements or replaces such section or subsection.

 

2.16         “Fiscal Year” means the fiscal year of the Company.

 

2.17         “Matching Deferral” means a deferral made for the benefit of a
Participant under Section 4.2.

 

2.18         “Maximum 401(k) Plan Deferral” means a Participant’s maximum
permissible elective deferral under the Savings Plan or the Retirement Savings
Plan, as applicable, at the time in question assuming the maximum permissible
elective deferrals have been made under the Savings Plan or Retirement Savings
Plan, as applicable, for prior periods during such Plan Year, regardless of
whether the Participant actually made any such elective deferrals.  The
determination of whether the Savings Plan or the Retirement Savings Plan is
applicable to a Participant for this purpose for a particular Plan Year shall be
by reference to the plan in which the Participant is eligible to participate as
of the beginning of said Plan Year.

 

2.19         “Maximum 401(k) Plan Match” means a Participant’s maximum
permissible matching contribution under the Savings Plan or the Retirement
Savings Plan, as applicable, at the time in question and assuming the maximum
permissible elective deferrals have been made under the Savings Plan or the
Retirement Savings Plan, as applicable, for prior periods during such Plan Year,
regardless of whether the Participant actually made any such elective
deferrals. 

 

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The determination of whether the Savings Plan or the Retirement Savings Plan is
applicable to a Participant for this purpose shall be by reference to the plan
in which the Participant is eligible to participate as of the beginning of said
Plan Year.

 

2.20         “Participant” means any individual who participates in the Plan in
accordance with Article 3.

 

2.21         “Plan” means The Neiman Marcus Group, Inc. Key Employee Deferred
Compensation Plan, originally effective as of January 1, 2006, as from time to
time in effect and including all amendments hereto.

 

2.22         “Plan Year” means the calendar year.

 

2.23         “Retirement” means Separation from Service on or after the date the
Participant has attained age 55 and reached the fifth anniversary of the date he
or she first performed an hour of service (as defined in Section 2.27 below).

 

2.24         “Retirement Savings Plan” means The Neiman Marcus Group, Inc.
Retirement Savings Plan, as amended from time to time.

 

2.25         “Savings Plan” means The Neiman Marcus Group, Inc. Employee Savings
Plan, as amended from time to time.

 

2.26         “Separation from Service” means the termination of services
provided by a Participant to his or her Employer (as defined in (c) below),
whether voluntary or involuntary, as determined by the Committee in accordance
with Treasury Regulation Section 1.409A-1(h).  In determining whether a
Participant has experienced a Separation from Service, the following provisions
shall apply:

 

(a)           Except as otherwise provided in subsection (b) below, a Separation
from Service will occur when such Participant has experienced a termination of
employment

 

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with the Employer.  A Participant will be considered to have experienced a
termination of employment when the facts and circumstances indicate that the
Participant and his or her Employer reasonably anticipate that either (A) no
further services will be performed for the Employer after a certain date, or
(B) that the level of bona fide services the Participant will perform for the
Employer after such date (whether as an employee or as an independent
contractor) will permanently decrease to no more than 20% of the average level
of bona fide services performed by the Participant (whether as an employee or an
independent contractor) over the immediately preceding 36-month period (or the
full period of services to the Employer if the Participant has been providing
services to the Employer less than 36 months).

 

If a Participant is on military leave, sick leave, or other bona fide leave of
absence, the employment relationship between the Participant and the Employer
will be treated as continuing, provided that the period of the leave of absence
does not exceed six months, or if longer, so long as the Participant has a right
to reemployment with the Employer under an applicable statute or by contract.
 If the period of a military leave, sick leave, or other bona fide leave of
absence exceeds six months and the Participant does not have a right to
reemployment under an applicable statute or by contract, the employment
relationship will be considered to be terminated for purposes of this Plan as of
the first day immediately following the end of such six-month period.  In
applying the provisions of this paragraph, a leave of absence will be considered
a bona fide leave of absence only if there is a reasonable expectation that the
Participant will return to perform services for the Employer.

 

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(b)                                 For a Participant who provides services to
an Employer as both an employee and an independent contractor, a Separation from
Service generally will not occur until the Participant has ceased providing
services for the Employer as both an employee and an independent contractor. 
Except as otherwise provided herein, in the case of an independent contractor a
Separation from Service will occur upon the expiration of the contract (or in
the case of more than one contract, all contracts) under which services are
performed for the Employer, provided that the expiration of such contract or
contracts is determined by the Employer to constitute a good-faith and complete
termination of the contractual relationship between the Participant and the
Employer.  If a Participant ceases providing services for an Employer as an
employee and begins providing services for such Employer as an independent
contractor, the Participant will not be considered to have experienced a
Separation from Service until the Participant has ceased providing services for
the Employer in both capacities, as determined in accordance with the applicable
provisions set forth in subsections (a) and (b) of this Section.

 

Notwithstanding the foregoing provisions in this subsection, if a  Participant
provides services for an Employer as both an employee and as a member of the
board of directors of an Employer, to the extent permitted by Treasury
Regulation
Section 1.409A-1(h)(5), the services provided by the Participant as a director
will not be taken into account in determining whether the Participant has
experienced a Separation from Service as an employee

 

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(c)                                  For purposes of this Section only,
“Employer” means:

 

(i)                                     The entity for whom the Participant
performs services and with respect to which the legally binding right to the
payment of benefits under this Plan arises; and

 

(ii)                                  All other entities with which the entity
described in (i) above would be aggregated and treated as a single employer
under Code Section 414(b) (controlled group of corporations) and Code
Section 414(c) (group of trades or businesses under common control), as
applicable; provided, however, that an  ownership threshold of 50% shall be used
as a substitute for the 80% minimum ownership threshold that appears in, and
otherwise must be used when applying, the applicable provisions of (1) Code
Section 1563 and the regulations thereunder for determining a controlled group
of corporations under Code Section 414(b), and (2) Treasury Regulation
Section 1.414(c)-2 for determining the trades or businesses that are under
common control under Code Section 414(c).

 

2.27                           “Year of Service” means completion of the twelve
consecutive month period beginning on the date the employee first performs an
hour of service upon initial employment with an Employer or an Affiliate during
which the employee is continuously employed by an Employer or an Affiliate or,
with respect to an employee who terminates employment prior to completing a Year
of Service, completion of the twelve consecutive month period beginning on the
date the employee first performs an hour of service upon reemployment with an
Employer or an Affiliate during which the employee is continuously employed by
an Employer or an Affiliate.  For this purpose and for purposes of Section 2.23
defining the term “Retirement”, an “hour of service” shall mean each hour for
which an employee is paid or entitled to payment for the performance of duties
for an Employer or an Affiliate.

 

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ARTICLE 3.  PARTICIPATION

 

3.1                                 Commencement of Participation.  An Eligible
Employee shall become a Participant on the effective date of an election to
defer Compensation in accordance with Section 4.1.

 

3.2                                 Continued Participation.  An individual who
has become a Participant in the Plan shall continue to be a Participant so long
as any amount remains credited to his or her Account.

 

ARTICLE 4.  DEFERRALS AND CREDITS

 

4.1                                 ELECTIVE DEFERRALS.

 

(A)                                  BASE PAY.  AN INDIVIDUAL WHO IS OR WILL BE
AN ELIGIBLE EMPLOYEE AS OF ANY JANUARY 1 MAY ELECT TO DEFER A DESIGNATED WHOLE
PERCENTAGE, NOT TO EXCEED 15 PERCENT, OF ALL BASE PAY THAT IS PAYABLE TO THE
INDIVIDUAL FOR SERVICES TO BE PERFORMED ON OR AFTER THAT DATE BY FILING AN
ELECTION WITH THE COMMITTEE PRIOR TO THAT JANUARY 1 (OR SUCH EARLIER DATE AS THE
COMMITTEE MAY PRESCRIBE).  ANY SUCH ELECTION SHALL BE IRREVOCABLE AS OF THE
DECEMBER 31 IMMEDIATELY PRIOR TO SUCH JANUARY 1 (OR SUCH EARLIER DATE AS THE
COMMITTEE MAY PRESCRIBE).  NOTWITHSTANDING THE PRECEDING PROVISIONS OF THIS
PARAGRAPH, A PARTICIPANT MAY REVOKE OR OTHERWISE MODIFY AN EXISTING ELECTION, OR
MAKE A NEW DEFERRAL ELECTION, EFFECTIVE AS OF ANY JANUARY 1 SUBSEQUENT TO THE
DATE OF SUCH REVOCATION, MODIFIED ELECTION, OR NEW ELECTION, BUT ONLY WITH
RESPECT TO BASE PAY EARNED THEREAFTER.  SUCH REVOCATION, MODIFICATION OR NEW
ELECTION MUST BE DELIVERED TO THE COMMITTEE NO LATER THAN THE DECEMBER 31
IMMEDIATELY PRECEDING THE EFFECTIVE DATE OF THE ELECTION (OR SUCH EARLIER DATE
AS THE COMMITTEE MAY PRESCRIBE).  THE SAME DEFERRAL PERCENTAGE SHALL APPLY TO
EACH PAYMENT OF BASE PAY COVERED BY THE ELECTION.

 

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(B)                                 BONUSES.  AN INDIVIDUAL WHO IS AN ELIGIBLE
EMPLOYEE MAY ELECT TO DEFER A DESIGNATED WHOLE PERCENTAGE, NOT TO EXCEED 15
PERCENT, OF A BONUS PAYABLE TO THE INDIVIDUAL WITH RESPECT TO A FISCAL YEAR
BEGINNING IN A CALENDAR YEAR AFTER THE CALENDAR YEAR IN WHICH THE ELECTION IS
MADE, BY FILING AN IRREVOCABLE ELECTION WITH THE COMMITTEE ON OR BEFORE
DECEMBER 31 OF SUCH CALENDAR YEAR (OR SUCH EARLIER DATE AS THE COMMITTEE MAY
PRESCRIBE).  A PARTICIPANT MAY REVOKE OR OTHERWISE MODIFY AN EXISTING ELECTION,
OR MAKE A NEW DEFERRAL ELECTION, EFFECTIVE WITH RESPECT TO A BONUS TO BE PAID
FOR A FISCAL YEAR BEGINNING IN A CALENDAR YEAR AFTER THE CALENDAR YEAR IN WHICH
OCCURS THE DATE OF SUCH REVOCATION, MODIFIED ELECTION, OR NEW ELECTION, BY
FILING AN IRREVOCABLE ELECTION WITH THE COMMITTEE ON OR BEFORE DECEMBER 31 OF
SUCH CALENDAR YEAR (OR SUCH EARLIER DATE AS THE COMMITTEE MAY PRESCRIBE).

 

(I)                                     FISCAL YEAR BONUS.  NOTWITHSTANDING THE
PRECEDING PROVISIONS OF THIS SUBPARAGRAPH (B), IF PERMITTED BY THE COMMITTEE, AN
INDIVIDUAL WHO IS AN ELIGIBLE EMPLOYEE MAY ELECT TO DEFER A DESIGNATED WHOLE
PERCENTAGE, NOT TO EXCEED 15 PERCENT, OF ANY FISCAL YEAR BONUS PAYABLE TO THE
INDIVIDUAL WITH RESPECT TO A FISCAL YEAR BEGINNING AFTER THE DATE ON WHICH THE
ELECTION IS MADE BY FILING AN IRREVOCABLE ELECTION WITH THE COMMITTEE BEFORE THE
FIRST DAY OF SUCH FISCAL YEAR (OR SUCH EARLIER DATE AS THE COMMITTEE MAY
PRESCRIBE).  A PARTICIPANT MAY REVOKE OR OTHERWISE MODIFY AN EXISTING ELECTION,
OR MAKE A NEW DEFERRAL ELECTION, EFFECTIVE WITH RESPECT TO A FISCAL YEAR BONUS
TO BE PAID FOR A FISCAL YEAR BEGINNING AFTER THE DATE OF SUCH REVOCATION,
MODIFIED ELECTION, OR NEW ELECTION, BY FILING AN IRREVOCABLE ELECTION WITH THE
COMMITTEE BEFORE THE FIRST DAY OF SUCH FISCAL YEAR (OR SUCH EARLIER DATE AS THE
COMMITTEE MAY PRESCRIBE).

 

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(II)                                  PERFORMANCE
BONUS.                                     NOTWITHSTANDING THE PRECEDING
PROVISIONS OF THIS SUBPARAGRAPH (B), IF PERMITTED BY THE COMMITTEE, AN
INDIVIDUAL WHO IS AN ELIGIBLE EMPLOYEE MAY ELECT TO DEFER A DESIGNATED WHOLE
PERCENTAGE, NOT TO EXCEED 15 PERCENT, OF ANY PERFORMANCE BONUS FOR A PERFORMANCE
PERIOD ENDING AFTER THE DATE OF THE ELECTION, BY FILING AN IRREVOCABLE ELECTION
WITH THE COMMITTEE AT LEAST SIX MONTHS PRIOR TO THE END OF ANY SUCH PERFORMANCE
PERIOD (OR SUCH EARLIER DATE AS THE COMMITTEE MAY PRESCRIBE); PROVIDED, HOWEVER,
THAT THE ELIGIBLE EMPLOYEE PERFORMS SERVICES CONTINUOUSLY FROM THE LATER OF THE
BEGINNING OF THE PERFORMANCE PERIOD OR THE DATE THE PERFORMANCE CRITERIA ARE
ESTABLISHED THROUGH THE DATE THE DEFERRAL ELECTION IS MADE AND THAT IN NO EVENT
MAY A DEFERRAL ELECTION BE MADE AFTER THE PERFORMANCE BONUS HAS BECOME READILY
ASCERTAINABLE AS DETERMINED IN ACCORDANCE WITH TREASURY REGULATION
SECTION 1.409A-2(A)(8).  A PARTICIPANT MAY REVOKE OR OTHERWISE MODIFY AN
EXISTING ELECTION, OR MAKE A NEW DEFERRAL ELECTION, EFFECTIVE WITH RESPECT TO A
PERFORMANCE BONUS TO BE PAID FOR ANY PERFORMANCE PERIOD ENDING MORE THAN SIX
MONTHS SUBSEQUENT TO THE DATE OF SUCH REVOCATION, MODIFIED ELECTION, OR NEW
ELECTION BY FILING AN IRREVOCABLE ELECTION WITH THE COMMITTEE AT LEAST SIX
MONTHS PRIOR TO THE END OF ANY SUCH PERFORMANCE PERIOD (OR SUCH EARLIER DATE AS
THE COMMITTEE MAY PRESCRIBE); PROVIDED, HOWEVER, THAT THE ELIGIBLE EMPLOYEE
PERFORMS SERVICES CONTINUOUSLY FROM THE LATER OF THE BEGINNING OF THE
PERFORMANCE PERIOD OR THE DATE THE PERFORMANCE CRITERIA ARE ESTABLISHED THROUGH
THE DATE OF THE REVOCATION, MODIFIED ELECTION, OR NEW ELECTION, AND THAT IN NO
EVENT MAY SUCH A REVOCATION, MODIFIED, ELECTION OR NEW ELECTION BE MADE AFTER
THE PERFORMANCE BONUS HAS BECOME READILY ASCERTAINABLE AS DETERMINED IN
ACCORDANCE WITH TREASURY REGULATION SECTION 1.409A-2(A)(8).

 

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(C)                                  THE PROVISIONS OF PARAGRAPHS (A) AND (B) TO
THE CONTRARY NOTWITHSTANDING, IN THE EVENT THAT AN EMPLOYEE RECEIVES A HARDSHIP
DISTRIBUTION FROM THE SAVINGS PLAN OR THE RETIREMENT SAVINGS PLAN, AS
APPLICABLE, AT A TIME AT WHICH THE SAVINGS PLAN OR THE RETIREMENT SAVINGS PLAN,
AS APPLICABLE, REQUIRES THE SUSPENSION OF ALL ELECTIVE CONTRIBUTIONS AND
DEFERRALS UNDER ALL PLANS MAINTAINED BY AN EMPLOYER UPON THE RECEIPT OF SUCH A
HARDSHIP WITHDRAWAL, THEN (I) ANY ELECTION TO DEFER BASE PAY PURSUANT TO THIS
PLAN IN EFFECT AT THE TIME OF SUCH HARDSHIP DISTRIBUTION SHALL BE REVOKED AT THE
TIME THE EMPLOYEE RECEIVES SUCH DISTRIBUTION AND SUCH EMPLOYEE SHALL NOT BE
ELIGIBLE TO MAKE A NEW ELECTION TO DEFER BASE PAY PRIOR TO A DATE THAT IS MORE
THAN SIX MONTHS AFTER THE DATE SUCH HARDSHIP DISTRIBUTION WAS MADE, AND (II) ANY
ELECTION TO DEFER A BONUS PURSUANT TO THIS PLAN SHALL BE REVOKED AT THE TIME THE
EMPLOYEE RECEIVES SUCH HARDSHIP DISTRIBUTION AND SUCH EMPLOYEE SHALL NOT BE
ELIGIBLE TO MAKE A NEW ELECTION TO DEFER A BONUS PRIOR TO A DATE THAT IS MORE
THAN SIX MONTHS AFTER THE DATE SUCH HARDSHIP DISTRIBUTION WAS MADE.

 

(D)                                 EACH ELECTION UNDER THIS SECTION 4.1 SHALL
BE MADE AT THE TIME AND IN THE MANNER APPROVED OR PRESCRIBED BY THE COMMITTEE. 
THE AMOUNT OF EACH PAYMENT THAT IS DEFERRED HEREUNDER SHALL BE CREDITED TO THE
PARTICIPANT’S ACCOUNT AS OF THE PAY DATE SUCH AMOUNT WOULD OTHERWISE HAVE BEEN
PAID TO THE PARTICIPANT.

 

(E)                                  FOR PURPOSES OF THIS PLAN, ANY AMOUNT OF
BASE PAY THAT IS PAYABLE AFTER THE END OF THE PLAN YEAR SOLELY FOR SERVICES
PERFORMED DURING THE FINAL PAYROLL PERIOD (DESCRIBED IN CODE SECTION 3401(B))
CONTAINING THE LAST DAY OF THE PLAN YEAR, WHERE THE AMOUNT IS PAYABLE PURSUANT
TO THE TIMING ARRANGEMENT UNDER WHICH THE EMPLOYER NORMALLY COMPENSATES THE
PARTICIPANT FOR SERVICES PERFORMED DURING A PAYROLL PERIOD (DESCRIBED IN CODE
SECTION 3401(B)), SHALL BE TREATED AS BASE PAY FOR SERVICES PERFORMED IN THE
SUBSEQUENT PLAN YEAR IN WHICH THE BASE PAY IS ACTUALLY PAYABLE.

 

14

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4.2                                 Matching Deferrals.  As of each pay date on
which a credit is made to a Participant’s Account with respect to such
Participant’s election to defer Base Pay or Bonus pursuant to Section 4.1, such
Participant’s Employer shall credit to the Participant’s Account a Matching
Deferral equal to:

 

(A)                                  100% OF THE SUM OF (I) THE PARTICIPANT’S
ELECTIVE DEFERRALS FOR SUCH PAY DATE AND (II) THE PARTICIPANT’S MAXIMUM
401(K) PLAN DEFERRALS FOR SUCH PAY DATE, TO THE EXTENT THAT SUCH SUM DOES NOT
EXCEED THE FIRST TWO PERCENT (2%) OF HIS OR HER COMPENSATION FOR SUCH PAY DATE,
PLUS

 

(B)                                 25% OF THE SUM OF (I) THE PARTICIPANT’S
ELECTIVE DEFERRALS FOR SUCH PAY DATE AND (II) THE PARTICIPANT’S MAXIMUM
401(K) PLAN DEFERRALS FOR SUCH PAY DATE, TO THE EXTENT THAT SUCH SUM DOES NOT
EXCEED THE NEXT FOUR PERCENT (4%) OF HIS OR HER COMPENSATION FOR SUCH PAY DATE,
MINUS

 

(C)                                  THE PARTICIPANT’S MAXIMUM 401(K) PLAN MATCH
FOR SUCH PAY DATE.

 

ARTICLE 5.  ACCOUNTS; INTEREST; PAYMENT; VESTING

 

5.1                                 Accounts.  An Employer shall establish and
maintain on its books an Account for each Participant employed by such
Employer.  Each such Account shall be designated by the name of the Participant
for whom it is established.  An Employer shall continue to maintain a
Participant’s Account as long as a positive balance remains credited to such
Account.  A Participant’s Account shall be credited with the amounts of Elective
Deferrals and Matching Deferrals as provided in the Plan and any adjustments
hereunder.  Within 45 days after the end of each calendar quarter, the Committee
shall provide the Participant with a statement of his or her Account.

 

15

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5.2                                 Interest.  As of the last day of each
calendar month, the Committee shall credit each Participant’s Account with
interest on the balance of such Account as of the last day of the preceding
calendar month less any distributions or withdrawals made during such calendar
month, plus interest on any amounts credited to such Account during such
calendar month from the date such amounts were credited.  In addition, payments
under Article 6 shall include interest on the amount of such payment from the
end of the preceding calendar month (except that with respect to the portion of
the payment attributable to an amount credited to the Account after the end of
the preceding calendar month, such portion of the payment shall include interest
only from the later date as of which the amount was credited to the Account). 
The interest to be credited pursuant to this Section shall be at an annual rate
equal to the prime interest rate published in The Wall Street Journal on the
last business day of the preceding calendar quarter (or, if two or more such
rates are published, the average of such rates).

 

5.3                                 Payments.  Each Participant’s Account shall
be reduced by the amount of any payment made to or on behalf of the Participant
under the Plan as of the date such payment is made.

 

5.4                                 Vesting.  All amounts credited to the
Accounts shall be fully vested and nonforfeitable at all times; provided,
however, that in the event of a Participant’s Separation from Service on account
of a termination of the Participant’s employment by the Employer for Cause, as
determined by the Committee in its discretion, any amounts credited to such
Participant’s Accounts that are attributable to Matching Deferrals made on or
after January 1, 2008, along with all interest credits thereon, shall be
forfeited.

 

16

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ARTICLE 6.  PAYMENTS

 

6.1                                 Election of Time and Form of Payment.

 

(a)                                  Prior to January 1, 2008 (or such earlier
date as the Committee may prescribe), each Participant, and each individual who
is or will be an Eligible Employee as of January 1, 2008 and who makes an
election pursuant to Section 4.1(a) or (b) to commence making Elective Deferrals
to the Plan effective as of January 1, 2008, shall elect the time and form of
payment from among the options set forth in this Section for the amounts
credited to his or her Account.  Each other individual who is or will be an
Eligible Employee as of January 1, 2008 but is not a Participant and who does
not elect to commence making Elective Deferrals to the Plan effective as of
January 1, 2008 but who makes an initial election subsequent to January 1, 2008
to commence making Elective Deferrals to the Plan pursuant to Section 4.1(a) or
(b) shall, on or before the deadline applicable to his or her initial election
to begin making Elective Deferrals to the Plan, elect the time and form of
payment from among the options set forth in this Section for the amounts
credited to his or her Account.

 

(b)                                 The options available for the commencement
of payment from a Participant’s Account are:

 

(I)                                     THE FIRST CALENDAR QUARTER FOLLOWING THE
CALENDAR QUARTER IN WHICH THE PARTICIPANT HAS A SEPARATION FROM SERVICE; OR

 

(II)                                  THE FIRST CALENDAR QUARTER OF THE CALENDAR
YEAR IMMEDIATELY FOLLOWING THE CALENDAR YEAR IN WHICH THE PARTICIPANT HAS A
SEPARATION FROM SERVICE OR ANY OF THE NEXT NINE (9) CALENDAR YEARS THEREAFTER,
AS DESIGNATED BY THE PARTICIPANT IN SUCH ELECTION.

 

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(c)                                  The options available for the form of
payment from a Participant’s Account are:

 

(I)                                     A SINGLE LUMP SUM PAYMENT; OR

 

(II)                                  ANNUAL INSTALLMENTS TO BE PAID IN THE SAME
CALENDAR QUARTER EACH YEAR OVER A PERIOD ELECTED BY THE PARTICIPANT UP TO TEN
(10) YEARS, THE AMOUNT OF EACH INSTALLMENT TO EQUAL THE BALANCE OF HIS OR HER
ACCOUNT IMMEDIATELY PRIOR TO THE INSTALLMENT DIVIDED BY THE NUMBER OF
INSTALLMENTS REMAINING TO BE PAID.

 

(d)                                 The foregoing elections shall be made at the
time and in the manner approved or prescribed by the Committee.  Each such
election shall be irrevocable as of the deadline for making such election as
provided above, except as otherwise provided in Section 6.6.  In the event a
Participant fails to make a valid election by the time provided in this Section,
the Participant shall be deemed to have elected options (b)(i) and (c)(i) above.

 

(e)                                  Notwithstanding the preceding provisions of
this Section, if the total amount credited to a Participant’s Account and any
other plans required to be aggregated with this Plan, including all agreements,
methods, programs, or other arrangements with respect to which deferrals of
compensation are treated as having been deferred under a single nonqualified
deferred compensation plan under Treasury Regulation Section 1.409A-1(c)(2), is
less than the applicable dollar amount under Code Section 402(g)(1)(B), the
Committee may require a distribution of the entire Account in the form of a
single lump sum payment.  Any payment made pursuant to this provision must
result in the termination and liquidation of the entirety of the Participant’s
interest under the Plan and any other plans required to be aggregated with this
Plan, including all agreements, methods, programs, or other arrangements with
respect to which deferrals of

 

18

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compensation are treated as having been deferred under a single nonqualified
deferred compensation plan under Treasury Regulations Section 1.409A-1(c)(2). 
Any determination by the Committee to require a distribution pursuant to this
paragraph must be evidenced in writing no later than the date of any payment
hereunder.

 

6.2                                 Retirement and Other Separation from
Service.  Upon a Participant’s Separation from Service on account of the
Participant’s Retirement, the Participant’s Account shall be paid to the
Participant at the time and in the form elected pursuant to Section 6.1.  Upon a
Participant’s Separation from Service for any reason other than death or
Retirement, the Participant’s Account shall be paid to the Participant in a
single lump sum payment during the calendar quarter immediately following the
calendar quarter in which such Separation from Service occurs.

 

6.3                                 Death.  If a Participant dies prior to the
complete distribution of his or her Account, the balance of the Account shall be
paid in a single lump sum payment in the first calendar quarter following the
calendar quarter in which the Participant died to the Participant’s designated
beneficiary or beneficiaries.  Any designation of beneficiary shall be made by
the Participant in a manner approved or prescribed by the Committee, shall be
effective upon receipt by the Committee or its designee, and may be changed by
the Participant at any time.  If there is no such designation or no designated
beneficiary survives the Participant, payment shall be made to the Participant’s
estate.

 

6.4                                 Change in Control.  In the event of a Change
in Control on or after January 1, 2006, all amounts credited to a Participant’s
Account shall be distributed in a single lump sum payment at the time of such
Change in Control or within five business days thereafter.  Notwithstanding the
preceding, a Change in Control shall not be deemed to have occurred with respect
to the Account of a Participant for purposes of this Section unless such Change
in

 

19

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Control also satisfies the requirements for a permitted distribution event with
respect to such Participant for purposes of Code Section 409A(a)(2)(A)(v).

 

6.5                                 Hardship Distributions.  If a Participant
encounters an unforeseeable emergency, as determined by the Committee, the
Committee shall direct the Employer maintaining such Participant’s Account to
pay to such Participant and deduct from such Account such portion of the vested
amount then credited to such Account (including, if appropriate, the entire
amount) as the Committee shall determine to be necessary to alleviate the severe
financial hardship of such Participant caused by such unforeseeable emergency
(which may include amounts necessary to pay any Federal, state, or local income
taxes or penalties reasonably anticipated to result from the distribution).  For
this purpose, an “unforeseeable emergency” shall be a severe financial hardship
of the Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, the Participant’s beneficiary, or the Participant’s
dependent (as defined in Code Section 152 without regard to Code
Section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant’s property
due to casualty (including the need to rebuild a home following damage to a home
not otherwise covered by insurance), or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant, including the need to pay for the funeral expenses of a spouse,
a beneficiary, or a dependent (as defined in Code Section 152, without regard to
Section 152(b)(1), (b)(2), and (d)(1)(B)).  The circumstances that will
constitute an unforeseeable emergency will depend upon the facts of each case,
but in any case, payment may not be made to the extent that such hardship is or
may be relieved (i) through reimbursement or compensation by insurance or
otherwise or (ii) by liquidation of the Participant’s assets, to the extent
liquidation of such assets would not itself cause severe financial hardship.  No
distribution shall be made to a Participant pursuant to this Section unless such
Participant requests such a distribution in such manner as the Committee

 

20

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may prescribe and provides to the Committee such information and documentation
with respect to his or her unforeseeable emergency as may be requested by the
Committee.  This Section shall be interpreted in a manner consistent with the
distribution requirements of Section 409A of the Code.

 

6.6                                 Changes in Time and Form of Payment.  A
Participant may change his or her previous payment elections under Section 6.1
regarding the time at which his or her Account will be paid or begin to be paid,
or the form of such payment, or both, after commencing participation in the Plan
provided that (i) no such change shall be effective until at least 12 months
after the date on which such modified election is made, (ii) no change may be
made less than twelve months prior to the date the payment is scheduled to be
paid or, in the case of installment payments elected pursuant to
Section 6.1(c)(ii) (which shall be treated for purposes of this Plan as a
“single payment”), twelve months prior to the date the first amount was
scheduled to be paid, and (iii) the payment made pursuant to any such subsequent
election is deferred for a period of not less than five years from the date such
payment was scheduled to be paid or, in the case of installment payments elected
pursuant to Section 6.1(c)(ii) (which shall be treated for purposes of this Plan
as a “single payment”), five years from the date the first amount was scheduled
to be paid.  A Participant’s election pursuant to this Section to change his or
her previous payment elections shall be made in the manner prescribed by the
Committee and shall become effective and be deemed to be “made” for purposes of
the above provisions of this Section at the time received by the Committee or
its designee, and shall be irrevocable upon such receipt.  In the case of a
payment that is scheduled to be made during a calendar quarter or such other
time period longer than one day, such payment shall be deemed to be scheduled to
be paid for purposes of this Section as of the first day of such time period.

 

21

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6.7                                 Withholding.  There shall be deducted from
all amounts paid under this Plan any taxes and other amounts required to be
withheld by any Federal, state, local or other government.  The Participant
and/or his or her beneficiary (including his or her estate) shall bear all taxes
on amounts paid under this Plan to the extent that no taxes are withheld,
irrespective of whether withholding is required.  The Participant will be
required to pay to his or her Employer the amount of any federal, state or local
taxes required by law to be withheld in connection with the Plan in the event
that such Participant is not being paid by an Employer or amounts being paid by
an Employer to such Participant are insufficient to satisfy any such withholding
obligation.

 

6.8                                 Specified Employees.  Any provision of the
Plan to the contrary notwithstanding, if a Participant is a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Code as of the date of the
Participant’s termination of employment with the Employer and all Affiliates, no
distribution shall be made or commence with respect to such Participant pursuant
to this Section sooner than six months from the date of such Participant’s
termination of employment (or, if earlier, the date of the Participant’s
death).  In such case, all payments that were scheduled to be made within such
six-month period shall be accumulated (with interest as provided in Section 5.2)
and paid in a single lump sum in the calendar quarter following the calendar
quarter in which such six-month period ends. The determination of whether an
individual is a “specified employee” shall be made in accordance with the
applicable regulations and other guidance pursuant to Code Section 409A using
the default provisions in such regulations and other guidance unless another
method permitted pursuant to such regulations and other guidance has been
prescribed for such purpose by the Company for application to all plans subject
to Code Section 409A.

 

6.9                                 409A Income Inclusion.  Any provision of the
Plan to the contrary notwithstanding, although the Plan is designed to comply in
form and operation with the

 

22

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requirements of Code Section 409A, in the event a Participant is required to
include in income an amount attributable to the Plan prior to the payment of any
such amount pursuant to this Plan on account of a violation of Code
Section 409A, the amount so required to be included in income shall be paid to
the Participant as soon as practicable.

 

ARTICLE 7.  COMMITTEE

 

7.1                                 Plan Administration and Interpretation.  The
Committee shall oversee the administration of the Plan.  The Committee shall
have complete control and authority to determine the rights and benefits and all
claims, demands and actions arising out of the provisions of the Plan of any
Participant, beneficiary, deceased Participant, or other person having or
claiming to have any interest under the Plan.  The Committee shall have the
exclusive and discretionary power to interpret the Plan and to decide all
matters under the Plan.  Such interpretation and decision shall be final,
conclusive and binding on all Participants and any person claiming under or
through any Participant, in the absence of clear and convincing evidence that
the Committee acted arbitrarily and capriciously.  Any individual serving on the
Committee who is a Participant will not vote or act on any matter relating
solely to himself or herself.  When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a Participant, a
beneficiary, or an Employer.  The Committee shall be deemed to be the Plan
administrator with responsibility for complying with any reporting and
disclosure requirements of ERISA.

 

7.2                                 Powers, Duties, Procedures, Etc.  The
Committee may adopt such rules and regulations as it deems necessary, desirable
or appropriate in administering the Plan so long as they are not inconsistent
with the terms of the Plan.  Any act which this Plan authorizes or requires the
Committee to do may be done by a majority of the members of the Committee

 

23

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acting hereunder; and the action of such majority of the members of the
Committee, expressed from time to time by a vote at a meeting or in writing
without a meeting, shall constitute the action of the Committee and shall have
the same effect for all purposes as if assented to by all of the members of the
Committee at the time in a regular or special meeting.  A dissenting Committee
member who, within a reasonable time after he or she has knowledge of any action
or failure to act by the majority, registers his or her dissent in writing
delivered to the other Committee members and the Company shall not be
responsible for any action or failure to act.  The Committee may elect one of
its members as chairman and it may appoint a secretary who may, but need not be,
a Committee member.  In addition, the Committee may appoint other agents and
representatives, who may but need not be in the employ of the Employer, to keep
its records and assist it in doing other acts or things to be done or performed
by the Committee.  Any such person, corporation or firm so designated by the
Committee may, when so authorized by the Committee, sign in the name of the
Committee all applications and other documents required hereunder. All usual and
reasonable expenses of the Committee including, without limiting the generality
thereof, the reasonable cost of record keeping, accountants’ fees, consultants’
fees, counsel fees, and administrative costs shall be paid by the Employers.

 

7.3                                 Information.  To enable the Committee to
perform its functions, the Employers shall supply full and timely information to
the Committee on all matters relating to the compensation of Participants, their
employment, retirement, death, termination of employment, and such other
pertinent facts as the Committee may require.

 

7.4                                 Indemnification of Committee.  The Employers
agree to indemnify and to defend to the fullest extent permitted by law any
officer or employee who serves as a member of the Committee (including any such
individual who formerly served as a member of the Committee) against all
liabilities, damages, costs and expenses (including attorneys’ fees and amounts
paid in

 

24

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settlement of any claims approved by the Company) occasioned by any act or
omission to act in connection with the Plan, if such act or omission is in good
faith.

 

7.5                                 Claims Procedure.  If any person
(hereinafter called the “Claimant”) feels that he or she is being denied a
benefit to which he or she is entitled under this Plan, such Claimant may file a
written claim for said benefit with the Committee.  Within sixty days following
the receipt of such claim the Committee shall determine and notify the Claimant
as to whether he or she is entitled to such benefit.  Such notification shall be
in writing and, if denying the claim for benefit, shall set forth the specific
reason or reasons for the denial, make specific reference to the pertinent
provisions of this Plan, describe any additional information necessary for the
Claimant to perfect the claim and explain why the information is necessary,
advise the Claimant that he or she may, within sixty days following the receipt
of such notice, in writing request to appear before the Committee or its
designated representative for a hearing to review such denial, and state that
the Claimant has the right to bring a civil action under Section 502(a) of the
Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) following
a denial of the claim on review.  Any hearing shall be scheduled at the mutual
convenience of the Committee or its designated representative and the Claimant,
and at any such hearing the Claimant and/or his or her duly authorized
representative may examine any relevant documents and present evidence and
arguments to support the granting of the benefit being claimed.  The final
decision of the Committee with respect to the claim being reviewed shall be made
within sixty days following the hearing thereon, and Committee shall in writing
notify the Claimant of said final decision, again specifying the reasons
therefor and the pertinent provisions of this Plan upon which said final
decision is based.  The written notice will also include a statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents and other information relevant to the
claim and a statement that the Claimant has a

 

25

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right to bring a civil action under Section 502(a) of ERISA.  The final decision
of the Committee shall be conclusive and binding upon all parties having or
claiming to have an interest in the matter being reviewed.

 

ARTICLE 8.  AMENDMENT AND TERMINATION

 

8.1                                 Amendments.  The Company shall have the
right to amend this Plan from time to time, subject to Section 8.3.

 

8.2                                 Termination of Plan.  This Plan is strictly
a voluntary undertaking on the part of the Employers and shall not be deemed to
constitute a contract between the Employers and any employee or a consideration
for, or an inducement or condition of employment for, the performance of
services by any employee.  The Company reserves the right to terminate this Plan
at any time effective with respect to any Plan Year subsequent to the date
action is taken by the Company to terminate this Plan, subject to Section 8.3. 
In the event the Plan is terminated, no further contributions or credits shall
be made after the effective date of the Plan’s termination other than interest
credits made pursuant to Section 5.2, and payments shall be made in accordance
with the payment provisions of Article 6.  The preceding provisions of this
Section 8.2 to the contrary notwithstanding, the Company may in its discretion
terminate the Plan effective as of a date that is prior to the first day of a
subsequent Plan Year and provide for accelerated payments of all amounts
credited to Accounts upon a termination of the Plan to the extent such
termination and acceleration of payments satisfies the applicable requirements
upon the termination of a plan pursuant to Code Section 409A.

 

8.3                                 Existing Rights.  No amendment or
termination of the Plan shall adversely affect the rights of any Participant
with respect to amounts credited to his or her Account prior to the date of such
amendment or termination.

 

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ARTICLE 9.  MISCELLANEOUS

 

9.1                                 No Funding; Source of Payments.  Nothing in
this Plan will be construed to create a trust or to obligate an Employer or any
other person to segregate a fund, purchase an insurance contract, or in any
other way currently to fund the future payment of any benefits hereunder, nor
will anything herein be construed to give any employee or any other person
rights to any specific assets of an Employer or of any other person.  Benefit
payments to be made with respect to a Participant’s Accounts shall be paid in
cash from the general assets of the Employer, and shall be the obligation solely
of the Employer maintaining such Accounts.

 

9.2                                 Nonassignability; Domestic Relations Order. 
None of the benefits, payments, proceeds or claims of any Participant or
beneficiary shall be subject to any claim of any creditor of the Participant or
beneficiary and, in particular, the same shall not be subject to attachment or
garnishment or other legal process by any creditor of the Participant or
beneficiary, nor shall any Participant or beneficiary have any right to
alienate, anticipate, commute, pledge, encumber or assign any of the benefits or
payments or proceeds which he may expect to receive, contingently or otherwise,
under this Plan.  Notwithstanding the preceding, the Committee shall direct that
all or any portion of the amount credited to a Participant’s Account be paid to
an individual other than the Participant to the extent necessary to comply with
an order that the Committee has determined to be a “domestic relations order” as
defined in Code Section 414(p)(1)(B).  Further, and any provision of the Plan to
the contrary notwithstanding, the payment of amounts credited to a Participant’s
Account to an individual other than the Participant shall be accelerated as may
be necessary to fulfill an order that the Committee has determined to be a
“domestic relations order” as defined in Code Section 414(p)(1)(B).

 

9.3                                 Limitation of Participants’ Rights. 
Participation in this Plan shall not give any Eligible Employee the right to be
retained in the employ of an Employer or an Affiliate or any

 

27

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right or interest in the Plan other than as herein provided.  The Employers and
their Affiliates reserve the right to dismiss any Eligible Employee without any
liability for any claim against the Employer or Affiliate, except to the extent
of benefit payments provided herein.

 

9.4                                 Participants Bound.  Any action with respect
to this Plan taken by the Committee or the Company or any action authorized by
or taken at the direction of the Committee or the Company shall be conclusive
upon all Participants and any other persons who claim entitlement to benefits
under the Plan.

 

9.5                                 Receipt and Release.  Any payment to any
Participant or beneficiary in accordance with the provisions of this Plan shall,
to the extent thereof, be in full satisfaction of all claims against the
Employers and the Committee under this Plan, and the Committee may require such
Participant or beneficiary, as a condition precedent to such payment, to execute
a receipt and release to such effect.  If any Participant or beneficiary is
determined by the Committee to be incompetent by reason of physical or mental
disability (including minority) to give a valid receipt and release, the
Committee may cause the payment or payments becoming due to such person to be
made to another person for his or her benefit without responsibility on the part
of the Committee or the Employer to follow the application of such funds.

 

9.6                                 Governing Law.  This Plan shall be
construed, administered, and governed in all respects under and by the internal
laws (and not the principles relating to conflicts of laws) of the State of
Texas, except where superseded by federal law.  If any provision shall be held
by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.

 

9.7                                 No Guarantee of Tax Consequences .  No
person connected with the Plan in any capacity, including, but not limited to,
the Employers and any Affiliate and their respective directors, officers, agents
and employees, makes any representation, commitment or guarantee

 

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that any tax treatment, including, but not limited to, federal, state and local
income, estate and gift tax treatment, will be applicable with respect to any
amounts deferred or payable under the Plan or that such tax treatment will apply
to or be available to a Participant on account of participation in the Plan.

 

9.8                                 Adoption by Other Employers .  With the
consent of the Board of Directors of the Company, this Plan may be adopted by
any Affiliate, such adoption to be effective as of the date specified by such
Affiliate at the time of adoption.

 

9.9                                 Headings and Subheadings.  Headings and
subheadings in this Plan are inserted for convenience only and are not to be
considered in the construction of the provisions hereof.

 

IN WITNESS WHEREOF, The Neiman Marcus Group, Inc. has caused this Plan to be
executed by its duly authorized officer this          day of December, 2007.

 

 

 

 

THE NEIMAN MARCUS GROUP, INC.

 

 

 

 

 

 

 

By:

/s/ Nelson A. Bangs

 

 

Nelson A. Bangs

 

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