Exhibit 10.1


 


Execution Copy


 


EMPLOYMENT AGREEMENT


 


This Employment Agreement (this “Agreement”),
effective as of the Effective Date, is by and among The Neiman Marcus Group, Inc.,
a Delaware corporation (“NMG”), Newton Acquisition Merger Sub, Inc., a
Delaware corporation (“Merger Sub”), Newton Acquisition, Inc., a Delaware
corporation (“Parent”) and Burton M. Tansky (the “Executive”).


 


1.             Definitions.  As used in this Agreement, the following
terms have the following meanings:


 


(a)           “Affiliate”
means, 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)           “Board”
means the Board of Directors of NMG.


 


(c)           “Cause”
shall have the meaning set forth in the Change of Control Agreement.


 


(d)           “Change
of Control” shall have the meaning set forth in the Stockholders’ Plan.  For purposes of clarification, the closing of
the transactions contemplated by the Merger Agreement will not constitute a “Change
of Control” for any purpose under this Agreement.


 


(e)           “Change
of Control Agreement” means the Change of Control Termination Protection Agreement
by and between NMG and Executive, dated as of April 1, 2005.


 


(f)            “Change
of Control Resignation” means a resignation by the Executive for any reason
(other than Good Reason) during the thirty-day period following the six-month
anniversary of a Change of Control.


 


(g)           “Competitor”
means (i) any person or entity (other than NMG or an Affiliate of NMG)
that owns or operates a luxury specialty retail store; (ii) Saks
Incorporated, Nordstrom, Inc., Barneys New York, Inc., or, if those
corporate names are not correct, the businesses commonly referred to as “Saks,”
“Nordstrom’s,” and “Barneys”; and (iii) the successors to and assigns of
the persons or entities described in (ii).


 


(h)           “Confidential
Information” means, without limitation, all documents or information, in
whatever form or medium, concerning or evidencing sales; costs; pricing;
strategies; forecasts and long range plans; financial and tax information;
personnel information; business, marketing and operational projections, plans
and opportunities; and customer, vendor, and supplier information; but
excluding any such information that is or becomes generally available to the
public other than as a result of any breach of this Agreement or other
unauthorized disclosure by the Executive.


 


(i)            “Effective
Date” means the Closing Date, as such term is defined in the Merger Agreement.


 

















 


(j)            “Employment
Termination Date” means the effective date of termination of the Executive’s
employment as established under Paragraph 6(g).


 


(k)           “Good
Reason” means any of the following actions if taken without the Executive’s
prior consent: (i) any material failure by NMG to comply with its
obligations under Paragraph 5 (Compensation and Related Matters); (ii) any
material failure by NMG to comply with its obligations under Paragraph 20
(Assumption by Successor); (iii) a substantial reduction in the Executive’s
responsibilities or duties except in accordance with the terms of this
Agreement; (iv) any relocation of Executive’s principal place of business
of 50 miles or more, other than normal travel consistent with past practice, or
any requirement that Executive engage in excessive business-related travel in a
manner inconsistent with past practice in any material respect; (v) during
the Subsequent Term, the assignment by NMG of duties that are inconsistent with
the Executive’s role as Chairman under Paragraph 4(b); (vi) the reduction
in title of the Executive as Chief Executive Officer or his reporting
relationships, except in accordance with the terms of this Agreement; or (vii) a
material breach of this Agreement by NMG; provided that (iii) and (vi) shall
not apply after the end of the CEO Term. 



 


(l)            “Inability
to Perform” means and shall be deemed to have occurred if the Executive has
been determined under NMG’s long-term disability plan to be eligible for
long-term disability benefits.  In the
absence of the Executive’s participation in such plan, “Inability to Perform”
means that, in the Board’s sole judgment, the Executive is unable to perform
any of the material duties of his regular position because of an illness or
injury for (i) 80% or more of the normal working days during six
consecutive calendar months or (ii) 50% or more of the normal working days
during twelve consecutive calendar months.


 


(m)          “Initial
Public Offering” shall be deemed to
occur on the effective date of the first registration statement (other than a
registration on Form S-4 or S-8, or any successor form) filed to register
at least 20% of the total then-outstanding equity interests in Parent or any
other entity substantially all of whose assets directly or indirectly consist
of NMG common stock under the U.S. Securities Act of 1933, as amended.


 


(n)           “Management
Equity Incentive Plan” means the NMG Management Equity Incentive Plan to be
adopted by NMG as soon as practicable after the Effective Date in a form
mutually acceptable to the parties.


 


(o)           “Merger”
means the merger of Newton Acquisition Merger Sub, Inc. with and into NMG,
as contemplated by the Merger Agreement.


 


(p)           “Merger
Agreement” means the Agreement and Plan of Merger, by and among Parent,
MergerSub Inc., a Delaware corporation, and NMG, dated as of May 1, 2005. 


 


(q)           “Stockholders’
Agreement” means the Management Stockholders’ Agreement, dated as of October 6,
2005, by and among Newton Acquisition, the Majority Stockholder (as defined
therein) and the Management Stockholders (as defined therein), including the
Executive.


 


(r)            “Target
Bonus” means 85% of Base Salary, payable if targeted level of performance is
achieved as established under NMG’s annual incentive programs.


 


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(s)           “Work
Product” means all ideas, works of authorship, inventions and other creations,
whether or not patentable, copyrightable, or subject to other intellectual-property
protection, that are made, conceived, developed or worked on in whole or in
part by the Executive while employed by NMG and/or any of its Affiliates, that
relate in any manner whatsoever to the business, existing or proposed, of NMG
and/or any of its Affiliates, or any other business or research or development
effort in which NMG and/or any of its Affiliates engages during the Executive’s
employment.  Work Product includes any
material previously conceived, made, developed or worked on during the
Executive’s employment with NMG prior to the Effective Date.


 


2.             Employment;
Prior Agreements.  NMG agrees to
continue to employ the Executive, and the Executive agrees to continue to be
employed, for the period set forth in Paragraph 3, in the position and with the
duties and responsibilities set forth in Paragraph 4, and upon the other terms
and conditions set out in this Agreement. 
The employment agreement entered into between the Executive and NMG,
dated August 3, 2003, is hereby terminated and replaced in its entirety by
this Agreement without further right or obligation thereunder on the part of
either party thereto (other than to pay or provide the Executive any unpaid
compensation thereunder).  The Change of
Control Agreement is expressly assumed hereby as contemplated in Paragraph 10
and the “Good Reason” definition in Schedule A thereof, and shall remain
in effect until the second anniversary of the Effective Date, provided,
however, that Executive and NMG hereby agree that the Change of Control
Agreement is hereby amended to (a) delete Paragraph 3(g) thereof in
its entirety, (b) provide that Paragraph 16 of this Agreement replaces
Paragraph 5 of the Change of Control Agreement in its entirety with respect to
any Payments (as defined in Paragraph 16) made in connection with a Change of
Control that occurs after the Effective Date and (c) the release attached
hereto as Exhibit B shall replace the release required under the Change of
Control Agreement and such release shall be governed by Paragraph 7(j)
herein.  


 


The
Executive hereby acknowledges and agrees that the foregoing assumption by NMG
of the Change of Control Agreement, and the entrance by NMG into this
Agreement, is in full satisfaction of NMG’s obligations under Paragraph 10 of
the Change of Control agreement to expressly, absolutely and unconditionally
assume and agree to perform the Change of Control Agreement and any other
employment agreements to which the Executive and NMG are parties, and that the
Executive will not have the right to terminate his employment for “Good Reason”
as defined in the Change of Control Agreement under item 5 of such definition.


 


3.             Term.  The term of the Agreement shall commence on
the Effective Date and extend until the end of the day immediately preceding the
fifth anniversary thereof (the “Employment Term”), unless sooner terminated as provided in this
Agreement.  The Employment Term is
divided into two periods, the “CEO Term” and the “Subsequent Term,” as defined
in Paragraph 4.  The Executive’s
employment will end upon the expiration of the Employment Term, but the end of
the Executive’s employment in that circumstance shall not constitute a
termination of employment by either party under this Agreement or give rise to
any of the obligations of NMG that arise under this Agreement as a result of a
termination of employment.


 


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4.             Position
and Duties.


 


(a)           From
the Effective Date and until the third anniversary thereof (the “CEO Term”),
the Executive shall serve as the Chief Executive Officer of NMG and
Parent.  In such capacity, the Executive,
subject to the ultimate control and direction of the Board and the Board of
Directors of Parent (“Parent Board”), shall have and exercise direct charge of
and general supervision over the business and affairs of NMG.  In addition, the Executive shall have such
other duties, functions, responsibilities, and authority as are from time to
time delegated to the Executive by the Board; provided, however, that such
duties, functions, responsibilities, and authority are reasonable and customary
for a person serving in the same or similar capacity of an enterprise
comparable to NMG.  The Executive shall
report and be accountable to the Board and the Parent Board.  The Executive and NMG acknowledge that one
purpose of this Agreement is to provide for a smooth and orderly transition to
a new chief executive officer in the future. 
Accordingly, during the CEO Term the Executive agrees to work with
reasonable diligence to identify a successor to the position of Chief Executive
Officer of NMG and Parent.  Nothing in
this Agreement, however, prohibits the Board from undertaking its own search
for a successor to the positions.  During
the Employment Term, the Executive shall serve as a member of the Board and
shall be appointed to the Parent Board and any other entity substantially all
of whose assets consist of NMG capital stock.


 


(b)           From
the third anniversary of the Effective Date until the end of the Employment
Term (the “Subsequent Term”), the Executive shall serve as the Chairman of the
Board and shall have such duties as are assigned by the Board and customary for
such position.  During the Subsequent
Term, the Executive shall be treated as an “executive officer” of NMG solely
for purposes of the Executive’s participation in employee benefit plans,
programs or arrangements of NMG and not in connection with his duties as
Chairman.


 


(c)           During the
CEO Term, the Executive shall devote his full time (and, during the Subsequent
Term, the time necessary), skill, and attention and his best efforts to the
business and affairs of NMG to the extent necessary to discharge fully,
faithfully, and efficiently the duties and responsibilities delegated and
assigned to the Executive in or pursuant to this Agreement, except for usual,
ordinary, and customary periods of vacation and absence due to illness or other
disability.  Notwithstanding the
foregoing, the Executive may (i) subject to the approval of the Board,
serve as a director or as a member of an advisory board of a noncompeting
company, (ii) serve as an officer or director or otherwise participate in
non-profit educational, welfare, social, religious and civil organizations,
including, without limitation, all such positions and participation in effect
as of the Effective Date, and (iii) manage personal and family
investments; provided, however, that any such activities as described in (i), (ii) or (iii) of the preceding
provisions of this paragraph do not significantly interfere with the performance
and fulfillment of the Executive’s duties and responsibilities as an executive,
or, if applicable, Chairman of the Board, of NMG in accordance with this
Agreement.


 


(d)           In
connection with the Executive’s employment by NMG under this Agreement, the
Executive shall be based at the principal executive offices of NMG in Dallas,
Texas, except for such reasonable travel as the performance of the Executive’s
duties in the business of NMG may require.


 


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(e)           All
services that the Executive may render to NMG or any of its Affiliates in any
capacity during the Employment Term shall be deemed to be services required by
this Agreement and the consideration for such services is that provided for in
this Agreement.


 


5.             Compensation
and Related Matters.


 


(a)           Base
Salary.  During the Employment Term, NMG
shall pay to the Executive for his services under this Agreement an annual base
salary (“Base Salary”).  


 


(i)            At
the commencement of the CEO Term, the Base Salary shall be $1,300,000.00.  During the CEO Term, the Base Salary will be
reviewed annually and is subject to adjustment at the discretion of the Board,
but in no event shall NMG pay the Executive a Base Salary less than that set
forth above during the CEO Term.  The Base
Salary shall be payable in installments in accordance with the general payroll
practices of NMG, or as otherwise mutually agreed upon.


 


(ii)           At
the commencement of the Subsequent Term, the Base Salary shall be equal to 75%
of the Base Salary payable to the Executive immediately preceding the
commencement of the Subsequent Term. 
During the Subsequent Term, the Base Salary will be reviewed annually
and is subject to adjustment at the discretion of the Board, but in no event
shall NMG pay the Executive a Base Salary less than that established at the
commencement of the Subsequent Term.  The
Base Salary shall be payable in installments in accordance with the general
payroll practices of NMG, or as otherwise mutually agreed upon.


 


(b)           Annual
Incentives.  The Executive will
participate in NMG’s annual incentive bonus program(s) applicable to the
Executive’s position, in accordance with the terms of such program(s), and
shall have the opportunity to earn an annual bonus thereunder based on the
achievement of performance objectives determined by the Board after
consultation with the Executive. 
Notwithstanding the foregoing, the performance objectives applicable to
the Executive’s annual bonus opportunity and the corresponding bonus
percentages (including the level of achievement required for the Executive to
earn the Target Bonus) for the fiscal year in which the Effective Date occurs
and for the first fiscal year commencing after the Effective Date occurs will
be mutually agreed by the Board and the Executive.  During each fiscal year, the minimum bonus
payable to the Executive if the bonus targets for such year are achieved will
be 50% of the Executive’s Base Salary for such fiscal year, the Target Bonus
will be 85% of Base Salary and the maximum bonus payable to the Executive will
be 170% of Base Salary.  The actual
amount of any annual incentive bonus paid to the Executive will be determined
according to the terms of the annual incentive bonus program(s), including any
such terms that place the amount of any annual incentive bonus within the
discretion of the Board.  In determining
whether the bonus targets for any fiscal year of NMG have been achieved, the
Board will disregard any fees paid to the Sponsors (as defined in the
Management Equity Incentive Plan) other than director fees paid to the Sponsors’
representatives for their service on the Board. 


 


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(c)           Long-term
Incentives and SERP.


 


(i)            As
soon as practicable after the Effective Date, Parent shall grant the Executive
an option to purchase 16,349.1797 shares of common stock of Parent (the “Shares”).  As to 7,269.3852 Shares, the option will have
a fixed exercise price per Share equal to $1,445.00, and will vest and become
exercisable as to 459.5392 Shares on the first anniversary of the Effective
Date, and as to 2269.9487 Shares on each of the second, third and fourth
anniversaries of the Effective Date.  As
to 9,079.7946 Shares, the option (the “Performance Option”) will have an
exercise price per Share that is initially equal to $1,445.00 increasing at a
10.00% compound rate on each anniversary of the Effective Date until the
earlier to occur of (i) exercise of such Option, (ii) the fifth
anniversary of the Effective Date, or (iii) the occurrence of a Change of
Control, and will vest and become exercisable as to 2269.9487 Shares on each of
the first through fourth anniversaries of the Effective Date.  In the event the Majority Stockholder (as
defined in the Stockholders’ Agreement) redeems or disposes of a portion of its
direct or indirect equity interests in Parent prior to the fifth anniversary of
the Effective Date in a transaction that does not constitute a Change of
Control, the compounding interest rate shall cease as to a proportionate share
of the Performance Option that bears the same ratio as the equity interests
redeemed or disposed of by the Majority Stockholder bears to the total equity
interest held by the Majority Stockholder. 
Vesting of the entire option will accelerate immediately prior to a Change
of Control or upon termination of the Executive’s employment pursuant to
Paragraph 6(a) or 6(b).  In
addition, upon a termination of employment by NMG pursuant to Paragraph 6(e) or
by the Executive pursuant to Paragraph 6(d), the option will vest as to (i) the
number of Shares that would have become vested on the next anniversary of the
Effective Date, plus (ii) if the Employment Termination Date occurs prior
to the third anniversary of the Effective Date, the number of Shares that would
have become vested on the next anniversary of the Effective Date, multiplied by
a fraction, the numerator of which is the number of days from the preceding
anniversary of the Effective Date (or the Effective date if such termination
occurs prior to the first anniversary thereof) and the denominator of which is
365.   The Executive shall be permitted
to exercise the vested portion of the option through net-physical settlement
(i.e., by delivery of Shares net of the number of Shares having a value equal
to the applicable exercise price and applicable withholding taxes at the
minimum statutory rate) if such exercise occurs after termination of the
Executive’s employment pursuant to Paragraph 6(a) or 6(b), by NMG pursuant
to Paragraph 6(e), by the Executive pursuant to Paragraph 6(d), or by the
Executive pursuant to Paragraph 6(e) on or after the fifth anniversary of
the Effective Date.  The option shall be
granted pursuant to and subject to the terms of the Management Equity Incentive
Plan, which shall contain rights to dividend equivalents in a manner intended
to comply with Section 409A of the Code. 
The numbers of Shares and exercise price per Share set forth above are
based on the capitalization table attached as Exhibit A hereto. 


 


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(ii)           Upon
the occurrence of the earlier of a Change in Control or an Initial Public
Offering, the Executive will be entitled to a cash bonus equal to $3,080,911,
provided that no such bonus will be paid unless (A) the Executive remains
employed with NMG through the earlier of (x) the date of the Change in Control,
(y) the Initial Public Offering or (z) the fourth anniversary of the Effective
Date, and (B) the internal rate of return to the Majority Stockholder (as
defined in the Stockholders’ Agreement) in respect of their direct and indirect
investment in Parent 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 Parent at a per share price equal to
the Initial Public Offering price or, in the case of a Change in 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 Parent, all management and transaction fees paid
by Parent or its subsidiaries to the Majority Stockholder and all expenses
incurred by the Majority Stockholder in connection with the investment.  If the Executive’s employment hereunder
terminates for other than Cause prior to the bonus payment becoming due as
described above and, subsequent to such termination, a Change in Control or
Initial Public Offering occurs in which the Majority Stockholder recognizes a
positive internal rate of return determined in accordance with the foregoing
provisions, the Executive will be entitled to a payment equal to the product of
$3,080,911 and the percentage determined as follows: (1) if the termination
of employment is pursuant to Paragraph 6(a) or 6(b), 100%; (2) if the
termination of employment is by the Executive pursuant to Paragraph 6(e), 25%
multiplied by the number of full years (and not fractions thereof) from the
Effective Date to the Employment Termination Date; and (3) if the
termination is by the Executive pursuant to Paragraph 6(d) or by NMG
pursuant to Paragraph 6(e), the sum (not to exceed 100%) of 25% multiplied by
the number of full years and fractions thereof from the Effective Date to the
Employment Termination Date and 25%.


 


(iii)          In
the event Parent declares and pays an extraordinary dividend while the
Executive’s Newco Options (as defined in that certain Letter Agreement, dated October 4,
2005, by and among NMG, Parent and Executive, the “Letter Agreement”) are
outstanding, the Parent shall pay Executive a cash bonus equal to the amount
that he would have received if he owned the shares underlying the
then-outstanding Newco Options (other than any Newco Options for which the Company
has an effective and exercisable call right pursuant to the Letter Agreement)
pursuant to such dividend payment, provided such bonus payment complies with Section 409A
of the Internal Revenue Code of 1986 and does not result in any adverse tax
treatment in respect of the Newco Options. 
In the event it is determined that such payment does not comply with Section 409A
or it adversely effects the Newco Options, the parties hereto shall use their
reasonable efforts and take reasonable actions necessary to put the Executive
in the same position he would have been in if the payment was permitted under Section 409A
to the extent reasonably practicable.   


 


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(iv)          SERP
Enhancement.  At the time of the
Executive’s termination of employment with NMG and all of its Affiliates, the
Executive’s years of service for purposes of calculating his benefit under The
Neiman Marcus Group, Inc. Supplemental Executive Retirement Plan (the “SERP”)
shall be determined by multiplying his actual service for purposes of the SERP
by 2, subject to the 25-year maximum set forth in the SERP, and by then
providing the Executive with an additional credit for each year of service by
the Executive to NMG following his attainment of age sixty-five (65)
(disregarding the 25-year maximum set forth in the SERP).  Following the Effective Date, NMG shall take
any necessary steps to amend the SERP or create a supplemental SERP for the
Executive in order to effectuate the crediting provisions set forth in this
Paragraph 5.  During the Employment Term,
the SERP shall not be terminated or amended in any way that adversely affects
the Executive.


 


(d)           Employee
Benefits and Perquisites.  During the
Employment Term, the Executive will be entitled to (i) participate in all
employee benefit plans, programs, and arrangements that are generally made
available by NMG to its senior executives, including without limitation NMG’s
life insurance, long-term disability, and health plans and (ii) the
perquisites and other fringe benefits that are made available by NMG to its
senior executives generally and to such perquisites and fringe benefits that
are made available by NMG to the Executive in particular, subject to any
applicable terms and conditions of any specific perquisite or other fringe
benefit.  NMG agrees that the employee
benefit plans, programs and arrangements and perquisites and other fringe
benefits that are made available to the Executive during the Employment Term will
not be materially diminished in the aggregate from those benefit plans,
programs and arrangements and perquisites and fringe benefits made available
immediately prior to the Effective Date (subject to any diminution during the
Subsequent Term that results from the diminution in the Executive’s Base Salary
from the CEO Term to the Subsequent Term). 
The Executive agrees to cooperate and participate in any medical or
physical examinations as may be required by any insurance company in connection
with the applications for such life
and/or disability insurance policies.


 


(e)           Support
during Subsequent Term.  During the
Subsequent Term, NMG will provide the Executive with a full-time administrative
assistant and an executive office space and furnishings appropriate to his
position and status.


 


(f)            Expenses.  The Executive shall be entitled to receive
reimbursement for all reasonable expenses incurred by the Executive in
performing his duties and responsibilities under this Agreement, consistent
with NMG’s policies or practices for reimbursement of expenses incurred by
other NMG senior executives.


 


(g)           Vacations.  The Executive shall be eligible for vacation,
sick pay, and other paid and unpaid time off in accordance with the policies
and practices of NMG.  The Executive
agrees to use his vacation and other paid time off at such times that are (i) consistent
with the proper performance of his duties and responsibilities and (ii) mutually
convenient for NMG and the Executive.


 


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(h)           Indemnification.  The Executive will be entitled to
indemnification on the same terms as indemnification is made available by NMG
to its other senior executives, whether through NMG’s bylaws, the Merger
Agreement or otherwise.


 


6.             Termination
of Employment.


 


(a)           Death.  The Executive’s employment shall terminate
automatically upon his death.


 


(b)           Inability
to Perform.  In the event of the
Executive’s Inability to Perform during the Employment Term, NMG may notify the
Executive of NMG’s termination of the Executive’s employment.


 


(c)           Termination
by NMG for Cause.  NMG may terminate the
Executive’s employment for Cause.  To
exercise its right to terminate the Executive pursuant to provision (iii) or
provision (v) of the definition of Cause, however, NMG must first provide
the Executive with a reasonable period of time to correct the circumstances or
events, to the extent that they may reasonably be corrected, that NMG contends
give rise to the existence of Cause under such provision.  Prior to terminating the Executive’s
employment for Cause under this Paragraph 6(c), NMG must provide the Executive
with a written notice of its intent to terminate his employment for Cause.  Such written notice must specify the
particular act or acts or failure(s) to act that form(s) the basis for the decision
to so terminate the Executive’s employment for Cause.  The Executive will be given the opportunity
within 30 calendar days of his receipt of such notice to meet with the Board to
defend himself with regard to the alleged act or acts or failure(s) to
act.  If at the conclusion of or
following such a meeting, the Board decides to proceed with the termination of
the Executive’s employment for Cause, such a termination will be effected by
providing the Executive with a Notice of Termination under Paragraph 6(f).  Upon or after NMG’s issuance of the notice of
intent to terminate the Executive’s employment for Cause, NMG may suspend the
Executive with pay pending the Board’s decision whether to proceed with the
termination.


 


(d)           Termination
by the Executive for Good Reason.  The
Executive may terminate his employment for Good Reason.  To exercise his right to terminate for Good
Reason, the Executive must provide written notice to NMG of his belief that
Good Reason exists, and that notice shall describe the circumstance believed to
constitute Good Reason.  If that
circumstance may reasonably be remedied, NMG shall have 30 days to effect that
remedy.  If not remedied within that 30-day
period, the Executive may submit a Notice of Termination; provided, however,
that the Notice of Termination invoking the Executive’s right to terminate his
employment for Good Reason must be given no later than 6 months after the later
of (i) the first date the Executive knew that Good Reason existed, and (ii) the
end of NMG’s 30-day cure period, if applicable; otherwise, the Executive is
deemed to have accepted the circumstance(s) that may have given rise to the
existence of Good Reason.


 


(e)           Termination
by Either Party Without Cause or Without Good Reason.  Either NMG or the Executive may terminate the
Executive’s employment without Cause or Good Reason upon at least three months’
prior written notice to the other party.


 


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(f)            Notice
of Termination.  Any termination of the
Executive’s employment by NMG or by the Executive (other than a termination
pursuant to Paragraph 6(a)) shall be communicated by a Notice of
Termination.  A “Notice of Termination”
is a written notice that must (i) indicate the specific termination
provision in this Agreement relied upon; (ii) in the case of a termination
for Inability to Perform, Cause, or Good Reason, set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision invoked, including the particular
act or acts or failure(s) to act that is or are the basis of any termination
for Cause or Good Reason; and (iii) if the termination is by the Executive
under Paragraph 6(e), or by NMG for any reason, specify the Employment
Termination Date.  The failure by NMG to
set forth in the Notice of Termination any fact or circumstance that
contributes to a showing of Cause shall not waive any right of NMG or preclude
NMG from asserting such fact or circumstance in enforcing NMG’s rights.


 


(g)           Employment
Termination Date.  The Employment
Termination Date shall be as follows: (i) if the Executive’s employment is
terminated by his death, the date of his death; (ii) if the Executive’s
employment is terminated by NMG because of his Inability to Perform or for
Cause, the date specified in the Notice of Termination, which date shall be no
earlier than the date such notice is given; (iii) if the Executive’s
employment is terminated by the Executive for Good Reason, the date on which the
Notice of Termination is given; or (iv) if the termination is under
Paragraph 6(e), the date specified in the Notice of Termination, which date
shall be no earlier than three months after the date such notice is given if
such Notice of Termination is given by the Executive.  


 


(h)           Resignation.  In the event of termination of the Executive’s
employment (for any reason other than the death of the Executive), the
Executive agrees that if at such time he is a member of the Board or is an
officer of NMG or a director or officer of any of its Affiliates, he shall be
deemed to have resigned from such position(s) effective on the Employment
Termination Date.


 


7.             Compensation
Upon Termination of Employment.


 


(a)           Death.  If the Executive’s employment is terminated by
reason of the Executive’s death, NMG shall pay to the Executive’s estate (i) any
unpaid portion of the Executive’s Base Salary through the Employment
Termination Date and any bonus payable for preceding fiscal year that has
otherwise not already been paid (together, the “Compensation Payment”), (ii) any
accrued but unused vacation days (the “Vacation Payment”), (iii) any
reimbursement for business travel and other expenses to which the Executive is
entitled (the “Reimbursement”), and (iv) 85% of the Base Salary in effect
immediately prior to the Employment Termination Date, multiplied by a fraction,
the numerator of which is the number of days during the fiscal year up to and
including the Employment Termination Date and the denominator of which is 365 (the
“Prorated Bonus”).  This Paragraph 7(a) does
not limit the entitlement of the Executive’s estate or beneficiaries to any
death or other vested benefits to which the Executive may be entitled under any
life insurance, stock ownership, stock options, or other benefit plan or policy
that is maintained by NMG for the Executive’s benefit, including any amounts
Executive is entitled to pursuant to Paragraph 5(c).


 


10
















 


(b)           Inability
to Perform.  If the Executive’s
employment is terminated by reason of the Executive’s Inability to Perform, NMG
shall pay to the Executive (i) the Compensation Payment, (ii) the
Vacation Payment, (iii) the Reimbursement, and (iv) the Prorated
Bonus.  This Paragraph 7(b) does not
limit the entitlement of the Executive to any amounts payable pursuant to the
terms of any applicable disability insurance plan, policy, or similar
arrangement that is maintained by NMG for the Executive’s benefit.  This Paragraph 7(b) does not limit the
entitlement of the Executive’s estate or beneficiaries to any death or other
vested benefits to which the Executive may be entitled under any life
insurance, stock ownership, stock options, or other benefit plan or policy that
is maintained by NMG for the Executive’s benefit, including any amounts
Executive is entitled to pursuant to

Paragraph 5(c).


 


(c)           Termination
by the Executive Without Good Reason.  If
the Executive’s employment is terminated by the Executive pursuant to and in
compliance with Paragraph 6(e) (other than in connection with a Change of
Control Resignation), NMG shall pay to the Executive (i) the Compensation
Payment, (ii) the Vacation Payment, and (iii) the Reimbursement.  This Paragraph 7(c) does not limit the
entitlement of the Executive’s estate or beneficiaries to any death or other
vested benefits to which the Executive may be entitled under any life
insurance, stock ownership, stock options, or other benefit plan or policy that
is maintained by NMG for the Executive’s benefit, including any amounts
Executive is entitled to pursuant to Paragraph 5(c).


 


(d)           Termination
for Cause.  If the Executive’s employment
is terminated by NMG for Cause, NMG shall pay to the Executive (i) the
Compensation Payment, (ii) the Vacation Payment, and (iii) the
Reimbursement.  This Paragraph 7(d) does
not limit the entitlement of the Executive’s estate or beneficiaries to any
death or other vested benefits to which the Executive may be entitled under any
life insurance, stock ownership, stock options, or other benefit plan or policy
that is maintained by NMG for the Executive’s benefit, including any amounts
Executive is entitled to pursuant to Paragraph 5(c).


 


(e)           Termination
without Cause or with Good Reason; Change of Control Resignation.  If (x) the Executive’s employment is
terminated by NMG for any reason other than death, Inability to Perform, or
Cause, or is terminated by the Executive for Good Reason and, in each such
case, the Executive is not entitled to receive payments or benefits under the
Change of Control Agreement in connection with such termination or (y) the
Executive’s employment terminates by reason of a Change of Control Resignation,
NMG shall pay to the Executive (1) the Compensation Payment, (2) the
Vacation Payment, and (3) the Reimbursement.  In addition, subject to the Executive’s
execution of a mutual release and waiver of claims against NMG in the form
attached as Exhibit B, NMG will pay the Executive a lump-sum
payment equal to: the Prorated Bonus plus (A) if such termination occurs
prior to the commencement of the Subsequent Term and is not a Change of Control
Resignation, three (3) times the sum of the Executive’s Base Salary and
Target Bonus in effect on the Employment Termination Date, and (B) if such
termination occurs during the Subsequent Term or is a Change of Control
Resignation, two (2) times the sum of the Executive’s Base Salary and
Target Bonus in effect on the Employment Termination Date; provided, however,
that the Executive shall be required to repay the above-described payments if:


 


11

















 


(i)            the
Executive receives written notice from NMG that in the reasonable judgment of
NMG, the Executive engaged or is engaging in any conduct that violates
Paragraph 8 or engaged or is engaging in any of the Restricted Activities
described in Paragraph 9, unless within 30 days of the date NMG so notifies the
Executive in writing, the Executive provides information to NMG that NMG
determines is sufficient to establish that the Executive did not engage in any
conduct that violated Paragraph 8 or engage in any of the Restricted Activities
described in Paragraph 9; or


 


(ii)           the
Executive is arrested or indicted for any felony, other serious criminal offense,
or any violation of federal or state securities laws, or has any civil
enforcement action brought against him by any regulatory agency, for actions or
omissions related to his employment with NMG or any of its Affiliates, or NMG
reasonably believes that the Executive has committed any act or omission,
either during his employment under this Agreement or, if related to such
employment thereafter, that during his employment would have entitled NMG to
terminate his employment for Cause under provisions (i), (ii), (iv), or (vi) of
the definition of Cause and the Executive is found guilty or enters into a plea
agreement, consent decree or similar arrangement with respect to any such
criminal or civil proceedings, or if the Board makes a finding that the Executive
has committed such an act or omission. 
If any such criminal or civil proceedings do not result in a finding of
guilt or the entry of a plea agreement or consent decree or similar
arrangement, or if the Board makes a finding that the Executive has not
committed such an act or omission, the Executive shall not be required to repay
any amounts hereunder.


 


This Paragraph 7(e) does
not limit the entitlement of the Executive’s estate or beneficiaries to any
death or other vested benefits to which the Executive may be entitled under any
life insurance, stock ownership, stock options, or other benefit plan or policy
that is maintained by NMG for the Executive’s benefit, including any amounts
Executive is entitled to pursuant to Paragraph 5(c).


 


(f)            Welfare
Benefits.  If, on or following the second
anniversary of the Effective Date, the Executive’s employment with NMG or any
Affiliate of NMG ends on account of a termination by NMG for any reason other
than for death or Cause, or a termination by the Executive for Good Reason, the
Executive will receive the benefits described in Paragraph 3b of the Change of
Control Agreement, provided that the “Welfare Continuation Period” shall be
reduced to 2 years if such termination occurs during the Subsequent Term or is a
Change of Control Resignation.


 


(g)           Termination
under Change of Control Agreement.  If
the Executive’s employment with NMG or an Affiliate or successor of NMG
terminates under circumstances that would entitle the Executive to receive
payments or benefits under the Change of Control Agreement, Executive shall not
be entitled to receive any payments or benefits under Paragraph 7 of this
Agreement, but shall instead be entitled to receive the payments and benefits
specified in the Change of Control Agreement, which payments and benefits shall
be subject to the


 


12

















 


obligations
provided in the Change of Control Agreement and shall be in lieu of any
severance payments or benefits that may otherwise be payable pursuant to
Paragraph 7 of this Agreement.


 


(h)           No
Mitigation.  The Executive will not be
required to mitigate the amount of any payment provided for in this Agreement
by seeking other employment or otherwise, nor will the amount of any payment
provided for under this Agreement be reduced by any profits, income, earnings,
or other benefits received by the Executive from any source other than NMG or
its successor.


 


(i)            Offset.  The Executive agrees that NMG may set off
against, and he authorizes NMG to deduct from, any payments due to the
Executive, or to his heirs, legal representatives, or successors, as a result
of the termination of the Executive’s employment (other than pursuant to the
Change of Control Agreement) any specified amounts which the Board determines
in good faith are due and owing to NMG by the Executive, whether arising under
this Agreement or otherwise.


 


(j)            Mutual
Release.  Following receipt of the
Executive’s signed mutual release pursuant to this Agreement or the Change in
Control Agreement (as modified by this Agreement), NMG and Parent shall have
ten (10) days from the date such release becomes irrevocable to execute
the release and deliver a copy to the Executive.  If NMG or Parent fail to execute such release
within the time frame established by the preceding sentence, the release shall
be null and void and the Executive shall be entitled to receive any benefits
under this Agreement or the Change in Control Agreement, as applicable, as he
would otherwise be entitled to receive had the mutual release been fully
executed.


 


8.             Confidential
Information.


 


(a)           The
Executive acknowledges and agrees that (i) NMG is engaged in a highly
competitive business; (ii) NMG has expended considerable time and
resources to develop goodwill with its customers, vendors, and others, and to
create, protect, and exploit Confidential Information; (iii) NMG must
continue to prevent the dilution of its goodwill and unauthorized use or
disclosure of its Confidential Information to avoid irreparable harm to its
legitimate business interests; (iv) in the luxury specialty retail
business, his participation in or direction of NMG’s day-to-day operations and
strategic planning are an integral part of NMG’s continued success and
goodwill; (v) given his position and responsibilities, he necessarily will
be creating Confidential Information that belongs to NMG and enhances NMG’s
goodwill, and in carrying out his responsibilities he in turn will be relying
on NMG’s goodwill and the disclosure by NMG to him of Confidential Information;
(vi) he will have access to Confidential Information that could be used by
any Competitor of NMG in a manner that would irreparably harm NMG’s competitive
position in the marketplace and dilute its goodwill; and (vii) he
necessarily would use or disclose Confidential Information if he were to engage
in competition with NMG.


 


(b)           NMG
acknowledges and agrees that the Executive must have and continue to have
throughout his employment the benefits and use of its and its Affiliates’
goodwill and Confidential Information in order to properly carry out his
responsibilities.  NMG accordingly
promises upon execution and delivery of this Agreement to provide the Executive
immediate


 


13

















 


access to new and
additional Confidential Information and authorize him to engage in activities
that will create new and additional Confidential Information.


 


(c)           NMG
and the Executive thus acknowledge and agree that during the Executive’s
employment with NMG and upon execution and delivery of this Agreement he (i) has
received, will receive, and will continue to receive, Confidential Information
that is unique, proprietary, and valuable to NMG and/or its Affiliates; (ii) has
created, will create, and will continue to create, Confidential Information
that is unique, proprietary, and valuable to NMG and/or its Affiliates; and (iii) has
benefited, will benefit, and will continue to benefit, including without
limitation by way of increased earnings and earning capacity, from the goodwill
NMG and its Affiliates have generated and from the Confidential Information.


 


(d)           Accordingly,
the Executive acknowledges and agrees that at all times during his employment
by NMG and/or any of its Affiliates and thereafter:


 


(i)            all
Confidential Information shall remain and be the sole and exclusive property of
NMG and/or its Affiliates;


 


(ii)           he
will protect and safeguard all Confidential Information;


 


(iii)          he
will hold all Confidential Information in strictest confidence and not,
directly or indirectly, disclose or divulge any Confidential Information to any
person other than an officer, director, or employee of, or legal counsel for,
NMG or its Affiliates, to the extent necessary for the proper performance of
his responsibilities unless authorized to do so by NMG or compelled to do so by
law or valid legal process; 


 


(iv)          if
he believes he is compelled by law or valid legal process to disclose or
divulge any Confidential Information, he will notify NMG in writing within 24
hours after receipt of legal process or other writing that causes him to form
such a belief, or as soon as practicable if he receives less than 24 hours’
notice, so that NMG may defend, limit, or otherwise protect its interests
against such disclosure;


 


(v)           at
the end of his employment with NMG for any reason or at the request of NMG at
any time, he will return to NMG all Confidential Information and all copies
thereof, in whatever tangible form or medium, including electronic; and


 


(vi)          absent
the promises and representations of the Executive in this Paragraph 8 and in
Paragraph 9, NMG would require him immediately to return any tangible
Confidential Information in his possession, would not provide the Executive
with new and additional Confidential Information, would not authorize the Executive
to engage in activities that will create new and additional Confidential
Information, and would not enter or have entered into this Agreement.


 


14

















 


9.             Noncompetition
and Nondisparagement Obligations.  In
consideration of NMG’s promises to provide the Executive with new and
additional Confidential Information and to authorize him to engage in
activities that will create new and additional Confidential Information upon
execution and delivery of this Agreement, and the other promises and
undertakings of NMG in this Agreement, the Executive agrees that, while he is
employed by NMG and/or any of its Affiliates and for a three-year period
following the end of that employment for any reason, he shall not engage in any
of the following activities (the “Restricted Activities”):


 


(a)           He
will not directly or indirectly disparage NMG or its Affiliates, any products,
services, or operations of NMG or its Affiliates, or any of the former,
current, or future officers, directors, or employees of NMG or its Affiliates;


 


(b)           He
will not, whether on his own behalf or on behalf of any other individual,
partnership, firm, corporation or business organization, either directly or
indirectly solicit, induce, persuade, or entice, or endeavor to solicit,
induce, persuade, or entice, any person who is then employed by or otherwise
engaged to perform services for NMG or its Affiliates to leave that employment
or cease performing those services;


 


(c)           He
will not, whether on his own behalf or on behalf of any other individual,
partnership, firm, corporation or business organization, either directly or
indirectly solicit, induce, persuade, or entice, or endeavor to solicit,
induce, persuade, or entice, any person who is then a customer, supplier, or
vendor of NMG or any of its Affiliates to cease being a customer, supplier, or
vendor of NMG or any of its Affiliates or to divert all or any part of such
person’s or entity’s business from NMG or any of its Affiliates; and


 


(d)           He
will not associate directly or indirectly, as an employee, officer, director,
agent, partner, stockholder, owner, member, representative, or consultant, with
any Competitor of NMG or any of its Affiliates, unless (i) he has advised
NMG in writing in advance of his desire to undertake such activities and the
specific nature of such activities; (ii) NMG has received written
assurances (that will be designed, among other things, to protect NMG’s and its
Affiliates’ goodwill, Confidential Information, and other important commercial
interests) from the Competitor and the Executive that are, in NMG’s sole
discretion, adequate to protect its interests; (iii) NMG, in its sole
discretion, has approved in writing such association; and (iv) the
Executive and the Competitor adhere to such assurances.  This restriction (i) extends to the
performance by the Executive, directly or indirectly, of the same or similar
activities the Executive has performed for NMG or any of its Affiliates or such
other activities that by their nature are likely to lead to the disclosure of
Confidential Information, and (ii) with respect to the post-employment
restriction, applies to any Competitor that has a retail store within 50 miles
of, or in the same Metropolitan Statistical Area as, any retail store of NMG or
any of its Affiliates.  The Executive
shall not be in violation of this Paragraph 9(d) solely as a result of his
investment in stock or other securities of a Competitor or any of its
Affiliates listed on a national securities exchange or actively traded in the
over-the-counter market if he and the members of his immediate family do not,
directly or indirectly, hold more than a total of one percent of all such
shares of stock or other securities issued and outstanding.  The Executive acknowledges and agrees that
engaging in the activities restricted by this Paragraph 9(d) would result
in the


 


15

















 


inevitable
disclosure or use of Confidential Information for the Competitor’s benefit or
to the detriment of NMG or its Affiliates.


 


The Executive acknowledges and agrees that the
restrictions contained in this Paragraph 9 are ancillary to an otherwise
enforceable agreement, including without limitation the mutual promises and
undertakings set forth in Paragraph 8; that NMG’s promises and undertakings set
forth in Paragraph 8, the Executive’s position and responsibilities with NMG,
and NMG granting to the Executive ownership in NMG in the form of NMG stock,
give rise to NMG’s interest in restricting the Executive’s post-employment
activities; that such restrictions are designed to enforce the Executive’s
promises and undertakings set forth in this Paragraph 9 and his common-law
obligations and duties owed to NMG and its Affiliates; that the restrictions
are reasonable and necessary, are valid and enforceable under Texas law, and do
not impose a greater restraint than necessary to protect NMG’s goodwill,
Confidential Information, and other legitimate business interests; that he will
immediately notify NMG in writing should he believe or be advised that the
restrictions are not, or likely are not, valid or enforceable under Texas law
or the law of any other state that he contends or is advised is applicable (the
“Enforceability Notification”); that the mutual promises and undertakings of
NMG and the Executive under Paragraphs 8 and 9 are not contingent on the
duration of the Executive’s employment with NMG; and that absent the promises
and representations made by the Executive in this Paragraph 9 and Paragraph 8,
NMG would require him to return any Confidential Information in his possession,
would not provide the Executive with new and additional Confidential
Information, would not authorize the Executive to engage in activities that
will create new and additional Confidential Information, and would not enter or
have entered into this Agreement. 
Notwithstanding the foregoing, NMG agrees that the Executive’s conduct
in providing the Enforceability Notification under this Paragraph 9(d) shall
not constitute a waiver of any attorney-client privilege between the Executive
and his attorney(s).


 


10.           Intellectual
Property.


 


(a)           In
consideration of NMG’s promises and undertakings in this Agreement, the
Executive agrees that all Work Product will be disclosed promptly by the Executive
to NMG, shall be the sole and exclusive property of NMG, and is hereby assigned
to NMG, regardless of whether (i) such Work Product was conceived, made,
developed or worked on during regular hours of his employment or his time away
from his employment, (ii) the Work Product was made at the suggestion of
NMG; or (iii) the Work Product was reduced to drawing, written
description, documentation, models or other tangible form.  Without limiting the foregoing, the Executive
acknowledges that all original works of authorship that are made by the
Executive, solely or jointly with others, within the scope of his employment
and that are protectable by copyright are “works made for hire,” as that term
is defined in the United States Copyright Act (17 U.S.C., Section 101),
and are therefore owned by NMG from the time of creation.


 


(b)           The
Executive agrees to assign, transfer, and set over, and the Executive does
hereby assign, transfer, and set over to NMG, all of his right, title and
interest in and to all Work Product, without the necessity of any further
compensation, and agrees that NMG is entitled to obtain and hold in its own
name all patents, copyrights, and other rights in respect of all Work
Product.  The Executive agrees to (i) cooperate
with NMG during and after his employment with NMG in obtaining patents or
copyrights or other intellectual-property


 


16

















 


protection for all
Work Product; (ii) execute, acknowledge, seal and deliver all documents
tendered by NMG to evidence its ownership thereof throughout the world; and (iii) cooperate
with NMG in obtaining, defending and enforcing its rights therein.


 


(c)           The
Executive represents that there are no other contracts to assign inventions or
other intellectual property that are now in existence between the Executive and
any other person or entity.  The
Executive further represents that he has no other employment or undertakings
that might restrict or impair his performance of this Agreement.  The Executive will not in connection with his
employment by NMG, use or disclose to NMG any confidential, trade secret, or
other proprietary information of any previous employer or other person that the
Executive is not lawfully entitled to disclose.


 


11.           Reformation.  If the provisions of Paragraphs 8, 9, or 10
are ever deemed by a court to exceed the limitations permitted by applicable
law, the Executive and NMG agree that such provisions shall be, and are,
automatically reformed to the maximum limitations permitted by such law.


 


12.           Assistance
in Litigation.  After the Employment
Term, the Executive shall, upon reasonable notice, furnish such information and
assistance to NMG or any of its Affiliates as may reasonably be requested by
NMG in connection with any litigation in which NMG or any of its Affiliates is,
or may become, a party.  NMG shall
reimburse the Executive for all reasonable out-of-pocket expenses, including
travel expenses, incurred by the Executive in rendering such assistance, but
shall have no obligation to compensate the Executive for his time in providing
information and assistance in accordance with this Paragraph 12.


 


13.           No
Obligation to Pay.  With regard to
any payment due to the Executive under this Agreement, it shall not be a breach
of any provision of this Agreement for NMG to fail to make such payment to the
Executive if (i) NMG is legally prohibited from making the payment; (ii) NMG
would be legally obligated to recover the payment if it was made; or (iii) the
Executive would be legally obligated to repay the payment if it was made.


 


14.           Survival.  The expiration or termination of the
Employment Term will not impair the rights or obligations of any party hereto
that accrue hereunder prior to such expiration or termination, except to the
extent specifically stated herein.  In
addition to the foregoing, NMG’s obligations under Paragraphs 5(h), 7 and 16,
and the Executive’s obligations under Paragraphs 8, 9, 10 and 12, will survive
the expiration or termination of the Executive’s employment.


 


15.           Withholding
Taxes.  NMG shall withhold from any
payments to be made to the Executive pursuant to this Agreement such amounts
(including social security contributions and federal income taxes) as shall be
required by federal, state, and local withholding tax laws.


 


16.           Excise
Tax Provisions in Connection with a Change of Control.  


 


(a)           If,
after the Effective Date, there occurs a transaction that constitutes a “change
of control” under Regulation 1.280G and, immediately prior to the consummation
of such change of control, NMG is an entity whose stock is readily tradeable on
an established


 


17

















 


securities market
(or otherwise) such that Excise Tax Exemption is not available, the following
provisions will apply:


 


(i)            In the event it shall
be determined that any Payment is subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are incurred by Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, hereinafter collectively referred to as the “Excise Tax”), Executive
shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and the Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.  Notwithstanding the foregoing provisions of
this Paragraph 16(b), if it shall be determined that Executive is entitled
to a Gross-Up Payment, but that the Payment does not exceed 110% of the greatest
amount that could be paid to Executive without giving rise to any Excise Tax
(the “Safe Harbor Amount”), then no Gross-Up Payment shall be made to Executive
and the amounts payable under this Agreement shall be reduced so that the
Payment, in the aggregate, is reduced to the Safe Harbor Amount.  The
reduction of the amounts payable hereunder, if applicable, shall be made by
first reducing the payments under Paragraph 7(e), unless an alternative
method of reduction is elected by Executive. 



 


(ii)           All determinations
required to be made under this Paragraph 16, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
a nationally recognized accounting firm selected by NMG (the “Accounting Firm”)
which shall provide detailed supporting calculations both to NMG and the
Executive within ten business days of the receipt of notice from Executive that
there has been a Payment, or such earlier time as is requested by NMG; provided
that for purposes of determining the amount of any Gross-Up Payment, the
Executive shall be deemed to pay federal income tax at the highest marginal
rates applicable to individuals in the calendar year in which any such Gross-Up
Payment is to be made and deemed to pay state and local income taxes at the
highest effective rates applicable to individuals in the state or locality of
the Executive’s residence or place of employment in the calendar year in which
any such Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes that can be obtained from deduction of such state and
local taxes, taking into account limitations applicable to individuals subject
to federal income tax at the highest marginal rates.  All fees and
expenses of the Accounting Firm shall be borne solely by NMG.  Any
Gross-Up Payment, as determined pursuant to this Paragraph 16, shall be
paid by NMG to the Executive (or to the appropriate taxing authority on the Executive’s
behalf) when the applicable tax is due.  If the Accounting Firm determines
that no Excise Tax is payable by the Executive, it shall so indicate to the
Executive in writing.  Any determination by the Accounting Firm shall be
binding upon NMG and the


 


18

















 


Executive.  As a result of the uncertainty in the
application of Section 4999 of the Code, it is possible that the amount of
the Gross-Up Payment determined by the Accounting Firm to be due to (or on
behalf of) the Executive was lower than the amount actually due (“Underpayment”). 
In the event that NMG exhausts its remedies pursuant to Paragraph 16(b) and
the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by NMG to or for the
benefit of Executive.


 


(iii)          The
Executive shall notify NMG in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by NMG of any Gross-Up
Payment.  Such notification shall be given as soon as practicable but no
later than ten business days after the Executive is informed in writing of such
claim and shall apprise NMG of the nature of such claim and the date on which
such claim is requested to be paid.  The Executive shall not pay such
claim prior to the expiration of the thirty day period following the date on
which it gives such notice to NMG (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due).  If NMG
notifies the Executive in writing prior to the expiration of such period that
it desires to contest such claim, the Executive shall (i) give NMG any
information reasonably requested by NMG relating to such claim, (ii) take
such action in connection with contesting such claim as NMG shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected
by NMG, (iii) cooperate with NMG in good faith in order to effectively
contest such claim and (iv) permit NMG to participate in any proceedings
relating to such claim; provided, however, that NMG shall bear and pay directly
all costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.  Without limitation on
the foregoing provisions of this Paragraph 16(b), NMG shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as NMG shall determine; provided, further, that if NMG directs the
Executive to pay such claim and sue for a refund, NMG shall advance the amount
of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; provided, further, that if the Executive is required
to extend the statute of limitations to enable NMG to contest such claim, the
Executive may limit this extension solely to such contested


 


19

















 


amount.  NMG’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.


 


(iv)          If,
after the receipt by the Executive of an amount paid or advanced by NMG
pursuant to this Paragraph 16(b), the Executive becomes entitled to
receive any refund with respect to a Gross-Up Payment, the Executive shall
(subject to NMG’s complying with the requirements of Paragraph 16(b))
promptly pay to NMG the amount of such refund received (together with any
interest paid or credited thereon after taxes applicable thereto).  If,
after the receipt by the Executive of an amount advanced by NMG pursuant to
Paragraph 16(b), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and NMG does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of the Gross-Up Payment
required to be paid.


 


17.           Notices.  All notices, requests, demands, and other
communications required or permitted to be given or made by either party shall
be in writing and shall be deemed to have been duly given or made (a) when
delivered personally, or (b) when deposited in the United States mail,
first class registered or certified mail, postage prepaid, return receipt
requested, to the party for which intended at the following addresses (or at
such other addresses as shall be specified by the parties by like notice,
except that notices of change of address shall be effective only upon receipt):


 


if to NMG, at:


 


The Neiman
Marcus Group, Inc.

Attn: General Counsel

1618 Main Street

Dallas, TX 75201


 


with a copy to:


 


Cleary Gottlieb
Steen & Hamilton LLP

Attn:  Robert J. Raymond

One Liberty Plaza 

New York, NY 10006


 


If to the Executive, at the
Executive’s then-current home address on file with NMG, with a copy to:


 


Morgan Lewis &
Bockius LLP

Attn:  Gary Rothstein

101 Park Avenue

New York, NY 10178


 


20
















 


18.           Injunctive
Relief.  The Executive acknowledges
and agrees that NMG would not have an adequate remedy at law and would be
irreparably harmed in the event that any of the provisions of Paragraphs 8, 9,
and 10 were not performed in accordance with their specific terms or were
otherwise breached.  Accordingly, the
Executive agrees that NMG shall be entitled to equitable relief, including
preliminary and permanent injunctions and specific performance, in the event
the Executive breaches or threatens to breach any of the provisions of such
Paragraphs, without the necessity of posting any bond or proving special
damages or irreparable injury.  Such
remedies shall not be deemed to be the exclusive remedies for a breach or
threatened breach of this Agreement by the Executive, but shall be in addition
to all other remedies available to NMG at law or equity.


 


19.           Binding
Effect; No Assignment by the Executive; No Third Party Benefit.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective heirs, legal
representatives, successors, and assigns; provided, however, that the Executive
shall not assign or otherwise transfer this Agreement or any of his rights or
obligations herein.  NMG is authorized to
assign or otherwise transfer this Agreement or any of its rights or obligations
herein to an Affiliate of NMG. The Executive shall not have any right to
pledge, hypothecate, anticipate, or in any way create a lien upon any payments
or other benefits provided under this Agreement; and no benefits payable under
this Agreement shall be assignable in anticipation of payment either by
voluntary or involuntary acts, or by operation of law, except by will or
pursuant to the laws of descent and distribution. Nothing in this Agreement,
express or implied, is intended to or shall confer upon any person other than
the parties, and their respective heirs, legal representatives, successors, and
permitted assigns, any rights, benefits, or remedies of any nature whatsoever
under or by reason of this Agreement.


 


20.           Assumption
by Successor.  NMG shall require any
successor or assignee (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all the business and/or
assets of NMG, by agreement in writing in form and substance reasonably
satisfactory to the Executive, expressly, absolutely, and unconditionally to
assume and agree to perform this Agreement in the same manner and to the same
extent that NMG would be required to perform it if no such succession or
assignment had taken place.  If NMG fails
to obtain such agreement by the effective time of any such succession or
assignment, such failure shall be considered Good Reason; provided, however,
that the compensation to which the Executive would be entitled upon a
termination for Good Reason pursuant to Paragraph 7(e) shall be the sole
remedy of the Executive for any failure by NMG to obtain such agreement.  As used in this Agreement, “NMG” shall
include any successor or assignee (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all the business
and/or assets of NMG that executes and delivers the agreement provided for in
this Paragraph 20 or that otherwise becomes obligated under this Agreement by
operation of law.


 


21.           Arbitration.  All disputes and controversies arising under
or in connection with this Agreement shall be settled by arbitration conducted
before one arbitrator sitting in Dallas, Texas, or such other location agreed
by the parties hereto, in accordance with the rules for expedited
resolution of employment disputes of the American Arbitration Association then
in


 


21

















 


effect.  The determination of the arbitrator shall be
made within thirty days following the close of the hearing on any dispute or
controversy and shall be final and binding on the parties.  Judgment may be entered on the award of the
arbitrator in any court having proper jurisdiction.


 


22.           Costs
of Proceedings.  The Company shall
pay all costs and expenses of the Company and, at least monthly, of the
Executive (including legal fees) in connection with any arbitration relating to
the interpretation or enforcement of any provision of this Agreement, whether
or not the Executive instituted the proceeding and whether or not the Executive
prevails; provided that if the Executive instituted the proceeding and the
arbitrator or other individual presiding over the proceeding affirmatively
finds that the Executive instituted the proceeding in bad faith, the Executive
shall reimburse the Company for all costs and expenses of the Executive
previously paid by the Company pursuant to this Paragraph 22.


 


23.           Section 409A
Savings Clause.  Notwithstanding
anything to the contrary contained herein, in the event that NMG receives
advice of counsel selected by NMG and reasonably acceptable to the Executive,
that payments under this Agreement are subject to Section 409A of the Code
(or the Executive makes such determination and informs NMG of such determination):  (i) any payments in the nature of
severance under this Agreement that would be treated as non-qualified deferred
compensation under 409A shall not commence until six months after the Executive’s
Date of Termination (or, if earlier, the date Executive dies) if required under
Section 409A of the Code; and (ii) after consultation with the
Executive and counsel, NMG may amend the Agreement to make such other changes
it reasonably determines are required to comply with Section 409A of the
Code in a manner that preserves the economics to the Executive to the extent
reasonable practicable.  The Executive
hereby stipulates that Cleary Gottlieb Steen and Hamilton LLP is acceptable
counsel for purposes of this Paragraph 23


 


24.           Applicable
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas,
without regard to conflicts of laws principles thereof. 


 


25.           Entire
Agreement.  This Agreement and the
Change of Control Agreement contain the entire agreement between the parties
concerning the subject matter hereof and supersede all prior agreements and
understandings, written and oral, between the parties with respect to the
subject matter of this Agreement and the Change of Control Agreement.  


 


26.           Modification;
Waiver.  No person, other than
pursuant to a resolution duly adopted by the members of the Board, shall have
authority on behalf of NMG to agree to modify, amend, or waive any provision of
this Agreement.  Further, this Agreement
may not be changed orally, but only by a written agreement signed by the party
against whom any waiver, change, amendment, modification or discharge is sought
to be enforced.  Each party to this
Agreement acknowledges and agrees that no breach of this Agreement by the other
party or failure to enforce or insist on its or his rights under this Agreement
shall constitute a waiver or abandonment of any such rights or defense to
enforcement of such rights.


 


27.           Construction.  This Agreement is to be construed as a whole,
according to its fair meaning, and not strictly for or against any of the
parties.


 


22

















 


28.           Severability.  If any provision of this Agreement shall be
determined by a court to be invalid or unenforceable, the remaining provisions
of this Agreement shall not be affected thereby, shall remain in full force and
effect, and shall be enforceable to the fullest extent permitted by applicable
law.


 


29.           Counterparts.  This Agreement may be executed by the parties
in any number of counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same agreement.


 


23

















 


IN WITNESS WHEREOF, NMG has caused this Agreement to
be executed on its behalf by its duly authorized officer, and the Executive has
executed this Agreement, effective as of the Effective Date.


 


 


	
   

  	
  THE
  NEIMAN MARCUS GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Nelson A. Bangs

  	
   

  
	
   

  	
  Name:

  	
  Nelson A. Bangs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEWTON
  ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  David Spuria

  	
   

  
	
   

  	
  Name:

  	
  David Spuria

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEWTON
  ACQUISITION MERGER SUB, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  David Spuria

  	
   

  
	
   

  	
  Name:

  	
  David Spuria

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Burton M.
  Tansky

  	
   

  
	
   

  	
  Name:

  	
  Burton M. Tansky

  



 


24

















 


EXHIBIT
A


 


	
  Assumptions:

  	
   

  	
   

  	
   

  
	
  Equity Investment by Sponsors:

  	
   

  	
  $

  	
  1,445,000,000.00

  	
   

  
	
  Shares Issued to LLC

  	
   

  	
  1,000,000

  	
   

  
	
  Fair Market Value Per Share of Parent

  	
   

  	
  $

  	
  1,445.00

  	
   

  
	
  Fair Market Value Per NMG Share

  	
   

  	
  $

  	
  100.00

  	
   

  
	
  Total Management Investment (including Tansky
  option rollover)

  	
   

  	
  $

  	
  25,629,355.00

  	
   

  
	
  Management Invest (excluding Tansky roll)

  	
   

  	
  $

  	
  17,721,230.00

  	
   

  
	
  Tansky option roll (spread)

  	
   

  	
  $

  	
  7,908,125

  	
   

  
	
  Shares Issued to Management at Closing

  	
   

  	
  12,263.8270

  	
   

  
	
  Number of Shares Would Get with $7,908,125
  Investment

  	
   

  	
  5,472.7509

  	
   

  
	
  Shares after management invests (fully diluted
  basis)

  	
   

  	
  1,017,736.5779

  	
   

  
	
  Original Pool (Before Adjustment for Tansky
  Options)

  	
   

  	
  82,519.1820

  	
   

  
	
  Pool Issued at Closing (Before Adjustment for
  Tansky Options)

  	
   

  	
  77,017.9032

  	
   

  
	
  Tansky Portion of the Pool (23.5784%)

  	
   

  	
  18,159.5893

  	
   

  
	
  Tansky Portion of Options that are Time-Based

  	
   

  	
  9,079.7946

  	
   

  
	
  Tansky Portion of Time-Based Options that Vest Each
  Year

  	
   

  	
  2,269.9487

  	
   

  



 


	
  Existing
  Options - $100/share

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Expiration Date

  	
   

  	
  Strike Price

  	
   

  	
  Number of Options

  	
   

  	
  Spread

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9/23/2010

  	
   

  	
  $

  	
  35.6250

  	
   

  	
  63,000

  	
   

  	
  4,055,625.0000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5/16/2011

  	
   

  	
  $

  	
  36.5000

  	
   

  	
  25,000

  	
   

  	
  1,587,500.0000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9/22/2011

  	
   

  	
  $

  	
  24.5000

  	
   

  	
  30,000

  	
   

  	
  2,265,000.0000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  118,000

  	
   

  	
  7,908,125.0000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rollover Options

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Expiration Date

  	
   

  	
  Unadjusted Strike Price

  	
   

  	
  Number of Options

  	
   

  	
  Adjusted Strike Price

  	
   

  	
  Adjusted Number of Options

  	
   

  	
  Spread

  	
   

  	
  Excess Options

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9/23/2010

  	
   

  	
  $

  	
  514.7813

  	
   

  	
  4,359.8616

  	
   

  	
  $

  	
  361.2500

  	
   

  	
  3,742.2145

  	
   

  	
  4,055,625.0000

  	
   

  	
  935.5536

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5/16/2011

  	
   

  	
  $

  	
  527.4250

  	
   

  	
  1,730.1038

  	
   

  	
  $

  	
  361.2500

  	
   

  	
  1,464.8212

  	
   

  	
  1,587,500.0000

  	
   

  	
  366.2053

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9/22/2011

  	
   

  	
  $

  	
  354.0250

  	
   

  	
  2,076.1246

  	
   

  	
  $

  	
  354.0250

  	
   

  	
  2,076.1246

  	
   

  	
  2,265,000.0000

  	
   

  	
  508.6505

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  8,166.0900

  	
   

  	
   

  	
   

  	
  7,283.1603

  	
   

  	
   

  	
   

  	
  1,810.4095

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tansky Option Summary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Adjusted Rollover Options Granted at
  Closing:*

  	
   

  	
  7,283.1603

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Excess Options

  	
   

  	
  1,810.4095

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tranche 1 of 23.5784% of 7.0% Pool after reduction
  for excess option

  	
   

  	
  459.5392

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






* If Tansky had invested his option spread at closing he would have been
entitled to 5,472.7509 options. To maintain proper leverage, Tansky’s option
grant under the Management Equity Incentive Plan 7% Pool must be reduced by
1,810.4095, which equals the number of shares underlying his Adjusted Rollover
Options minus the number of shares he would have received had he invested cash
at closing.


 
















 


EXHIBIT B


 


GENERAL RELEASE


 


THIS GENERAL RELEASE is entered into between The Neiman Marcus Group, Inc.,
a Delaware corporation (“NMG”),
Newton Acquisition Inc. (together with NMG, the “NMG Group”) and Burton M. Tansky (the “Employee”) as of the           
day of                                ,
              .  The NMG Group and the Employee agree as
follows:


 


1.             Employment
Status.  The Employee’s employment
with the NMG Group shall terminate effective as of                              ,
                          .


 


2.             Payment
and Benefits.  Upon the effectiveness
of the terms set forth herein, NMG shall provide the Employee with the payments
and benefits set forth in Section 7 of the Employment Agreement between
NMG and the Employee, dated as of                         
(as amended from time to time, the “Employment
Agreement”), or the payments and benefits set forth in Section 3(a) of
the Change of Control Termination Protection Agreement dated as of April 1,
2005, between the Employee and The Neiman Marcus Group, Inc. (the “CIC Agreement”).


 


3.             No
Liability.  This Release does not
constitute an admission by the NMG Group, or any of their subsidiaries,
affiliates, divisions, trustees, officers, directors, partners, agents, or
employees, or by the Employee, of any unlawful acts or of any violation of
federal, state or local laws.


 


4.             Release.  In consideration of the payments and benefits
set forth in Section 7(e) and (f) of the Employment Agreement,
the Employee for himself, his heirs, administrators, representatives,
executors, successors and assigns (collectively, “Employee Releasors”) does hereby irrevocably and
unconditionally release, acquit and forever discharge the NMG Group and each of
their subsidiaries, affiliates, divisions, successors, assigns, trustees,
officers, directors, partners, agents, and former and current employees,
including without limitation all persons acting by, through, under or in
concert with any of them, including without limitation the Majority
Stockholders (as defined in the Management Stockholders’ Agreement dated as of                   
among the Employee and the other parties specified therein) and Newton Holding,
LLC  (collectively, “NMG Releasees”), and each of them from any
and all charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, remedies, actions, causes of action, suits,
rights, demands, costs, losses, debts and expenses (including attorneys’ fees
and costs) of any nature whatsoever, known or unknown, whether in law or equity
and whether arising under federal, state or local law and in particular
including any claim for discrimination based upon race, color, ethnicity, sex,
national origin, religion, disability age (including without limitation under
the Age Discrimination in Employment Act of 1967 as amended by the Older
Workers Benefit Protection Act (“ADEA”), Title VII of the Civil Rights Act of
1964 as amended by the Civil Rights Act of 1991, the Equal Pay Act of 1962, and
the Americans with Disabilities Act of 1990) or any other unlawful criterion or
circumstance, which Employee Releasors had, now have, or may have or claim to
have in the future against each or any of the NMG Releasees by reason of any
matter, cause or thing occurring, done or omitted to be done from the beginning
of the world until the date of the execution of this Release; provided, 


 

















 


however, that nothing herein shall release (i) any
obligation of NMG under Sections 5(c), 7, 16 or 22 of the Employment Agreement
or Section 3, 5 or 9 of the CIC Agreement as applicable, (ii) any
obligation of Newton Acquisition, Inc. under Section 5(c) of the
Employment Agreement and Section 10 of the Letter Agreement (as defined in
the Employment Agreement) or (iii) any right of indemnification or to
director and officer liability insurance coverage under any of the company’s
organizational documents or at law under any plan or agreement and applicable
to the Employee.


 


In addition, nothing in this Release is intended to interfere with the
Employee’s right to file a charge with the Equal Employment Opportunity
Commission in connection with any claim the Employee believes he may have
against the NMG Releasees.  However, by
executing this Release, the Employee hereby waives the right to recover in any
proceeding that the Employee may bring before the Equal Employment Opportunity
Commission or any state human rights commission or in any proceeding brought by
the Equal Employment Opportunity Commission or any state human rights
commission on the Employee’s behalf.  In
addition, this release is not intended to interfere with the Employee’s right
to challenge that his waiver of any and all ADEA claims pursuant to this
Release is a knowing and voluntary waiver, notwithstanding the Employee’s
specific representation to the NMG Group that he has entered into this
Agreement knowingly and voluntarily.


 


5.             NMG
Release.  The NMG Group on behalf of
itself and its subsidiaries, affiliates, divisions, successors, assigns,
officers, directors, agents, partners and current and former employees,
including without limitation the Majority Stockholders and Newton Holding, LLC
(collectively, the “Releasors”)
agrees to and does hereby irrevocably and unconditionally release, acquit and
forever discharge the Employee, and his heirs, executors, administrators,
representatives, successors and assigns (hereinafter collectively referred to
as the “Employee Releasees”), with
respect to and from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, controversies, damages, remedies, causes of
action, suits, rights, demands, costs, losses, debts, and expenses (including
attorneys’ fees and costs) of any kind whatsoever, known or unknown, whether in
law or equity and whether arising under federal, state or local law, which the
Releasors had, now have, or may have or claim to have in the future against
each or any of the Employee Releasees by reason of any matter, course or thing
whatsoever from the beginning of the world until the date of execution of this
Release; provided, however, that nothing herein shall release the
Employee from (i) obligations or restrictions arising under or referred to
or described in the Employment Agreement and nothing herein shall impair the
right or ability of NMG to enforce such provisions in accordance with the terms
of the Employment Agreement, or (ii) any claims arising out of the
Employee’s fraud or willful misconduct in connection with the conduct of the
business of the NMG Group.


 


6.             Bar.  The Employee acknowledges and agrees that if
he should hereafter make any claim or demand or commence or threaten to
commence any action, claim or proceeding against the NMG Releasees with respect
to any cause, matter or thing which is the subject of the release under
Paragraph 4 of this Release (other than a claim brought under ADEA), this
Release may be raised as a complete bar to any such action, claim or
proceeding, and the applicable NMG Releasee may recover from the Employee all
costs incurred in connection with such action, claim or proceeding, including
attorneys’ fees.  The NMG Group
acknowledges and agrees that if it should hereafter make any claim or demand or
commence or threaten to 


 


2

















 


commence any action, claim or proceeding against any
of the Employee Releasees with respect to any cause, matter or thing which is
the subject of the release under Paragraph 5 of this Release, this Release
may be raised as a complete bar to any such action, claim or proceeding, and
the applicable Employee Releasee may recover from NMG all costs incurred in
connection with such action, claim or proceeding, including attorneys’ fees


 


7.             Restrictive
Covenants.  The Employee acknowledges
that the provisions of Sections 8, 9, 10 and 11 of the Employment Agreement
shall continue to apply pursuant to their terms.


 


8.             Governing
Law.  This Release shall be governed
by and construed in accordance with the laws of the State of Texas, without
regard to conflicts of laws principles.


 


9.             Acknowledgment.  The parties hereto have read this Release,
understand it, and voluntarily accept its terms, and the Employee acknowledges
that he has been advised by NMG to seek the advice of legal counsel before
entering into this Release, and has been provided with a period of twenty-one
(21) days in which to consider entering into this Release.


 


10.           Revocation.  The Employee has a period of seven (7) days
following the execution of this Release during which the Employee may revoke
this Release, and this Release shall not become effective or enforceable until
such revocation period has expired.  If,
within the ten (10) day period following such expiration, NMG or Newton
Acquisition, Inc. fails to execute this Release, then this Release shall
become null and void and have no force or effect.


 


11.           Counterparts.  This Release may be executed by the parties
hereto in counterparts, which taken together shall be deemed one original.


 


3

















 


IN WITNESS WHEREOF, the parties have executed this
Release on the date first set forth above.


 


	
   

  	
   

  
	
   

  	
  Burton M. Tansky

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Newton
  Acquisition, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  The Neiman Marcus
  Group, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  



 


4