**EXHIBIT10.28**

 

**NEIMANMARCUS, INC.**

 

**CASHINCENTIVE PLAN**

 

**(As amended January 21, 2008)**

 

**Section 1.  Purpose.**

 

The purpose of this Neiman Marcus, Inc. CashIncentive Plan (this “**Plan**”) is toaid Neiman Marcus, Inc. and its affiliates (the “**Company**”) in providing a corporate benefitto key professionals of The Neiman Marcus Group, Inc. and its affiliates(the “**Employer**”) to align theirinterests and motivations with the commercial goals of the Company.

 

**Section 2.**  **Certain Definitions.**

 

(a)                  “**Bonus Pool**”shall mean $14 million, less the amount payable, if any, to Burton M. Tanskypursuant to Section 5(c)(ii) of his Employment Agreement with theCompany.

 

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

 

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

 

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

 

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

 

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

 

(g)                 “**Eligible Employee”**means each individual other than BurtonM. Tansky who has been granted an Option.

 

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

 

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

 

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

 

(k)                  “**MajorityStockholder**” shall have the meaning set forth in the ManagementStockholders’ Agreement.

 

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

 

 

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(m)               “**Option**”shall mean any option to purchase Common Stock granted on November 29,2005 under the  Incentive Plan, and eachadditional option granted under the Incentive Plan  thereafter if and to the extent determined bythe Committee in its discretion after consultation with the Chief ExecutiveOfficer of the Company.

 

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

 

(o)                 “**ParticipantHoldings**” shall mean the sum of (A) the aggregate number ofShares held by all Participants (or their Permitted Transferees) employed bythe Employer as of the Payment Event as a result of the previous exercise ofOptions, (B) the aggregate number of Shares underlying outstanding vestedand unvested Options held by all Participants (or their Permitted Transferees)employed by the Employer as of the Payment Date, (C) the aggregate numberof Shares held on the date of termination by all Participants (or theirPermitted Transferees) whose employment was terminated without Cause within thesix-month period immediately preceding the Payment Event as a result of theprevious exercise of Options and (D) the aggregate number of Sharesunderlying vested Options held on the date of termination by all Participants(or their Permitted Transferees) whose employment was terminated without Causewithin the six-month period immediately preceding the Payment Event.

 

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

 

(q)                 “**PermittedTransferee**” shall mean the meaning set forth in the Incentive Plan.

 

(r)                    “**Pro Rata Portion**”shall mean, as of the Payment Event:

 

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

 

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

 

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

 

**Section 3.**  **Administration.**

 

This Plan shall be administered by the Committee,which shall have full discretion to administer this Plan, including but notlimited to discretion (A) to determine all questions related to aParticipant’s entitlement to receive the Cash Bonus, (B) to interpret andconstrue any provision of this Plan, and (C) to adopt, amend, or rescindany rules and regulations for the operation and administration of thisPlan.  Decisions of the Committee shallbe final and binding for all purposes. None of the Company, the Employer, the Committee, nor any member of theCommittee, shall be liable to any party for any action, omission, ordetermination relating to this Plan. This Plan shall be administered at the expense of the Company.

 

**Section 4.  Cash Bonuses.**

 

(a)                                  Subject to the terms of this Plan, uponthe occurrence of the Payment Event, each Participant shall be entitled to aCash Bonus, provided that the internal rate of return to the MajorityStockholder in respect of their direct and indirect investment in the Companyis positive.  The Majority Stockholder’sinternal rate of return shall be calculated in the case of an Initial PublicOffering as if the Majority Stockholder sold all of its direct and indirectequity interests in the Company at a per share price equal to the InitialPublic Offering price or, in the case of a

 

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Changeof Control, based on the value of its equity interests implied by thetransaction giving rise to the Change of Control, and in each case, taking intoaccount all investments made directly or indirectly in the Company, all managementand transaction fees paid by the Company or its subsidiaries to the MajorityStockholder and all expenses incurred by the Majority Stockholder in connectionwith the investment.

 

(b)                                 In no event shall a Participant beentitled to receive a Cash Bonus (A) prior to the Payment Event and (B) unlessand until the Committee in its sole discretion determines that the conditionsset forth in Section 4(a) above have been satisfied with respect tosuch Participant.

 

**Section 5.**  **Payment.**

 

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

 

(b)                                 The Company shall deduct from allpayments and distributions under this Plan any required federal, state, orlocal government tax withholdings.

 

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

 

**Section 6.**  **General Provisions.**

 

(a) **NoRight to Continued Employment.** Nothing contained in this Planshall confer upon the Participant any right with respect to the continuation ofhis or her employment by the Employer, or interfere in any way with the rightof the Employer at any time to terminate such employment or to increase ordecrease the compensation of the employee or Participant.  No person other than the Participants shallhave any claim or right to participate in this Plan.  Any conditional grant by the Company to anyParticipant of any Cash Bonus contemplated herein shall neither require theCompany to make any additional grant to such Participant or any otherParticipant or other person at any time nor preclude the Company from makingsubsequent grants to such Participant or any other Participant or other personat any time.

 

(b)  **Participationin Other Plans.**  Nothing inthis Plan shall be deemed to entitle a Participant to participate in, nor prohibitnor restrict any Participant participation in, any other plan, program, orarrangement maintained by the Company or the Employer.

 

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

 

(d)  **Section 409A.**  Notwithstanding any provision herein to thecontrary, the Committee may, in its sole discretion, change the form and timingof any distribution or otherwise modify the terms of this Plan in order tocomply with applicable law, including, without limitation, in order to avoidadverse tax treatment to any Participant under Section 409A of the Code; providedthat the Committee shall use commercially reasonable efforts to put theParticipants in the same position as they would have been in but for theapplication of this Section 6(d).

 

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

 

(f)  **GoverningProvisions.**  The provisions ofthis Plan shall govern in all respects the allocation, distribution, and natureof the Cash Bonuses, and shall supersede all prior written agreements andnegotiations and oral understandings regarding such Cash Bonuses, if any.

 

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(g)  **GoverningLaw.**  This Plan and the rightsof all persons under this Plan shall be construed and administered in accordancewith the laws of the State of Delaware, without regard to its conflict of lawprinciples.

 

(h)  **EffectiveDate.**  This Plan is effectiveas of November 29, 2005.

 

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