Document:

Exhibit-10.1

     

    EMCORE
      CORPORATION

    
       

      AMENDED
        AND RESTATED 2000 STOCK OPTION PLAN

       

      1. Purposes.
        The
        purposes of the EMCORE
        Corporation 2000 Stock Option Plan are to give officers and other employees,
        consultants and non-employee directors of the Company and its Affiliates
        an
        opportunity to acquire shares of Stock, to provide an incentive for such
        employees, consultants and directors to continue to promote the best interests
        of the Company and its Affiliates and enhance its long-term performance and
        to
        provide an incentive for such employees, consultants and directors to join
        or
        remain with the Company and its Affiliates. Toward these objectives, the
        Committee may grant Options to such employees, directors and consultants,
        all
        pursuant to the terms and conditions of the Plan.

       

      2. Definitions.
        As used
        in the Plan, the following capitalized terms shall have the meanings set
        forth
        below:

       

      (a) “Affiliate”
-
        other
        than the Company, (i) any corporation or limited liability company in an
        unbroken chain of corporations or limited liability companies ending with
        the
        Company if each corporation or limited liability company owns stock or
        membership interests (as applicable) possessing more than fifty percent (50%)
        of
        the total combined voting power of all classes of stock in one of the other
        corporations or limited liability companies in such chain; (ii) any corporation,
        trade or business (including, without limitation, a partnership or limited
        liability company) which is more than fifty percent (50%) controlled (whether
        by
        ownership of stock, assets or an equivalent ownership interest or voting
        interest) by the Company or one of its Affiliates; or (iii) any other entity,
        approved by the Committee as an Affiliate under the Plan, in which the Company
        or any of its Affiliates has a material equity interest.

       

      (b) “Agreement”
-
        a
        written stock option award agreement evidencing an Option, as described in
        Section 3(e).

       

      (c) “Award
        Limit”
-
        300,000 shares of Stock (as adjusted in accordance with Section
        10).

       

      (d) “Beneficial
        Ownership”
-
        (including correlative terms) shall have the same meaning given such term
        in
        Rule 13d-3 promulgated under the Exchange Act.

       

      (e) “Board”
-
        the
        Board of Directors of the Company.

       

      (f) “Change
        in Control”
-
        the
        occurrence of any of the following:

       

      (i)
        an
        acquisition in one transaction or a series of related transactions (other
        than
        directly from the Company or pursuant to Options granted under the Plan or
        other
        similar awards granted by the Company) of any Voting Securities by any Person,
        immediately after which such Person has Beneficial Ownership of fifty percent
        (50%) or more of the combined voting power of the Company’s then outstanding
        Voting Securities; provided,
        however,
        in
        determining whether a Change in Control has occurred pursuant to this Section
        2(f), Voting Securities which are acquired in a Non-Control Acquisition shall
        not constitute an acquisition that would cause a Change in Control;

       

      (ii)
        the
        individuals who, immediately prior to the Effective Date, are members of
        the
        Board (the “Incumbent
        Board”),
        cease
        for any reason to constitute at least a majority of the members of the Board;
        provided,
        however,
        that if
        the election, or nomination for election, by the Company’s common stockholders,
        of any new director was approved by a vote of at least a majority of the
        Incumbent Board, such new director shall, for purposes of the Plan, be
        considered as a member of the Incumbent Board; provided
        further,
        however,
        that no
        individual shall be considered a member of the Incumbent Board if such
        individual initially assumed office as a result of either an actual or
        threatened “Election Contest” (as described in Rule 14a-11 promulgated under the
        Exchange Act) or other actual or threatened solicitation of proxies or consents
        by or on behalf of a Person other than the Board (a “Proxy
        Contest”)
        including by reason of any agreement intended to avoid or settle any Election
        Contest or Proxy Contest; or

       

      (iii)
        the
        consummation of:

       

      (A)
        a
        merger, consolidation or reorganization involving the Company unless:

       

      (1)
        the
        stockholders of the Company, immediately before such merger, consolidation
        or
        reorganization, own, directly or indirectly, immediately following such merger,
        consolidation or reorganization, more than fifty percent (50%) of the combined
        voting power of the outstanding voting securities of the corporation resulting
        from such merger or consolidation or reorganization (the “Surviving
        Corporation”)
        in
        substantially the same proportion as their ownership of the Voting Securities
        immediately before such merger, consolidation or reorganization,

       

      (2)
        the
        individuals who were members of the Incumbent Board immediately prior to
        the
        execution of the agreement providing for such merger, consolidation or
        reorganization constitute at least a majority of the members of the board
        of
        directors of the Surviving Corporation, or a corporation Beneficially Owning,
        directly or indirectly, a majority of the voting securities of the Surviving
        Corporation, and

       

      (3)
        no
        Person, other
        than
        (i) the
        Company, (ii) any Related Entity (as defined in Section 2(p)), (iii) any
        employee benefit plan (or any trust forming a part thereof) that, immediately
        prior to such merger, consolidation or reorganization, was maintained by
        the
        Company, the Surviving Corporation, or any Related Entity or (iv) any Person
        who, together with its Affiliates, immediately prior to such merger,
        consolidation or reorganization had Beneficial Ownership of fifty percent
        (50%)
        or more of the then outstanding Voting Securities, owns, together with its
        Affiliates, Beneficial Ownership of fifty percent (50%) or more of the combined
        voting power of the Surviving Corporation’s then outstanding voting
        securities (a
        transaction described in clauses (1) through (3) above is referred to herein
        as
        a “Non-Control
        Transaction”);

       

      (B)
        a
        complete liquidation or dissolution of the Company; or 

       

      (C)
        an
        agreement for the sale or other disposition of all or substantially all of
        the
        assets or business of the Company to any Person (other than a transfer to
        a
        Related Entity or the distribution to the Company’s stockholders of the stock of
        a Related Entity or any other assets).

       

      Notwithstanding
        the foregoing, a Change in Control shall not be deemed to occur solely because
        any Person (the “Subject
        Person”)
        acquired Beneficial Ownership of fifty percent (50%) or more of the combined
        voting power of the then outstanding Voting Securities as a result of the
        acquisition of Voting Securities by the Company which, by reducing the number
        of
        Voting Securities then outstanding, increases the proportional number of
        shares
        Beneficially Owned by the Subject Persons, provided
        that if
        a Change in Control would occur (but for the operation of this sentence)
        as a
        result of the acquisition of Voting Securities by the Company, and (1) before
        such share acquisition by the Company the Subject Person becomes the Beneficial
        Owner of any new or additional Voting Securities in a related transaction
        or (2)
        after such share acquisition by the Company the Subject Person becomes the
        Beneficial Owner of any new or additional Voting Securities which in either
        case
        increases the percentage of the then outstanding Voting Securities Beneficially
        Owned by the Subject Person, then a Change in Control shall be deemed to
        occur.
        Solely for purposes of this Section 2(f), (x) “Affiliate” shall mean, with
        respect to any Person, any other Person that, directly or indirectly, controls,
        is controlled by, or is under common control with, such Person; (y) any
“Relative” (for this purpose, “Relative” means a spouse, child, parent, parent
        of spouse, sibling or grandchild) of an individual shall be deemed to be
        an
        Affiliate of such individual for this purpose; and (z) neither the Company
        nor
        any Person controlled by the Company shall be deemed to be an Affiliate of
        any
        holder of Common Stock.

      

      (g) “Code”
-
        the
        Internal Revenue Code of 1986, as it may be amended from time to time, including
        regulations and rules thereunder and successor provisions and regulations
        and
        rules thereto.

       

      (h) “Committee”
-
        the
        Compensation Committee of the Board, or such other Board committee as may
        be
        designated by the Board to administer the Plan.

       

      (i) “Company”
-
        EMCORE
        Corporation, a New Jersey corporation, or any successor entity.

       

      (j) “Disqualified
        Option”
-
        the
        meaning given such term in Section 10(d).

       

      (k) “Disqualifying
        Disposition”
-
        the
        meaning given such term in Section 10(d).

       

      (l) “Effective
        Date”
-
        the
        date on which the Plan is effective, as determined pursuant to Section
        15.

       

      (m) “Exchange
        Act”
-
        the
        Securities Exchange Act of 1934, as amended, and the rules and regulations
        promulgated thereunder.

       

      (n) “Fair
        Market Value”
-
        of a
        share of Stock as of a given date shall be: (i) if the Stock is listed or
        admitted to trading on an established stock exchange (including, for this
        purpose, the Nasdaq National Market), the mean of the highest and lowest
        sale
        prices for a share of Stock on the composite tape or in Nasdaq National Market
        trading as reported in The
        Wall Street Journal
        (or, if
        not so reported, such other nationally recognized reporting source as the
        Committee shall select) for such date, or, if no such prices are reported
        for
        such date, the most recent day for which such prices are available shall
        be
        used; (ii) if the Stock is not then listed or admitted to trading on such
        a
        stock exchange, the mean of the closing representative bid and asked prices
        for
        the Stock on such date as reported by the Nasdaq Small Cap Market or, if
        not so
        reported, by the OTC Bulletin Board (or any successor or similar quotation
        system regularly reporting the market value of the Stock in the over-the-counter
        market), or, if no such prices are reported for such date, the most recent
        day
        for which such prices are available shall be used; or (iii) in the event
        neither
        of the valuation methods provided for in clauses (i) and (ii) above are
        practicable, the fair market value of a share of Stock determined by such
        other
        reasonable valuation method as the Committee shall, in its discretion, select
        and apply in good faith as of the given date; provided,
        however,
        that
        for purposes of paragraphs (a) and (h) of Section 6, such fair market value
        shall be determined subject to Section 422(c)(7) of the Code. 

       

      (o) “ISO”
or
        “Incentive
        Stock Option”
-
        a
        right to purchase Stock granted to an Optionee under the Plan in accordance
        with
        the terms and conditions set forth in Section 6 and which conforms to the
        applicable provisions of Section 422 of the Code.

       

      (p) “Non-Control
        Acquisition”
-
        an
        acquisition by (i) an employee benefit plan (or a trust forming a part thereof)
        maintained by (A) the Company or (B) any corporation or other Person of which
        a
        majority of its voting power or its voting equity securities or equity interest
        is owned, directly or indirectly, by the Company (a “Related
        Entity”),
        (ii)
        the Company or any Related Entity, (iii) any of Thomas Russell, The AER Trust
        1997, Robert Louis-Dreyfus, Gallium Enterprises, Inc. and Reuben Richards
        or
        (iv) any Person in connection with a Non-Control Transaction.

       

      (q) “Notice”
-
        written notice actually received by the Company at its executive offices
        on the
        day of such receipt, if received on or before 1:30 p.m., on a day when the
        Company’s executive offices are open for business, or, if received after such
        time, such notice shall be deemed received on the next such day, which notice
        may be delivered in person to the Company’s Secretary or sent by facsimile to
        the Company at (732) 271-9686, or sent by certified or registered mail or
        overnight courier, prepaid, addressed to the Company at 394 Elizabeth Avenue,
        Somerset, New Jersey 08873, Attention: Secretary.

       

      (r) “Option”
-
        a
        right to purchase Stock granted to an Optionee under the Plan in accordance
        with
        the terms and conditions set forth in Section 6. Options may be either ISOs
        or
        stock options other than ISOs.

       

      (s) “Optionee”
-
        an
        individual who is eligible, pursuant to Section 5, and who has been selected,
        pursuant to Section 3(c), to participate in the Plan, and who holds an
        outstanding Option granted to such individual under the Plan in accordance
        with
        the terms and conditions set forth in Section 6.

       

      (t) “Person”
-
        “person” as such term is used for purposes of Section 13(d) or 14(d) of the
        Exchange Act, including, without limitation, any individual, corporation,
        limited liability company, partnership, trust, unincorporated organization,
        government or any agency or political subdivision thereof, or any other entity
        or any group of Persons.

       

      (u) “Plan”
-
        this
        EMCORE Corporation 2000 Stock Option Plan.

       

      (v) “Predecessor
        Plan”
-
        the
        Company’s 1995 Incentive and Non-Statutory Stock Option Plan.

       

      (w) “Securities
        Act”
-
        the
        Securities Act of 1933, as it may be amended from time to time, including
        the
        regulations and rules promulgated thereunder and successor provisions and
        regulations and rules thereto.

       

      (x) “Stock”
-
        the
        common stock of the Company, without par value.

       

      (y) “Subsidiary”
-
        any
        present or future corporation which is or would be a “subsidiary corporation” of
        the Company as the term is defined in Section 424(f) of the Code.

       

      (z) “Voting
        Securities”
-
        all
        the outstanding voting securities of the Company entitled to vote generally
        in
        the election of the Board.

       

      3. Administration
        of the Plan.
        (a)
        The
        Committee shall have exclusive authority to operate, manage and administer
        the
        Plan in accordance with its terms and conditions. Notwithstanding the foregoing,
        in its absolute discretion, the Board may at any time and from time to time
        exercise any and all rights, duties and responsibilities of the Committee
        under
        the Plan, including, but not limited to, establishing procedures to be followed
        by the Committee, but excluding matters which under any applicable law,
        regulation or rule, including, without limitation, any exemptive rule under
        Section 16 of the Exchange Act (including Rule 16b-3, or any successor rule,
        as
        the same may be amended from time to time) or Section 162(m) of the Code,
        are
        required to be determined in the sole discretion of the Committee. If and
        to the
        extent that no Committee exists which has the authority to administer the
        Plan,
        the functions of the Committee shall be exercised by the Board.

       

      (b) The
        Committee shall be appointed from time to time by the Board, and the Committee
        shall consist of not less than three members of the Board. Appointment of
        Committee members shall be effective upon their acceptance of such appointment.
        Committee members may be removed by the Board at any time either with or
        without
        cause, and such members may resign at any time by delivering notice thereof
        to
        the Board. Any vacancy on the Committee, whether due to action of the Board
        or
        any other reason, shall be filled by the Board.

       

      (c) The
        Committee shall have full authority to grant, pursuant to the terms of the
        Plan,
        Options to those individuals who are eligible to receive Options under the
        Plan.
        In particular, the Committee shall have discretionary authority, in accordance
        with the terms of the Plan, to: determine eligibility for participation in
        the
        Plan; select, from time to time, from among those eligible, the employees,
        directors and consultants to whom Options shall be granted under the Plan,
        which
        selection may be based upon information furnished to the Committee by the
        Company’s or an Affiliate’s management; determine whether an Option shall take
        the form of an ISO or an Option other than an ISO; determine the number of
        shares of Stock to be included in any Option and the periods for which Options
        will be outstanding; establish and administer any terms, conditions, performance
        criteria, restrictions, limitations, forfeiture, vesting or exercise schedule,
        and other provisions of or relating to any Option; grant waivers of terms,
        conditions, restrictions and limitations under the Plan or applicable to
        any
        Option, or accelerate the vesting or exercisability of any Option; amend
        or
        adjust the terms and conditions of any outstanding Option and/or adjust the
        number and/or class of shares of Stock subject to any outstanding Option;
        at any
        time and from time to time after the granting of an Option, specify such
        additional terms, conditions and restrictions with respect to any such Option
        as
        may be deemed necessary or appropriate to ensure compliance with any and
        all
        applicable laws or rules, including, but not limited to, terms, restrictions
        and
        conditions for compliance with applicable securities laws, regarding an
        Optionee’s exercise of Options by tendering shares of Stock or under any
“cashless exercise” program established by the Committee, and methods of
        withholding or providing for the payment of required taxes; and, to the extent
        permitted under the applicable Agreement, permit the transfer of an Option
        or
        the exercise of an Option by one other than the Optionee who received the
        grant
        of such Option (other than any such a transfer or exercise which would cause
        any
        ISO to fail to qualify as an “incentive stock option” under Section 422 of the
        Code). 

       

      (d) The
        Committee shall have all authority that may be necessary or helpful to enable
        it
        to discharge its responsibilities with respect to the Plan. Without limiting
        the
        generality of the foregoing sentence or Section 3(a), and in addition to
        the
        powers otherwise expressly designated to the Committee in the Plan, the
        Committee shall have the exclusive right and discretionary authority to
        interpret the Plan and the Agreements; construe any ambiguous provision of
        the
        Plan and/or the Agreements and decide all questions concerning eligibility
        for
        and the amount of Options granted under the Plan. The Committee may establish,
        amend, waive and/or rescind rules and regulations and administrative guidelines
        for carrying out the Plan and may correct any errors, supply any omissions
        or
        reconcile any inconsistencies in the Plan and/or any Agreement or any other
        instrument relating to any Options. The Committee shall have the authority
        to
        adopt such procedures and subplans and grant Options on such terms and
        conditions as the Committee determines necessary or appropriate to permit
        participation in the Plan by individuals otherwise eligible to so participate
        who are foreign nationals or employed outside of the United States, or otherwise
        to conform to applicable requirements or practices of jurisdictions outside
        of
        the United States; and take any and all such other actions it deems necessary
        or
        advisable for the proper operation and/or administration of the Plan. The
        Committee shall have full discretionary authority in all matters related
        to the
        discharge of its responsibilities and the exercise of its authority under
        the
        Plan. Decisions and actions by the Committee with respect to the Plan and
        any
        Agreement shall be final, conclusive and binding on all persons having or
        claiming to have any right or interest in or under the Plan and/or any
        Agreement. 

       

      (e) Each
        Option shall be evidenced by an Agreement, which shall be executed by the
        Company and the Optionee to whom such Option has been granted, unless the
        Agreement provides otherwise; two or more Options granted to a single Optionee
        may, however, be combined in a single Agreement. An Agreement shall not be
        a
        precondition to the granting of an Option; no person shall have any rights
        under
        any Option, however, unless and until the Optionee to whom the Option shall
        have
        been granted (i) shall have executed and delivered to the Company an Agreement
        or other instrument evidencing the Option, unless such Agreement provides
        otherwise, and (ii) has otherwise complied with the applicable terms and
        conditions of the Option. The Committee shall prescribe the form of all
        Agreements, and, subject to the terms and conditions of the Plan, shall
        determine the content of all Agreements. Any Agreement may be supplemented
        or
        amended in writing from time to time as approved by the Committee; provided
        that the
        terms and conditions of any such Agreement as supplemented or amended are
        not
        inconsistent with the provisions of the Plan. 

       

      (f) A
        majority of the members of the entire Committee shall constitute a quorum
        and
        the actions of a majority of the members of the Committee in attendance at
        a
        meeting at which a quorum is present, or actions by a written instrument
        signed
        by all members of the Committee, shall be the actions of the Committee.

       

      (g) The
        Committee may consult with counsel who may be counsel to the Company. The
        Committee may, with the approval of the Board, employ such other attorneys
        and/or consultants, accountants, appraisers, brokers and other persons as
        it
        deems necessary or appropriate. In accordance with Section 12, the Committee
        shall not incur any liability for any action taken in good faith in reliance
        upon the advice of such counsel or other persons.

       

      (h) In
        serving on the Committee, the members thereof shall be entitled to
        indemnification as directors of the Company, and to any limitation of liability
        and reimbursement as directors with respect to their services as members
        of the
        Committee.

       

      (i) Except
        to
        the extent prohibited by applicable law, including, without limitation, the
        requirements applicable under Section 162(m) of the Code to any Option intended
        to be “qualified performance-based compensation,” or the requirements for any
        Option granted to an officer or director to be covered by any exemptive rule
        under Section 16 of the Exchange Act (including Rule 16b-3, or any successor
        rule, as the same may be amended from time to time), or the applicable rules
        of
        a stock exchange, the Committee may, in its discretion, allocate all or any
        portion of its responsibilities and powers under this Section 3 to any one
        or
        more of its members and/or delegate all or any part of its responsibilities
        and
        powers under this Section 3 to any person or persons selected by it;
provided,
        however,
        that
        the Committee may not delegate its authority to correct errors, omissions
        or
        inconsistencies in the Plan. Any such authority delegated or allocated by
        the
        Committee under this paragraph (i) of Section 3 shall be exercised in accordance
        with the terms and conditions of the Plan and any rules, regulations or
        administrative guidelines that may from time to time be established by the
        Committee, and any such allocation or delegation may be revoked by the Committee
        at any time.

       

      4. Shares
        of Stock Subject to the Plan.
        (a)
        The
        shares of stock subject to Options granted under the Plan shall be shares
        of
        Stock. Such shares of Stock subject to the Plan may be either authorized
        and
        unissued shares (which will not be subject to preemptive rights) or previously
        issued shares acquired by the Company or any Subsidiary. The total number
        of
        shares of Stock that may be delivered pursuant to Options granted under the
        Plan
        is 725,000, plus any shares of Stock subject to a stock option granted under
        the
        Predecessor Plan which for any reason expires or is terminated or canceled
        without having been fully exercised by delivery of shares of Stock; provided,
        however,
        that
        the total number of shares of Stock that may be delivered pursuant to Incentive
        Stock Options under the Plan is 725,000, without application of paragraph
        (d) of
        this Section 4. 

       

      (b) Notwithstanding
        any of the foregoing limitations set forth in this Section 4, the numbers
        of
        shares of Stock specified in this Section 4 shall be adjusted as provided
        in
        Section 10.

       

      (c) Any
        shares of Stock subject to an Option which for any reason expires or is
        terminated or canceled without having been fully exercised by delivery of
        shares
        of Stock may again be granted pursuant to an Option under the Plan, subject
        to
        the limitations of this Section 4. 

       

      (d) If
        the
        option exercise price of an Option granted under the Plan or a stock option
        granted under the Predecessor Plan is paid by tendering to the Company shares
        of
        Stock already owned by the holder of such option (or such holder and his
        or her
        spouse jointly), only the number of shares of Stock issued net of the shares
        of
        Stock so tendered shall be deemed delivered for purposes of determining the
        total number of shares of Stock that may be delivered under the
        Plan.

       

      (e) Any
        shares of Stock delivered under the Plan in assumption or substitution of
        outstanding stock options, or obligations to grant future stock options,
        under
        plans or arrangements of an entity other than the Company or an Affiliate
        in
        connection with the Company or an Affiliate acquiring such another entity,
        or an
        interest in such an entity, or a transaction otherwise described in Section
        6(j), shall not reduce the maximum number of shares of Stock available for
        delivery under the Plan.

       

      5. Eligibility.
        Executive employees and other employees, including officers, of the Company
        and
        the Affiliates, directors (whether or not also employees), and consultants
        of
        the Company and the Affiliates, shall be eligible to become Optionees and
        receive Options in accordance with the terms and conditions of the Plan,
        subject
        to the limitations on the granting of ISOs set forth in Section 6(h).

       

      6. Terms
        and Conditions of Stock Options.
        All
        Options to purchase Stock granted under the Plan shall be either ISOs or
        Options
        other than ISOs. To the extent that any Option does not qualify as an Incentive
        Stock Option (whether because of its provisions or the time or manner of
        its
        exercise or otherwise), such Option, or the portion thereof which does not
        so
        qualify, shall constitute a separate Option other than an Incentive Stock
        Option. Each Option shall be subject to all the applicable provisions of
        the
        Plan, including the following terms and conditions, and to such other terms
        and
        conditions not inconsistent therewith as the Committee shall determine and
        which
        are set forth in the applicable Agreement. Options need not be uniform as
        to all
        grants and recipients thereof.

       

      (a) The
        option exercise price per share of shares of Stock subject to each Option
        shall
        be determined by the Committee and stated in the Agreement; provided,
        however,
        that,
        subject to paragraph (h)(iii) and/or (j) of this Section 6, if applicable,
        such
        price applicable to any ISO shall not be less than one hundred percent (100%)
        of
        the Fair Market Value of a share of Stock at the time that the Option is
        granted.

       

      (b) Each
        Option shall be exercisable in whole or in such installments, at such times
        and
        under such conditions as may be determined by the Committee, in its discretion
        in accordance with the Plan, and stated in the Agreement, and, in any event,
        over a period of time ending not later than ten (10) years from the date
        such
        Option was granted, subject to paragraph (h)(iii) of this Section
        6.

       

      (c) An
        Option
        shall not be exercisable with respect to a fractional share of Stock or the
        lesser of one hundred (100) shares and the full number of shares of Stock
        then
        subject to the Option. No fractional shares of Stock shall be issued upon
        the
        exercise of an Option. 

       

      (d) Each
        Option may be exercised by giving Notice to the Company specifying the number
        of
        shares of Stock to be purchased, which shall be accompanied by payment in
        full
        including applicable taxes, if any, in accordance with Section 9. Payment
        shall
        be in any manner permitted by applicable law and prescribed by the Committee,
        in
        its discretion, and set forth in the Agreement, including, in the Committee’s
        discretion, and subject to such terms, conditions and limitations as the
        Committee may prescribe, payment in accordance with a “cashless exercise”
arrangement established by the Committee and/or in Stock owned by the Optionee
        or by the Optionee and his or her spouse jointly and acquired more than six
        (6)
        months prior to such tender.

       

      (e) No
        Optionee or other person shall become the beneficial owner of any shares
        of
        Stock subject to an Option, nor have any rights to dividends or other rights
        of
        a shareholder with respect to any such shares until he or she has exercised
        his
        or her Option in accordance with the provisions of the Plan and the applicable
        Agreement.

       

      (f) An
        Option
        may be exercised only if at all times during the period beginning with the
        date
        of the granting of the Option and ending on the date of such exercise, the
        Optionee was an employee, director or consultant of the Company or an Affiliate,
        as applicable. Notwithstanding the preceding sentence, the Committee may
        determine in its discretion that an Option may be exercised prior to expiration
        of such Option following termination of such continuous employment, directorship
        or consultancy, whether or not exercisable at the time of such termination,
        to
        the extent provided in the applicable Agreement.

       

      (g) Subject
        to the terms and conditions and within the limitations of the Plan, the
        Committee may modify, extend or renew outstanding Options granted under the
        Plan, or accept the surrender of outstanding Options (up to the extent not
        theretofore exercised) and authorize the granting of new Options in substitution
        therefor (to the extent not theretofore exercised). 

       

      (h)
        (i) Each
        Agreement relating to an Option shall state whether such Option will or will
        not
        be treated as an ISO. No ISO shall be granted unless such Option, when granted,
        qualifies as an “incentive stock option” under Section 422 of the Code. No ISO
        shall be granted to any individual otherwise eligible to participate in the
        Plan
        who is not an employee of the Company or a Subsidiary on the date of granting
        of
        such Option. Any ISO granted under the Plan shall contain such terms and
        conditions, consistent with the Plan, as the Committee may determine to be
        necessary to qualify such Option as an “incentive stock option” under Section
        422 of the Code. Any ISO granted under the Plan may be modified by the Committee
        to disqualify such Option from treatment as an “incentive stock option” under
        Section 422 of the Code.

       

      (ii)
        Notwithstanding any intent to grant ISOs, an Option granted under the Plan
        will
        not be considered an ISO to the extent that it, together with any other
“incentive stock options” (within the meaning of Section 422 of the Code, but
        without regard to subsection (d) of such Section) under the Plan and any
        other
“incentive stock option” plans of the Company, any Subsidiary and any “parent
        corporation” of the Company within the meaning of Section 424(e) of the Code,
        are exercisable for the first time by any Optionee during any calendar year
        with
        respect to Stock having an aggregate Fair Market Value in excess of $100,000
        (or
        such other limit as may be required by the Code) as of the time the Option
        with
        respect to such Stock is granted. The rule set forth in the preceding sentence
        shall be applied by taking Options into account in the order in which they
        were
        granted. 

       

      (iii)
        No
        ISO shall be granted to an individual otherwise eligible to participate in
        the
        Plan who owns (within the meaning of Section 424(d) of the Code), at the
        time
        the Option is granted, more than ten percent (10%) of the total combined
        voting
        power of all classes of stock of the Company or a Subsidiary or any “parent
        corporation” of the Company within the meaning of Section 424(e) of the Code.
        This restriction does not apply if at the time such ISO is granted the Option
        exercise price per share of Stock subject to the Option is at least 110%
        of the
        Fair Market Value of a share of Stock on the date such ISO is granted, and
        the
        ISO by its terms is not exercisable after the expiration of five years from
        such
        date of grant.

       

      (i) An
        Option
        and any shares of Stock received upon the exercise of an Option shall be
        subject
        to such other transfer and/or ownership restrictions and/or legending
        requirements as the Committee may establish in its discretion and which are
        specified in the Agreement and may be referred to on the certificates evidencing
        such shares of Stock. The Committee may require an Optionee to give prompt
        Notice to the Company concerning any disposition of shares of Stock received
        upon the exercise of an ISO within: (i) two (2) years from the date of granting
        such ISO to such Optionee or (ii) one (1) year from the transfer of such
        shares
        of Stock to such Optionee or (iii) such other period as the Committee may
        from
        time to time determine. The Committee may direct that an Optionee with respect
        to an ISO undertake in the applicable Agreement to give such Notice described
        in
        the preceding sentence, at such time and containing such information as the
        Committee may prescribe, and/or that the certificates evidencing shares of
        Stock
        acquired by exercise of an ISO refer to such requirement to give such
        Notice.

       

      (j) In
        the
        event that a transaction described in Section 424(a) of the Code involving
        the
        Company or a Subsidiary is consummated, such as the acquisition of property
        or
        stock from an unrelated corporation, individuals who become eligible to
        participate in the Plan in connection with such transaction, as determined
        by
        the Committee, may be granted Options in substitution for stock options granted
        by another corporation that is a party to such transaction. If such substitute
        Options are granted, the Committee, in its discretion and consistent with
        Section 424(a) of the Code, if applicable, and the terms of the Plan, though
        notwithstanding paragraph (a) of this Section 6, shall determine the option
        exercise price and other terms and conditions of such substitute
        Options.

       

      (k) Notwithstanding
        any other provision contained in the Plan to the contrary, the maximum number
        of
        shares of Stock which may be subject to Options granted under the Plan to
        any
        Optionee in any twelve (12) month period shall not exceed the Award Limit.
        To
        the extent required by Section 162(m) of the Code, shares of Stock subject
        to
        Options which are canceled shall continue to be counted against the Award
        Limit
        and if, after the grant of an Option, the price of shares subject to such
        Option
        is reduced and the transaction is treated as a cancellation of the Option
        and a
        grant of a new Option, both the Option deemed to be canceled and the Option
        deemed to be granted shall be counted against the Award Limit.

       

      7. Transfer,
        Leave of Absence.
        A
        transfer of an employee from the Company to an Affiliate (or, for purposes
        of
        any ISO granted under the Plan, a Subsidiary), or vice versa, or from one
        Affiliate to another (or in the case of an ISO, from one Subsidiary to another),
        and a leave of absence, duly authorized in writing by the Company or a
        Subsidiary or Affiliate, shall not be deemed a termination of employment
        of the
        employee for purposes of the Plan or with respect to any Option (in the case
        of
        ISOs, to the extent permitted by the Code).

       

      8. Rights
        of Employees and Other Persons.
        (a)
        No
        person shall have any rights or claims under the Plan except in accordance
        with
        the provisions of the Plan and the applicable Agreement.

       

      (b) Nothing
        contained in the Plan or in any Agreement shall be deemed to (i) give any
        employee or director the right to be retained in the service of the Company
        or
        any Affiliate nor restrict in any way the right of the Company or any Affiliate
        to terminate any employee’s employment or any director’s directorship at any
        time with or without cause or (ii) confer on any consultant any right of
        continued relationship with the Company or any Affiliate, or alter any
        relationship between them, including any right of the Company or an Affiliate
        to
        terminate its relationship with such consultant.

       

      (c) The
        adoption of the Plan shall not be deemed to give any employee of the Company
        or
        any Affiliate or any other person any right to be selected to participate
        in the
        Plan or to be granted an Option.

       

      (d) Nothing
        contained in the Plan or in any Agreement shall be deemed to give any employee
        the right to receive any bonus, whether payable in cash or in Stock, or in
        any
        combination thereof, from the Company or any Affiliate, nor be construed
        as
        limiting in any way the right of the Company or any Affiliate to determine,
        in
        its sole discretion, whether or not it shall pay any employee bonuses, and,
        if
        so paid, the amount thereof and the manner of such payment.

       

      9. Tax
        Withholding Obligations.
        (a)
        The
        Company and/or any Affiliate are authorized to take whatever actions are
        necessary and proper to satisfy all obligations of Optionees (including,
        for
        purposes of this Section 9, any other person entitled to exercise an Option
        pursuant to the Plan or an Agreement) for the payment of all Federal, state,
        local and foreign taxes in connection with any Options (including, but not
        limited to, actions pursuant to the following paragraph (b) of this Section
        9).

       

      (b) Each
        Optionee shall (and in no event shall Stock be delivered to such Optionee
        with
        respect to an Option until), no later than the date as of which the value
        of the
        Option first becomes includible in the gross income of the Optionee for income
        tax purposes, pay to the Company in cash, or make arrangements satisfactory
        to
        the Company, as determined in the Committee’s discretion, regarding payment to
        the Company of, any taxes of any kind required by law to be withheld with
        respect to the Stock or other property subject to such Option, and the Company
        and any Affiliate shall, to the extent permitted by law, have the right to
        deduct any such taxes from any payment of any kind otherwise due to such
        Optionee. Notwithstanding the above, the Committee may, in its discretion
        and
        pursuant to procedures approved by the Committee, permit the Optionee to
        (i)
        elect withholding by the Company of Stock otherwise deliverable to such Optionee
        pursuant to his or her Option (provided,
        however,
        that
        the amount of any Stock so withheld shall not exceed the amount necessary
        to
        satisfy required Federal, state, local and foreign withholding obligations
        using
        the minimum statutory rate) and/or (ii) tender to the Company Stock owned
        by
        such Optionee (or by such Optionee and his or her spouse jointly) and acquired
        more than six (6) months prior to such tender in full or partial satisfaction
        of
        such tax obligations, based, in each case, on the Fair Market Value of the
        Stock
        on the payment date as determined by the Committee.

       

      10. Changes
        in Capital.
        (a)
        The
        existence of the Plan and any Options granted hereunder shall not affect
        in any
        way the right or power of the Board or the stockholders of the Company to
        make
        or authorize any adjustment, recapitalization, reorganization or other change
        in
        the Company’s capital structure or its business, any merger or consolidation of
        the Company or an Affiliate, any issue of debt, preferred or prior preference
        stock ahead of or affecting Stock, the authorization or issuance of additional
        shares of Stock, the dissolution or liquidation of the Company or its
        Affiliates, any sale or transfer of all or part of its assets or business
        or any
        other corporate act or proceeding.

       

      (b)(i)
        Upon
        changes in the outstanding Stock by reason of a stock dividend, stock split,
        reverse stock split, subdivision, recapitalization, reclassification, merger,
        consolidation (whether or not the Company is a surviving corporation),
        combination or exchange of shares of Stock, separation, or reorganization,
        or in
        the event of an extraordinary dividend, “spin-off,” liquidation, other
        substantial distribution of assets of the Company or acquisition of property
        or
        stock or other change in capital of the Company, or the issuance by the Company
        of shares of its capital stock without receipt of full consideration therefor,
        or rights or securities exercisable, convertible or exchangeable for shares
        of
        such capital stock, or any similar change affecting the Company’s capital
        structure, the aggregate number, class and kind of shares of stock available
        under the Plan as to which Options may be granted, the Award Limit, and the
        number, class and kind of shares under each outstanding Option and the exercise
        price per share applicable to any such Options shall be appropriately adjusted
        by the Committee in its discretion to preserve the benefits or potential
        benefits intended to be made available under the Plan or with respect to
        any
        outstanding Options or otherwise necessary to reflect any such change.

       

      (ii) Fractional
        shares of Stock resulting from any adjustment in Options pursuant to Section
        10(b)(i) shall be aggregated until, and eliminated at, the time of exercise
        of
        the affected Options. Notice of any adjustment shall be given by the Committee
        to each Optionee whose Option has been adjusted and such adjustment (whether
        or
        not such Notice is given) shall be effective and binding for all purposes
        of the
        Plan.

       

      (c) In
        the
        event of a Change in Control:

       

      (i) Immediately
        prior thereto, all outstanding Options shall be accelerated and become
        immediately exercisable as to all of the shares of Stock covered thereby,
        notwithstanding anything to the contrary in the Plan or the
        Agreement.

       

      (ii) In
        its
        discretion, and on such terms and conditions as it deems appropriate, the
        Committee may provide, either by the terms of the Agreement applicable to
        any
        Option or by resolution adopted prior to the occurrence of the Change in
        Control, that any outstanding Option shall be adjusted by substituting for
        Stock
        subject to such Option stock or other securities of the surviving corporation
        or
        any successor corporation to the Company, or a parent or subsidiary thereof,
        or
        that may be issuable by another corporation that is a party to the transaction
        resulting in the Change in Control, whether or not such stock or other
        securities are publicly traded, in which event the aggregate exercise price
        shall remain the same and the amount of shares or other securities subject
        to
        the Option shall be the amount of shares or other securities which could
        have
        been purchased on the closing date or expiration date of such transaction
        with
        the proceeds which would have been received by the Optionee if the Option
        had
        been exercised in full (or with respect to a portion of such Option, as
        determined by the Committee, in its discretion) prior to such transaction
        or
        expiration date and the Optionee exchanged all of such shares in the
        transaction.

       

      (iii) In
        its
        discretion, and on such terms and conditions as it deems appropriate, the
        Committee may provide, either by the terms of the Agreement applicable to
        any
        Option or by resolution adopted prior to the occurrence of the Change in
        Control, that any outstanding Option shall be converted into a right to receive
        cash on or following the closing date or expiration date of the transaction
        resulting in the Change in Control in an amount equal to the highest value
        of
        the consideration to be received in connection with such transaction for
        one
        share of Stock, or, if higher, the highest Fair Market Value of the Stock
        during
        the thirty (30) consecutive business days immediately prior to the closing
        date
        or expiration date of such transaction, less the per share exercise price
        of
        such Option, multiplied by the number of shares of Stock subject to such
        Option,
        or a portion thereof.

       

      (iv) The
        Committee may, in its discretion, provide that an Option cannot be exercised
        after such a Change in Control, to the extent that such Option is or becomes
        fully exercisable on or before such Change in Control or is subject to any
        acceleration, adjustment or conversion in accordance with the foregoing
        paragraphs (i), (ii) or (iii) of this Section 10.

       

      No
        Optionee shall have any right to prevent the consummation of any of the
        foregoing acts affecting the number of shares of Stock available to such
        Optionee. Any actions or determinations of the Committee under this subsection
        10(c) need not be uniform as to all outstanding Options, nor treat all Optionees
        identically. Notwithstanding the foregoing adjustments, in no event may any
        Option be exercised after ten (10) years from the date it was originally
        granted, and any changes to ISOs pursuant to this Section 10 shall, unless
        the
        Committee determines otherwise, only be effective to the extent such adjustments
        or changes do not cause a “modification” (within the meaning of Section
        424(h)(3) of the Code) of such ISOs or adversely affect the tax status of
        such
        ISOs.

       

      (d) If,
        as a
        result of a Change in Control transaction, an ISO fails to qualify as an
        “incentive stock option,” within the meaning of Section 422 of the Code, either
        because of the failure of the Optionee to meet the holding period requirements
        of Code Section 422(a)(1) (a “Disqualifying Disposition”) or the exercisability
        of such Option is accelerated pursuant to Section 10(c)(i), or any similar
        provision of the applicable Agreement, in connection with such Change in
        Control
        and such acceleration causes the aggregate Fair Market Value (determined
        at the
        time the Option is granted) of the shares of Stock with respect to which
        such
        Option, together with any other “incentive stock options,” as provided in
        Section 6(h)(ii), are exercisable for the first time by such Optionee during
        the
        calendar year in which such accelerated exercisability occurs to exceed the
        limitations set forth in Section 6(h)(ii) (a “Disqualified Option”); or any
        other exercise, payment, acceleration, adjustment or conversion of an Option
        in
        connection with a Change in Control transaction results in any additional
        taxes
        imposed on an Optionee, then the Company may, in the discretion of the
        Committee, make a cash payment to or on behalf of the Optionee who holds
        any
        such Option equal to the amount that will, after taking into account all
        taxes
        imposed on the Disqualifying Disposition or other exercise, payment,
        acceleration, adjustment or conversion of the Option, as the case may be,
        and
        the receipt of such payment, leave such Optionee in the same after-tax position
        the Optionee would have been in had the Code Section 422(a)(1) holding period
        requirements been met at the time of the Disqualifying Disposition or had
        the
        Disqualified Option continued to qualify as an “incentive stock option,” within
        the meaning of Code Section 422 on the date of such exercise or otherwise
        equalize the Optionee for any such taxes; provided,
        however,
        that
        the amount, timing and recipients of any such payment or payments shall be
        subject to such terms, conditions and limitations as the Committee shall,
        in its
        discretion, determine. Without limiting the generality of the proviso
        contained in the immediately preceding sentence, in determining the amount
        of
        any such payment or payments referred to therein, the Committee may adopt
        such
        methods and assumptions as it considers appropriate, and the Committee shall
        not
        be required to examine or take into account the individual tax liability
        of any
        Optionee.

       

      11. Prohibition
        on Repricing and Reload Grants.
        Other
        than in connection with a change in the Company’s capitalization (e.g., stock
        splits, recapitalizations, etc., as described in Section 10 of the Plan),
        without stockholder approval (i) the exercise price of an Option may not
        be
        reduced, (ii) no Option may be amended or cancelled for the purpose of
        repricing, replacing or regranting such Option with an exercise price that
        is
        less than the original exercise price of such Option, and (iii) the Committee
        shall not offer
        to
        buy out an Option previously granted for cash or other consideration.

       

      12. Miscellaneous
        Provisions.
        (a)
        The Plan
        shall be unfunded. The Company shall not be required to establish any special
        or
        separate fund or to make any other segregation of assets to assure the issuance
        of shares of Stock or the payment of cash upon exercise or payment of any
        Option. Proceeds from the sale of shares of Stock pursuant to Options granted
        under the Plan shall constitute general funds of the Company. 

       

      (b) Except
        as
        otherwise provided in this paragraph (b) of Section 12 or by the Committee,
        an
        Option by its terms shall be personal and may not be sold, transferred, pledged,
        assigned, encumbered or otherwise alienated or hypothecated otherwise than
        by
        will or by the laws of descent and distribution and shall be exercisable
        during
        the lifetime of an Optionee only by him or her. An Agreement may permit the
        exercise or payment of an Optionee’s Option (or any portion thereof) after his
        or her death by or to the beneficiary most recently named by such Optionee
        in a
        written designation thereof filed with the Company, or, in lieu of any such
        surviving beneficiary, as designated by the Optionee by will or by the laws
        of
        descent and distribution. In the event any Option is exercised by the executors,
        administrators, heirs or distributees of the estate of a deceased Optionee,
        or
        such an Optionee’s beneficiary, or the transferee of an Option, in any such case
        pursuant to the terms and conditions of the Plan and the applicable Agreement
        and in accordance with such terms and conditions as may be specified from
        time
        to time by the Committee, the Company shall be under no obligation to issue
        Stock thereunder unless and until the Committee is satisfied that the person
        or
        persons exercising such Option is the duly appointed legal representative
        of the
        deceased Optionee’s estate or the proper legatee or distributee thereof or the
        named beneficiary of such Optionee, or the valid transferee of such Option,
        as
        applicable.

       

      (c) (i)
        If at
        any time the Committee shall determine, in its discretion, that the listing,
        registration and/or qualification of shares of Stock upon any securities
        exchange or under any state, Federal or foreign law, or the consent or approval
        of any governmental regulatory body, is necessary or desirable as a condition
        of, or in connection with, the sale or purchase of shares of Stock hereunder,
        no
        Option may be granted, exercised or paid in whole or in part unless and until
        such listing, registration, qualification, consent and/or approval shall
        have
        been effected or obtained, or otherwise provided for, free of any conditions
        not
        acceptable to the Committee.

       

      (ii) If
        at any
        time counsel to the Company shall be of the opinion that any sale or delivery
        of
        shares of Stock pursuant to an Option is or may be in the circumstances unlawful
        or result in the imposition of excise taxes on the Company or any Affiliate
        under the statutes, rules or regulations of any applicable jurisdiction,
        the
        Company shall have no obligation to make such sale or delivery, or to make
        any
        application or to effect or to maintain any qualification or registration
        under
        the Securities Act, or otherwise with respect to shares of Stock or Options
        and
        the right to exercise any Option shall be suspended until, in the opinion
        of
        such counsel, such sale or delivery shall be lawful or will not result in
        the
        imposition of excise taxes on the Company or any Affiliate. 

       

      (iii) Upon
        termination of any period of suspension under this Section 12(c), any Option
        affected by such suspension which shall not then have expired or terminated
        shall be reinstated as to all shares available before such suspension and
        as to
        the shares which would otherwise have become available during the period
        of such
        suspension, but no suspension shall extend the term of any Option.

       

      (d) The
        Committee may require each person receiving Stock in connection with any
        Option
        under the Plan to represent and agree with the Company in writing that such
        person is acquiring the shares of Stock for investment without a view to
        the
        distribution thereof. The Committee, in its absolute discretion, may impose
        such
        restrictions on the ownership and transferability of the shares of Stock
        purchasable or otherwise receivable by any person under any Option as it
        deems
        appropriate. Any such restrictions shall be set forth in the applicable
        Agreement, and the certificates evidencing such shares may include any legend
        that the Committee deems appropriate to reflect any such
        restrictions.

       

      (e) By
        accepting any benefit under the Plan, each Optionee and each person claiming
        under or through such Optionee shall be conclusively deemed to have indicated
        their acceptance and ratification of, and consent to, all of the terms and
        conditions of the Plan and any action taken under the Plan by the Committee,
        the
        Company or the Board, in any case in accordance with the terms and conditions
        of
        the Plan.

       

      (f) In
        the
        discretion of the Committee, an Optionee may elect irrevocably (at a time
        and in
        a manner determined by the Committee) prior to exercising an Option that
        delivery of shares of Stock upon such exercise shall be deferred until a
        future
        date and/or the occurrence of a future event or events, specified in such
        election. Upon the exercise of any such Option and until the delivery of
        any
        deferred shares, the number of shares otherwise issuable to the Optionee
        shall
        be credited to a memorandum account in the records of the Company or its
        designee and any dividends or other distributions payable on such shares
        shall
        be deemed reinvested in additional shares of Stock, in a manner determined
        by
        the Committee, until all shares of Stock credited to such Optionee’s memorandum
        account shall become issuable pursuant to the Optionee’s election.

       

      (g) The
        Committee may, in its discretion, extend one or more loans to Optionees who
        are
        directors, key employees or consultants of the Company or an Affiliate in
        connection with the exercise or receipt of an Option granted to any such
        individual. The terms and conditions of any such loan shall be established
        by
        the Committee.

       

      (h) Except
        with respect to Incentive Stock Options granted under the Predecessor Plan
        (within the meaning of the Predecessor Plan) and outstanding on the Effective
        Date, subject to approval of the Plan by the Company’s shareholders, in
        accordance with Section 15, the provisions of the Plan shall apply to and
        govern
        all stock options granted under the Predecessor Plan and, unless otherwise
        determined by the Committee, such stock options granted under the Predecessor
        Plan shall be deemed to be amended to provide any additional rights applicable
        to Options hereunder, subject to the right of any affected participant in
        the
        Predecessor Plan to refuse to consent to such amendment pursuant to the terms
        and conditions of the Predecessor Plan and the applicable option or award
        agreement between the Company and such participant. 

       

      (i) Neither
        the adoption of the Plan nor anything contained herein shall affect any other
        compensation or incentive plans or arrangements of the Company or any Affiliate
        (other than the Predecessor Plan, as provided in paragraph (h) of this Section
        12), or prevent or limit the right of the Company or any Affiliate to establish
        any other forms of incentives or compensation for their directors, employees
        or
        consultants or grant or assume options or other rights otherwise than under
        the
        Plan.

       

      (j) The
        Plan
        shall be governed by and construed in accordance with the laws of the State
        of
        New Jersey, without regard to such state’s conflict of law provisions, and, in
        any event, except as superseded by applicable Federal law.

       

      (k) The
        words
“Section,” “subsection” and “paragraph” herein shall refer to provisions of the
        Plan, unless expressly indicated otherwise. Wherever any words are used in
        the
        Plan or any Agreement in the masculine gender they shall be construed as
        though
        they were also used in the feminine gender in all cases where they would
        so
        apply, and wherever any words are used herein in the singular form they shall
        be
        construed as though they were also used in the plural form in all cases where
        they would so apply.

       

      (l) The
        Company shall bear all costs and expenses incurred in administering the Plan,
        including expenses of issuing Stock pursuant to any Options granted
        hereunder.

       

      13. Limits
        of Liability.
        (a)
        Any
        liability of the Company or an Affiliate to any Optionee with respect to
        any
        Option shall be based solely upon contractual obligations created by the
        Plan
        and the Agreement.

       

      (b) None
        of
        the Company, any Affiliate, any member of the Committee or the Board or any
        other person participating in any determination of any question under the
        Plan,
        or in the interpretation, administration or application of the Plan, shall
        have
        any liability, in the absence of bad faith, to any party for any action taken
        or
        not taken in connection with the Plan, except as may expressly be provided
        by
        statute.

       

      14. Limitations
        Applicable to Certain Options Subject to Exchange Act Section 16 and Code
        Section 162(m).
        Unless
        stated otherwise in the Agreement, notwithstanding any other provision of
        the
        Plan, any Option granted to an officer or director of the Company who is
        then
        subject to Section 16 of the Exchange Act, shall be subject to any additional
        limitations set forth in any applicable exemptive rule under Section 16 of
        the
        Exchange Act (including Rule 16b-3, or any successor rule, as the same may
        be
        amended from time to time) that are requirements for the application of such
        exemptive rule, and the Plan and applicable Agreement shall be deemed amended
        to
        the extent necessary to conform to such limitations. Furthermore, unless
        stated
        otherwise in the Agreement, notwithstanding any other provision of the Plan,
        any
        Option granted to an employee of the Company or an Affiliate intended to
        qualify
        as “other performance-based compensation” as described in Section 162(m)(4)(C)
        of the Code shall be subject to any additional limitations set forth in Section
        162(m) of the Code or any regulations or rulings issued thereunder (including
        any amendment to any of the foregoing) that are requirements for qualification
        as “other performance-based compensation” as described in Section 162(m)(4)(C)
        of the Code, and the Plan and applicable Agreement shall be deemed amended
        to
        the extent necessary to conform to such requirements.

       

      15. Amendments
        and Termination.
        The
        Board may, at any time and with or without prior notice, amend, alter, suspend
        or terminate the Plan, retroactively or otherwise; provided,
        however,
        unless
        otherwise required by law or specifically provided herein, no such amendment,
        alteration, suspension or termination shall be made which would impair the
        previously accrued rights of any holder of an Option theretofore granted
        without
        his or her written consent, or which, without first obtaining approval of
        the
        stockholders of the Company (where such approval is necessary to satisfy
        (i) any
        applicable requirements under the Code relating to ISOs or for exemption
        from
        Section 162(m) of the Code; (ii) the then-applicable requirements of Rule
        16b-3
        promulgated under the Exchange Act, or any successor rule, as the same may
        be
        amended from time to time; or (iii) any other applicable law, regulation
        or
        rule), would:

       

      
        	 	
                (a)

              	
                except
                  as is provided in Section 10, increase the maximum number of shares
                  of
                  Stock which may be sold or awarded under the Plan or increase the
                  limitations set forth in Section 6(k) on the maximum of shares
                  of Stock
                  that may be subject to Options granted to an
                  Optionee;

              

      

       

      
        	 	
                (b)

              	
                except
                  as is provided in Section 10, decrease the minimum option exercise
                  price
                  requirements of Section 6(a);

              

      

       

      
        	 	
                (c)

              	
                change
                  the class of persons eligible to receive Options under the Plan;
                  

              

      

       

      
        	 	
                (d)

              	
                extend
                  the duration of the Plan or the period during which Options may
                  be
                  exercised under Section 6(b); or

              

      

       

      
        	 	
                (e)

              	
                other
                  than in connection with a change in the Company’s capitalization (e.g.,
                  stock splits, recapitalizations, etc., as described in Section
                  10 of the
                  Plan), (i) reduce the exercise price of an Option, (ii) amend or
                  cancel
                  any Option for the purpose of repricing, replacing or regranting
                  such
                  Option with an exercise price that is less than the original exercise
                  price of such Option or (iii) permit the Committee to
                  buy out an Option previously granted for cash or other
                  consideration.

              

      

       

      The
        Committee may amend the terms of any Option theretofore granted, including
        any
        Agreement, retroactively or prospectively, but no such amendment shall
        materially impair the previously accrued rights of any Optionee without his
        or
        her written consent.

       

      16. Duration.
        Following the adoption of the Plan by the Board, the Plan shall become effective
        as of the date on which it is approved by the holders of a majority of the
        Company's outstanding Stock which is present and voted at a meeting, or by
        written consent in lieu of a meeting (the “Effective Date”), which approval must
        occur within the period ending twelve (12) months after the date the Plan
        is
        adopted by the Board. The Plan shall terminate upon the earliest to occur
        of:

       

      
        	 	
                (a)

              	
                the
                  effective date of a resolution adopted by the Board terminating
                  the
                  Plan;

              

      

       

      
        	 	
                (b)

              	
                the
                  date all shares of Stock subject to the Plan are delivered pursuant
                  to the
                  Plan's provisions; or

              

      

       

      
        	 	
                (c)

              	
                ten
                  (10) years from the Effective Date.

              

      

       

      No
        Option
        may be granted under the Plan after the earliest to occur of the events or
        dates
        described in the foregoing paragraphs (a) through (c) of this Section 15;
        however,
        Options
        theretofore granted may extend beyond such date.

       

      No
        such
        termination of the Plan shall affect the previously accrued rights of any
        Optionee hereunder and all Options previously granted hereunder shall continue
        in force and in operation after the termination of the Plan, except as they
        may
        be otherwise terminated in accordance with the terms of the Plan or the
        Agreement.EMPLOYMENT AGREEMENT

EXHIBIT 10.32

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement"), effective as of the Effective Date, is by and between The Neiman Marcus Group, Inc., a Delaware corporation ("NMG") and Karen Katz (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" means one or more of the following: (i) the Executive's willful and material failure to substantially perform her duties (other than as a result of physical or mental illness or injury), or other material breach of this Agreement; (ii) the Executive's (a) willful misconduct or (b) gross negligence, in each case which is materially injurious to the Company or its Affiliates; (iii) the Executive's willful breach of her fiduciary duty or duty of loyalty to the Company or its Affiliates; or (iv) the commission by the Executive of any felony or other serious crime involving moral turpitude.   For purposes of the foregoing, no act or failure to act shall be treated as "willful" unless done, or omitted to be done, by the Executive not in good faith and without the reasonable belief that the Executive's action or omission was in the best interest of NMG. "Change of Control Agreement" means the Change of Control Termination Protection Agreement by and between NMG and Executive, dated as of April 1, 2005.

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

     (e)  "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).

     (f)  "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.

     (g)  "Disability" 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, "Disability" means that, in the Board's sole judgment, the Executive is unable to perform any of the material duties of her 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.

     (h)  "Effective Date" means October 6, 2005.

     (i)  "Employment Termination Date" means the effective date of termination of the Executive's employment as established under Paragraph 6(g).

     (j)  "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 material reduction in the Executive's responsibilities or duties as in effect on the date hereof; (iv) any relocation of the Executive's place of business to a location 50 miles or more from the current location; (v) the reduction in title of the Executive or reporting relationships as President and Chief Executive Officer of NMS; or (vi) a material breach of this Agreement by NMG.

     (k)  "Management Equity Incentive Plan" means the NMG Management Equity Incentive Plan, dated as of November 29, 2005.

     (l)  "Parent" means Newton Acquisition, Inc., a Delaware corporation.

     (m)  "Target Bonus" means the target bonus under NMG's annual incentive bonus program(s).

     (n)  "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 Agreement.  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 Change of Control Agreement is expressly assumed hereby as contemplated in Section 10 thereof.  Notwithstanding the foregoing, the Executive acknowledges and agrees that the terms of the grant of an award pursuant to the Management Equity Incentive Plan shall be governed exclusively by the terms of such grant, including, without limitation, the vesting provisions thereof.  Accordingly, notwithstanding anything to the contrary in the Change of Control Agreement, there shall be no acceleration of vesting as a result of a termination of employment for any reason.

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 agreements to which the Executive and NMG are parties, and that the Executive will not have the right to terminate her employment for "Good Reason" as defined in the Change of Control Agreement under item 5 of such definition.

3.  Term.  Unless sooner terminated as provided in this Agreement, the term of the Agreement shall commence on the Effective Date and extend until the fifth anniversary thereof (the "Employment Term"), provided that the Employment Term shall automatically be extended for successive one year periods thereafter, unless at least three months prior to the commence of any such one year period, either party provides written notice to the other (a "Notice of Non-Renewal") that the Employment Term shall not be so extended..  The Executive's employment will end upon the expiration of the Employment Term.

4.  Position and Duties.

     (a)  The Executive shall serve as the Chief Executive Officer and President of Neiman Marcus Stores, a division of NMG ("NMS").  In such capacity, the Executive, subject to the ultimate control and direction of the Board, shall have and exercise direct charge of and general supervision over the business and affairs of NMS.  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 and the Chief Executive Officer of NMG; 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 NMS.  The Executive shall report and be accountable to the Board and the President and Chief Executive Officer of NMG or their respective designees.

     (b)  During the Employment Term, the Executive shall devote her full time, skill, and attention and her best efforts to the business and affairs of NMS 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 of NMS in accordance with this Agreement.

     (c)  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 and NMS may require.

     (d)  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 her services under this Agreement an annual base salary ("Base Salary").  The Base Salary on the Effective Date shall be $760,000.  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.  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).  The Executive's Target Bonus on the Effective Date is 65% of her Base Salary.  The Target Bonus percentage may be adjusted but may not be reduced below 65% of the Executive's 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.

     (c)  Long-term Incentives.  The Executive shall participate in the Management Equity Incentive Plan in a manner that is consistent with the participation of other senior executives of NMG.

     (d)  SERP Enhancement.  During the Employment Term, the Executive shall continue to accrue benefits under The Neiman Marcus Group, Inc. Supplemental Executive Retirement Plan (the "SERP"), provided that (i) the SERP shall not be amended or terminated in any way that adversely affects the Executive, and (ii) after the Executive has reached the 25-year maximum set forth in the SERP, she shall be entitled to an additional one year of credit for each full year of service thereafter.  In addition, if (i) during the Employment Term, the Executive's employment is terminated by NMG for any reason other than death, Disability, or Cause, (ii)during the Employment Term, the Executive's employment is terminated by the Executive for Good Reason, or (iii) the Executive's employment terminates upon expiration of the Employment Term following the provision by NMG of a Notice of Non-Renewal, and, in any such case, on the date of such termination the Executive has not yet reached age 65, the Executive's SERP benefit shall not be reduced according to the terms of the SERP solely by reason of the Executive's failure to reach age 65 as of the Employment Termination Date.

     (d)  Employee Benefits.  During the Employment Term, the Executive shall be entitled to 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.  NMG agrees that the employee benefit plans, programs and arrangements 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 made available immediately prior to the Effective Date.  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)  Fringe Benefits.  The Executive will be entitled for the Employment Term to 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 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 perquisites and fringe benefits made available immediately prior to the Effective Date.  Without limiting the foregoing, the Executive's $25,000 annual clothing allowance shall remain in place during the Employment Term.

     (f)  Expenses.  The Executive shall be entitled to receive reimbursement for all reasonable expenses incurred by the Executive in performing her 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.  During the Employment Term, 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 her vacation and other paid time off at such times that are (i) consistent with the proper performance of her duties and responsibilities and (ii) mutually convenient for NMG and the Executive.

     (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 or otherwise.

6.  Termination of Employment.

     (a)  Death.  The Executive's employment shall terminate automatically upon her death.

     (b)  Disability.  In the event of the Executive's Disability 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 or the Chief Executive Officer of NMG may terminate the Executive's employment for Cause.  To exercise its right to terminate the Executive's employment pursuant to clause (i), (ii) or (iii) 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 her 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 her receipt of such notice to meet with the Board to defend herself 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 her employment for Good Reason.  To exercise her right to terminate for Good Reason, the Executive must provide written notice to NMG of her 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 her employment for Good Reason must be given no later than 60 days after the later of (i) the first date the Executive knew or should have known 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.

     (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 Disability, 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 her death, the date of her death; (ii) if the Executive's employment is terminated by NMG because of her Disability 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; (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; or (v) if a Notice of Non-Renewal is provided by either party, upon expiration of the Employment Term.

     (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 she is a member of the Board or is an officer of NMG or a director or officer of any of its Affiliates, she 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 the 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) an amount of annual incentive pay, as described in Paragraph 5(b), equal to a prorated portion of the Target Bonus amount for the year in which the Employment Termination Date occurs (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.

     (b)  Disability.  If the Executive's employment is terminated by reason of the Executive's Disability, 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.

     (c)  Termination by the Executive Without Good Reason or Following Executive Non-Renewal.  If the Executive's employment is terminated by the Executive pursuant to and in compliance with Paragraph 6(e) or by reason of the provision of a Notice of Non-Renewal by the Executive, NMG shall pay to the Executive (i) the Compensation Payment, (ii) the Vacation Payment, and (iii) the Reimbursement.

     (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.

     (e)  Termination Without Cause or With Good Reason or Following NMG Notice of Non-Renewal.  If, following the second anniversary of the Effective Date, the Executive's employment (x) is terminated by NMG during the Employment Term for any reason other than death, Disability, or Cause, (y) is terminated by the Executive for Good Reason during the Employment Term, or (z) terminates upon expiration of the Employment Term following the provision of a Notice of Non-Renewal by NMG, then NMG shall pay to the Executive (i) the Compensation Payment, (ii) the Vacation Payment, and (iii) the Reimbursement.  In addition, subject to the Executive's execution of a release and waiver of claims against NMG and its Affiliates in such form as NMG may reasonably require, NMG will (i) pay to the Executive the Prorated Bonus, (ii) pay to the Executive a lump sum equal to two (2) times the sum of the Base Salary provided for in Paragraph 5(a) and the Target Bonus under Paragraph 5(b), at the level in effect as of the Employment Termination Date, and (iii) for the two (2) year period following such termination provide to the Executive the benefits described in, and subject to the terms of, Paragraph 3b of the Change of Control Agreement; provided, however, that the Executive shall be required to repay the amounts described in clauses (i) and (ii), and the benefits described in clause (iii) shall cease if:

	
   
	
(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 her by any regulatory agency, for actions or omissions related to her employment with NMG or any of its Affiliates, or if NMG reasonably believes that the Executive has committed any act or omission, either during her employment under this Agreement or if related to such employment thereafter, that during her employment would have entitled NMG to terminate her 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.

     (f)  Termination Within Two Years Following the Effective Date.  If, within the two-year period following the Effective Date, the Executive's employment with NMG or an Affiliate or successor of NMG is terminated for any reason, the Executive's entitlements and obligations, if any, shall be governed by the Change of Control Agreement, and Paragraphs 7, 8, 9 and 10 of this Agreement shall not be applicable; provided, however, that (i) as provided in Paragraph 2 of this Agreement, there shall be no acceleration of vesting as a result of a termination of employment for any reason, and (ii) the provisions of Paragraph 5(d) of this Agreement (relating to SERP enhancements) shall be applicable notwithstanding any contrary provisions of the Change in Control Agreement with respect to the SERP.

     (g)  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.

     (h)  Offset.  The Executive agrees that NMG may set off against, and she authorizes NMG to deduct from, any payments due to the Executive, or to her heirs, legal representatives, or successors, as a result of the termination of the Executive's employment any specified amounts which may be due and owing to NMG by the Executive, whether arising under this Agreement or otherwise.

8.  Confidential Information.

     (a)  The Executive acknowledges and agrees that (i) NMG is engaged in a highly competitive business; (ii) 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, her 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 her position and responsibilities, she necessarily will be creating Confidential Information that belongs to NMG and enhances NMG's goodwill, and in carrying out her responsibilities she in turn will be relying on NMG's goodwill and the disclosure by NMG to her of Confidential Information; (vi) she 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) she necessarily would use or disclose Confidential Information if she were to engage in competition with NMG.

     (b)  NMG acknowledges and agrees that the Executive must have and continue to have throughout her employment the benefits and use of its and its Affiliates' goodwill and Confidential Information in order to properly carry out her responsibilities.  NMG accordingly promises upon execution and delivery of this Agreement to provide the Executive immediate access to new and additional Confidential Information and authorize her 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 she (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 her 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)
	
she will protect and safeguard all Confidential Information;

	 	 	 
	 	
(iii)
	
she 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 her responsibilities unless authorized to do so by NMG or compelled to do so by law or valid legal process;

	 	
(iv)
	
if she believes she is compelled by law or valid legal process to disclose or divulge any Confidential Information, she will notify NMG in writing within 24 hours after receipt of legal process or other writing that causes her to form such a belief, or as soon as practicable if she 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 her employment with NMG for any reason or at the request of NMG at any time, she 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 her immediately to return any tangible Confidential Information in her 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.

9.  Noncompetition and Nondisparagement Obligations.  In consideration of NMG's promises to provide the Executive with new and additional Confidential Information and to authorize her 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 she is employed by NMG and/or any of its Affiliates and for a one-year period following the end of that employment for any reason, she shall not engage in any of the following activities (the "Restricted Activities"):

     (a)  She 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)  She will not, whether on her 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)  She will not, whether on her 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)  She 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) she has advised NMG in writing in advance of her 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 her 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 she and the members of her 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 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 her 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 she will immediately notify NMG in writing should she 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 she 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 her to return any Confidential Information in her 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 her 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 her employment or her time away from her 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 her 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 her 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 her employment with NMG in obtaining patents or copyrights or other intellectual-property 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 she has no other employment or undertakings that might restrict or impair her performance of this Agreement.  The Executive will not in connection with her 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 her time in providing information and assistance in accordance with this Paragraph 12.

13.  No Obligation to Pay; Section 409A of the Code.

     (a)  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.

     (b)  In the event any payment herein would result in the imposition of an excise tax pursuant to Section 409A of the Internal Revenue Code of 1986 or the regulations thereunder ("409A Excise Tax"), the Executive agrees that such payment shall be postponed to the date that is the earliest date upon which such payment would no longer result in the imposition of a 409A Excise Tax.

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(i), 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 securities market (or otherwise) such that the excise tax exemption for non-public companies 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 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 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):

	 	
(i)
	
If to NMG, at:

The Neiman Marcus Group, Inc.

Attn: General Counsel

1618 Main Street

Dallas, TX 75201

If to the Executive, at the Executive's then-current home address on file with NMG.

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 her 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.  Governing Law.  This Agreement and the employment of the Executive shall be governed by the laws of the State of Texas except for its laws with respect to conflict of laws.

22.  Arbitration.  (a)  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 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.

     (b)  Notwithstanding the foregoing, NMG and its Affiliates may seek such injunctive or other legal or equitable relief to which it may be entitled in any state or federal court of competent jurisdiction to enforce its rights under Paragraphs 7(e), 8, 9, 10 or 12 of this Agreement.

23.  Costs of Proceedings.  In connection with any arbitration relating to the interpretation or enforcement of any provision of this Agreement, each party shall bear its own costs, provided that NMG shall pay all costs and expenses of the Executive (including legal fees) solely with respect to any arbitration instituted on or before the second anniversary of the Effective Date or relating to any termination of employment that occurs on or prior to such second anniversary.  Reimbursement of the Executive as set forth herein shall occur on a monthly basis.  Notwithstanding the foregoing, 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 NMG for all costs and expenses of the Executive previously paid by NMG pursuant to this Paragraph 22.

24.  Entire Agreement.  This Agreement and the Change of Control Agreement contain the entire agreement between the parties concerning the subject matter hereof and supersede the Confidentiality, Non-Competition and Termination Benefits Agreement dated November 20, 2002 between the Executive and NMG, and all other 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.

25.  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 her rights under this Agreement shall constitute a waiver or abandonment of any such rights or defense to enforcement of such rights.

26.  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.

27.  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.

28.  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.

Remainder of Page Left Intentionally Blank

 

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

	
	
	

	 	
Title:
	
       Senior Vice President

	 	 	 
	 	 	 
	 	 	 
	 	 	
EXECUTIVE:

	 	 	 
	 	 	
   /s/ Karen Katz

	
	
	

	 	
Name:
	
      Karen Katz

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]