Document:

Exhibit

EXHIBIT 10.5
Confidential Treatment Requested

Certain material (indicated by asterisks) has been omitted from this document and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.

NEIMAN MARCUS GROUP, INC. 
FY 2018 MID-TERM CASH INCENTIVE PLAN
1.The Plan.  
 1.1    Purposes.  The purpose of this Plan is to promote the success of the Company by rewarding the Participants for their dedicated service to the Company and its Subsidiaries and to provide incentives for Participants to remain in the employ or other service of the Company or a Subsidiary of the Company and contribute to the performance of the Company.  Capitalized terms used herein are defined in Section 5.    
 1.2    Eligibility.  The Plan Administrator shall, in its sole discretion, determine the Eligible Service Providers to participate in this Plan subject to the terms and conditions hereof.  
 1.3    Administration and Authorization; Power and Procedure.  
1.3.1    Plan Administrator.  This Plan will be administered, and all Awards will be authorized, by the Plan Administrator.  The Plan Administrator may delegate ministerial, non-discretionary functions to individuals who are directors, officers or employees of the Company or any of its Affiliates.  
1.3.2    Plan Awards; Interpretation; Powers of the Plan Administrator.  The Plan Administrator shall have the power to make all determinations and take such actions as contemplated by this Plan or as may be necessary or advisable for the administration of this Plan and the effectuation of its purposes.  Such actions shall include the ability to grant Awards to Participants and determine the amount, payment date and other terms of such Awards in accordance with the terms of this Plan.  Any decision, interpretation, determination, evaluation, election, approval, authorization, appointment, consent or other action made or taken by or at the direction of the Plan Administrator (or any of its members) arising out of or in connection with this Plan or any agreement relating to an Award or this Plan shall be within the sole and absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all Eligible Service Providers and Participants, and their respective heirs, executors, administrators, successors and assigns. 
1.3.3    No Liability; Indemnification.  None of the Company, any of its Affiliates or any director, officer, employee or agent of the Company or any of its Affiliates will be liable for any action, omission or decision under this Plan taken, made or omitted in good faith.  To the maximum extent permitted by applicable law and the Certificate of Incorporation and Bylaws of the Company, and to the extent not covered by insurance directly insuring such Person, the Company shall indemnify and hold harmless each director, officer, employee and agent of the Company or any of its Affiliates from and against any cost or expense (including reasonable fees of counsel) or liability (including any sum paid in settlement of a claim with the approval of the Plan Administrator, such approval not to be unreasonably withheld), directly or indirectly arising out of any act or omission to act in connection with the administration of this 

1

Plan, except to the extent arising out of such director’s, officer’s, employee’s or agent’s own fraud or bad faith.  Such indemnification shall be in addition to any rights of indemnification under applicable law, under the Certificate of Incorporation or Bylaws of the Company or any of its Affiliates, or otherwise.  Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to himself or herself under this Plan.
2.    Award Authorization.  The Plan Administrator may grant an Award to any Eligible Service Provider.   The target amount of each Award for each Participant is set forth on Appendix A hereto (each, a “Mid-Term Bonus”).  The Plan Administrator delegates to the Chief Executive Officer the authority to grant Awards to (i) any successor of any Participant, with a Senior Vice President or Vice President-level position, whose employment with the Company terminates after the Effective Date, and (ii) any other new hire for a Vice President-level position that is not currently occupied as of the Effective Date, in each case subject to maximum total of all Awards approved by the Plan Administrator in connection with the adoption of this Plan.  
3.    Mid-Term Cash Incentive Awards.
 3.1    Performance Conditions.  Payment of each Award shall be subject to the payment condition and other conditions set forth herein, including achievement of Adjusted EBITDA Before Bonus performance conditions, as determined by the Plan Administrator following completion of the audit of the Company’s financial statements for the applicable fiscal year.
3.1.1    If the Company achieves Adjusted EBITDA Before Bonus equal to or exceeding $[***] for the Company’s 2018 fiscal year (the “First EBITDA Goal”), the fiscal year 2018 portion of the Participant’s Mid-Term Bonus as set forth on Appendix A (the “First Payment”) shall become eligible for payment.  No portion of the First Payment will be paid under this Plan and the First Payment will be forfeited if the First EBITDA Goal is not achieved.  
3.1.2    If the Company achieves Adjusted EBITDA Before Bonus equal to or exceeding $[***] for the Company’s 2019 fiscal year (the “Second EBITDA Goal”), the fiscal year 2019 portion of the Participant’s Mid-Term Bonus as set forth on Appendix A (the “Second Payment”) shall become eligible for payment.  
3.1.3    If the Company achieves Adjusted EBITDA Before Bonus equal to or exceeding $[***] for the Company’s 2020 fiscal year (the “Third EBITDA Goal”), the fiscal year 2020 portion of the Participant’s Mid-Term Bonus as set forth on Appendix A (the “Third Payment”) shall become eligible for payment.  
3.1.4    Within 60 days prior to the commencement of the Company’s 2019 fiscal year, the Plan Administrator shall determine a payout curve for the 2019 fiscal year and 2020 fiscal year pursuant to which each Participant shall become eligible to receive (i) a pro-rata portion of the Second Payment or the Third Payment (as applicable) if the Company achieves at least 80% of the Second EBITDA Goal or Third EBITDA Goal, respectively, and (ii) an amount 

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in excess of the Second Payment or the Third Payment (as applicable) if the Company exceeds the Second EBITDA Goal or Third EBITDA Goal, respectively.  
3.1.5    To the extent the First Payment, Second Payment or Third Payment becomes eligible for payment in accordance with this Section 3.1, such payments shall be referred to as “Eligible Payments”).
 3.2    Payment Condition.  Payment of Eligible Payments shall be made only to the extent that Free Cash Flow exceeds the amount of the outstanding Eligible Payments on a Measurement Date (as defined below) that occurs on or after Eligible Payments become eligible for payment.  Free Cash Flow shall be measured as of the last day of fiscal year 2018 and as of the last day of each second quarter and fourth quarter of each fiscal year thereafter (each, a “Measurement Date”), provided that there are outstanding Eligible Payments on such Measurement Dates, until the earlier of (a) the date on which Eligible Payments are paid in full and (b) the end of fiscal year 2022.  If Free Cash Flow as of any Measurement Date, is not sufficient to pay the full amount of outstanding Eligible Payments, then (i) the Eligible Payments shall be paid to Participants on a pro-rata basis to the extent permitted by the first sentence of this Section 3.2 and (ii) Free Cash Flow shall be re-measured as of the following Measurement Date to determine whether further payment of any remaining portion of the Eligible Payments may be made pursuant to this Section 3.2.  Free Cash Flow shall be allocated (i) first to any outstanding and unpaid First Payments, (ii) then to any outstanding and unpaid Second Payments and (iii) to any outstanding and unpaid Third Payments.  If Free Cash Flow does not exceed the amount of the outstanding Eligible Payments, if any, at the end of fiscal year 2022, no further amounts will be paid under this Plan and all Awards will be forfeited.
 3.3    Payment Timing.  The applicable portion of the Participant’s Eligible Payments shall be paid, in cash, within 30 days following the completion of (a) the annual audited financial statements (for fiscal year Measurement Dates) or (b) the interim financial statements (for quarterly Measurement Dates), relating to the Measurement Date with respect to which the Company is required to make such payment pursuant to Section 3.2, provided that the Participant has not experienced a termination of employment from the Company and its Subsidiaries prior to such date of payment.
 3.4    Termination of Employment.  Unless otherwise determined by the Plan Administrator, (a) if a Participant incurs a termination of employment from the Company and its Subsidiaries for any reason prior to a payment hereunder, the Participant’s Award shall automatically terminate as of the date of such termination of employment, and thereafter the Participant shall have no right as to any unpaid Mid-Term Bonus; and (b) there shall be no proportionate or partial vesting in the periods prior to payment of the Award.  Nothing in any employment agreement or severance agreement between a Participant and the Company or one of its Affiliates shall accelerate or cause the payment of any unpaid Mid-Term Bonus.
4.    Other Provisions.  
 4.1    Status.  Status as an Eligible Service Provider will not be construed as a commitment that any Award will be granted under this Plan.  

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 4.2    No Right to Employment.  The Plan is not an agreement of employment.  Nothing in this Plan shall (a) guarantee that the Company or any of its Affiliates will employ any Eligible Service Provider for any specific time period or (b) modify or limit in any respect the Company’s or any of its Affiliates’ right to terminate or modify such Eligible Service Provider’s employment or compensation.
 4.3    Plan Not Funded.  The Plan is intended to constitute an “unfunded” plan.  Awards payable under this Plan will be payable from the general assets of the Company and no special or separate reserve, fund or deposit will be made to assure payment of such Awards.  No Participant, beneficiary or other Person will have any right, title or interest in any fund or in any specific asset of the Company by reason of any Award hereunder.  Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan will create, or be construed to create, a trust of any kind or a fiduciary relationship between the Company or its Affiliates, on the one hand, and any Participant, beneficiary or other Person, on the other hand.    
 4.4    Withholding of Taxes.  The Company and any of its Subsidiaries shall have the right to deduct from any payment to be made to the Participant the required Federal, state, local and other taxes required to be withheld.  The Participant shall be solely responsible for any and all tax liability incurred in connection with the Award.
 4.5    Confidentiality.  To the extent disclosure is not required by applicable law, a Participant’s coverage by this Plan, level of participation and Awards are confidential information of the Company and its Affiliates, subject to the Participant’s obligations to protect such information under any employment, confidentiality or similar agreement between the Participant and the Company or any of its Affiliates.  Each Participant agrees not to share such information with any other Person (except (a) his or her legal counsel and financial advisors who agree to maintain the confidentiality of such information, or (b) any member of the Board).  
 4.6    Plan and Award Amendments and Termination.  Notwithstanding any other provision of this Plan, the Plan Administrator may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of this Plan or any Award thereunder, or suspend or terminate it entirely, retroactively or otherwise, provided that if the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination are materially and adversely impaired as a result of such amendment, suspension or termination, the consent of the Chief Executive Officer shall be required.  All authority of the Plan Administrator with respect to Awards hereunder will continue during any suspension of this Plan and in respect of Awards outstanding upon or following the termination of this Plan.  Notwithstanding anything herein to the contrary, the Plan Administrator may amend this Plan or any Award granted hereunder at any time without a Participant’s consent to comply with Section 409A of the Code or any other applicable law; provided that the Plan Administrator shall use good faith efforts to cause any such amendment to preserve as closely as possible the benefits intended to be delivered under this Plan.  Nothing in this Plan is intended to provide a guarantee of any particular tax treatment to any Participant.  The Plan will automatically terminate six months following the end of fiscal year 2022.  

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 4.7    Adjustments.  Without limiting Section 4.6, the Plan Administrator may, in its sole discretion, adjust the performance goals under this Plan or the financial metrics used to determine achievement of those goals in accordance with this Plan to reflect (a) a change in accounting standards or principles, (b) a significant acquisition or divestiture, (c) a significant capital transaction, (d) a change to or difference in the applicable fiscal year, or (e) any other unusual, nonrecurring or other extraordinary item or event.
 4.8    Non-Transferability.  Each Award and all rights of each Participant under this Plan are nontransferable.    
 4.9    Governing Law.  All matters arising out of or relating to this Plan, the Awards and all other related documents, the actions taken in connection herewith and the transactions contemplated hereby, including its validity, interpretation, construction, performance and enforcement, shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to its principles of conflict of laws.  
 4.10    Severability.  If it is determined that any provision of this Plan is invalid and unenforceable, the remaining provisions of this Plan will continue in effect provided that the essential economic terms of this Plan and the Award can still be enforced.  
 4.11    Construction of Plan.  This Plan shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.
 4.12    Dispute Resolution.  All controversies and claims arising out of or relating to this Plan, or the breach hereof, shall be settled pursuant to any mandatory dispute resolution procedures of the Company as may be in effect from time to time with respect to matters arising out of or relating to each Participant’s employment with the Company or a Subsidiary. 
 4.13    Captions; Construction of Terms.  Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference.  Such headings will not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.  Wherever any words are used in this Plan 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.  As used herein, (a) “or” shall mean “and/or” and (b) “including” or “include” shall mean “including, without limitation.”  Any reference herein to an agreement in writing shall be deemed to include an electronic writing to the extent permitted by applicable law.
 4.14    Section 409A.  Although the Company does not guarantee to any Participant the particular tax treatment of any Award, all Awards are intended to comply with, or be exempt from, the requirements of Section 409A of the Code, and this Plan and any Award letter shall be limited, construed and interpreted in accordance with such intent.  In no event shall the Company be liable for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A of the Code or for any damages for failing to comply with Section 409A of the Code.  For purposes of Section 409A of the Code, a Participant’s right to receive any installment 

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payments under this Plan or pursuant to an Award shall be treated as a right to receive a series of separate and distinct payments.  Only to the extent required by Section 409A of the Code, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Plan upon or following a termination of a Participant’s employment unless such termination is also a “separation from service”, as defined in Section 409A of the Code.  Whenever a payment under this Plan or pursuant to an Award specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.
 4.15    Effective Date.  This Plan is effective as of the Effective Date.  
 4.16    Recoupment.  All Awards paid by the Company under this Plan will be subject to any compensation recapture policies adopted or established by the Company from time to time, as it deems advisable.
5.    Definitions.  Capitalized terms used in this Plan are used as defined below if not otherwise defined herein:
“Adjusted EBITDA Before Bonus” means audited consolidated net income, determined in accordance with generally accepted accounting principles, plus (without duplication) to the extent deducted in calculating such consolidated net income, the sum of (a) the provision for taxes based on income or profits; plus (b) consolidated net interest expense (or net interest income added as a negative number in calculating such sum); plus (c) consolidated depreciation and amortization expense; plus or minus (as applicable) (d) the expense or income effect of certain items, including non-cash lease expense, discontinued operations and closed store costs (including termination expenses), severance, termination and other one-time personnel-related expenses, and non-capitalized consulting expenses; plus (e) bonus payments (including bonuses payable under this Plan), plus (f) stock-based compensation, plus (g) certain other adjustments as determined to be appropriate by the Plan Administrator, in each case without regard to Mytheresa.com GmbH, Theresa Warenvertrieb GmbH, and their successors, as such sum may be adjusted by the Plan Administrator in its sole discretion.  For the avoidance of doubt Adjusted EBITDA Before Bonus shall be determined based on a 52-week fiscal year.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person.  No Person shall be deemed to be an Affiliate of another Person solely by virtue of the fact that both Persons own shares of the capital stock of the Company.
“Award” means a mid-term cash incentive award authorized by and granted under this Plan.  
“Board” means the Board of Directors of the Company.  
“Capital Expenditures” means, for any fiscal period, the Company’s capital expenditures as calculated in accordance with generally accepted accounting principles, 

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consistent with the Company’s annual audited or interim financial statements, as determined by the Plan Administrator.
“Cash from Operations” means the Company’s net cash provided by operating activities, as calculated in accordance with generally accepted accounting principles in the preparation of the Company’s statement of cash flows.
“Code” means the Internal Revenue Code of 1986, as amended.  
“Company” means Neiman Marcus Group, Inc., a Delaware corporation, and its successors.  
“Effective Date” means January 4, 2018.
“Eligible Service Provider” means any employee of the Company or a Subsidiary of the Company.
“Free Cash Flow” means, as of any Measurement Date, (i) the Company’s Cash from Operations less (ii) Capital Expenditures, in each case consistently applied across periods.  Free Cash Flow shall be determined based on the twelve month period prior to and including the Measurement Date, as such sum may be adjusted by the Plan Administrator in its sole discretion.  
“Participant” means an Eligible Service Provider who has been granted an Award under this Plan, which Award has not terminated pursuant to any provision of this Plan.  
“Person” means any individual, partnership, limited partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental entity or department, agency or political subdivision thereof.  
“Plan” means this Neiman Marcus Group, Inc. FY 2018 Mid-Term Cash Incentive Plan, as it may hereafter be amended from time to time.  
“Plan Administrator” means the compensation committee of the Board, provided that the functions of the compensation committee may be exercised by the Board.
“Subsidiary” means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.
 

7Exhibit

EXHIBIT 10.6

January 4, 2018

Karen Katz

Re: Retirement Agreement and General Release of Claims

Dear Karen:

This letter confirms our discussions concerning your retirement from The Neiman Marcus Group LLC, a Delaware limited liability company (the “Company”) and its subsidiaries and parent entities.  By signing this letter below, you and the Company will have entered into this Retirement Agreement and General Release of Claims (the “Agreement”), which will be binding on you, your heirs, successors and assigns, setting forth the terms of your retirement from the Company, subject to your right to revoke as set forth in Paragraph 8.

		
	1.
	Retirement

		
	a.
	Your last day of active employment with the Company (the “Retirement Date”) will be effective on the earliest of: 

		
	i.
	February 12, 2018,

		
	ii.
	the date of completion of a satisfactory handover of responsibilities to a successor Chief Executive Officer of the Company (the “Successor CEO”), as determined by the Board of Directors of Neiman Marcus Group, Inc. (the “Parent”) or an authorized committee thereof (the “Board”), but not prior to February 12, 2018 and not otherwise to exceed 30 days after the Successor CEO’s commencement date (the earlier of i. and ii., the “Scheduled Retirement Date”), and 

		
	iii.
	your earlier termination for Cause or as a result of your death or Disability, in accordance with, as defined in, your employment agreement with the Company dated October 25, 2013 (the “Employment Agreement”).  

		
	b.
	Contingent upon and subject to (i) the performance of your duties and responsibilities to the Company and its Affiliates (as defined in the Employment Agreement) (collectively, “NMG”) through the Scheduled Retirement Date; (ii) your execution and delivery to the Company (without revocation) of this Agreement and the Reconfirmation Release in the form of Exhibit A hereto (the “Reconfirmation Release”); and (ii) your continued compliance with the restrictive covenants and other obligations contemplated by this Agreement (collectively, the “Restrictive Covenants”) at all times, you and the Parent will enter into a director services agreement with the Parent substantially in the form attached hereto as Exhibit B (the “Director Services Agreement”).

		
	c.
	As of your Retirement Date, you will cease to be eligible to participate in, or be covered by, any employee benefit plan or program offered by or through NMG, and you shall not receive any benefits or payments from NMG, except as otherwise provided in this Agreement, the Director Services Agreement or as required under the terms of the Company’s or its Affiliate’s benefits plans or by law.  Additionally, as of your Retirement Date, you will no longer have authorization to incur any expenses on behalf of NMG, except as otherwise provided in the Director Services Agreement.  

		
	d.
	Without limitation on the other covenants in this Agreement, you agree to not to issue any press release or public statement or otherwise publicly disclose any matter arising in connection with this Agreement or your retirement from the Company, in each case, unless so issued or disclosed with the prior written consent of the Company.  

		
	e.
	Upon the Retirement Date, you hereby resign, to the extent applicable, if any, as an officer of NMG and, other than as provided in the Director Services Agreement, as a member of the board of directors (and committee) of NMG and each other entity you serve at the request of the Company including as a fiduciary of any benefit plan of any of the foregoing.  You further agree to confirm the foregoing by submitting to the Company in writing a confirmation of your resignation(s) to the extent reasonably requested by the Company.

		
	2.
	Compensation and Benefits during Employment through the Retirement Date.  Without regard to whether you sign this Agreement, you will be entitled to the following payments and benefits.

		
	a.
	You will receive your current annual base salary of $1,100,000 per year and except as otherwise set forth in this Agreement, you will continue to participate through your Retirement Date in the Company’s employee benefits arrangements consistent with your Employment Agreement and the terms and conditions (including eligibility) of the Company’s plans, policies and programs as in effect from time to time.  

		
	b.
	On the Retirement Date, the Company will pay, provide to or reimburse you, as applicable, any: (i) accrued but unpaid salary, (ii) accrued but unused vacation time, (iii) vested employee benefits accrued under the Company’s employee benefit plans, and (iv) unreimbursed business expenses in accordance with the Company’s policies or practices for the reimbursement of expenses incurred by other Company senior executives.  

		
	c.
	If, prior to the Retirement Date (other than termination of employment due to death or Disability), you have not yet reached age 65, your benefit under the Company’s Supplemental Executive Retirement Plan (the “SERP”) shall not be reduced according to the terms of the SERP solely by reason of your failure to reach age 65 

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 2

prior to the Retirement Date, and will otherwise be payable in accordance with the terms of the SERP.

		
	3.
	Severance Benefits.   Except as provided in this Agreement, you will not be eligible to receive the payments and benefits provided in the Employment Agreement.  In exchange for and subject to you signing this Agreement and releasing and waiving claims that you may have against the Company and/or other Released Parties (as defined below in Paragraph 4 below), your signing and not revoking the Reconfirmation Release within thirty (30) days following the Retirement Date, and your compliance with the Restrictive Covenants and other terms and conditions of this Agreement, except in the case of a termination of your employment by the Company for Cause or as a result of your death or Disability or a resignation by you for any reason prior to the Scheduled Retirement Date: 

		
	a.
	The Company will pay you a lump sum amount of $2,475,000 to be paid on the first business day after the 65th day following the Retirement Date and $1,000,000 on or before March 14, 2019;

		
	b.
	You will be eligible to receive a pro-rata incentive payment in respect of the 2018 fiscal year of the Company (the “FY18 Annual Bonus”) pursuant to the terms of the Company’s annual bonus program, as determined by the Compensation Committee of the Board (the “Committee”) in its sole discretion.  Any such FY18 Annual Bonus will be subject to the terms of such program and any ancillary documentation and the achievement of performance goals determined by the Committee in its sole discretion, and will be payable, on a pro-rata basis based on days employed during the 2018 fiscal year of the Company through the Retirement Date, following completion of audited financial results for fiscal 2018 at the time 2018 bonuses are paid to active executives of the Company (expected to be on or about October 2018, but no later than December 2018);

		
	c.
	Provided that you timely elect coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company will pay you a lump sum amount equal to (1) the monthly COBRA premium applicable to you on the Retirement Date under the Company’s group medical plan multiplied by (2) 18, payable on paid on the first business day after the 65th day following the Retirement Date;

		
	d.
	The Retirement Date will be a Termination (as defined in the Restricted Stock Agreement) for purposes of the Restricted Stock Agreement.  Effective as of the Retirement Date, (i) 2,278 Shares (as defined in the Restricted Stock Agreement granted to you pursuant to the Neiman Marcus Group, Inc. Management Equity Incentive Plan (the “Equity Incentive Plan”), between you and Parent, dated as of October 27, 2016) will vest or will have vested and cease to be Restricted Stock (as defined in the Restricted Stock Agreement) and (ii) the remaining 2,279 unvested Shares shall be forfeited.

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 3

		
	e.
	Effective as of the Retirement Date, the non-qualified stock option granted to you under the Time-Vested Option Non-Qualified Stock Option Agreement pursuant the Equity Incentive Plan between you and Parent, dated as of November 5, 2013, will be amended in the form as provided in Exhibit C. 

		
	f.
	Effective as of the Retirement Date, (i) you will forfeit the non-qualified stock options granted to you under the Performance-Vested Option Non-Qualified Stock Option Agreement pursuant the Equity Incentive Plan between you and Parent, dated as of November 5, 2013, as amended, and (ii) Section 9 (Participant’s Put Right on an Option) of the Co-Invest Option Non-Qualified Stock Option Agreement between you and Parent dated as of September 8, 2017, will be deleted in its entirety.

You 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 you from any source other than NMG or its successor. If your employment with the Company is terminated as a result of your death or Disability prior to the Scheduled Retirement Date, you will only be eligible to receive the payments and benefits provided in Sections 7(a) or 7(b), as applicable, of the Employment Agreement. 

		
	4.
	Release of Claims. By signing this Agreement, you are releasing all claims against NMG and certain other parties, and promising not to sue NMG in the future, as described in more detail below.  You are giving up your right to claim benefits and/or damages under laws that relate to or arise from your employment with NMG and/or separation from employment with NMG. 

 
		
	a.
	In consideration for the payment and benefits to be provided to you pursuant to Paragraph 3 above and other valuable consideration, and except as provided below, you, for yourself and for your heirs, executors, administrators, trustees, legal representatives, successors and assigns forever release and discharge the Company’s and any and all of the Company’s past and present parent companies, direct and indirect investors, subsidiaries, Affiliates, partners, successors and assigns and each of their respective past and present officers, directors, employees, shareholders, principals, members, agents, attorneys and employee benefit plans and their administrators and trustees, in their individual and official capacities (the “Released Parties”), from any and all claims, demands, causes of action, fees and liabilities of any kind whatsoever, whether known or unknown, which you ever had, now have, or may have against any of the Released Parties by reason of any act, omission, transaction, practice, plan, policy, procedure, conduct, occurrence, or other matter, up to and including the date you sign this Agreement, including but not limited to all claims, without limitation, under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1991, the Equal Pay Act, the Americans with Disabilities Act, Sections 1981 through 1988 of Title 42 of the United States Code, the National Labor Relations Act, the Employee Retirement Income Security Act, Age 

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 4

Discrimination in Employment Act (ADEA), the Older Workers Benefit Protection Act (OWBPA), all claims under the Family and Medical Leave Act and other federal, state and local leave laws; all claims under the Workers Adjustment and Retraining Notification Act and similar state and local laws; all claims under any whistleblower protection law, including but not limited to any claims under the Sarbanes-Oxley Act or the Dodd-Frank Wall Street Reform and Consumer Protection Act; all claims of discrimination, harassment, hostile work environment, and retaliation in connection with your employment, the terms and conditions of such employment and your separation from employment under any federal, state and local fair employment, non-discrimination or civil rights law or regulation; all claims sounding in tort or breach of contract (express or implied), wrongful discharge, whistleblowing, detrimental reliance, defamation, emotional distress or compensatory and/or punitive damages; and all claims for attorneys’ fees, costs, disbursements and/or the like.  All of the above statutes are as amended.

		
	b.
	This Agreement does not prevent you from participating in investigations or proceedings conducted by the Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), or similar state agencies.  This Agreement does not prevent you from reporting possible violations of federal law or regulation to, or cooperating with any investigation being conducted by, any governmental agency, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation.  This Agreement does not affect the rights and responsibilities of the EEOC to enforce the Title VII, the EPA, the ADEA, the ADA, GINA, Sections 102 and 103 of the Civil Rights Act if 1991, or Sections 501 and 505 of the Rehabilitation Act of 1973 and cannot be used to interfere with the protected rights of an employee related to an EEOC investigation or proceeding.  However, you give up all rights to recover or receive damages, money, or other personal benefits as a result of any EEOC, NLRB or other agency charge, investigation or proceeding.  This Agreement does not prevent you from exercising your rights, if any, to (i) vested benefits under any pension or savings plan or deferred compensation plan; (ii) COBRA benefits; (iii) workers’ compensation benefits; (iv) unemployment benefit claims; (v) pay for accrued but unused vacation; (vi) base salary through the Retirement Date; and/or (vii) indemnification pursuant to any agreement with NMG, NMG by-laws or other organizational documents, or as provided by state law as well as any other claims that cannot lawfully be released.

		
	c.
	You will not sue NMG with respect to claims you have released in this Agreement, or otherwise break your promises under this Agreement.  You must pay NMG’s legal fees if you sue NMG or otherwise break your promises in this Agreement.  You do not have to pay NMG’s legal fees under this paragraph, and that you will not be penalized in any way, if you challenge only the validity of the waiver or release of age discrimination claims under the ADEA.

		
	d.
	The making of this Agreement is not intended, and shall not be construed, as an admission that the Company or any of the Released Parties have violated any federal, 

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 5

state or local law (statutory or decisional), ordinance or regulation, breached any contract or committed any wrongdoing whatsoever against you or otherwise. 

		
	5.
	Cooperation and Other Covenants. 

		
	a.
	You will reasonably cooperate in any investigations and/or litigation regarding events that occurred during your employment with NMG, as provided in Section 12 of the Employment Agreement, and any transitional inquiries that arise following the Separation Date.  You will cooperate with NMG with regard to the intellectual property covenants contained in Section 10(b) of the Employment Agreement.  

		
	b.
	You remain bound by the obligations and promises to NMG, including, but not limited to, any confidentiality, nondisparagement, non-competition, non-solicitation, or intellectual property covenants made by you, including, without limitation, such covenants contained in Sections 8, 9, 10 and 12 of the Employment Agreement and as modified in the Director Services Agreement.

		
	c.
	Nothing in this Agreement shall prohibit or prevent you from: (i) reporting possible violations of federal law or regulations, including any possible securities laws violations, to any governmental agency or entity, including the U.S. Department of Justice, the U.S. Securities and Exchange Commission, the U.S. Congress, or any agency Inspector General; (ii) making any other disclosures that are protected under the whistleblower provisions of federal law or regulations; (iii) otherwise fully participating in any federal whistleblower programs, including any such programs managed by the U.S. Securities and Exchange Commission or the Occupational Safety and Health Administration; or (iv) receiving individual monetary awards or other individual relief by virtue of participating in any such Federal whistleblower programs.

		
	d.
	Under the Federal Defend Trade Secrets Act of 2016, you will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (i) (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; (ii) to your attorney in relation to a lawsuit for retaliation against you for reporting a suspected violation of law; or (iii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

		
	e.
	In accordance with your existing and continuing obligations to NMG (including those obligations arising under any applicable employee handbook or code of conduct and any confidentiality, intellectual property and/or your Employment Agreement), you will immediately return to NMG, within ten (10) days after the Retirement Date, all NMG property, including, as applicable, building passes, credit cards, keys, telephones, company files, documents, records, computer access codes, computer programs, instruction manuals, business plans, and other property that you 

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 6

received, prepared, or helped to prepare in connection with your employment with NMG.  You will not keep copies, duplicates, reproductions, computer disks, or excerpts of any NMG materials or documents.

		
	6.
	Miscellaneous.  

		
	a.
	The laws of Texas apply to this Agreement, except for its laws with respect to conflict of laws.  

		
	b.
	This Agreement may be enforceable in parts.  This Agreement is valid, even if any section or term is not enforceable.  In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be unenforceable under the applicable law, the rest of the Agreement shall continue to apply. 

		
	c.
	You waive your right to a trial by jury.  You understand that pursuant to this Agreement, you are giving up your right to a trial by jury.  The Company also waives its right to a trial by jury. 

		
	d.
	This is the entire Agreement between the Company and you.  This Agreement, including the Exhibits and references to the Employment Agreement contained herein, contains the entire agreement between the Company and you concerning the separation of your employment.  In deciding to sign this Agreement, you are not relying on any statements or promises except those found in this Agreement.  

		
	e.
	The Company has advised you to consult with an attorney, at your own expense, before signing this Agreement, and you have had the opportunity to do so. 

		
	f.
	Any controversy, dispute or claim arising out of or relating to this Agreement or its breach will first be settled in accordance with Section 21 of the Employment Agreement.  

		
	7.
	Taxes.

		
	a.
	NMG shall withhold from any amounts payable to you hereunder all federal, state, city or other taxes that are required to be withheld pursuant to any applicable law or regulation. 

		
	b.
	The payments and benefits under this Agreement are intended to comply with, or be exempt from, Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively, “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  In no event whatsoever shall NMG be liable for any additional tax, interest or penalty that may be imposed on you by Code Section 409A or any damages for failing to comply with Code Section 409A.  No person connected with NMG in any capacity, including but not limited to any affiliate of NMG, and their 

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 7

respective directors, officers, agents and employees, makes any representation, commitment or guarantee that any particular tax treatment, including, but not limited to, federal, state and local income, estate and gift tax treatment, will be applicable with respect to any amounts payable under the Agreement or that such tax treatment will apply to or be available to you.  Any reimbursements or in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Code Section 409A, including, where applicable, the requirement that (a) any reimbursement is for expenses incurred during the period of time specified in this Agreement, (b) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (c) the reimbursement of an eligible expense will be made no later than the last day of the calendar year following the year in which the expense is incurred, and (d) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.  For purposes of Code Section 409A, your right to receive any installment payment under this Agreement shall be treated as a right to receive a series of separate and distinct payments.

		
	8.
	Acceptance and Effective Date.  

		
	a.
	You have twenty-one (21) calendar days from receipt of this Agreement to consider it and may sign it at any time during that period.  This Agreement shall not become effective until the eighth day after you sign it (the “Effective Date”), and you may at any time prior to the Effective Date revoke this Agreement by giving notice to the Company in writing of such revocation.  In the event that you do not timely sign, or if you revoke this Agreement, this Agreement will be null and void and you will not be entitled to receive the payments and benefits referred to in Paragraph 3. 

		
	b.
	In addition, you will have twenty-one (21) calendar days from your Retirement Date to consider the Reconfirmation Release and may sign it at any time during that period.  The Reconfirmation Release shall not become effective until the eighth day after you sign it (the “Reconfirmation Release Effective Date”), and you may at any time prior to the Reconfirmation Release Effective Date revoke the Reconfirmation Release by giving notice to the Company in writing of such revocation.  You are advised to consult with an attorney before signing the Reconfirmation Release.  In the event that you do not timely sign, or if you revoke the Reconfirmation Release, the Reconfirmation Release will be null and void and you will not be entitled to receive the payments and benefits referred to in Paragraph 3.

		
	c.
	You may accept this Agreement by signing it and delivering it to the Company’s General Counsel in the time period specified in this Agreement.  This Agreement will not be effective or accepted if modified by you unilaterally without the express written consent/agreement of the Company.

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 8

		
	d.
	This Agreement may be executed in several counterparts, each of which shall be deemed as an original, but all of which together shall constitute one and the same instrument.

		
	9.
	Acknowledgments.  By signing below, you acknowledge that you: (a) have carefully read this Agreement in its entirety; (b) have had an opportunity to consider the terms of this Agreement for at least twenty-one (21) calendar days; (c) are advised by the Company to consult with an attorney of your choice before signing this Agreement; (d) fully understand the significance of all of the terms and conditions of this Agreement and have discussed them with an attorney of your choice, or have had a reasonable opportunity to do so; and (e) are signing this Agreement voluntarily and of your own free will and agree to abide by all the terms and conditions contained herein.

[Remainder of Page Left Intentionally Blank]

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 9

PLEASE READ AND CONSIDER THIS AGREEMENT CAREFULLY BEFORE EXECUTING. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.  If the terms of this Agreement are acceptable to you, please sign, date and return it to:

Agreed to and accepted by, on this 4th day of January, 2018:

Karen Katz

/s/ Karen Katz             
                                

Agreed to and accepted by, on this 4th day of January, 2018:

Neiman Marcus Group, Inc.

By: /s/ Tracy M. Preston         

Title: Senior Vice President, General Counsel and Corporate Secretary

The Neiman Marcus Group LLC

By: /s/ Tracy M. Preston         

Title: Senior Vice President, General     Counsel and Corporate Secretary

RETIREMENT AGREEMENT AND GENERAL RELEASE OF CLAIMS    Page 10

Exhibit A

Reconfirmation Release

		
	1.
	In consideration for the payment and benefits to be provided to you pursuant to Paragraph 3 of the Retirement Agreement and General Release of Claims The Neiman Marcus Group LLC (the “Company”) dated January 4, 2018 (the “Retirement Agreement”) and other valuable consideration, and except as provided below, you, for yourself and for your heirs, executors, administrators, trustees, legal representatives, successors and assigns forever release and discharge the Company and any and all of the Company’s past and present parent companies, direct and indirect investors, subsidiaries, Affiliates (as defined in the Retirement Agreement), partners, successors and assigns and each of their respective past and present officers, directors, employees, shareholders, principles, members, agents, attorneys and employee benefit plans and their administrators and trustees, in their individual and official capacities (the “Released Parties”), from any and all claims, demands, causes of action, fees and liabilities of any kind whatsoever, whether known or unknown, which you ever had, now have, or may have against any of the Released Parties by reason of any act, omission, transaction, practice, plan, policy, procedure, conduct, occurrence, or other matter, up to and including the date you sign this Reconfirmation Release, including but not limited to all claims, without limitation, under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 and 1991, the Equal Pay Act, the Americans with Disabilities Act, Sections 1981 through 1988 of Title 42 of the United States Code, the National Labor Relations Act, the Employee Retirement Income Security Act, Age Discrimination in Employment Act (ADEA), the Older Workers Benefit Protection Act (OWBPA), all claims under the Family and Medical Leave Act and other federal, state and local leave laws; all claims under the Workers Adjustment and Retraining Notification Act and similar state and local laws; all claims under any whistleblower protection law, including but not limited to any claims under the Sarbanes-Oxley Act or the Dodd-Frank Wall Street Reform and Consumer Protection Act; all claims of discrimination, harassment, hostile work environment, and retaliation in connection with your employment, the terms and conditions of such employment and your separation from employment under any federal, state and local fair employment, non-discrimination or civil rights law or regulation; all claims sounding in tort or breach of contract (express or implied), wrongful discharge, whistleblowing, detrimental reliance, defamation, emotional distress or compensatory and/or punitive damages; and all claims for attorneys’ fees, costs, disbursements and/or the like.  All of the above statutes are as amended.

		
	2.
	This Reconfirmation Release does not prevent you from participating in investigations or proceedings conducted by the Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), or similar state agencies.  This Reconfirmation Release does not prevent you from reporting possible violations of federal law or regulation to, or cooperating with any investigation being conducted by, any governmental agency, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation.  This Reconfirmation Release does not affect the rights and responsibilities 

RECONFIRMATION RELEASE            
Page 1

of the EEOC to enforce the Title VII, the EPA, the ADEA, the ADA, GINA, Sections 102 and 103 of the Civil Rights Act if 1991, or Sections 501 and 505 of the Rehabilitation Act of 1973 and cannot be used to interfere with the protected rights of an employee related to an EEOC investigation or proceeding.  However, you give up all rights to recover or receive damages, money, or other personal benefits as a result of any EEOC, NLRB or other agency charge, investigation or proceeding.  This Reconfirmation Release does not prevent you from exercising your rights, if any, to (a) vested benefits under any pension or savings plan or deferred compensation plan; (b) COBRA benefits; (c) workers’ compensation benefits; (d) unemployment benefit claims; (e) pay for accrued but unused vacation; (f) base salary through the Retirement Date; and/or (g) indemnification pursuant to any agreement with NMG, NMG by-laws or other organizational documents, or as provided by state law as well as any other claims that cannot lawfully be released.

		
	3.
	You will not sue NMG (as defined in the Retirement Agreement) with respect to claims you have released in this Reconfirmation Release, or otherwise break your promises under the Retirement Agreement or Reconfirmation Release.  You must pay NMG’s legal fees if you sue NMG or otherwise break your promises in this Reconfirmation Release or the Retirement Agreement.  You do not have to pay NMG’s legal fees under this paragraph, and that you will not be penalized in any way, if you challenge only the validity of the waiver or release of age discrimination claims under the ADEA.

		
	4.
	The making of this Reconfirmation Release is not intended, and shall not be construed, as an admission that the Company or any of the Released Parties have violated any federal, state or local law (statutory or decisional), ordinance or regulation, breached any contract or committed any wrongdoing whatsoever against you or otherwise. 

		
	5.
	By signing below, you acknowledge that you: (a) have carefully read this Reconfirmation Release in its entirety; (b) have had an opportunity to consider the terms of this Reconfirmation Release for at least twenty-one (21) calendar days; (c) are advised by the Company to consult with an attorney of your choice before signing this Reconfirmation Release; (d) fully understand the significance of all of the terms and conditions of this Reconfirmation Release and have discussed them with an attorney of your choice, or have had a reasonable opportunity to do so; and (e) are signing this Reconfirmation Release voluntarily and of your own free will and agree to abide by all the terms and conditions contained herein.

		
	6.
	By signing below, you confirm that you have returned all equipment and intellectual property of NMG.

[Remainder of Page Left Intentionally Blank]

RECONFIRMATION RELEASE            
Page 2

Agreed to and accepted by, on this ____ day of _____________, 201__:

              Karen Katz:
      

            _________________________
                                

RECONFIRMATION RELEASE            
Page 3

Exhibit B

Director Services Agreement

    

Exhibit C

Amended & Restated Time-Vested Option Non-Qualified Stock Option Agreement

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