EXHIBIT 10.25
AMENDMENT TO EMPLOYMENT
AGREEMENT
This Amendment to Employment
Agreement (the “Amendment”) is made and entered into
effective as of January 1, 2009, by and between The Neiman
Marcus Group, Inc., a Delaware corporation (“NMG”)
and Karen Katz (the “Executive”).
W I T N E S
S E T H :
WHEREAS, NMG and the Executive
entered into an Employment Agreement effective as of
October 6, 2005 (the “Employment Agreement”);
and
WHEREAS, NMG and the Executive now
desire to amend the Employment Agreement for compliance with
Internal Revenue Code Section 409A and the Treasury
Regulations thereunder, and to make certain other
changes;
NOW, THEREFORE, in consideration of
the premises, the parties do hereby agree as follows:
1.
The last sentence of Paragraph
1(c) is hereby deleted in its entirety.
2.
Paragraph 1(d) of the
Employment Agreement is hereby deleted in its entirety, with such
paragraph reserved for future use.
3.
Paragraph 1(j) of the
Employment Agreement is hereby amended by the addition of the
following sentence:
In addition to the foregoing, if the
Executive experiences a “separation from service” (as
determined in accordance with Treasury Regulation
Section 1.409A-1(h)) prior to her termination of employment as
a result of action taken by NMG without the consent of the
Executive, the separation from service shall constitute “Good
Reason” hereunder; provided that the Executive delivers a
Notice of Termination to NMG within 10 days following such
separation from service.
4.
Paragraph 1(k) of the
Employment Agreement is hereby amended and restated in its entirety
as follows:
(k) “Management Equity
Incentive Plan” means the Neiman Marcus, Inc. Management
Equity Incentive Plan (formerly known as the Newton
Acquisition, Inc. Management Equity Incentive Plan), adopted
November 29, 2005.
5.
Paragraph 2 of the Employment
Agreement is hereby amended and restated in its entirety as
follows:
2. Employment
. 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 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,
there shall be no acceleration of vesting as a result of a
termination of employment for any reason.
6.
Paragraph 4(a) of the
Employment Agreement is hereby amended and restated in its entirety
as follows:
(a) The Executive shall serve
as the Chief Executive Officer and President of Neiman Marcus
Stores, a division of NMG (“NMS”) and as an Executive
Vice President of NMG. 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 and over the strategy, business
development and marketing of NMG. In addition, the Executive
shall have such other duties, functions, responsibilities, and
authority as are from time to time delegated to the Executive by
the Board 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.
7.
Paragraph 4(b) of the
Employment Agreement is hereby amended and restated in its entirety
as follows:
(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
and NMG to the extent necessary to discharge fully, faithfully, and
efficiently the duties and responsibilities delegated and assigned
to the Executive in or pursuant to this Agreement, except for
usual, ordinary, and customary periods of vacation and absence due
to illness or other disability. Notwithstanding the
foregoing, the Executive may (i) subject to the approval of
the Board, serve as a director or as a member of an advisory board
of a noncompeting company, (ii) serve as an officer or
director or otherwise participate in non-profit educational,
welfare, social, religious and civil organizations, including,
without limitation, all such positions and participation in effect
as of the Effective Date, and (iii) manage personal and family
investments; provided, however, that any such activities as
described in (i), (ii) or (iii) of the preceding
provisions of
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this paragraph do not significantly
interfere with the performance and fulfillment of the
Executive’s duties and responsibilities as an executive of
NMS or NMG in accordance with this Agreement.
8.
Paragraph 5(a) of the
Employment Agreement is hereby amended by the addition of the
following sentence:
Effective as of January 1,
2009, Base Salary shall be increased by $25,000, in exchange for
Executive’s relinquishment of her annual clothing
allowance.
9.
The first sentence of Paragraph
5(d) (SERP Enhancement) of the Employment agreement is hereby
amended and restated in its entirety as follows:
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 without the consent of 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.
10.
Paragraphs 5(d) (Employee
Benefits) through 5(h) (Indemnification) are hereby
redesignated Paragraphs 5(e) through
5(i) respectively.
11.
Paragraph 5(f) (Fringe
Benefits) of the Employment Agreement is hereby amended by the
addition of the following sentence:
Notwithstanding the preceding,
effective as of January 1, 2009, Executive shall no longer
receive a clothing allowance.
12.
Paragraph 7(a) of the
Employment Agreement is hereby amended and restated in its entirety
as follows:
(a) Death .
If the Executive’s employment is terminated by reason of the
Executive’s death, NMG shall pay to the Executive’s
estate within 60 days of the Employment Termination Date
(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;
provided that the payment of any such bonus may not be delayed past
the date the bonus is payable under the terms of any bonus plan
(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
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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.
13.
Paragraph 7(b) of the
Employment Agreement is hereby amended and restated in its entirety
as follows:
(b) Disability
. If the Executive’s employment is terminated by reason
of the Executive’s Disability, NMG shall pay to the Executive
within 60 days of the Employment Termination Date (i) the
Compensation Payment, provided that the payment of the bonus
portion of the Compensation Payment may not be delayed past the
date the bonus is payable under the terms of any bonus plan,
(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.
14.
Paragraph 7(c) of the
Employment Agreement is hereby amended and restated in its entirety
as follows:
(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 within
60 days of the Employment Termination Date (i) the
Compensation Payment, provided that the payment of the bonus
portion of the Compensation Payment may not be delayed past the
date the bonus is payable under the terms of any bonus plan,
(ii) the Vacation Payment, and (iii) the
Reimbursement.
15.
Paragraph 7(d) of the
Employment Agreement is hereby amended and restated in its entirety
as follows:
(d) Termination for
Cause . If the Executive’s employment is terminated
by NMG for Cause, NMG shall pay to the Executive within 60 days of
the Employment Termination Date (i) the Compensation Payment,
provided that the payment of the bonus portion of the Compensation
Payment may not be delayed past the date the bonus is payable under
the terms of any bonus plan, (ii) the Vacation Payment, and
(iii) the Reimbursement.
16.
Paragraph 7(e) of the
Employment Agreement is hereby amended and restated in its entirety
as follows:
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(e) Termination
Without Cause or With Good Reason or Following NMG Notice of
Non-Renewal .
(i)
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 within 60 days of the Employment
Termination Date (i) the Compensation Payment, provided that
the payment of the bonus portion of the Compensation Payment may
not be delayed past the date the bonus is payable under the terms
of any bonus plan, (ii) the Vacation Payment, and
(iii) the Reimbursement.
(ii)
In addition, subject to (x) the
occurrence of the conditions in subparagraph (i) above and
(y) the Executive’s execution of a release and waiver of
claims against NMG and its Affiliates in such form as NMG may
reasonably require within 45 days of the Employment Termination
Date and provided that the Executive does not revoke such release
and waiver within any revocation period, NMG will:
(A) pay to the Executive a
lump-sum payment equal to: the Prorated Bonus, plus an amount
equal to the Executive’s monthly COBRA premium multiplied by
six (6), as a supplement for the cost of post-employment welfare
benefits, plus 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;
(B) in the event
Executive’s termination of employment constitutes a
“separation from service” under Treasury Regulation
Section 1.409A-1(h), and if immediately prior to the
Employment Termination Date the Executive participates in group
medical or dental coverage offered by NMG and the Executive is
eligible for and elects continued coverage in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) or any successor law, reimburse the Executive
monthly during the period of COBRA continuation coverage for the
total amount of the monthly COBRA premiums actually paid by
Executive; and
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(C) for a period of 2 years
following the Employment Termination Date, provide the Executive
and the Executive’s spouse and dependents life insurance
coverage at the same benefit level as provided to Executive
immediately prior to the Employment Termination Date and at the
same cost to Executive as is generally provided to similarly
situated active employees of NMG. The amount expended for the
provision of life insurance during a taxable year of the Executive
shall not affect the amount expended for the provision of life
insurance in any other taxable year.
(iii)
The payment provided under Paragraph
7(e)(ii)(A) shall be made (x) in the event the
Executive’s termination of employment constitutes a
“separation from service” under Treasury Regulation
Section 1.409A-1(h), on the 65 th day following the Employment Termination
Date, (y) in the event the Executive does not experience a
separation from service until after her termination of employment,
on the 65 th
day following such separation
from service, or (z) in the event the Executive experiences a
separation from service which constitutes Good Reason under
Paragraph 1(j) prior to her termination of employment, on the
65 th day following such separation from
service. Notwithstanding the foregoing, if the Executive
experiences a separation from service which does not co
