Exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into as of the
1st day of May, 1994 by and between The Neiman Marcus Group, Inc.
(the "Company") a Delaware corporation having its principal place
of business in Chestnut Hill, Massachusetts and BURTON TANSKY
("Executive").
I. RECITALS
1.01. The Executive is to be employed as Chairman and Chief
Executive Officer of the Neiman Marcus division of The
Neiman Marcus Group, Inc., from May 1, 1994 for the
remainder of the term of this Employment Agreement.
1.02. To ensure the continued services and association of the
Executive, and to retain the Executive's experience,
skills, ability and knowledge, the Company is willing
to engage the Executive's services upon the terms of
this Employment Agreement and the Executive agrees to
become employed by the Company under the terms of this
Employment Agreement.
II. AGREEMENT
In consideration of the recitals to this Employment
Agreement, the parties mutually covenant and agree as follows:
2.01. POSITION AND REPORTING RESPONSIBILITIES OF EXECUTIVE
As Chairman and Chief Executive Officer of Neiman
Marcus, the Executive will report directly to the Chief
Operating Officer of the Company on all matters
relating to the Executive's performance and duties, and
the performance of Neiman Marcus. The Executive will
devote his full, working time and best efforts to the
performance of his duties.
2.02. TERM OF EMPLOYMENT
Subject to the limitations contained in this Employment
Agreement, the Company will employ the Executive for a
term beginning May 1, 1994 and ending January 31, 1997,
and the Executive agrees to accept such employment.
II. COMPENSATION
3.01. BASE SALARY
For his services hereunder, the Executive will receive
base compensation at the annual rate of $600,000, paid
in such installments as are paid to other, senior
executives of Neiman Marcus. Beginning in August 1995,
and year to year thereafter for the duration of this
Employment Agreement, the Company will review the
Executive's salary. Thereafter, at its yearly meetings
(generally held in October), the Compensation Committee
of The Neiman Marcus Group Board of Directors will
consider annual percentage increases in the Executive's
base salary, retroactive to the preceding August, based
upon such salary reviews.
3.02. STOCK OPTIONS
a. The Executive will be eligible for annual grants of
nonqualified options to purchase shares of the
Company's stock pursuant to the Company's 1987 Stock
Incentive Plan up to the maximum number in accordance
with the following formula:
.6 x annual base salary = number of nonqualified stock options
market value of shares for which Executive is eligible
on the day of award
The actual number granted will be determined by the
Compensation Committee of the Board of Directors of the
Company and will be a function of the Executive's
performance and the Company's achieving agreed upon
performance goals.
3.03. BONUSES
a. For the fiscal year ending July 31, 1994, the Executive
may elect to receive the greater of:
(i) $67,500 - which is based upon $150,000 (i.e., 1/4
of his yearly Neiman Marcus salary) x .45 (his
bonus eligibility rate)
or
(ii) The bonus the Executive would have earned at
Bergdorf Goodman for FY '94 based on his $525,000
base salary and 45% bonus eligibility.
b. For the fiscal years thereafter, the Executive will be
eligible to participate in the Company's Annual
Incentive Plan (Incentive Plan) pursuant to its terms.
The Executive's maximum bonus potential will be .45 x
actual base compensation received during the Company's
fiscal year, with the actual bonus amount based upon
the Executive's performance and the Company's achieving
agreed upon performance goals.
3.04. STOCK PURCHASE LOAN PLAN
The Executive will be eligible to secure loans from The
Neiman Marcus Group, Inc. in aggregate amounts up to
one (1) times his then-base salary for the purchase of
stock under the provisions of The Neiman Marcus Group,
Inc. Stock Purchase Loan Plan.
3.05. AUTOMOBILE
The Executive is eligible for a $1,000/month car
allowance. However, the Company will include as W-2
income the value of the Executive's personal use of the
vehicle or the amount of the car allowance allocated
for personal use, whichever is applicable.
3.06. RELOCATION BENEFITS
In connection with his move from the greater New York
area to the greater Dallas area in order to assume the
position of President and Chief Executive Officer of
Neiman Marcus, the Executive is eligible for the
benefits set forth in the draft Neiman Marcus Group
relocation policy (which he received on or about April
6, 1994) as modified, below.
a. The Company authorizes the Executive to use the Home
Purchase Program, described therein, for his primary
residence.
b. In lieu of the bridge loan arrangements set forth in
the policy, the Company would provide a bridge loan of
up to $600,000, at an annual interest rate of 5%, for
no more than nine (9) months. Payments would be due
quarterly, in arrears. The loan would be secured by a
second mortgage on the Executive's home in the Dallas,
Texas area. The Executive agrees to execute all
documents reasonably related to the bridge loan,
including, but not limited to, mortgage, security
interest, and other documents evidencing the Company's
right to security for and repayment of the loan.
c. In lieu of the settling in allowance described in the
policy, the Company will provide the Executive with a
one-time payment of $60,000 (subject to applicable tax
and payroll deductions) when he closes on a new,
primary residence in the greater-Dallas area.
d. The Company will extend the Executive's eligibility for
temporary living expenses from the 30-day limit in the
policy to 120-days.
e. The Company will approve shipment of two of the
Executive's cars from the greater-New York area to the
greater-Dallas area.
3.07. OTHER COMPANY BENEFITS
The Executive will be entitled to and will receive
other benefits maintained by the Company for executives
of the Company at his level and with comparable
responsibilities, subject to such eligibility
requirements as are applicable generally to such other
executives. The benefits include first class travel,
group health insurance, executive medical, dental and
disability benefits, group life insurance, four weeks
annual paid vacation during each 12 month period of
employment, up to $3,000 annually for financial
planning and tax assistance, and the opportunity to
participate in any deferred compensation, profit
sharing or retirement income plan for the Company's
executives, including The Neiman Marcus Group, Inc.
Supplemental Executive Retirement Plan (SERP). In
addition, the Executive will be reimbursed for out-of-
pocket expenses reasonably incurred in the performance
of his duties hereunder, upon receipt of appropriate
accounting in accordance with Company policies.
3.08. SERVICE ACCRUAL
Provided the Executive remains continuously employed by
the Company until, or after, his 65th birthday, the
Executive will accrue service under The Neiman Marcus
Group, Inc. SERP at a rate equal to the product of 5/3
multiplied by his years of service (including
fractions of years) with the Company. Thus, under such
circumstances, should the Executive retire at age 65,
he will be credited with 20 years' service for the
purpose of calculating his SERP benefit. However,
should the Executive fail to remain continuously
employed by the Company until, or after, his 65th
birthday, the Executive's accrued service will be
calculated in the normal manner provided in the SERP.
IV. TERMINATION OF EMPLOYMENT
4.01. TERMINATION OF THIS EMPLOYMENT AGREEMENT UPON
DISABILITY OF THE EXECUTIVE
If at the end of any month the Executive then is
and has been for either: (a) eighty percent (80%)
or more of the normal working days during the six
(6) consecutive full calendar months then ending;
or (b) fifty percent (50%) or more of the normal
working days during the twelve (12) consecutive
full calendar months then ending, unable to
perform his duties under this Employment Agreement
in the normal and regular manner, due to mental or
physical disability, then either the Company or
the Executive may terminate this Agreement and its
or his obligations hereunder, upon 30 days' notice
to the other of intent to terminate. Nothing
contained in this paragraph is intended to limit
the Executive's right to any compensation or
benefits to which he is otherwise entitled under
the terms of any company policy, benefit plan, or
by operation of law.
4.02. TERMINATION OF THIS EMPLOYMENT AGREEMENT UPON
DEATH OF THE EXECUTIVE
If the Executive dies, this Employment Agreement
shall be terminated on the last day of the month
of the Executive's death. However, nothing herein
is intended to limit the rights, if any, of the
Executive's heirs, devisees or estate to payments
or benefits in which the Executive has an accrued,
vested interest at the time of his death.
4.03. TERMINATION OF THE EXECUTIVE'S SERVICES FOR CAUSE
The Company may terminate the Executive's
services, for cause, upon written notice
specifying the reason for such termination. All
of the Company's obligations under this Employment
Agreement shall cease upon the Executive's
termination for cause. For the purpose of the
preceding sentence, "cause" shall mean: a breach
of duty by the Executive in the course of his
employment involving fraud, acts of dishonesty,
acts of moral turpitude, repeated insubordination,
failure to devote his full, working time and best
efforts to the performance of his duties, or
conviction of a felony or other criminal offense.
4.04. TERMINATION OF EXECUTIVE'S SERVICES UPON CHANGE OF
CONTROL
a. If the Executive's services are terminated without
cause or good reason within 24 months of a change
of control of Neiman Marcus, as a change of
control is defined below, or if within 24 months
of a change of such control, the Executive resigns
his employment because he is not permitted to
continue in a position comparable in duties and
responsibilities to that which he held before a
change in control, the Executive will receive the
termination package set forth in paragraph 4.05.a.
b. For the purposes of paragraph 4.04.a., change of
control shall mean: (i) the sale of all or
substantially all of the assets of Neiman Marcus
to an entity other than the Company or Harcourt
General, Inc. or an entity wholly owned by the
Company or Harcourt General, Inc.; or (ii) the
sale of all or substantially all of the assets of
the Company to an entity other than Harcourt
General, Inc. or an entity wholly owned by the
Company or Harcourt General, Inc.; or (iii) any
person, entity or group having greater voting
power in the election of Company directors than
Harcourt General, Inc.
4.05. OTHER TERMINATION OF THE EXECUTIVE'S SERVICES
a. If the Company does not intend to extend the
Executive's employment beyond January 31, 1997, it
will so notify him on or before October 31, 1996.
Notwithstanding such notification, the Company
will continue to pay the Executive his then-
current, base compensation until July 31, 1998,
reduced, dollar-for-dollar between August 1, 1997
and July 31, 1998, by the amount of any income the
Executive earns during that period from employment
of any kind (including, but not limited to, self-
employment), in full satisfaction of the Company's
obligations hereunder.
b. If, during the term of this Employment Agreement,
the Company terminates the Executive's services
for any reason[s] other than those set forth in
paragraphs 4.01 and 4.03., above, the Executive
will continue to receive from the Company his base
compensation and existing benefits (but will
not receive any performance or incentive bonuses
or additional stock options), until the expiration
date of this Employment Agreement or for 18 months
(whichever is greater), in full satisfaction of
the Company's obligations hereunder.
4.06. EXTENSION OF THE EXECUTIVE'S EMPLOYMENT
Should the Company wish to continue the
Executive's employment beyond January 31, 1997,
the Company agrees to extend the Executive a good-
faith offer of compensation and benefits on or
before the expiration of this Employment
Agreement.
If, by January 31, 1997, the parties are unable to
agree on the terms and conditions of the
Executive's continued employment, the parties may:
a. continue to discuss such terms and conditions
in the hope of reaching agreement, or
b. terminate discussions and sever the
employment relationship.
Should either party choose to sever the employment
relationship pursuant to the provisions of this
paragraph, then the Company will continue to pay
the Executive his then-current, base compensation
until July 31, 1998, reduced, dollar-for-dollar,
between the date six months from the date the
employment relationship is severed and July 31,
1998, by the amount of any income the Executive
earns during that period from employment of any
kind (including, but not limited to self-
employment), in full satisfaction of the Company's
obligations hereunder.
V. GENERAL PROVISIONS
5.01. ASSIGNABILITY
The Company will have the right to assign all
rights and obligations arising under this
Agreement to one or more of its subsidiaries or
affiliates, whether now existing or hereafter
organized. Despite any such assignment, the
Company will remain bound by any obligations
running from the Company to the Executive under
the terms of this Agreement.
5.02. INTEGRATION
This Employment Agreement contains the entire
agreement between the parties and supersedes all
prior oral and written agreements, understandings
and commitments between the parties. No amendment
to this Employment Agreement may be made except by
a writing signed by both parties.
5.03. SPECIFIC ENFORCEMENT
The Executive is obligated under this Employment
Agreement to render service of a special, unique,
unusual, extraordinary, and intellectual
character, thereby giving this Employment
Agreement peculiar value. Thus, the loss of such
services could not be reasonably or adequately
compensated in damages in an action at law.
Therefore, in addition to other remedies provided
by law, the Company shall have the right during
the term or any renewal term of this Employment
Agreement to obtain injunctive relief against the
performance of services elsewhere by the
Executive. The right to seek injunctive relief
will not extend to efforts of the Executive to
secure employment in connection with the
provisions of paragraph 4.04(a) or 4.05.
5.04. CONFIDENTIAL INFORMATION
The Executive acknowledges and stipulates that in
the performance of duties hereunder, the Company
will disclose to and entrust the Executive with
confidential and proprietary information which the
Executive may not disclose to any third party or
entity either during or after the Executive's
employment by the Company. This paragraph
survives the expiration or termination of this
Agreement.
5.05. SEPARABILITY OF PROVISIONS
If one or more of the covenants or agreements
provided for in this Employment Agreement should
be contrary to law, then any such covenant or
agreement shall be null and void and shall be
deemed separable and divisible from the remaining
covenants or agreements.
5.06. CHOICE OF LAW
This Employment Agreement shall be interpreted and
enforced in accordance with the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Company has caused this
instrument to be executed on its behalf by a duly authorized
officer and the Executive has executed this instrument, all
as of the first day and year written above.
THE NEIMAN MARCUS GROUP, INC.
By s/Robert J. Tarr, Jr.
Robert J. Tarr, Jr.
s/Burton Tansky
Executive