Exhibit 10.22

 

CONFIDENTIALITY, NON-COMPETITION AND TERMINATION BENEFITS

AGREEMENT

 

This Confidentiality, Non-Competition and Termination Benefits Agreement
(“Agreement”) is entered into effective as of May 21, 2003 between Nelson A.
Bangs (“Executive”) and The Neiman Marcus Group, Inc., a Delaware corporation,
(“NMG”), and replaces and supersedes in its entirety that certain Termination
and Change of Control Agreement between Executive and NMG dated April 17, 2001
(the “2001 Agreement”).  All capitalized terms used but not defined herein shall
have the meanings assigned to them in Appendix A, which is attached hereto and
incorporated fully herein by reference.

 

WHEREAS, Executive is employed “at will” as Senior Vice President and General
Counsel NMG and either Executive or NMG may terminate Executive’s employment at
any time, with or without notice, and for any reason;

 

WHEREAS, in connection with the restructuring of the compensation and benefits
provided to senior executives of NMG, including Executive, the Board of
Directors of NMG has determined that stock option and restricted stock awards
should be combined with appropriate post-employment and other restrictions
designed to protect the legitimate business interests of NMG and its Affiliates;

 

WHEREAS, NMG and Executive have entered into separate stock option and
restricted stock agreements (the “Incentive Agreements”) effective November 20,
2002 that set forth the rights and obligations of NMG and Executive with respect
to such awards;

 

WHEREAS, NMG has granted to Executive an ownership interest in NMG in the form
of NMG stock;

 

WHEREAS, by virtue of his position and responsibilities, Executive is a
fiduciary of NMG and its Affiliates and has unique access to and knowledge of
NMG’s and its Affiliates’ privileged and unprivileged confidential information
acquired during the course of and by reason of his legal representation of NMG
and its Affiliates and his employment by NMG;

 

WHEREAS, by virtue of his position and responsibilities, Executive is obligated
by the Texas Rules of Disciplinary Conduct and the common law to protect and
preserve NMG’s and its Affiliates’ privileged and unprivileged confidential
information and not to use that information to the disadvantage of NMG or its
Affiliates or for his own or a third party’s benefit;

 

WHEREAS, Executive’s association with NMG to the exclusion of its competitors
has enhanced NMG’s goodwill and Executive’s earning capacity;

 

WHEREAS, NMG and Executive mutually desire to protect NMG’s goodwill created by
Executive’s association with NMG and NMG’s and its Affiliates’ privileged and
unprivileged confidential information, and in recognition of the possible
interruption of Executive’s earnings after the end of his NMG employment and
Executive’s obligations under the Texas Rules of Disciplinary Conduct; and

 

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WHEREAS, NMG and Executive accordingly desire to make certain modifications to
the provisions of the 2001 Agreement, necessitating its replacement with this
Agreement;

 

NOW, THEREFORE, in consideration of the Incentive Agreements and the promises
and undertakings of the parties set out herein, and intending to be legally
bound, Executive and NMG agree as follows:

 

1.                                       (a)                                 
While Executive is employed at-will by NMG, if NMG terminates Executive’s
employment for any reason other than for “Cause,” his “Total Disability,” or his
death, subject to paragraphs 1(c) and 1(d) below, NMG shall provide Executive
with benefits (“Termination Benefits”) consisting of:

 

(1)          an amount equivalent to 1.5 times his then-current annual base
salary, less required withholding, which amount would be paid over an 18-month
period (hereinafter, the “Salary Continuance Period”) in regular, bi-weekly
installments following such termination; and

 

(2)          if, at the time of his termination, Executive participates in a
group medical insurance plan offered by NMG and Executive is eligible for and
elects to receive continued coverage under such plan in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or any
successor law, NMG will reimburse Executive during the Salary Continuance Period
or, if shorter, the period of such actual COBRA continuation coverage, for the
total amount of the monthly COBRA medical insurance premiums actually paid by
Executive for such continued medical insurance benefits.

 

For the purposes of determining whether or not NMG has terminated Executive’s
employment under this paragraph 1(a), any material, adverse change in the terms
and conditions of his employment, including but not limited to a relocation of
Executive’s place of business 50 miles or more from the current location, which
change causes Executive to resign his employment with NMG, will be deemed a
termination by NMG.  A transfer of employment between NMG and its Affiliates
shall not be considered as a termination of employment for purposes of this
Agreement.

 

(b)                                 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 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 a material, adverse change in the terms and
conditions of Executive’s employment and will be deemed a termination by NMG for
purposes of paragraph 1(a) of this Agreement if such failure causes Executive to
resign his employment with NMG; provided that the Termination Benefits to which
Executive would be entitled after such resignation pursuant to paragraph 1(a) of
this Agreement shall be the sole remedy of 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

 

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and/or assets of NMG that executes and delivers the agreement provided for in
this paragraph 1(b) or that otherwise becomes obligated under this Agreement by
operation of law.

 

(c)                                  If, in the reasonable judgment of NMG,
Executive engages in any of the Restricted Activities described in paragraph 3
of this Agreement, NMG’s obligation to provide the Termination Benefits shall
end as of the date NMG so notifies Executive in writing.

 

(d)                                 If 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 him by any
regulatory agency, for actions or omissions related to his employment with NMG,
or if NMG reasonably believes in its sole judgment that Executive has committed
any act or omission that would have entitled NMG to terminate his employment for
Cause, whether such act or omission was committed during his employment with NMG
or during the Salary Continuance Period, NMG may suspend any payments remaining
pursuant to paragraph 1(a) of this Agreement until the final resolution of such
criminal or civil proceedings or until NMG has made a final determination in its
sole judgment as to whether Executive committed such an act or omission.  If
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 NMG determines in its sole judgment that Executive has committed such an act
or omission, (1) NMG’s obligation to provide the Termination Benefits shall
immediately end, and (2) Executive shall repay to NMG any amounts paid to him
pursuant to paragraph 1(a) of this Agreement within 30 days after a written
request to do so by NMG.  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 NMG determines in its sole judgment that Executive
has not committed such an act or omission, NMG shall pay to Executive any
payments pursuant to paragraph 1(a) of this Agreement that it has suspended,
with interest on such suspended payments at its cost of funds, and shall make
any remaining payments due thereunder.

 

2.                                       Executive acknowledges and agrees that
(a) NMG is engaged in a highly competitive business; (b) NMG has expended
considerable time and resources to develop goodwill with its customers, vendors,
and others, and to create, protect, and exploit Confidential Information; (c)
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; (d) given his position and responsibilities, he
is a fiduciary of NMG and its affiliates; (e) his status as a fiduciary and the
proper functioning of the legal system require the preservation by him of the
Confidential Information during his employment by NMG and thereafter; (f) he is
obligated by the Texas Rules of Disciplinary Conduct and the common law during
his employment by NMG and thereafter to protect and preserve NMG and its
Affiliates’ Confidential Information and not to use the Confidential Information
to the disadvantage of NMG or its Affiliates or for his own or a third party’s
benefit; (g) in the specialty retail business, his participation in or direction
of NMG’s day-to-day operations, strategic planning, and legal affairs are an
integral part of NMG’s continued success and goodwill; (h) given his position
and responsibilities, he necessarily will be creating Confidential Information
that belongs to NMG and enhances NMG’s goodwill, and in carrying out his
responsibilities he in turn will be relying on NMG’s goodwill and the disclosure
by NMG to him of Confidential Information; (i) he 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 (j) he necessarily would use or disclose Confidential
Information if he were to engage in competition with NMG and/or enter

 

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into an attorney-client relationship with a Competitor.  NMG acknowledges and
agrees that Executive must have and continue to have throughout his employment
the benefits and use of its goodwill and Confidential Information in order to
properly carry out his responsibilities.  NMG accordingly promises upon
execution and delivery of this Agreement to provide Executive immediate access
to new and additional Confidential Information and authorize him to engage in
activities that will create new and additional Confidential Information.  NMG
and Executive thus acknowledge and agree that during Executive’s employment with
NMG and upon execution and delivery of this Agreement he (a) has received, will
receive, and will continue to receive, Confidential Information that is unique,
proprietary, and valuable to NMG, (b) has created, will create, and will
continue to create, Confidential Information that is unique, proprietary, and
valuable to NMG, and (c) has benefited, will benefit, and will continue to
benefit, including without limitation by way of increased earnings and earning
capacity, from the goodwill NMG has generated and from the Confidential
Information.  Accordingly, Executive acknowledges and agrees that at all times
during his employment by NMG and thereafter:

 

(a)                                  he will comply in all respects with the
Texas Disciplinary Rules of Professional Conduct;

 

(b)                                 all Confidential Information shall remain
and be the sole and exclusive property of  NMG;

 

(c)                                  he will protect and safeguard all
Confidential Information;

 

(d)                                 he 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 NMG to the extent necessary for the proper performance of his
responsibilities unless authorized to do so by NMG, compelled to do so by law or
valid legal process, or required to do so by the Texas Disciplinary Rules of
Professional Conduct;

 

(e)                                  if he believes he is compelled by law or
valid legal process or required by the Texas Disciplinary Rules of Professional
Conduct to disclose or divulge any Confidential Information, he will notify NMG
in writing sufficiently in advance of any such disclosure to allow NMG the
opportunity to defend, limit, or otherwise protect its interests against such
disclosure;

 

(f)                                    at the end of his employment with NMG for
any reason or at the request of NMG at any time, he will return to NMG all
Confidential Information and all copies thereof, in whatever tangible form or
medium including electronic; and

 

(g)                                 absent the promises and representations of
Executive in this paragraph and paragraph 3 below, NMG would require him
immediately to return any tangible Confidential Information in his possession,
would not provide Executive with new and additional Confidential Information,
would not authorize Executive to engage in activities that will create new and
additional Confidential Information, and would not enter or have entered into
this Agreement or the Incentive Agreements.

 

3.                                       In consideration of NMG’s promises to
provide Executive with new and additional Confidential Information and to
authorize him to engage in activities that will create new and

 

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additional Confidential Information upon execution and delivery of this
Agreement, and the other promises and undertakings of NMG in this Agreement and
the Incentive Agreements, Executive agrees that, while he is employed by NMG and
for a 1.5 year period following the end of that employment for any reason, he
shall not engage in any of the following activities (the “Restricted
Activities”):

 

(a)                                          He 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)                                         He will not, whether on his 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)                                          He will not, whether on his 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;

 

(d)                                         He will not enter into an
attorney-client relationship, whether as an employee or otherwise, with any
Competitor of NMG or any of its Affiliates without the advance written consent
of NMG.  Executive acknowledges and agrees that the restrictions imposed by this
subparagraph do not violate the Texas Disciplinary Rules of Professional Conduct
(or the disciplinary or ethical rules of any other state or body) and that
entering into an attorney-client relationship with a Competitor of NMG or any of
its Affiliates would result in the inevitable disclosure or use of Confidential
Information for the Competitor’s benefit or to the detriment of NMG; and

 

(e)                                          He will not associate directly or
indirectly, in a non-legal capacity as an employee, officer, director, agent,
partner, stockholder, owner, representative, or consultant, with any Competitor
of NMG or any of its Affiliates, unless (1) he has advised NMG in writing in
advance of his desire to undertake such activities and the specific nature of
such activities; (2) 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
Executive that are, in NMG’s sole discretion, adequate to protect its interests;
(3) NMG, in its sole discretion, has approved in writing such association; and
(4) Executive and the Competitor adhere to such assurances.  This restriction
(1) extends to the performance by Executive, directly or indirectly, of the same
or similar activities Executive has performed for NMG or any of its Affiliates
in a non-legal capacity, if any, or such other activities that by their nature
are likely to lead to the disclosure of Confidential Information, and (2) 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.  Executive shall not be in
violation of this paragraph 3(d) solely as a result of his investment in stock
or other securities of a Competitor or any of its Affiliates listed

 

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on a national securities exchange or actively traded in the over-the-counter
market if he and the members of his immediate family do not, directly or
indirectly, hold more than a total of one (1) percent of all such shares of
stock or other securities issued and outstanding.  Executive acknowledges and
agrees that engaging in the activities restricted by this subparagraph would
result in the inevitable disclosure or use of Confidential Information for the
Competitor’s benefit or to the detriment of NMG.

 

Executive acknowledges and agrees that the restrictions contained in this
paragraph 3 are designed to and do comply with Executive’s obligations under the
Texas Disciplinary Rules of Professional Conduct; are ancillary to an otherwise
enforceable agreement, including without limitation the mutual promises and
undertakings set forth in paragraph 2 of this Agreement and in the Incentive
Agreements; that NMG’s promises and undertakings set forth in paragraph 2 of
this Agreement and in the Incentive Agreements, Executive’s position and
responsibilities with NMG, and NMG granting to Executive ownership in NMG in the
form of NMG stock, give rise to NMG’s interest in restricting Executive’s
post-employment activities; that such restrictions are designed to enforce
Executive’s promises and undertakings set forth in this paragraph 3 and his
obligations and duties owed to NMG and its Affiliates under the Texas
Disciplinary Rules of Professional Conduct and at common law; 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 he will immediately notify NMG in writing should he believe or be advised
that the restrictions are not valid or enforceable under Texas law, the Texas
Disciplinary Rules of Professional Conduct, or the law or disciplinary or
ethical rules of any other state or body that he contends or is advised is
applicable; that the mutual promises and undertakings of NMG and Executive under
paragraphs 2 and 3 of this Agreement are not contingent on the duration of
Executive’s employment with NMG; and that absent the promises and
representations made by Executive in this paragraph 3 and paragraph 2 above, NMG
would require him to return any Confidential Information in his possession,
would not provide Executive with new and additional Confidential Information,
would not authorize Executive to engage in activities that will create new and
additional Confidential Information, and would not enter or have entered into
this Agreement or the Incentive Agreements.

 

4.                                       The Termination Benefits constitute all
of NMG’s obligations to Executive with respect to the end of Executive’s
employment with NMG.  However, nothing in this Agreement is intended to limit
any earned, vested benefits (other than any entitlement to severance or
separation pay, if any) that Executive may have under the applicable provisions
of any benefit plan of NMG in which Executive is participating at the time of
his termination of employment or resignation.

 

5.                                       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 2 or 3 of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached.  Accordingly, Executive agrees that NMG shall be entitled to equitable
relief, including preliminary and permanent injunctions and specific
performance, in the event 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 Executive, but shall be in addition to all other remedies available
to NMG at law

 

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or equity.  Executive acknowledges and agrees that NMG shall be entitled to
recover its attorneys’ fees, expenses, and court costs, in addition to any other
remedies to which it may be entitled, in the event he breaches this Agreement. 
Executive acknowledges and agrees that no breach by NMG of this Agreement or
failure to enforce or insist on its rights under this Agreement shall constitute
a waiver or abandonment of any such rights or defense to enforcement of such
rights.

 

6.                                       If the provisions of paragraphs 2 or 3
of this Agreement are ever deemed by a court to exceed the limitations permitted
by applicable law, Executive and NMG agree that such provisions shall be, and
are, automatically reformed to the maximum limitations permitted by such law.

 

7.                                       This Agreement contains the entire
agreement between the parties and supersedes all prior agreements and
understandings, oral or written, with respect to the ending of Executive’s
at-will employment and the subject matter of this Agreement, including the 2001
Agreement, which is hereby terminated.  This Agreement may not be changed
orally.  It may be changed only by written agreement signed by the party against
whom any waiver, change, amendment, modification or discharge is sought to be
enforced.  This Agreement is to be construed as a whole, according to its fair
meaning, and not strictly for or against any of the parties.  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.

 

8.                                       The validity, performance and
enforceability of this Agreement shall be determined and governed by the laws of
the State of Texas, without regard to its conflict of laws principles. NMG and
Executive agree that the exclusive forum for any action concerning this
Agreement shall be in a court of competent jurisdiction in Dallas County, Texas,
with respect to a state court, or the Dallas Division of the United States
District Court for the Northern District of Texas, with respect to a federal
court.  EXECUTIVE HEREBY CONSENTS TO THE EXERCISE OF JURISDICTION OF A COURT IN
THE EXCLUSIVE FORUM AND WAIVES ANY RIGHT HE MAY HAVE TO CHALLENGE OR CONTEST THE
REMOVAL AT ANY TIME BY NMG TO FEDERAL COURT OF ANY SUCH ACTION HE MAY BRING
AGAINST IT IN STATE COURT.  EXECUTIVE AND NMG FURTHER HEREBY MUTUALLY WAIVE
THEIR RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT.

 

9.                                       Executive’s promises and obligations
under this Agreement shall survive the end of his employment with NMG, and such
promises and obligations shall inure to the benefit of any Affiliates,
subsidiaries, divisions, successors, or assigns of NMG.

 

 

 

 

THE NEIMAN MARCUS GROUP, INC.

 

 

 

 

 

 

 

/s/  Nelson A. Bangs

 

By:

  /s/  Marita O’Dea

 

Nelson A. Bangs

 

 

 

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APPENDIX A

 

Definitions

 

1.                                       “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.

 

2.                                       “Cause” means, in NMG’s reasonable
judgment, (i) a breach of duty by Executive in the course of his employment
involving fraud, acts of dishonesty (other than inadvertent acts or omissions),
disloyalty, or moral turpitude; (ii) conduct that is materially detrimental to
NMG, monetarily or otherwise, or reflects unfavorably on NMG or Executive to
such an extent that NMG’s best interests reasonably require the termination of
Executive’s employment; (iii) acts of Executive in violation of his obligations
under this Agreement or at law; (iv) Executive’s failure to comply with or
enforce NMG’s policies concerning equal employment opportunity, including
engaging in sexually or otherwise harassing conduct; (v) Executive’s repeated
insubordination or failure to comply with or enforce other personnel policies of
NMG or its Affiliates; (vi) Executive’s failure to devote his full working time
and best efforts to the performance of his responsibilities to NMG or its
Affiliates; or (vii) Executive’s conviction of or entry of a plea agreement or
consent decree or similar arrangement with respect to, a felony, other serious
criminal offense, or any violation of federal or state securities laws;
provided, however, that with respect to items (v) and (vi), Executive has been
provided prior written notice of the failure and afforded a reasonable
opportunity to correct same.

 

3.                                       “Competitor” means (i) the person or
entity that owns or operates Saks Incorporated, Nordstrom, Inc., or Barneys New
York, Inc.; (ii) the successors to or assigns of the persons or entities
identified in (i); and (iii) any other person or entity that owns or operates a
luxury specialty retail store.

 

4.                                       “Confidential Information” means any
information about NMG or its Affiliates that is protected by the attorney-client
privilege and any unprivileged information relating to NMG or its Affiliates or
furnished to Executive by NMG or its Affiliates and acquired by Executive during
the course of or by reason of Executive’s legal representation of NMG or its
Affiliates and Executive’s employment by NMG, including, 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 Executive.

 

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5.                                       “Total Disability” means that, in NMG’s
reasonable judgment, either (i) Executive has been unable to perform his duties
because of a physical or mental impairment for 80% or more of the normal working
days during six consecutive calendar months or 50% or more of the normal working
days during twelve consecutive calendar months, or (ii) Executive has become
totally and permanently incapable of performing the usual duties of his
employment with NMG on account of a physical or mental impairment.

 

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