Exhibit 10.10

 

CONFIDENTIALITY, NON-COMPETITION AND TERMINATION BENEFITS AGREEMENT

 

This Confidentiality, Non-Competition and Termination Benefits Agreement
(“Agreement”) is entered into effective as of November 20, 2002 between Ronald
L. Frasch (“Executive”) and Bergdorf Goodman, Inc., a New York corporation,
(“Bergdorf”), and replaces and supersedes in its entirety that certain
Termination and Change of Control Agreement between Executive and The Neiman
Marcus Group, Inc., a Delaware corporation (“NMG”), dated April 27, 2000 (the
“2000 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 Chairman and Chief Executive Officer
of Bergdorf and either Executive or Bergdorf may terminate Executive’s
employment at any time, with or without notice, and for any reason;

 

WHEREAS, Bergdorf is a wholly-owned subsidiary of NMG;

 

WHEREAS, in connection with the restructuring of the compensation and benefits
provided to senior executives of NMG and its Affiliates, 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, including Bergdorf;

 

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 has unique
access to and knowledge of Bergdorf’s trade secrets and other confidential and
proprietary business information;

 

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

 

WHEREAS, Bergdorf and Executive mutually desire to protect Bergdorf’s goodwill
created by Executive’s association with Bergdorf and Bergdorf’s trade secrets
and other confidential and proprietary business information, and in recognition
of the possible interruption of Executive’s earnings after the end of his
Bergdorf employment; and

 

WHEREAS, Bergdorf and Executive accordingly desire to make certain modifications
to the provisions of the 2000 Agreement, necessitating its replacement with this
Agreement;

 

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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 Bergdorf agree as follows:

 

1.             (a)           While Executive is employed at-will by Bergdorf, if
Bergdorf 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, Bergdorf shall provide Executive with benefits (“Termination
Benefits”) consisting of:

 

(1)  an amount equivalent to one and one-half times his then-current annual base
salary, less required withholding, which amount would be paid over an
eighteen-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 Bergdorf 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, Bergdorf 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 Bergdorf 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 Bergdorf,
will be deemed a termination by Bergdorf.  A transfer of employment between
Bergdorf and NMG or any Affiliate of NMG shall not be considered as a
termination of employment for purposes of this Agreement.

 

(b)           Bergdorf 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 Bergdorf, 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 Bergdorf would be required to
perform it if no such succession or assignment had taken place.  If Bergdorf
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 Bergdorf for purposes of paragraph 1(a) of this Agreement if such failure
causes Executive to resign his employment with Bergdorf; 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 Bergdorf to obtain such agreement.  As used in this
Agreement, “Bergdorf” shall include any successor or assignee (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all the business and/or assets of Bergdorf 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.

 

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It is the expectation of the parties that 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, if such assets continue to
include a controlling interest in the stock of Bergdorf as of the time of such
succession or assignment, shall by agreement in writing, in form and substance
reasonably satisfactory to Executive, expressly, absolutely, and unconditionally
agree to cause Bergdorf to honor and agree to perform this Agreement following
such succession or assignment.  If such agreement has not been executed and
delivered 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
Bergdorf for purposes of paragraph 1(a) of this Agreement if such failure causes
Executive to resign his employment with Bergdorf; 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 if no
such agreement has been executed and delivered as of the effective time of such
succession or assignment.  As used in this Agreement, “NMG” shall include any
successor or assignee (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all the business and/or
assets of NMG that executes and delivers the agreement provided for in this
paragraph or that otherwise becomes obligated under this Agreement by operation
of law.

 

(c)           If, in the reasonable judgment of Bergdorf, Executive engages in
any of the Restricted Activities described in paragraph 3 of this Agreement,
Bergdorf’s obligation to provide the Termination Benefits shall end as of the
date Bergdorf 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 Bergdorf, or if Bergdorf
reasonably believes in its sole judgment that Executive has committed any act or
omission that would have entitled Bergdorf to terminate his employment for
Cause, whether such act or omission was committed during his employment with
Bergdorf or during the Salary Continuance Period, Bergdorf 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 Bergdorf 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 Bergdorf determines in its sole judgment
that Executive has committed such an act or omission, (1) Bergdorf’s obligation
to provide the Termination Benefits shall immediately end, and (2) Executive
shall repay to Bergdorf any amounts paid to him pursuant to paragraph 1(a) of
this Agreement within 30 days after a written request to do so by Bergdorf.  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
Bergdorf determines in its sole judgment that Executive has not committed such
an act or omission, Bergdorf 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) Bergdorf is engaged in
a highly competitive business; (b) Bergdorf has expended considerable time and
resources to develop goodwill with its customers, vendors, and others, and to
create, protect, and exploit Confidential Information;

 

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(c) Bergdorf 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) in the specialty
retail business, his participation in or direction of Bergdorf’s day-to-day
operations and strategic planning are an integral part of Bergdorf’s continued
success and goodwill; (e) given his position and responsibilities, he
necessarily will be creating Confidential Information that belongs to Bergdorf
and enhances Bergdorf’s goodwill, and in carrying out his responsibilities he in
turn will be relying on Bergdorf’s goodwill and the disclosure by Bergdorf to
him of Confidential Information; (f) he will have access to Confidential
Information that could be used by any Competitor of Bergdorf in a manner that
would irreparably harm Bergdorf’s competitive position in the marketplace and
dilute its goodwill; and (g) he necessarily would use or disclose Confidential
Information if he were to engage in competition with Bergdorf.  Bergdorf
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.  Bergdorf 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.  Bergdorf and Executive thus acknowledge and agree that during
Executive’s employment with Bergdorf 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 Bergdorf,
(b) has created, will create, and will continue to create, Confidential
Information that is unique, proprietary, and valuable to Bergdorf, 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
Bergdorf has generated and from the Confidential Information.  Accordingly,
Executive acknowledges and agrees that at all times during his employment by
Bergdorf and thereafter:

 

(a)           all Confidential Information shall remain and be the sole and
exclusive property of Bergdorf;

 

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

 

(c)           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
Bergdorf or NMG to the extent necessary for the proper performance of his
responsibilities unless authorized to do so by Bergdorf or compelled to do so by
law or valid legal process;

 

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

 

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

 

(f)            absent the promises and representations of Executive in this
paragraph and paragraph 3 below, Bergdorf would require him immediately to
return any tangible Confidential

 

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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 into this Agreement, and NMG would not have entered into the
Incentive Agreements.

 

3.             In consideration of Bergdorf’s promises to provide Executive with
new and additional Confidential Information and to authorize him to engage in
activities that will create new and additional Confidential Information upon
execution and delivery of this Agreement, and the other promises and
undertakings of Bergdorf in this Agreement and NMG in the Incentive Agreements,
Executive agrees that, while he is employed by Bergdorf and for an eighteen
month 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 Bergdorf, NMG, or
their Affiliates, or any products, services, or operations of Bergdorf, NMG or
their Affiliates, or any of the former, current, or future officers, directors,
or employees of Bergdorf, NMG or their 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 Bergdorf, NMG, or their 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 Bergdorf, NMG, or any of their Affiliates to cease being
a customer, supplier, or vendor of Bergdorf, NMG or their Affiliates or to
divert all or any part of such person’s or entity’s business from Bergdorf, NMG
or their Affiliates; and

 

(d)           He will not associate directly or indirectly, as an employee,
officer, director, agent, partner, stockholder, owner, representative, or
consultant, with any Competitor of Bergdorf, NMG, or any of their Affiliates,
unless (1) he has advised Bergdorf in writing in advance of his desire to
undertake such activities and the specific nature of such activities; (2)
Bergdorf has received written assurances (that will be designed, among other
things, to protect Bergdorf’s, NMG’s and their Affiliates’ goodwill,
Confidential Information, and other important commercial interests) from the
Competitor and Executive that are, in Bergdorf’s sole discretion, adequate to
protect its interests; (3) Bergdorf, 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 Bergdorf, NMG or any of their Affiliates 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 Bergdorf, NMG, or any of
their 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 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

 

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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
Bergdorf.

 

Executive acknowledges and agrees that the restrictions contained in this
paragraph 3 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 the promises and
undertakings of Bergdorf set forth in paragraph 2 of this Agreement and those of
NMG in the Incentive Agreements, Executive’s position and responsibilities with
Bergdorf, and NMG granting to Executive ownership in NMG in the form of NMG
stock, give rise to Bergdorf’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
common-law obligations and duties owed to Bergdorf; that the restrictions are
reasonable and necessary, are valid and enforceable under New York law, and do
not impose a greater restraint than necessary to protect Bergdorf’s goodwill,
Confidential Information, and other legitimate business interests; that he will
immediately notify Bergdorf in writing should he believe or be advised that the
restrictions are not valid or enforceable under New York law or the law of any
other state that he contends or is advised is applicable; that the mutual
promises and undertakings of Bergdorf and Executive under paragraphs 2 and 3 of
this Agreement are not contingent on the duration of Executive’s employment with
Bergdorf; and that absent the promises and representations made by Executive in
this paragraph 3 and paragraph 2 above, Bergdorf 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 into this Agreement, and NMG would not have entered into the
Incentive Agreements.

 

4.             The Termination Benefits constitute all of Bergdorf’s obligations
to Executive with respect to the end of Executive’s employment with Bergdorf. 
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
Bergdorf in which Executive is participating at the time of his termination of
employment or resignation.

 

5.             Executive acknowledges and agrees that Bergdorf 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 Bergdorf 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 Bergdorf at law or
equity.  Executive acknowledges and agrees that Bergdorf 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 Bergdorf of this Agreement
or failure to enforce or insist on its rights under this

 

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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 Bergdorf 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 2000 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 New York, without
regard to its conflict of laws principles. Bergdorf and Executive agree that the
exclusive forum for any action concerning this Agreement shall be in a court of
competent jurisdiction in New York County, New York, with respect to a state
court, or the United States District Court for the Southern District of New
York, 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 BERGDORF TO
FEDERAL COURT OF ANY SUCH ACTION HE MAY BRING AGAINST IT IN STATE COURT. 
EXECUTIVE AND BERGDORF 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 Bergdorf, and such promises and
obligations shall inure to the benefit of any Affiliates, subsidiaries,
divisions, successors, or assigns of Bergdorf.

 

 

BERGDORF GOODMAN, INC.

 

 

 

 

/s/  Ronald L. Frasch

 

By:

/s/  Marita O’Dea

 

RONALD L. FRASCH

 

 

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It is acknowledged and agreed that the 2000 Agreement is hereby replaced and
superseded by this Agreement.

 

 

 

THE NEIMAN MARCUS GROUP, INC.

 

 

 

 

 

 

 

 

By:

/s/  Marita O’Dea

 

 

 

 

Marita O’Dea, Senior Vice President

 

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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 Bergdorf’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 Bergdorf, monetarily
or otherwise, or reflects unfavorably on Bergdorf or Executive to such an extent
that Bergdorf’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
Bergdorf’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
Bergdorf or its Affiliates; (vi) Executive’s failure to devote his full working
time and best efforts to the performance of his responsibilities to Bergdorf 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” shall mean, 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.

 

5.             “Total Disability” means that, in Bergdorf’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
Bergdorf on account of a physical or mental impairment.

 

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