Exhibit 10.1

EMPLOYMENT AGREEMENT

 

 

This Employment Agreement (“Agreement”) is entered into effective as of June 15,
2015 (the “Effective Date”) between Donald Grimes (the “Executive”) and The
Neiman Marcus Group LLC, a Delaware limited liability company (“NMG”).  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.

 

1.                         Employment.  NMG agrees to employ the Executive, and
the Executive agrees to be employed in the position and with the duties and
responsibilities set forth in Section 3, and upon the other terms and conditions
set out in this Agreement.

 

2.                         At-Will Employment.  The Executive acknowledges and
agrees that the Executive’s employment is on an “at-will” basis and may be
terminated by either party at any time for any reason, or for no reason.

 

3.                         Position and Duties.

 

(a)                                 The Executive shall serve as Executive Vice
President, Chief Operating Officer and Chief Financial Officer of NMG.  In such
capacities, the Executive shall report to and be accountable to the President
and Chief Executive Officer of NMG and Parent (the “CEO”).  The Executive shall
have such duties, functions, responsibilities, and authority as are from time to
time delegated to the Executive by the CEO; provided such duties, functions,
responsibilities and authority are consistent with his titles and reasonable or
customary for a person serving in the same or similar capacity of a comparable
enterprise.

 

(b)                                While employed by NMG, the Executive shall
devote his full time, skill, and attention and his best efforts to the business
and affairs of 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 prior
written approval of the Parent 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,
professional, and civic organizations, and (iii) manage personal and family
investments; provided, that any such activities as described in (i), (ii) or
(iii) of the preceding provisions of this Section 3(b) do not interfere with the
performance and fulfillment of the Executive’s duties and responsibilities as an
executive of NMG in accordance with this Agreement.

 

(c)                                 In connection with the Executive’s
employment by NMG, the Executive shall be based in NMG’s offices in Dallas,
Texas, except for such travel as the performance of the Executive’s duties in
the business of NMG and its Affiliates may require.

 

(d)                               All services that the Executive may render to
NMG or any of its Affiliates in any capacity while employed by NMG shall be
deemed to be services required by this Agreement and the consideration for such
services is that provided for in this Agreement.

 

1

--------------------------------------------------------------------------------

 

4.                         Compensation and Related Matters.

 

(a)                                 Base Salary.  While employed by NMG, NMG
shall pay to the Executive for his services under this Agreement a base salary
bi-weekly in the amount of $27,884.61 ($725,000 annualized) (such amount, as may
be increased by NMG, the “Base Salary”), less required withholding. The Base
Salary shall be payable in installments in accordance with the general payroll
practices of NMG, no less frequently than monthly.

 

(b)                                Annual Incentives.  Beginning in NMG’s fiscal
year beginning August 2, 2015, the Executive will be eligible to participate in
NMG’s annual incentive bonus program(s) applicable to the Executive’s position,
in accordance with the terms of such program(s), and shall have the opportunity
to earn an annual bonus thereunder based on the achievement of performance
objectives determined by the Parent Board.  During each fiscal year, the
Executive’s target bonus will be 75% of his annual Base Salary with a maximum
bonus opportunity of 150% of his annual Base Salary.  The actual amount of any
annual incentive bonus paid to the Executive will be determined according to the
terms of the annual incentive bonus program(s), including any such terms that
place the amount of any annual incentive bonus within the discretion of the
Parent Board.  No annual incentive bonus will be paid pursuant to this Section
4(b) unless the Executive has remained continuously employed with NMG through
the applicable payment date, except as otherwise expressly provided for in
Section 5 hereof.

 

(c)                                 Long-term Incentives.  The Executive will
participate in such long-term incentive programs as the Board may determine. 
The Executive acknowledges and agrees that the terms of the grant of an award
pursuant to the Parent’s Management Equity Incentive Plan (the “Equity Plan”)
shall be governed exclusively by the terms of such plan and award agreement,
including, without limitation, with respect to the vesting (which may consist of
time vesting, performance vesting or a combination thereof).  Following the
Effective Date, subject to the approval of the Parent Board, the Executive will
be awarded 11,000 options (“Options”) to purchase Class A Common Stock and Class
B Common Stock of Parent (collectively, a “Parent Common Unit”), 50% of which
shall be subject to time-based vesting and 50% of which shall be subject to
performance-based vesting, in each case, in accordance with the terms of the
Equity Plan and the applicable award agreement(s) at Fair Market Value (as
defined in the Equity Plan) at the date of grant (the “Option Exercise Price”).
 Notwithstanding the foregoing, in lieu of granting the Executive the Options
under the Equity Plan, the Parent Board may elect, in its sole discretion to
grant the Executive a number of options under a new equity incentive plan of
Parent. In such case, such options shall be subject to the terms of such equity
plan and any applicable award agreement(s); provided that the economic terms of
such options shall be consistent with the economic terms set forth in this
section.

 

2

--------------------------------------------------------------------------------

 

(d)                               Employee Benefits.  While employed by NMG, the
Executive shall be entitled to participate in the employee benefit plans,
programs, and arrangements that are generally made available by NMG to its
senior executives; provided that medical and dental benefits shall begin on the
first month following Executive’s 60th day of employment by NMG.  For the period
of employment prior to the Executive’s participation in a group medical plan
offered by NMG, NMG shall pay the Executive the difference between the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) rate payable by
the Executive with his prior employer and the rate that similarly situated
executives of NMG pay out-of-pocket for medical insurance; provided the
Executive submits documentation of such COBRA payments in accordance with
Section 4(h).  The Executive shall cooperate with, and participate in any
medical or physical examinations as may be required by, any insurance company in
connection with the applications for any life and/or disability insurance
policies, in all cases, provided such examinations and the results therefrom are
consistent with governing law.

 

(e)                                 Signing Bonus.  The Executive shall receive
a one-time signing bonus of $300,000 (the “Signing Bonus”), payable in a lump
sum less required withholding, to be paid in the first pay period following the
Effective Date.  If the Executive’s employment is terminated for any reason
prior to the first anniversary of the Effective Date, other than (i) by NMG
without Cause, (ii) by the Executive for Good Reason, or (iii) by reason of the
Executive’s Total Disability or death, the Executive shall repay the Signing
Bonus to NMG within 60 days following the date of the Executive’s termination of
employment, prorated for the number of months that the Executive was employed by
NMG.

 

(f)                                  Relocation.  A relocation program will be
made available to the Executive to assist the Executive with relocation to the
greater Dallas, Texas area, a summary of which will be provided to the
Executive. As agreed between the Executive and the Company, a residence of the
Executive will be eligible for the Amended Value Sale program (as defined in the
relocation policy) and a residence of the Executive may be eligible for the
Guaranteed Purchase benefit should it not sell within 90 days, as provided in
the relocation policy. If the Executive’s employment with NMG is terminated for
Cause, or if the Executive resigns his employment for any reason other than Good
Reason or retirement, in each case, prior to the 24 month anniversary of the
Effective Date (the “Reimbursement Period”), the Executive shall reimburse NMG a
prorated amount of the cost associated with his relocation.  The amount of the
reimbursement payable to NMG by the Executive shall be determined by (i)
 dividing (A) the number of months remaining in the Reimbursement Period by (B)
24, then (ii) multiplying the result by the total cost of the relocation.  Any
amounts that have been paid by NMG to gross-up the Executive for taxes
associated with the relocation costs shall be included in the calculation toward
the total costs of the relocation.  It will be the Executive’s responsibility to
file personal taxes for moving expenses.                                      
The Executive acknowledges that he has read and understands the Neiman Marcus
Relocation Policy, and his obligations thereunder.

 

(g)                                Financial Planning and Advice.  The Executive
shall be entitled to receive reimbursement for up to $5,000 per each calendar
year while employed by NMG for fees and expenses incurred by him for personal
financial and tax advice and planning, including without limitation fees and
expenses covering services relating to personal financial and tax advice and

 

3

--------------------------------------------------------------------------------

 

planning arising from the Executive’s compensation and benefits provided
pursuant to this Agreement and otherwise by NMG.  The Executive shall provide to
NMG a request for reimbursement along with a reasonably detailed receipt
indicating the nature of the services provided for any such fees and expenses
within 30 days of the occurrence of such fees and expenses.  Any such
reimbursement shall be made as soon as administratively possible, but in any
event no later than the maximum time permitted by Treasury Regulation Section
1.409A-3(i)(1)(iv).  The amount of expenses incurred that are eligible for
reimbursement pursuant to this Section 4(g) with respect to any calendar year
shall not affect the amount eligible for reimbursement in any other calendar
year.

 

(h)                                Expenses.  The Executive shall be entitled to
receive reimbursement for all reasonable expenses incurred by the Executive in
performing his duties and responsibilities under this Agreement, consistent with
NMG’s policies or practices for reimbursement of expenses incurred by other NMG
senior executives.

 

(i)                                    Vacations.  While employed by NMG, the
Executive shall be eligible to accrue five weeks of vacation per year, and shall
be eligible for sick pay and other paid and unpaid time off in accordance with
the policies and practices of NMG from time to time.  The Executive agrees to
use his vacation and other paid time off at such times that are (i) consistent
with the proper performance of his duties and responsibilities and (ii) mutually
convenient for NMG and the Executive.

 

(j)                                    Withholding Taxes.  NMG shall withhold
from any payments to be made to the Executive pursuant to this Agreement such
amounts (including social security contributions and federal income taxes) as
shall be required by federal, state, and local withholding tax laws.

 

5.                         Termination of Employment.

 

(a)                                 Termination by NMG for Cause, Total
Disability or Death; Termination by the Executive without Good Reason.  If the
Executive’s employment is terminated (x) by NMG for Cause, (y) by reason of his
Total Disability, or death, or (z) by the Executive without Good Reason, NMG
shall pay to the Executive within 30 days of the date of the Executive’s
termination of employment (i) any unpaid portion of the Executive’s Base Salary
accrued through the date of the Executive’s termination of employment, (ii) any
accrued but unused vacation days, and (iii) any reimbursement for business
travel and other expenses to which the Executive is entitled pursuant to Section
4(h) (prongs (i) through (iii), the “Accrued Amounts”).

 

(b)                                While the Executive is employed at-will by
NMG, if (i) NMG terminates the Executive’s employment for any reason other than
for Cause, his Total Disability, or his death, or the Executive terminates his
employment for Good Reason in accordance with Section 5(g), and (ii) the
Executive executes in a timely fashion, and does not revoke, the Release, then,
subject to Sections 5(c), (d) and (f) below, in addition to the Accrued Amounts,
NMG shall provide the Executive with benefits (“Termination Benefits”)
consisting of:

 

(1)  an amount equivalent to one and one-half (1 ½) times the then-current
annualized Base Salary, less required withholding, which amount shall be paid
over an 18-month period (hereinafter, the “Salary Continuance Period”)

 

4

--------------------------------------------------------------------------------

 

in regular, bi-weekly installments beginning with the first payroll period on or
following the 30th day after the date of the Executive’s termination of
employment  (with any payments that otherwise would have been paid during such
30-day period being made in a lump sum in the first payment);

 

(2)  the Executive’s pro-rated annual incentive bonus for the year of the
Executive’s termination of employment, less required withholding, pursuant to
the terms of the NMG annual incentive plan and payable at the time bonuses are
paid generally pursuant to the NMG annual incentive plan;

 

(3)  any earned and unpaid annual incentive bonus for the year prior to the year
of the Executive’s termination of employment, less required withholding, payable
in accordance with the terms of the NMG annual incentive plan; and

 

(4)  if, at the time of the Executive’s termination of employment, the Executive
participates in a group medical plan offered by NMG and the Executive is
eligible for and elects to receive continued coverage under such plan in
accordance with COBRA or any successor law, NMG will pay the Executive during
the Salary Continuance Period a monthly amount equal to cost of the monthly
COBRA medical insurance premiums for the Executive as of the date of the
Executive’s termination of employment, less required withholdings on such
amounts.

 

(c)                                 If, in the reasonable judgment of NMG, the
Executive engages in any of the Restricted Activities described in Section 7 of
this Agreement, NMG’s obligation to provide the Termination Benefits shall end
as of the date NMG so notifies the Executive in writing.

 

(d)                               If the 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, in each case, for actions or omissions related to his
employment with NMG, or if NMG reasonably determines in its sole judgment that
the 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, then (i)
NMG’s obligation to provide Termination Benefits shall immediately end, and (ii)
the Executive shall repay to NMG any amounts paid to him as Termination Benefits
within 30 days after a written request to do so by NMG.

 

(e)                                 The Executive will not be required to
mitigate the amount of any payment provided herein by seeking other employment
or otherwise, nor will the amount of payment provided for under this Agreement
be reduced by any earnings received by the Executive from any third party.

 

(f)                                  As indicated in subsection 5(b)(ii) above,
the payment to the Executive of the Termination Benefits is conditioned on the
Executive’s timely execution and non-revocation of the Release within 30 days of
the Executive’s termination of employment.  If (i) the Executive does not
execute the Release within such period; or (ii) the Executive revokes the
Release within such period, NMG shall have no obligation to pay the Executive
any of the Termination

 

5

--------------------------------------------------------------------------------

 

Benefits.  The Executive understands and agrees, however, that, in such event,
the Executive’s agreements, obligations and restrictions set forth in Sections 6
and 7 hereof shall continue to be in full force and effect.

 

(g)                                The Executive may terminate his employment
for Good Reason.  To exercise his right to terminate for Good Reason, the
Executive must provide written notice to NMG of his belief that Good Reason
exists within 90 days of the initial existence of the circumstance(s) believed
to constitute Good Reason, and such notice shall describe the circumstance(s)
believed to constitute Good Reason.  If such circumstance(s) may reasonably be
remedied, as determined by NMG, NMG shall have 30 days to effect that remedy. 
If not remedied within that 30-day period, the Executive may terminate his
employment for Good Reason by delivery of written notice to NMG; provided,
however, that a termination for Good Reason must occur no later than 135 days
after the initial existence of the circumstance(s) believed to constitute Good
Reason; otherwise, the Executive is deemed to have accepted the circumstance(s)
that may have given rise to the existence of Good Reason.

 

6.                         Confidential Information. The Executive acknowledges
and agrees that (i) NMG is engaged in a highly competitive business; (ii) NMG
has expended considerable time and resources to develop goodwill with its
customers, vendors, and others, and to create, protect, and exploit Confidential
Information; (iii) 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; (iv) in the specialty
retail business, his participation in or direction of NMG’s day-to-day
operations and strategic planning are an integral part of NMG’s continued
success and goodwill; (v) 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; (vi) 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
(vii) he necessarily would use or disclose Confidential Information if he were
to engage in competition with NMG.  NMG acknowledges and agrees that the
Executive must have and continue to have throughout his employment the benefits
and use of its goodwill and Confidential Information to properly carry out his
responsibilities.  NMG accordingly promises to provide the Executive with access
to new and additional Confidential Information and authorize him to engage in
activities that will create new and additional Confidential Information. NMG and
the Executive thus acknowledge and agree that during the Executive’s employment
with NMG he (1) will receive new and additional Confidential Information that is
unique, proprietary, and valuable to NMG, (2) will create new and additional
Confidential Information that is unique, proprietary, and valuable to NMG, and
(3) will benefit, including without limitation by way of increased earnings and
earning capacity, from the goodwill NMG has generated and from the Confidential
Information.  Accordingly, the Executive acknowledges and agrees that at all
times during his employment by NMG and thereafter:

 

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

 

(b)                                the Executive will protect and safeguard all
Confidential Information;

 

6

--------------------------------------------------------------------------------

 

(c)                                 the Executive 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 or compelled to do so
by law or valid legal process; provided that nothing in this Agreement shall be
construed to prohibit him from reporting possible violations of law or
regulation to any governmental agency or regulatory body or making other
disclosures that are protected under any law or regulation, or from filing a
charge with or participating in any investigation or proceeding conducted by any
governmental agency or regulatory body, and that he does not need the prior
authorization of NMG to make any such reports or disclosures and he is not
required to notify NMG that he has made such reports or disclosures;

 

(d)                               if the Executive believes he is compelled by
law or valid legal process to disclose or divulge any Confidential Information,
subject to the proviso in Section 6(c) above, 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;

 

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

 

(f)                                  absent the promises and representations of
the Executive in this Section 6 and Section 7 below, NMG would require him
immediately to return any tangible Confidential Information in his possession,
would not provide the Executive with new and additional Confidential
Information, would not authorize the Executive to engage in activities that will
create new and additional Confidential Information, and would not enter or have
entered into this Agreement.

 

7.                         Restricted Activities. In consideration of the new
and additional Confidential Information which the Executive will obtain in
connection with his employment with NMG, the goodwill of NMG that will be
created by the Executive’s employment, and to permit NMG to protect such
Confidential Information and goodwill, as well as the other promises and
undertakings of NMG in this Agreement, the Executive agrees that, while he is
employed by NMG and for a period of 18 months following the end of that
employment for any reason, he shall not engage in any of the following
activities (the “Restricted Activities”):

 

(a)                                 the Executive will not directly or
indirectly make or publish any disparaging or derogatory statements or otherwise
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)                                the Executive will not, whether on his own
behalf or on behalf of any other individual, partnership, firm, corporation or
business organization, either (i) solicit or attempt to hire any individual who
is at that time employed by or otherwise engaged to perform services for NMG or
its Affiliates or (ii) 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 or materially reduce
services.  Notwithstanding the foregoing, (i) this restriction only applies to

 

7

--------------------------------------------------------------------------------

 

those employees and service providers with whom the Executive had contact or
from whom the Executive received Confidential Information, (ii) general
solicitations not directed at employees of NMG or its Affiliates shall not
constitute a violation of this provision;

 

(c)                                 the Executive 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; and

 

(d)                               the Executive will not, directly or
indirectly, as an employee, officer, director, agent, partner, stockholder,
owner, representative, or consultant, provide services to any Competitor.  After
the end of the Executive’s employment with NMG and any Affiliate, the
restriction just set forth in this Section 7(d) applies only to conduct of the
Executive that takes place anywhere in, or is directed at any part of, the
Noncompetition Area.   The Executive shall not be in violation of this Section
7(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 one
(1) percent of all such shares of stock or other securities issued and
outstanding. The Executive acknowledges and agrees that engaging in the
Restricted Activities described in this subsection would result in the
inevitable disclosure or use of Confidential Information, and the damage or
diminution of NMG’s goodwill, for the Competitor’s benefit or to the detriment
of NMG.

 

The Executive acknowledges and agrees that the restrictions contained in this
Section 7 are ancillary to an otherwise enforceable agreement, including without
limitation the mutual promises and undertakings set forth in Section 6 of this
Agreement; that NMG’s promises and undertakings set forth in Section 6 of this
Agreement, and the Executive’s position and responsibilities with NMG, give rise
to NMG’s interest in restricting the Executive’s post-employment activities;
that such restrictions are designed to enforce the Executive’s promises and
undertakings set forth in this Section 7 and his common-law obligations and
duties owed to NMG; 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 or the law of any other state that he contends or is
advised is applicable; and that absent the promises and representations made by
the Executive in Sections 6 and 7 of this Agreement, NMG would require him to
return any Confidential Information in his possession, would not provide the
Executive with new and additional Confidential Information, would not authorize
the Executive to engage in activities that will create new and additional
Confidential Information, and would not enter or have entered into this
Agreement or employed the Executive.

 

8.                         Invention Assignment.  The Executive hereby assigns
to NMG all right, title and interest to all Work Product that (i) relates to
NMG’s actual or anticipated business, research and development or existing or
future products or services, or (ii) is conceived, reduced to practice,
developed or made using any equipment, supplies, facilities, assets, information
or resources of

 

8

--------------------------------------------------------------------------------

 

NMG (including, without limitation, any intellectual property rights).  The
Executive shall promptly disclose Work Product to NMG and perform all actions
reasonably requested by NMG (whether during or after the Executive’s period of
employment) to establish and confirm the ownership and proprietary interest of
NMG in any Work Product (including, without limitation, the execution of
assignments, consents, powers of attorney, applications and other instruments). 
The Executive shall not file any patent or copyright applications related to any
Work Product except with NMG’s written consent.

 

9.                         Resignation of Positions.  Upon the Executive’s
termination of employment for any reason (unless otherwise agreed in writing by
Parent and the Executive), the Executive will be deemed to have resigned without
any further action by the Executive, from any and all officer and director
positions that the Executive, immediately prior to such termination, (a) held
with Parent or any of its subsidiaries and (b) held with any other entities at
the direction of, or as a result of the Executive’s affiliation with, Parent or
any of its subsidiaries.

 

10.                 Indemnification.  The Executive will be entitled to
indemnification on the same terms as indemnification is made available by NMG to
its other senior executives, whether through NMG’s bylaws or otherwise.

 

11.                 Payment of the Termination Benefits (conditioned upon
execution and non-revocation of the Release) constitute all of NMG’s obligations
to the Executive with respect to the Executive’s termination of employment with
NMG.  However, nothing in this Agreement is intended to limit any accrued and
vested benefits (other than any entitlement to severance or separation pay, if
any) that the Executive may have under the applicable provisions of any benefit
plan of NMG in which the Executive is participating at the time of his
termination of employment or resignation, or any rights under applicable law.

 

12.                 Remedies.  The Executive acknowledges and agrees that NMG
would not have an adequate remedy at law and would be irreparably harmed if any
of the provisions of Section 6 and 7 of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.  Accordingly,
the Executive agrees that NMG shall be entitled to equitable relief, including
preliminary and permanent injunctions and specific performance, if the Executive
breaches or threatens to breach any of the provisions of such sections, 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 the Executive, but shall be in
addition to all other remedies available to NMG at law or equity.  The Executive
acknowledges and agrees that NMG shall be entitled to seek to recover its
attorneys’ fees, expenses, and court costs, in addition to any other remedies to
which it may be entitled, if he breaches this Agreement.  Each party
acknowledges and agrees that no breach by the other party 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.

 

13.                 Tolling.  If the Executive violates the restrictive
covenants set forth in Section 6 and 7 of this Agreement and NMG brings legal
action for injunctive or other relief and obtains such relief, the terms of such
restrictions, as applicable, shall be extended by computing the applicable
period of time from the date relief is granted for NMG and then reducing such
period by the amount of time, after the Executive’s termination of employment
with NMG, during which the Executive complied with such restrictions.

 

9

--------------------------------------------------------------------------------

 

14.                 Reformation.  If the provisions of Sections 6 or 7 of this
Agreement are ever deemed by a court to exceed the limitations permitted by
applicable law, the Executive and NMG agree that such provisions shall be, and
are, automatically reformed to the maximum limitations permitted by such law.

 

15.                 Entire Agreement; Severability.  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 the Executive’s
at-will employment and the subject matter of this Agreement, including the Offer
Letter between the Executive and NMG, dated April 16, 2015.  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.

 

16.                 Governing Law; Arbitration.  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.  Except
with respect to claims by NMG for equitable relief under Section 12 of this
Agreement, all disputes under, or relating to, this Agreement shall be subject
to, and resolved exclusively under, The Neiman Marcus Group LLC Mandatory
Arbitration Agreement effective as of March 1, 2013, and as amended from time to
time (“Mandatory Arbitration Agreement”).  The Executive hereby acknowledges and
agrees that the Executive is a Covered Employee under the Mandatory Arbitration
Agreement, and is subject to the Mandatory Arbitration Agreement in all
respects.  With respect to claims by NMG for equitable relief under Section 12
of this Agreement, NMG and the Executive agree that the exclusive forum for any
such claim 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.

 

17.                 Representations. The Executive hereby represents, warrants
and agrees that: (i) there are no restrictions or agreements, oral or written,
to which the Executive is a party or by which the Executive is bound that
prevent or make unlawful the Executive’s employment by NMG or execution and
delivery of, or performance under, this Agreement; (ii) to the best actual
knowledge and belief of the Executive, none of the information supplied by the
Executive to NMG in connection with the Executive’s employment by NMG misstated
a material fact or omitted material facts necessary to make the information
supplied by the Executive not materially misleading; (iii) the Executive will
not, as of the Effective Date, have any business or employment relationship that
creates a conflict between the interests of the Executive and NMG or any of its
Affiliates; and (iv) the Executive will not disclose to NMG, or use, or induce
NMG to use, any proprietary information or trade secrets of others.

 

10

--------------------------------------------------------------------------------

 

18.                 Cooperation.  Following the Executive’s termination of
employment, the Executive shall (a) cooperate with NMG, as reasonably requested
by NMG, to effect a transition of the Executive’s responsibilities and to ensure
that NMG is aware of all matters being handled by the Executive and (ii)
cooperate and provide assistance to NMG at its reasonable request in connection
with any action, suit or proceeding brought by or against NMG or any of its
Affiliates (or in which any of them is or may be a party) or that relates in any
way to the Executive’s acts or omissions while employed by NMG.  NMG agrees to
promptly reimburse the Executive for reasonable expenses incurred by him in
connection with assisting NMG in the manner described in the immediately
preceding sentence (including reasonable legal fees approved in advance by
NMG).  Reimbursement shall be made in accordance with the applicable policy of
NMG then in effect. NMG shall provide reasonable notice of any need for
assistance, and shall use reasonable best efforts to not materially interfere
with his employment or business activities.

 

19.                 Successors and Assigns.  This Agreement is intended to bind
and inure to the benefit of and be enforceable by the Executive, NMG and their
respective heirs, successors and assigns, except that the Executive may not
assign his rights or delegate his duties or obligations hereunder without the
prior written consent of NMG.  NMG may (i) assign any or all of their respective
rights and interests hereunder to one or more of their Affiliates, (ii)
designate one or more of their Affiliates to perform their respective
obligations hereunder, and (iii) assign this Agreement in connection with the
sale of all or substantially all of NMG’s or any of its subsidiary’s equity
interests (directly or indirectly), business or assets (whether by merger, sale
of stock or assets, recapitalization or otherwise).  The rights of NMG hereunder
are enforceable by their Affiliates, who are the intended third party
beneficiaries hereof.  NMG shall require any entity that acquires all or
substantially all the business and/or assets of NMG 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 acquisition had taken place.  If NMG fails
to obtain such agreement, such failure (after notice and opportunity to cure as
set forth in Section 5(g)) shall constitute Good Reason; provided that the
Termination Benefits to which the Executive is entitled upon a termination for
Good Reason pursuant to Section 5(b) shall be the sole remedy of the Executive
for any failure by NMG to obtain such agreement.  As used in this Agreement,
“NMG” shall include any acquirer of all or substantially all the business and/or
assets of NMG that executes and delivers the agreement provided for in this
section or that otherwise becomes obligated under this Agreement by operation of
law

 

20.                 Survival.  The Executive’s termination of employment will
not impair the rights or obligations of any party hereto that accrue hereunder
prior to such termination, except to the extent specifically stated herein.  In
addition to the foregoing, NMG’s obligation under Sections 5 or 10, and the
Executive’s obligations under Sections 4(e), 4(f), 6, 7, 8, and 18, will survive
the Executive’s termination of employment.

 

21.                 Section 409A.  It is the intent of the parties that this
Agreement be interpreted and administered in compliance with the requirements of
Code section 409A to the extent applicable.  In no event whatsoever shall NMG be
liable for any additional tax, interest or penalties that may be imposed on the
Executive by Code section 409A or any damages for failing to comply with Code
section 409A.  In furtherance, but not in limitation of the foregoing:  (a) in
the event that the Executive is a “specified employee” within the meaning of
Code section 409A, payments which constitute a “deferral of compensation” under
Code section 409A and which would otherwise become due during the first six (6)
months following the Executive’s termination of employment shall be delayed and
all such delayed payments shall be paid in full in the seventh (7th) month after
the Executive’s termination of employment, and all subsequent payments shall

 

11

--------------------------------------------------------------------------------

 

be paid in accordance with their original payment schedule, provided that the
above delay shall not apply to any payments that are excepted from coverage by
Code section 409A, such as those payments covered by the “short-term deferral”
exception described in Treasury Regulations section 1.409A-1(b)(4), or the
exception for an “involuntary separation from service” described in Treasury
Regulations section 1.409A-1(n); and (b) notwithstanding any other provision of
this Agreement, a termination of the Executive’s employment hereunder shall
mean, and be interpreted consistent with, a “separation from service” within the
meaning of Code section 409A. For purposes of Code section 409A, the Executive’s
right to receive any installment payments pursuant to this Agreement shall be
treated as a right to receive a series of separate and distinct payments. In no
event may the Executive, directly or indirectly, designate the calendar year of
any payment to be made under this Agreement that is considered non-qualified
deferred compensation. 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 (i) any
reimbursement is for expenses incurred during the period of time specified in
this Agreement, (ii) 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, (iii) 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 (iv) the right to reimbursement or in kind benefits is
not subject to liquidation or exchange for another benefit.

 

22.                 Section 162(m).  The parties hereto recognize that NMG is
not currently subject to Section 162(m) of the Code but that it may become
subject to said section during the term of this Agreement.  In such event, NMG
retains the right to amend the provisions of this Agreement that impact, relate
to or reference NMG’s annual bonus program if NMG determines that such an
amendment would be necessary or appropriate to ensure that any performance-based
compensation payable under a new bonus plan satisfies the requirements for
exemption under Section 162(m) of the Code, provided, however, that any such
amendment is discussed in good faith with the Executive prior to being
implemented, and provides the Executive at least the same economic benefit under
this Agreement as he had prior to the amendment.

 

 

[Remainder of Page Intentionally Left Blank]

 

12

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, NMG has caused this Agreement to be executed on its behalf
by its duly authorized officer, and the Executive has executed this Agreement,
effective as of the Effective Date.

 

 

EXECUTIVE:

 

 

THE NEIMAN MARCUS GROUP LLC

 

 

 

 

 

 

 

 

 

 

 

 

/s/ Donald Grimes

 

By:

/s/  Joe Weber

 

 

 

Senior Vice President and Chief

 

 

 

Human Resources Officer

 

 

 

 

 

13

--------------------------------------------------------------------------------

 

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, any of the following, as
determined in NMG’s sole discretion, (i) the commission of any acts of fraud,
dishonesty (other than inadvertent acts or omissions), disloyalty to NMG or its
affiliates, or moral turpitude; (ii) conduct that is materially detrimental to
NMG, monetarily or otherwise, or reflects unfavorably on NMG or the Executive;
(iii) acts of the Executive in material violation of his obligations under this
Agreement or at law; (iv) the Executive’s failure to comply with or enforce
NMG’s policies concerning equal employment opportunity, including engaging in
sexually or otherwise harassing conduct; (v) the Executive’s insubordination,
failure to perform any duties reasonably assigned to him by NMG or failure to
comply with or enforce other personnel policies of NMG or its Affiliates (other
than by reason of physical or mental illness or injury); (vi) the Executive’s
failure to devote his full working time and best efforts to the performance of
his responsibilities to NMG or its Affiliates; (vii) any act of material
misconduct or gross negligence by the Executive in the performance of his duties
relating to his employment; or (viii) the Executive’s indictment for 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 (iii), (v) and
(vi), the Executive has been provided prior written notice of the failure and
afforded a reasonable opportunity to correct same.

 

3.                                    “Code” means the Internal Revenue Code of
1986, as amended, or any successor statute.

 

4.                                    “Competitor” means (i) the retail
operations of any Person who, at any time during the Executive’s employment with
NMG was a vendor of NMG or any of its Affiliates and who, during any consecutive
12-month period during the five years immediately preceding the Executive’s
termination of employment with NMG had annual gross sales to NMG and its
Affiliates in the aggregate of $150 million or more at retail; (ii) any Person
(Other than NMG or an Affiliate of NMG ) that owns or operates a luxury
specialty retail store in New York, New York metropolitan area; (iii) Saks
Incorporated, Nordstrom, Inc., Barneys New York, Inc., Macy’s Inc., Hudson’s Bay
Company, Amazon.com, Inc., Net-a-Porter LLC, Gilt Groupe, Inc., or if those
corporate names are not correct, the businesses commonly referred to as “Saks,”
“Nordstrom’s,” “Barney’s,” “Bloomingdales,” “Lord & Taylor,” “Amazon,”
“Net-a-Porter,” and “Gilt” or any of their respective parent companies, if
applicable; and (iv) the Affiliates of, successors to and assigns of the Persons
described in (i) and (iii).

 

14

--------------------------------------------------------------------------------

 

5.                                    “Confidential Information” shall mean,
without limitation, all documents or information, in whatever form or medium,
that relates to the business, products, financial condition, services or
research or development of Parent, any of its subsidiaries, or any of their
respective suppliers, distributors, customers, independent contractors,
consultants or other business relations (unless and to the extent that the
Confidential Information becomes generally known to and available for use by the
public other than as a result of any breach of this Agreement or other
unauthorized disclosure by the Executive).  Confidential Information includes,
but is not limited to, the following:  (i) internal business and financial
information (including information relating to strategic and staffing plans and
practices, business, finances, training, marketing, promotional and sales plans
and practices, cost, rate and pricing structures and accounting and business
methods); (ii) identities of, individual requirements of, specific contractual
arrangements with, and information about, Parents’ and any of its Affiliates’
suppliers, distributors, customers, independent contractors, consultants or
other business relations and their confidential information; (iii) trade
secrets, know-how, compilations of data and analyses, techniques, systems,
formulae, recipes, research, records, reports, manuals, documentation, models,
data and data bases relating thereto; (iv) inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports and
all similar or related information (whether or not patentable); and (v) other
Work Product.  Confidential Information shall not include information that (a)
is or becomes generally available to the public other than a result of a
disclosure by the Executive, or (b) is required to be disclosed by applicable
law.

 

6.                                    “Good Reason” shall mean any of the
following actions if taken without the Executive’s prior written consent:  (i) a
material diminution in the Executive’s base compensation (other than pursuant to
action of NMG or its Affiliates reducing the base compensation of all NMG senior
executives by substantially equal amounts or substantially equal percentages as
the reduction of the Executive’s base compensation); (ii) a material diminution
in the Executive’s authority or duties or (iii) a material change in the primary
geographic location at which the Executive must perform services.

 

7.                                    “Management Equity Incentive Plan” means
the NM Mariposa Holdings, Inc. Management Equity Incentive Plan.

 

8.                                    “Noncompetition Area” means the following
geographic areas: (i) any foreign country where NMG or its Affiliates engage in
business of any kind, including selling, purchasing or ordering goods, at any
time during the Executive’s employment with NMG or its Affiliate, and where the
Executive has, during the twenty-four (24) month period immediately predating
the termination of employment, engaged in business on behalf of NMG or its
Affiliates, either in person or remotely; (ii) the United States of America; and
(iii) each metropolitan statistical area, as defined by the US Office of
Management and Budget, where, during the twenty-four (24) month period
immediately predating the termination of employment, the Executive engaged in
business on behalf of NMG or its Affiliates, either in person or remotely.

 

15

--------------------------------------------------------------------------------

 

9.                                    “Parent” means NM Mariposa Holdings, Inc.

 

10.                            “Parent Board” means the Board of Directors of
Parent, or any successor governing body of Parent or its successors.

 

11.                            “Person” means any individual, corporation,
partnership, sole proprietorship, joint venture, association, joint-stock
company, trust, unincorporated organization, limited liability company,
government or other entity.

 

12.                            “Release” means the Agreement and Release to be
executed by the Executive in favor of NMG, which Agreement and Release shall be
in the form prepared by NMG, but which shall contain no post-employment
restrictions other than as stated herein.

 

13.                            “Total Disability” means that the Executive has
been determined under NMG’s long-term disability plan to be eligible for
long-term disability benefits, or, in the absence of the Executive’s
participation in such plan, in NMG’s reasonable judgment, either (i) the
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) the 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.

 

14.                            “Work Product” means all patents and patent
applications, all inventions, innovations, improvements, developments, methods,
designs, analyses, drawings, reports, creative works, discoveries, software,
computer programs, modifications, enhancements, know-how, formulations, concepts
and ideas, and all similar or related information (in each case whether or not
patentable), all copyrights and copyrightable works, all trade secrets,
confidential information, and all other intellectual property and intellectual
property rights that are conceived, reduced to practice, developed or made by
the Executive either alone or with others in the course of employment with NMG
(including employment prior to the date of this Agreement).

 

16

--------------------------------------------------------------------------------