**EXHIBIT 10.32**

 

**CONFIDENTIALITY, NON-COMPETITIONAND TERMINATION BENEFITS AGREEMENT**

 

This Confidentiality,Non-Competition and Termination Benefits Agreement (“Agreement”) is enteredinto effective as of May 3, 2004 between James J. Gold (“Executive”) and BergdorfGoodman, Inc., a New York corporation (“Bergdorf’) and a wholly-ownedsubsidiary of The Neiman Marcus Group, Inc., a Delaware corporation (“NMG”).All capitalized terms used but not defined herein shall have the meaningsassigned to them in Appendix A, which is attached hereto and incorporated fullyherein by reference.

 

WHEREAS, Executive hasbeen promoted to the position of President and Chief Executive Officer ofBergdorf, and Executive understands and agrees that his employment in suchposition shall be on an “at will” basis, and that either Executive or Bergdorfmay terminate Executive’s employment at any time, with or without notice, andfor any reason;

 

WHEREAS, in connectionwith the restructuring of the compensation and benefits provided to seniorexecutives of NMG and its Affiliates, including Executive, the Board ofDirectors of NMG has determined that stock option and restricted stock awardsshould be combined with appropriate post-employment and other restrictionsdesigned to protect the legitimate business interests of NMG and itsAffiliates, including Bergdorf;

 

WHEREAS, effective as ofthis date and as a consequence of his promotion, (i) NMG and Executivel1ave entered into separate stock option and purchase restricted stockagreements (the “Incentive Agreements”) that set forth the rights andobligations of NMG and Executive with respect to such awards, and (ii) NMGhas granted to Executive an ownership interest in NMG in the form of NMG stock;;’

 

WHEREAS, by virtue of hisnew position and responsibilities, Executive has and will have unique access toand knowledge of Bergdorf’s trade secrets and other confidential andproprietary business information;

 

WHEREAS, Executive’sassociation with Bergdorf to the exclusion of its competitors will enhanceBergdorf’s goodwill and Executive’s earning capacity; and

 

WHEREAS, Bergdorf andExecutive mutually desire to protect Bergdorf’s goodwill created by Executive’sassociation with Bergdorf and Bergdorf’s trade secrets and other confidentialand proprietary business information, and in recognition of the possibleinterruption of Executive’s earnings after the end of his Bergdorf employment;

 

NOW, THEREFORE, inconsideration of the Incentive. Agreements and the promises and undertakings ofthe parties set out herein, and intending to be legally bound, Executive andBergdorf agree as follows:

 

1. (a) WhileExecutive is employed at-will by Bergdorf, if Bergdorf terminates Executive’semployment for any reason other than for “Cause,” his “Total Disability,” orhis death, subject to paragraphs l(c) and l(d) below, Bergdorf shallprovide Executive with benefits (“Termination Benefits”) consisting of:

 

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(1) an amount equivalent to 1.5 times histhen-current annual base salary, less required withholding, which amount wouldbe 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, Executiveparticipates in a group medical insurance plan offered by Bergdorf andExecutive is eligible for and elects to receive continued coverage under suchplan in accordance with the Consolidated I Omnibus Budget Reconciliation Act of1985 (“COBRA”) or any successor law, Bergdorf will reimburse Executive duringthe Salary Continuance Period or, if shorter, the period of such actual COBRAcontinuation coverage, for the total amount of the monthly COBRA medicalinsurance premiums actually paid by Executive for such continued medicalinsurance benefits.

 

For the purposes ofdetermining whether or not Bergdorf has terminated Executive’s employment underthis paragraph l(a), any material, adverse change in the terms and conditionsof his employment, including but not limited to a relocation of Executive’s placeof business 50 miles or more from the current location, which change causesExecutive to resign his employment with Bergdorf, will be deemed a terminationby Bergdorf.  A transfer of employment between Bergdorf and NMG or anyAffiliate of NMG shall not be considered as a termination of employment forpurposes of this Agreement.

 

(b) Bergdorfshall require any successor or assignee (whether direct or indirect, bypurchase, merger, consolidation, or otherwise) to all or substantially all thebusiness and/or assets of Bergdorf, by agreement in writing in form andsubstance reasonably satisfactory to Executive, expressly, absolutely, andunconditionally to assume and agree to ‘perform this Agreement in the samemanner and to the same extent that Bergdorf would be required to perform it ifno such succession or assignment had taken place. If Bergdorf fails to obtainsuch agreement by the effective time of any such succession or assignment, suchfailure shall be considered a material, adverse change in the terms andconditions of Executive’s employment and will be deemed a termination byBergdorf for purposes of paragraph l(a) of this Agreement if such failurecauses Executive to resign his employment with Bergdorf; provided that theTermination Benefits to which Executive would be entitled after suchresignation pursuant to paragraph l(a) of this Agreement shall be the soleremedy of Executive for any failure by Bergdorf to obtain such agreement. Asused 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 thatexecutes and delivers the agreement provided for in this paragraph 1 (b) orthat otherwise becomes obligated under this Agreement by operation of law.

 

It is theexpectation of the parties that any successor or assignee (whether direct orindirect, by purchase, merger, consolidation, or otherwise) to an orsubstantially all the business and/or assets of NMG, if such assets continue toinclude a controlling interest in the stock of Bergdorf as of the time of suchsuccession or assignment, shall by agreement in writing, in form and substancereasonably satisfactory to Executive, expressly, absolutely, andunconditionally agree to cause Bergdorf to honor and agree to perform thisAgreement following such succession or assignment. If such agreement has notbeen executed and delivered by the effective time of any such succession orassignment, such failure shall be considered a material, adverse change in theterms and conditions of Executive’s employment and will be deemed a terminationby Bergdorf for purposes of paragraph l(a) of this Agreement if suchfailure causes Executive to resign his employment with Bergdorf; provided thatthe Termination Benefits to which Executive would be entitled after suchresignation pursuant to paragraph l(a) of this Agreement shall be the soleremedy of Executive if no such agreement has been executed and delivered as ofthe effective time of such succession or assignment. As used in this Agreement,“NMG” shall include any successor or assignee (whether direct or indirect, bypurchase, merger, consolidation, or otherwise) to all or substantially all thebusiness and/or assets of NMG that executes and delivers the agreement providedfor in this paragraph or that otherwise becomes obligated under II thisAgreement by operation of law.

 

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(c) If, inthe reasonable judgment of Bergdorf, Executive engages in any of the RestrictedActivities described in paragraph 3 of this Agreement, Bergdorf s obligation toprovide the Termination Benefits shall end as of the date Bergdorf so notifiesExecutive in writing.

 

(d) IfExecutive is arrested or indicted for any felony, other serious criminaloffense, or any violation of federal or state securities laws, or has any civilenforcement action brought against him by any regulatory agency, for actions oromissions related to his employment with Bergdorf, or if Bergdorf reasonablybelieves in its sole judgment that Executive has committed any act or omissionthat would have entitled Bergdorf to terminate his employment for Cause,whether such act or omission was committed during his employment with Bergdorfor during the Salary Continuance Period, Bergdorf may suspend any paymentsremaining pursuant to paragraph l(a) of this Agreement until the finalresolution of such criminal or civil proceedings or until Bergdorf has made afinal determination in its sole judgment as to whether Executive committed suchan act or omission. If Executive is found guilty or enters into a pleaagreement, consent decree or similar arrangement with respect to any suchcriminal or civil proceedings, or if Bergdorf determines in its sole judgmentthat Executive has committed such an act or omission, (1) Bergdorf’sobligation to provide the Termination Benefits shall immediately end, and (2) Executiveshall repay to Bergdorf any amounts paid to him pursuant to paragraph 1 (a) ofthis Agreement within 30 days after a written request to do so by Bergdorf. Ifany such criminal or civil proceedings do not result in 11 finding of guilt orthe entry of a plea agreement or consent decree or similar arrangement, orBergdorf determines in its sole judgment that Executive has not committed suchan act or omission, Bergdorf shall pay to Executive any payments pursuant toparagraph l(a) of this Agreement that it has suspended, with interest onsuch suspended payments at its cost of funds, and shall make any remainingpayments due thereunder.

 

2. Executive acknowledgesand agrees that (a) Bergdorf is engaged in a highly competitive business; (b) Bergdorfhas expended considerable time and resources to develop goodwill with itscustomers, vendors, and others, and to create, protect, and exploitConfidential Information; (c) Bergdorf must continue to prevent thedilution of its goodwill and unauthorized use or disclosure of its ConfidentialInformation to avoid irreparable harm to its legitimate business interests; (d) inthe specialty retail business, his participation in or direction of Bergdorf’sday-today operations and strategic planning are an integral part of Bergdorf’scontinued success and goodwill; ( e) given his position and responsibilities,he necessarily will be creating Confidential Information that belongs toBergdorf and enhances Bergdorf s goodwill, and in carrying out hisresponsibilities he in turn will be relying on Bergdorf’s goodwill and thedisclosure by Bergdorf to him of Confidential Information; (f) he willhave access to Confidential Information that could be used by any Competitor ofBergdorf in a manner that would irreparably harm Bergdorf’s competitiveposition in the marketplace and dilute its goodwill; and (g) henecessarily would use or disclose Confidential Information if he were to engagein competition with Bergdorf.  Bergdorf acknowledges and agrees thatExecutive must have and continue to have throughout his employment the benefitsand use of its goodwill and Confidential Information in order to properly carryout his responsibilities. Bergdorf accordingly promises upon execution anddelivery of this Agreement to provide Executive immediate access to new andadditional Confidential Information and authorize him to engage in activitiesthat will create new and additional Confidential Information. Bergdorf andExecutive thus acknowledge and agree that I during Executive’s employment withBergdorf and upon execution and delivery of this Agreement he (a) hasreceived, will receive, and will continue to receive, Confidential Informationthat is unique, proprietary, and valuable to Bergdorf, (b) has created,will create, and will continue to create, Confidential Information that isunique, proprietary, and valuable to Bergdorf, and (c) has benefited, willbenefit, and will continue to benefit, including without limitation by way ofincreased earnings and earning capacity, from the goodwill Bergdorf hasgenerated and from the Confidential Information. Accordingly, Executiveacknowledges and agrees that at all times during his employment by Bergdorf andthereafter:

 

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(a) allConfidential Information shall remain and be the sole and exclusive property ofBergdorf;

 

(b) he willprotect and safeguard all Confidential Information;

 

(c) he willhold all Confidential Information in strictest confidence and not, directly orindirectly, disclose or divulge any Confidential Information to any personother than an officer, director, or employee of Bergdorf or NMG to the extentnecessary for the proper performance of his responsibilities unless authorizedto do so by Bergdorf or compelled to do so by law or valid legal process;

 

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

 

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

 

(f) absentthe promises and representations of Executive in this paragraph and paragraph 3below, Bergdorf would require him immediately to return any tangibleConfidential Information in his possession, would not provide Executive withnew and additional Confidential Information, would not authorize Executive toengage in activities that will create new and additional ConfidentialInformation and would not enter into this Agreement, and NMG would not haveentered into the Incentive Agreements.

 

3. In consideration ofBergdorf’s promises to provide Executive with new and additional ConfidentialInformation and to authorize him to engage in activities that will create newand additional Confidential Information upon execution and delivery of thisAgreement, and the other promises and undertakings of Bergdorf in thisAgreement and NMG in the Incentive Agreements, Executive agrees that, while heis employed by Bergdorf and for a period of eighteen months following the endof that employment for any reason, he shall not engage in any of the followingactivities (the “Restricted Activities”):

 

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(a) He willnot directly or indirectly disparage Bergdorf, NMG, or their Affiliates, or anyproducts, services, or operations of Bergdorf, NMG or their Affiliates, or anyof the former, current, or future officers, directors, or employees ofBergdorf, NMG or their Affiliates;

 

(b) He willnot, whether on his own behalf or on behalf of any other individual,partnership, firm, corporation or business organization, either directly orindirectly solicit, induce, persuade, or entice, or endeavor to solicit,induce, persuade, or entice, any person who is then employed by or otherwiseengaged to perform services for Bergdorf, NMG, or their Affiliates to leavethat employment or cease performing those services;

 

(c) He willnot, whether on his own behalf or on behalf of any other individual,partnership, firm, corporation or business organization, either directly orindirectly solicit, induce, persuade, or entice, or endeavor to solicit,induce, persuade, or entice, any person who is then a customer, supplier, orvendor 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 orany part of such person’s or entity’s business from Bergdorf, NMG or theirAffiliates; and

 

(d) He willnot associate directly or indirectly, as an employee, officer, director, agent,partner, stockholder, owner, representative, or consultant, with any Competitorunless (1) he has advised Bergdorf in writing in advance of his desire toundertake, such activities and the specific nature of such activities; (2) Bergdorfhas received written assurances (that will be designed, among other things, toprotect Bergdorf’s, NMG’s and their Affiliates’ goodwill, ConfidentialInformation, and other important commercial interests) from the Competitor andExecutive that are, in Bergdorf’s sole discretion, adequate to protect itsinterests; (3) Bergdorf, in its sole discretion, has approved in writingsuch association; and (4) Executive and the Competitor adhere to suchassurances. Executive shall not be in violation of this paragraph 3( d) solelyas a result of his investment in stock or other securities of a Competitor orany of its Affiliates listed on a national securities exchange or activelytraded in the over-the-counter market if he and the members of his immediatefamily do not, directly or indirectly, hold more than a total of one (1) percentof all such shares of stock or other securities issued and outstanding.Executive acknowledges and agrees that engaging in the Restricted Activitiesdescribed in this subparagraph would result in the inevitable disclosure or useof Confidential Information for the Competitor’s benefit or to the detriment ofBergdorf.

 

Executiveacknowledges and agrees that the restrictions contained in this paragraph 3 areancillary to an otherwise enforceable agreement, including without limitationthe mutual promises and undertakings set forth in paragraph 2 of this Agreementand in the Incentive Agreements; that the promises and undertakings of Bergdorfset forth in paragraph 2 of this Agreement and those of NMG in the IncentiveAgreements, Executive’s position and responsibilities with Bergdorf, and NMGgranting to Executive ownership in NMG in the form of NMG stock, give rise toBergdorf’s interest in restricting Executive’s post-employment activities; thatsuch restrictions are designed to enforce Executive’s promises and undertakingsset forth in this paragraph 3 and his common-law obligations and duties owed toBergdorf; that the restrictions are reasonable and necessary, are valid andenforceable under New York law, and do not impose a greater restraint thannecessary to protect Bergdorf’s goodwill, Confidential Information, and otherlegitimate business interests; that he will immediately notify Bergdorf inwriting should he believe or be advised that the restrictions are not valid orenforceable under New York law or the law of any other state that he contendsor is advised is applicable; that the mutual promises and undertakings ofBergdorf and Executive under paragraphs 2 and 3 of this Agreement are notcontingent on the duration of Executive’s employment with Bergdorf; and thatabsent the promises and representations made by Executive in this paragraph 3and paragraph 2 above, Bergdorf would require him to return any ConfidentialInformation in his possession, would not provide Executive with new andadditional Confidential Information, would not authorize Executive to engage inactivities that will create new and additional Confidential Information, andwould not enter into this Agreement, and NMG would not have entered into theIncentive Agreements.

 

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4. The TerminationBenefits constitute all of Bergdorf’s obligations to Executive with respect tothe end of Executive’s employment with Bergdorf. However, nothing in thisAgreement is intended to limit any earned, vested benefits (other than anyentitlement to severance or separation pay, if any) that Executive may haveunder the applicable provisions of any benefit plan of Bergdorf in whichExecutive is participating at the time of his termination of employment orresignation.

 

5. Executive acknowledgesand agrees that Bergdorf would not have an adequate remedy at law and would beirreparably harmed in the event that any of the provisions of paragraphs 2 or 3of this Agreement were not performed in accordance with their specific terms orwere otherwise breached. Accordingly, Executive agrees that Bergdorf shall beentitled to equitable relief, including preliminary and permanent injunctionsand specific performance, in the event Executive breaches or threatens tobreach any of the provisions of such paragraphs, without the necessity ofposting any bond or proving special damages or irreparable injury. Suchremedies shall not be deemed to be the exclusive remedies for a breach orthreatened breach of this Agreement by Executive, but shall be in addition toall other remedies available to Bergdorf at law or equity. Executiveacknowledges and agrees that Bergdorf shall be entitled to recover itsattorneys’ fees, expenses, and court ‘costs, in addition to any other remediesto which it may be entitled, in the event he breaches this Agreement. Executiveacknowledges and agrees that no breach by Bergdorf of this Agreement or failureto enforce or insist on its rights under this Agreement shall constitute awaiver or abandonment of any such rights or defense to enforcement of suchrights.

 

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

 

7. This Agreementcontains the entire agreement between the parties and supersedes all prioragreements and understandings, oral or written, with respect to the ending ofExecutive’s at-will employment and the subject matter of this Agreement. ThisAgreement may not be changed orally. It may be changed only by writtenagreement signed by the party against whom any waiver, change, amendment,modification or discharge is sought to be enforced. This Agreement is to beconstrued as a whole, according to its fair meaning, and not strictly for oragainst any of the parties. If any provision of this Agreement shall bedetermined by a court to be invalid or unenforceable, the remaining provisionsof this Agreement shall not be affected thereby, shall remain in full force andeffect, and shall be enforceable to the fullest extent permitted by applicablelaw.

 

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8. The validity,performance and enforceability of this Agreement shall be determined andgoverned by the laws of the State of New York, without regard to its conflictof laws principles.  Bergdorf and Executive agree that the exclusive forumfor any action concerning this Agreement shall be in a court of competentjurisdiction in New York County, New York, with respect to a state court, orthe United States District Court for the Southern District of New York, withrespect to a federal court. EXECUTIVE HEREBY CONSENTS TO THE EXERCISE OFJURISDICTION OF A COURT IN THE EXCLUSIVE FORUM AND WAIVES ANY RIGHT HE MAY HAVETO CHALLENGE OR CONTEST THE REMOVAL AT ANY TIME BY BERGDORF TO FEDERAL COURT OFANY SUCH ACTION HE MAY BRING AGAINST IT IN STATE COURT. EXECUTIVE ANDBERGDORF FURTHER HEREBY MUTUALLY WAIVE THEIR RIGHT TO TRIAL BY JURY IN ANYACTION CONCERNING THIS AGREEMENT.

 

9. Executive’s promisesand obligations under this Agreement shall survive the end of his employmentwith Bergdorf, and such promises and obligations shall inure to the benefit ofany Affiliates, subsidiaries, divisions, successors, or assigns of Bergdorf.

 

 
| ** **              | ** ** | ** ** | **BERGDORF  GOODMAN, INC.**      |
|-------------------------|------------|------------|----------------------------------|
|                    |       |       |                             |
|                    |       |       |                             |
| /S/  James J. Gold |       | By:        | /s/  Nelson  A. Bangs       |
|                    |       |       | Nelson A. Bangs,  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 incorporatedor unincorporated, directly or indirectly controlling or controlled by or underdirect or indirect common control with such entity.

 

2. “Cause” means, inBergdorf’s reasonable judgment, (i) a breach of duty by Executive in thecourse of his employment involving fraud, acts of dishonesty (other thaninadvertent acts or omissions), disloyalty, or moral turpitude; (ii) conductthat is materially detrimental to Bergdorf, monetarily or otherwise, orreflects unfavorably on Bergdorf or Executive to such an extent that Bergdorf’sbest interests reasonably require the termination of Executive’s employment; (iii) actsof Executive in violation of his obligations under this Agreement or at law; (iv) Executive’sfailure to comply with or enforce Bergdorf’s policies concerning equalemployment opportunity, including engaging in sexually or otherwise harassingconduct; (v) Executive’s repeated insubordination or failure to complywith or enforce other personnel policies of Bergdorf or its Affiliates; (vi) Executive’sfailure to devote his full working time and best efforts to the performance ofhis responsibilities to Bergdorf or its Affiliates; or (vii) Executive’sconviction of or entry of a plea agreement or consent decree or similararrangement with respect to, a felony, other serious criminal offense, or anyviolation of federal or state securities laws; provided, however, that withrespect to items (v) and (vi), Executive has been provided prior writtennotice of the failure and afforded a reasonable opportunity to correct same.

 

3. “Competitor” means (i) eachof Saks Incorporated, Nordstrom, Inc., Barneys New York, Inc., anyAffiliate of any of them, and any other person or entity that owns, operates orcontrols any of them or any of their Affiliates, directly or indirectly; (ii) thesuccessors to or assigns of the persons or entities identified in (i); and (iii) anyother person or entity (and any Affiliate of such person or entity) that owns,operates or controls, directly or indirectly, a luxury specialty retail store.

 

4. “ConfidentialInformation” shall mean, without limitation, all documents or information, inwhatever 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, plansand opportunities; and customer, vendor, and supplier information; butexcludin1! any such information that is or becomes generally available to thepublic other than as a result of any breach of this Agreement or otherunauthorized disclosure by Executive.

 

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

 

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