Document:

Exhibit
10.11

 

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 Karen W. Katz (“Executive”) and The Neiman Marcus Group, Inc., a
Delaware corporation, (“NMG”), and replaces and supersedes in its entirety that
certain Termination and Change of Control Agreement between Executive and NMG
dated May 22, 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 President and Chief
Executive Officer of Neiman Marcus Stores and either Executive or NMG may
terminate Executive’s employment at any time, with or without notice, and for
any reason;

 

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

 

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

 

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

 

WHEREAS, by virtue of her new position and responsibilities, Executive
has unique access to and knowledge of NMG’s trade secrets and other
confidential and proprietary business information;

 

WHEREAS, Executive’s association with NMG to the exclusion of its
competitors is anticipated to enhance NMG’s goodwill and Executive’s earning
capacity; and

 

WHEREAS, NMG and Executive mutually desire to protect NMG’s goodwill created
by Executive’s association with NMG and NMG’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 her NMG
employment;

 

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

 

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

 

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

 

 

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

 

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

 

For
the purposes of determining whether or not NMG has terminated Executive’s
employment under this paragraph 1(a), any material, adverse change in the terms
and conditions of her 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 her employment with NMG, will be deemed a
termination by NMG. A transfer of employment between NMG and its Affiliates
shall not be considered as a termination of employment for purposes of this
Agreement.

 

(b) NMG shall require any successor or assignee (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all the business and/or assets of NMG, by agreement in writing in
form and substance reasonably satisfactory to Executive, expressly, absolutely,
and unconditionally to assume and agree to perform this Agreement in the same
manner and to the same extent that NMG would be required to perform it if no
such succession or assignment had taken place. If NMG fails to obtain such
agreement by the effective time of any such succession or assignment, such
failure shall be considered a material, adverse change in the terms and
conditions of Executive’s employment and will be deemed a termination by NMG for
purposes of paragraph 1(a) of this Agreement if such failure causes Executive
to resign her employment with NMG; provided that the Termination Benefits to
which Executive would be entitled after such resignation pursuant to paragraph
1(a) of this Agreement shall be the sole remedy of Executive for any failure by
NMG to obtain such agreement. As used in this Agreement, “NMG” shall include
any successor or assignee (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all the business and/or
assets of NMG that executes and delivers the agreement provided for in this
paragraph 1(b) or that otherwise becomes obligated under this Agreement by
operation of law.

 

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

 

(d) If Executive is arrested or indicted for any felony, other serious
criminal offense, or any violation of federal or state securities laws, or has
any civil enforcement action brought against him by any regulatory agency, for
actions or omissions related to her employment with NMG, or if NMG reasonably
believes in its sole judgment that Executive has committed any act or omission
that would have entitled NMG to terminate her employment for Cause, whether
such act or omission was committed during her employment with NMG or during the
Salary Continuance Period, NMG may suspend any

 

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payments
remaining pursuant to paragraph l(a) of this Agreement until the [mal
resolution of such criminal or civil proceedings or until NMG has made a final
determination in its sole judgment as to whether Executive committed such an
act or omission. If Executive is found guilty or enters into a plea agreement,
consent decree or similar arrangement with respect to any such criminal or
civil proceedings, or if NMG determines in its sole judgment that Executive has
committed such an act or omission, (1) NMG’s obligation to provide the
Termination Benefits shall immediately end, and (2) Executive shall repay to
NMG any amounts paid to him pursuant to paragraph 1(a) of this Agreement within
30 days after a written request to do so by NMG. If any such criminal or civil
proceedings do not result in a finding of guilt or the entry of a plea
agreement or consent decree or similar arrangement, or NMG determines in its
sole judgment that Executive has not committed such an act or omission, NMG
shall pay to Executive any payments pursuant to paragraph 1(a) of this
Agreement that it has suspended, with interest on such suspended payments at
its cost of funds, and shall make any remaining payments due thereunder.

 

2. Executive acknowledges and agrees that (a) NMG is engaged in a
highly competitive business; (b) NMG has expended considerable time and
resources to develop goodwill with its customers, vendors, and others, and to
create, protect, and exploit Confidential Information; (c) NMG must continue to
prevent the dilution of its goodwill and unauthorized use or disclosure of its
Confidential Information to avoid irreparable harm to its legitimate business
interests; (d) in the specialty retail business, her participation in or
direction of NMG’s day-to-day operations and strategic planning as a result of
her promotion will be an integral part of NMG’s continued success and goodwill;
(e) given her new position and responsibilities, she necessarily will be
creating Confidential Information that belongs to NMG and enhances NMG’s
goodwill, and in carrying out her new responsibilities she in turn will be
relying on NMG’s goodwill and the disclosure by NMG to her of Confidential
Information; (f) she 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 (g) she
necessarily would use or disclose Confidential Information if she were to
engage in competition with NMG. NMG acknowledges and agrees that Executive must
have and continue to have throughout her employment the benefits and use of its
goodwill and Confidential Information in order to properly carry out her new
responsibilities. NMG accordingly promises upon execution and delivery of this
Agreement and in connection with Executive’s promotion to provide Executive
immediate access to new and additional Confidential Information and authorize
her to engage in activities that will create new and additional Confidential
Information. NMG and Executive thus acknowledge and agree that upon execution
and delivery of this Agreement and in connection with the promotion of
Executive and during her employment in her new position, Executive (a) will
receive Confidential Information that is unique, proprietary, and valuable to
NMG, (b) will create Confidential Information that is unique, proprietary, and
valuable to NMG, and (c) 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, Executive acknowledges and
agrees that at all times during her employment by NMG and thereafter:

 

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

 

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

 

(c) she 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

 

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officer,
director, or employee of NMG to
the extent necessary for the proper performance of her responsibilities unless
authorized to do so by NMG or compelled to do so by law or valid legal process;

 

(d) if she believes she is compelled by law or valid legal process to
disclose or divulge any Confidential Information, she 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 her employment with NMG for any reason or at the
request of NMG at any time, she
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 Executive in this
paragraph and paragraph 3 below, NMG would not promote Executive, would require
her immediately to return any tangible Confidential Information in her
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 or the Incentive Agreements.

 

3.
            In consideration of NMG’s
promises to promote Executive, provide her with new and additional Confidential
Information, and to authorize her 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 NMG in this Agreement and
the Incentive Agreements, Executive agrees that, while she is employed by NMG
and for a period of 18 months following the end of that employment for any
reason, she shall not engage in any of the following activities (the
“Restricted Activities”):

 

(a) She will not directly or indirectly disparage NMG or its
Affiliates, any products, services, or operations of NMG or its Affiliates, or
any of the former, current, or future officers, directors, or employees of NMG or its Affiliates;

 

(b) She will not, whether on her own behalf or on behalf of any other
individual, partnership, firm, corporation or business organization, either
directly or indirectly solicit, induce, persuade, or entice, or endeavor to
solicit, induce, persuade, or entice, any person who is then employed by or
otherwise engaged to perform services for NMG or its Affiliates to leave that
employment or cease performing those services;

 

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

 

4

 

to
protect its interests; (3) NMG, in its sole discretion, has approved in writing
such association; and (4) Executive and the Competitor adhere to such
assurances. This restriction (1) extends to the performance by Executive,
directly or indirectly, of the same or similar activities Executive has
performed for NMG or any of its Affiliates or such other activities that by
their nature are likely to lead to the disclosure of Confidential Information,
and (2) with respect to the post-employment restriction, applies to any Competitor
that has a retail store within 50 miles of, or in the same Metropolitan
Statistical Area as, any retail store of NMG or any of its Affiliates.
Executive shall not be in violation of this paragraph 3(d) solely as a result
of her 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 she and the members of her immediate family do not,
directly or indirectly, hold more than a total of one (1) percent of all such
shares of stock or other securities issued and outstanding. Executive
acknowledges and agrees that engaging in the activities restricted by this
subparagraph would result in the inevitable disclosure or use of Confidential Information
for the Competitor’s benefit or to the detriment of NMG.

 

Executive acknowledges and agrees that the restrictions contained in
this paragraph 3 are ancillary to an otherwise enforceable agreement, including
without limitation the mutual promises and undertakings set forth in paragraph
2 of this Agreement and in the Incentive Agreements; that NMG’s promises and
undertakings set forth in paragraph 2 of this Agreement and in the Incentive
Agreements, Executive’s new position and responsibilities with NMG, and NMG
granting to Executive ownership in NMG in the form of NMG stock, give rise to
NMG’s interest in restricting Executive’s post-employment activities; that such
restrictions are designed to enforce Executive’s promises and undertakings set
forth in this paragraph 3 and her 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 she will immediately notify NMG in writing
should she believe or be advised that the restrictions are not valid or
enforceable under Texas law or the law of any other state that she contends or
is advised is applicable; that the mutual promises and undertakings of NMG and
Executive under paragraphs 2 and 3 of this Agreement are not contingent on the
duration of Executive’s employment with NMG; and that absent the promises and
representations made by Executive in this paragraph 3 and paragraph 2 above,
NMG would not promote Executive, would require her to return any Confidential
Information in her 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 or the Incentive Agreements.

 

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

 

5.
            Executive acknowledges and
agrees that NMG would not have an adequate remedy at law and would be
irreparably harmed in the event that any of the provisions of paragraphs 2 or 3
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, Executive agrees that NMG shall be
entitled to equitable relief, including preliminary and permanent injunctions
and specific performance, in the event Executive breaches or threatens to
breach any of the provisions

 

5

 

of
such paragraphs, without the necessity of posting any bond or proving special
damages or irreparable injury. Such remedies shall not be deemed to be the
exclusive remedies for a breach or threatened breach of this Agreement by
Executive, but shall be in addition to all other remedies available to NMG at
law or equity. Executive acknowledges and agrees that NMG shall be entitled to
recover its attorneys’ fees, expenses, and court costs, in addition to any
other remedies to which it may be entitled, in the event she breaches this
Agreement. Executive acknowledges and agrees that no breach by NMG of this
Agreement or failure to enforce or insist on its rights under this Agreement
shall constitute a waiver or abandonment of any such rights or defense to
enforcement of such rights.

 

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

 

7.
            This Agreement contains the
entire agreement between the parties and supersedes all prior agreements and
understandings, oral or written, with respect to the ending of Executive’s
at-will employment and the subject matter of this Agreement. This Agreement may
not be changed orally. It may be changed only by written agreement signed by
the party against whom any waiver, change, amendment, modification or discharge
is sought to be enforced. This Agreement is to be construed as a whole,
according to its fair meaning, and not strictly for or against any of the
parties. If any provision of this Agreement shall be determined by a court to
be invalid or unenforceable, the remaining provisions of this Agreement shall
not be affected thereby, shall remain in full force and effect, and shall be
enforceable to the fullest extent permitted by applicable law.

 

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

 

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

 

 

	
   

  	
   

  	
  THE NEIMAN MARCUS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/  Karen W. Katz

  	
   

  	
   

  	
  By:

  	
  /s/  Marita O’Dea

  	
   

  
	
  Karen
  W. Katz

  	
   

  	
   

  	
  Marita
  O’Dea, Senior Vice President

  
						

 

6

 

APPENDIX A

 

Definitions

 

1.
            “Affiliate” means, with
respect to any entity, any other corporation, organization, association, partnership,
sole proprietorship or other type of entity, whether incorporated or
unincorporated, directly or indirectly controlling or controlled by or under
direct or indirect common control with such entity.

 

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

 

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

 

4.
            “Confidential Information”
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 NMG’s reasonable judgment, either (i) Executive has been unable
to perform her 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 her employment with NMG on account of a physical or mental
impairment.

 

7Exhibit 10.22

 

CONFIDENTIALITY, NON-COMPETITION AND
TERMINATION BENEFITS

AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 NMG shall require any successor
or assignee (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all the business and/or assets of NMG, by
agreement in writing in form and substance reasonably satisfactory to
Executive, expressly, absolutely, and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that NMG would
be required to perform it if no such succession or assignment had taken
place.  If NMG fails to obtain such
agreement by the effective time of any such succession or assignment, such
failure shall be considered a material, adverse change in the terms and
conditions of Executive’s employment and will be deemed a termination by NMG
for purposes of paragraph 1(a) of this Agreement if such failure causes
Executive to resign his employment with NMG; provided that the Termination
Benefits to which Executive would be entitled after such resignation pursuant
to paragraph 1(a) of this Agreement shall be the sole remedy of Executive for
any failure by NMG to obtain such agreement. 
As used in this Agreement, “NMG” shall include any successor or assignee
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all the business 

 

2

 

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

 

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

 

(d)                                 If Executive is arrested or
indicted for any felony, other serious criminal offense, or any violation of
federal or state securities laws, or has any civil enforcement action brought
against him by any regulatory agency, for actions or omissions related to his
employment with NMG, or if NMG reasonably believes in its sole judgment that
Executive has committed any act or omission that would have entitled NMG to
terminate his employment for Cause, whether such act or omission was committed
during his employment with NMG or during the Salary Continuance Period, NMG may
suspend any payments remaining pursuant to paragraph 1(a) of this Agreement
until the final resolution of such criminal or civil proceedings or until NMG
has made a final determination in its sole judgment as to whether Executive
committed such an act or omission.  If
Executive is found guilty or enters into a plea agreement, consent decree or
similar arrangement with respect to any such criminal or civil proceedings, or
if NMG determines in its sole judgment that Executive has committed such an act
or omission, (1) NMG’s obligation to provide the Termination Benefits shall
immediately end, and (2) Executive shall repay to NMG any amounts paid to him
pursuant to paragraph 1(a) of this Agreement within 30 days after a written
request to do so by NMG.  If any such
criminal or civil proceedings do not result in a finding of guilt or the entry
of a plea agreement or consent decree or similar arrangement, or NMG determines
in its sole judgment that Executive has not committed such an act or omission,
NMG shall pay to Executive any payments pursuant to paragraph 1(a) of this
Agreement that it has suspended, with interest on such suspended payments at
its cost of funds, and shall make any remaining payments due thereunder.

 

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

 

3

 

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

 

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

 

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

 

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

 

(d)                                 he will hold all Confidential
Information in strictest confidence and not, directly or indirectly, disclose
or divulge any Confidential Information to any person other than an officer,
director, or employee of NMG to the extent necessary for the proper performance
of his responsibilities unless authorized to do so by NMG, compelled to do so
by law or valid legal process, or required to do so by the Texas Disciplinary
Rules of Professional Conduct;

 

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

 

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

 

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

 

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

 

4

 

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

 

(a)                                          He will not directly or
indirectly disparage NMG or its Affiliates, any products, services, or
operations of NMG or its Affiliates, or any of the former, current, or future
officers, directors, or employees of NMG or its Affiliates;

 

(b)                                         He will not, whether on his own
behalf or on behalf of any other individual, partnership, firm, corporation or
business organization, either directly or indirectly solicit, induce, persuade,
or entice, or endeavor to solicit, induce, persuade, or entice, any person who
is then employed by or otherwise engaged to perform services for NMG or its
Affiliates to leave that employment or cease performing those services;

 

(c)                                          He will not, whether on his own
behalf or on behalf of any other individual, partnership, firm, corporation or
business organization, either directly or indirectly solicit, induce, persuade,
or entice, or endeavor to solicit, induce, persuade, or entice, any person who
is then a customer, supplier, or vendor of NMG or any of its Affiliates to
cease being a customer, supplier, or vendor of NMG or any of its Affiliates or
to divert all or any part of such person’s or entity’s business from NMG or any
of its Affiliates;

 

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

 

(e)                                          He will not associate directly
or indirectly, in a non-legal capacity as an employee, officer, director,
agent, partner, stockholder, owner, representative, or consultant, with any
Competitor of NMG or any of its Affiliates, unless (1) he has advised NMG in
writing in advance of his desire to undertake such activities and the specific
nature of such activities; (2) NMG has received written assurances (that will
be designed, among other things, to protect NMG’s and its Affiliates’ goodwill,
Confidential Information, and other important commercial interests) from the
Competitor and Executive that are, in NMG’s sole discretion, adequate to
protect its interests; (3) NMG, in its sole discretion, has approved in writing
such association; and (4) Executive and the Competitor adhere to such
assurances.  This restriction (1) extends
to the performance by Executive, directly or indirectly, of the same or similar
activities Executive has performed for NMG or any of its Affiliates in a
non-legal capacity, if any, or such other activities that by their nature are
likely to lead to the disclosure of Confidential Information, and (2) with
respect to the post-employment restriction, applies to any Competitor that has
a retail store within 50 miles of, or in the same Metropolitan Statistical Area
as, any retail store of NMG or any of its Affiliates.  Executive shall not be in violation of this paragraph 3(d) solely
as a result of his investment in stock or other securities of a Competitor or
any of its Affiliates listed 

 

5

 

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

 

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

 

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

 

5.                                       Executive acknowledges and
agrees that NMG would not have an adequate remedy at law and would be
irreparably harmed in the event that any of the provisions of paragraphs 2 or 3
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached.  Accordingly,
Executive agrees that NMG shall be entitled to equitable relief, including
preliminary and permanent injunctions and specific performance, in the event
Executive breaches or threatens to breach any of the provisions of such
paragraphs, without the necessity of posting any bond or proving special
damages or irreparable injury.  Such
remedies shall not be deemed to be the exclusive remedies for a breach or
threatened breach of this Agreement by Executive, but shall be in addition to
all other remedies available to NMG at law 

 

6

 

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

 

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

 

7.                                       This Agreement contains the
entire agreement between the parties and supersedes all prior agreements and
understandings, oral or written, with respect to the ending of Executive’s
at-will employment and the subject matter of this Agreement, including the 2001
Agreement, which is hereby terminated. 
This Agreement may not be changed orally.  It may be changed only by written agreement signed by the party
against whom any waiver, change, amendment, modification or discharge is sought
to be enforced.  This Agreement is to be
construed as a whole, according to its fair meaning, and not strictly for or
against any of the parties.  If any
provision of this Agreement shall be determined by a court to be invalid or
unenforceable, the remaining provisions of this Agreement shall not be affected
thereby, shall remain in full force and effect, and shall be enforceable to the
fullest extent permitted by applicable law.

 

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

 

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

 

 

	
   

  	
   

  	
  THE
  NEIMAN MARCUS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ 
  Nelson A. Bangs

  	
   

  	
  By:

  	
    /s/  Marita O’Dea

  	
   

  
	
  Nelson A. Bangs

  	
   

  	
   

  
						

 

7

APPENDIX A

 

Definitions

 

1.                                       “Affiliate” means, with respect
to any entity, any other corporation, organization, association, partnership,
sole proprietorship or other type of entity, whether incorporated or
unincorporated, directly or indirectly controlling or controlled by or under
direct or indirect common control with such entity.

 

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

 

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

 

4.                                       “Confidential Information” means
any information about NMG or its Affiliates that is protected by the
attorney-client privilege and any unprivileged information relating to NMG or
its Affiliates or furnished to Executive by NMG or its Affiliates and acquired
by Executive during the course of or by reason of Executive’s legal
representation of NMG or its Affiliates and Executive’s employment by NMG,
including, without limitation, all documents or information, in whatever form
or medium, concerning or evidencing sales; costs; pricing; strategies;
forecasts and long range plans; financial and tax information; personnel
information; business, marketing and operational projections, plans and opportunities;
and customer, vendor, and supplier information; but excluding any such
information that is or becomes generally available to the public other than as
a result of any breach of this Agreement or other unauthorized disclosure by
Executive.

 

i

 

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

 

ii

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