Document:

Exhibit 10.46

 

THE NEIMAN MARCUS GROUP, INC.

GENERAL

CHANGE OF CONTROL SEVERANCE PLAN

 

THIS GENERAL CHANGE OF CONTROL SEVERANCE PLAN, made and executed at
Dallas, Texas, by THE NEIMAN MARCUS GROUP, INC., a Delaware corporation, is
being established to provide for the payment of severance benefits to certain
of its eligible employees.

 

Section 1.               Definitions.  Unless the context clearly indicates
otherwise, when used in this Plan:

 

(a)           “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.

 

(b)           “Board” means the board of directors of the Company.

 

(c)           “Bonus” means the amount payable to Employee under
the Company’s applicable annual incentive bonus plan with respect to a fiscal
year of the Company.

 

(d)           “Cause” means

 

(1)           the willful and continued failure by Employee to
substantially perform duties consistent with Employee’s position with the
Company (other than any such failure resulting from incapacity due to physical
or mental illness), after a demand for substantial performance is delivered to
Employee, and Employee has failed to resume substantial performance of Employee’s
duties on a continuous basis within 14 days of receiving such demand;

 

(2)           the willful engaging by Employee in conduct that is
demonstrably and materially injurious to the Company, monetarily or otherwise;
or

 

(3)           Employee’s commission of a felony, commission of a
misdemeanor involving assets of the Company, or violation of the Company
merchandise discount policy.

 

 

For purposes of this
definition, no act, or failure to act, on Employee’s part shall be deemed “willful”
unless done, or omitted to be done, by Employee not in good faith and without
reasonable belief that Employee’s action or omission was in the best interest
of the Company.

 

(e)           “Change of Control” means, and shall be deemed to
have occurred:

 

(1)           upon the consummation of any transaction or series of
transactions under which the Company is merged or consolidated with any other
company, other than a merger or consolidation that would result in the
stockholders of the Company immediately prior thereto owning voting securities
immediately thereafter (either by the securities such stockholders owned
immediately prior thereto remaining outstanding or by the securities such
stockholders owned immediately prior thereto being converted into voting
securities of the surviving entity) representing more than 50% of the combined
voting power of the voting securities of the Company, the acquiring entity or
such surviving entity, as the case may be, outstanding immediately after such
merger or consolidation;

 

(2)           if any person or group (as used in Section 13(d) of the
Exchange Act) (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the
Company representing more than 40% of (a) the shares of the Company’s Class B
Common Stock then outstanding or (b) the combined voting power (other than in
the election of directors) of all voting securities of the Company then
outstanding;

 

(3)           if, during any period of 24 consecutive months, individuals
who at the beginning of such period constituted the Board, and any director
whose election or nomination for election by the Company’s stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason (other than death or disability) to constitute at least a majority
thereof; or

 

(4)           upon the complete liquidation of the Company or the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a liquidation of the Company into a wholly-owned subsidiary.

 

(f)            “COBRA” means the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

 

(g)           “Code” means the Internal Revenue Code of 1986, as
amended.

 

 

(h)           “Committee” means the committee designated pursuant
to Section 7 to administer this Plan.

 

(i)            “Company” means The
Neiman Marcus Group, Inc., a Delaware corporation and, after a Change of
Control, any successor or successors thereto.

 

(j)            “Eligible Employee” means
an Employee whose employment with Employee’s Employer is involuntarily
terminated by the Employer for any reason other than Cause (i) in
connection with or in anticipation of a Change of Control at the request of, or
upon the initiative of, the buyer in the Change of Control transaction (an “Anticipatory
Termination”), but
only if an anticipated Change of Control actually occurs during the period in
which this Plan is effective (in which case the Employee’s date of termination
shall be deemed to have occurred immediately following the Change of Control)
or (ii) during the two-year period beginning on the effective date of a
Change of Control; provided, however, that:

 

(1)           the term “Eligible Employee” shall not include:

 

(i)            any
Employee who is eligible to receive severance or similar type payments under
the provisions of any other severance pay plan of, or any agreement (including
but not limited to any employment or severance agreement) with, an Employer or
an Affiliate,

 

(ii)           a
temporary Employee, including a project Employee, of an Employer or any other
Employee who is not a regular, part-time or full-time Employee (as determined
by the Employer in accordance with employment policies and practices
established by such Employer),

 

(iii)          any
Employee who is not, as of the date immediately prior to his or her termination
of employment, being paid on the Employer’s U.S.A. payroll,

 

(iv)          any
individual performing services for an Employer who is treated by such Employer
as an independent contractor, or

 

(v)           an
Employee who is a member of a collective bargaining unit with which an Employer
negotiates and with respect to whom no coverage under this Plan has been provided
by a collective bargaining agreement; and

 

 

(2)           the employment of an Employee shall not be considered to
have been “involuntarily terminated” in any of the following circumstances:

 

(i)            an
Employee whose employment with an Employer is terminated by reason of a
transfer to the employ of another Employer or an Affiliate,

 

(ii)           an
Employee whose employment with an Employer is terminated by reason of a
transfer to the employ of another entity into which the Employer is merged or
otherwise consolidated; provided such entity adopts this Plan,

 

(iii)          an
Employee whose employment is terminated upon the expiration of a leave of
absence by reason of his or her failure to return to work at such time or the
absence at such time of an available position for which the Employee is
qualified,

 

(iv)          an
Employee whose employment with an Employer is terminated in connection with the
sale of stock or the sale or lease by such Employer of all or part of its
assets if (i) such Employer determines in its sole discretion that either
(A) in connection with such sale or lease such Employee was offered
employment for a comparable position at a comparable salary, annual bonus
opportunity and employee benefits with the purchaser or lessee, as the case may
be, of the Employer’s stock or assets or (B) such Employee voluntarily
elected not to participate in the selection process for such employment and
(ii) the purchaser or lessee adopts this Plan,

 

(v)           an
Employee who resigns from employment with an Employer for any reason, or

 

(vi)          an
Employee whose employment is terminated due to death or Total Disability.

 

(k)           “Employee” means an employee of an Employer who holds
one of the position classifications specified in Schedule A annexed hereto
at the time of a Change of Control or an equivalent position as determined by
the Committee, who is not eligible to receive benefits pursuant to The Neiman
Marcus Group, Inc. Executive Change of Control Severance Plan and who is not
performing services for an Employer as a leased worker or an independent
contractor.

 

(l)            “Employer” means the
Company and any other Affiliate of the Company which adopts this Plan with the
consent of the Board.

 

(m)          “Exchange Act” means the Securities Exchange Act of
1934, as amended.

 

 

(n)           “Plan” means THE NEIMAN MARCUS GROUP, INC. GENERAL
CHANGE OF CONTROL SEVERANCE PLAN as in effect from time to time.

 

(o)           “Plan Year” means the calendar year.

 

(p)           “Release” means a release to be signed by an Eligible
Employee in such form as the Company shall determine, which shall, to the
extent permitted by law, waive all claims and actions against the Employers and
Affiliates and such other related parties and entities as the Company chooses
to include in the release except for claims and actions for benefits provided
under the terms of this Plan (which Release is not revoked by the Eligible
Executive).

 

(q)           “Total Disability” means that, in the Company’s
reasonable judgment, either (1) Employee has been unable to perform
Employee’s 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 12 consecutive calendar months, or
(2) Employee has become totally and permanently incapable of performing
the usual duties of his employment with the Company on account of a physical or
mental impairment.

 

(r)            “Weekly Base Compensation”
means the greater of (A) the annual base compensation or salary being paid
by an Employer to the Employee in effect immediately prior to the date of the
Change of Control and (B) the annual base compensation or salary being
paid by an Employer to the Employee in effect immediately prior to the
effective date of the Employee’s termination, in each case, determined prior to
reduction for any employee-elected salary reduction contributions made to an
Employer-sponsored non-qualified deferred compensation plan or an
Employer-sponsored plan pursuant to Section 401(k) or 125 of the Internal
Revenue Code, and excluding bonuses, overtime, allowances, commissions,
deferred compensation payments and any other extraordinary remuneration,
multiplied by a fraction, the numerator of which shall equal 1 and the
denominator of which shall equal 52.

 

(s)           “Years of Service” means the number of whole years of
continuous service commencing on an Eligible Employee’s initial date of
employment as an Eligible Employee or, if later, his or her date of
reemployment as an Eligible Employee with an Employer or an Affiliate and
ending on the date such Eligible Employee’s employment as an Eligible Employee
with an Employer terminates entitling such Eligible Employee to severance pay
benefits hereunder; provided, however, that service prior to an
Employee’s reemployment with an Employer or an Affiliate shall not be included
in computing Years of Service if (i) ten or more years elapsed from the
date of the Employee’s prior termination of employment with an Employer or an
Affiliate and the Employee’s date of reemployment as an Eligible Employee with
an Employer or an Affiliate, or (ii) the Employee was provided severance
pay or other severance benefits by an Employer or Affiliate at the time of such
earlier termination of employment under this Plan or any other severance pay
plan, program, arrangement, policy or

 

 

practice of an
Employer or an Affiliate.  In determining
the number of an Employee’s Years of Service, an Employee’s period of service
consisting of a partial year shall be rounded up or down to the nearest whole
year.  Transfers of employment between
and among Employers and Affiliates shall not be considered an interruption or
termination of continuous service for purposes of determining an Eligible
Employee’s Years of Service.

 

Section 2.               Severance Benefits.  Each Eligible Employee who executes a Release
at the time and in the manner prescribed by the Company (and who does not
revoke such Release) and who agrees to be subject to the restrictive covenants
set forth on Exhibit A shall be entitled to the following:

 

(a)           Severance Pay.  Such an Eligible Employee shall be entitled
to receive severance pay from his or her Employer in a lump sum amount equal to
the sum of (i) the amount of the Eligible Employee’s Weekly Base
Compensation multiplied by a minimum number of weeks based on such
Eligible Employee’s completion of two or less Years of Service (the “Minimum
Weeks of Severance”) and (ii) an additional number of weeks of Weekly
Base Compensation (the “Additional Weeks of Severance”) multiplied
by each Year of Service above the initial two Years of Service referenced in the
preceding clause (i), subject to a specified a maximum number of weeks of
severance (the “Maximum Weeks of Severance”).  The Minimum Weeks of Severance, Additional
Weeks of Severance and Maximum Weeks of Severance shall be based on the
Eligible Employee’s position classification, as specified in Schedule A
annexed hereto.  For purposes of
clarification and by way of example only, if a Company Vice President was an
Eligible Employee with ten Years of Service and entitled to 16 Minimum
Weeks of Severance, four Additional Weeks of Severance and 52 Maximum
Weeks of Severance, the such Eligible Employee would be entitled to
48 weeks of severance (16 weeks, plus four weeks multiplied
by eight Years of Service (32 weeks)). 
In the event that an Eligible Employee has previously received severance
or retention pay from an Employer or an Affiliate, the amount of which was
calculated pursuant to a formula based upon the Employee’s prior period of
employment, and all or part of such prior period of employment is also taken
into account in determining such Employee’s Years of Service hereunder (such
common period of employment to be referred to herein as the “Overlap Years”),
then the portion of the amount of the cash severance benefit such Employee
shall be eligible to receive pursuant to this Plan in accordance with the
preceding provisions of this Section 2 that is attributable to the Overlap
Years shall be offset (but not below zero) by an amount equal to the amount of
such prior payment that was attributable to the Overlap Years.  In the event of an Anticipatory Termination,
such Eligible Employee shall also be entitled to receive an amount equal to
Employee’s Weekly Base Compensation from the date of Employee’s termination
through the date immediately following the Change of Control and any Bonus for
the previously completed fiscal year, if not previously paid due to Employee’s
earlier termination of employment.

 

(b)           Medical and Dental Insurance
Benefit Continuation.  For the number of weeks with respect to which
such Eligible Employee receives severance which follow such Eligible Employee’s
termination of employment (the “Welfare Continuation Period”), the
Eligible Employee and such Eligible Employee’s spouse and dependents (each as
defined under the

 

 

applicable program)
shall receive the following benefits: medical and dental insurance coverages at
the same benefit level as provided to the Eligible Employee immediately prior
to the Change of Control, for which the Company will (A) reimburse the
Eligible Employee during the Welfare Continuation Period or, if shorter, the
period of actual COBRA continuation coverage received by the Eligible Employee
during the Welfare Continuation Period, for the excess of (x) the total
amount of the COBRA medical and dental insurance premiums payable by the
Eligible Employee for such continued benefits over (y) the premiums that
would otherwise have been payable by the Eligible Employee for such coverage as
an active employee of the Company (by reducing such premium obligations by such
excess) and (B) provide such coverage for any remaining portion of the
Welfare Continuation Period at the same cost to the Eligible Employee as is
generally provided to similarly situated active employees of the Company (provided,
however, that if, during the Welfare Continuation Period, the Eligible
Employee becomes employed by a new employer, continuing medical and dental
coverage from the Company will become secondary to any coverage afforded by the
new employer in which the Eligible Employee becomes enrolled).

 

(c)           Accrued Benefits.  Such Eligible Employee shall be entitled to
receive any unpaid Weekly Base Compensation through the date of such Eligible
Employee’s termination, any Bonus earned but unpaid as of the date of such
Eligible Employee’s termination for any previously completed fiscal year of the
Company, and all compensation previously deferred by such Eligible Employee but
not yet paid as well as the Company’s matching contribution with respect to
such deferred compensation with respect to the year in which such termination
of employment occurs and all accrued interest thereon.  In addition, such Eligible Employee shall be
entitled to prompt reimbursement of any unreimbursed expenses properly incurred
by such Eligible Employee in accordance with Company policies prior to the date
of such Eligible Employee’s termination. 
Such Eligible Employee shall also receive such other benefits, if any,
to which such Eligible Employee may be entitled pursuant to the terms and
conditions of the employee compensation, incentive, equity, benefit or fringe
benefit plans, policies or programs of the Company, other than any Company
severance policy and as provided in Section 11.

 

(d)           Outplacement.  Such an Eligible Employee shall be provided
professional outplacement services by qualified consultants selected by the
Company at the Employer’s cost, at a benefit level based on the Eligible
Employee’s position classification as specified in Schedule A annexed
hereto (but for no longer than the date the Eligible Employee first obtains
full-time employment after the date of termination of employment).

 

(e)           Discount.  At all times from and following such Eligible
Employee’s termination of employment during which the Employee also meets the
age and service requirements for retirement eligibility pursuant to the
Employer’s applicable programs and policies, the Company shall provide to the
Eligible Employee and the Eligible Employee’s spouse and dependents (each as
defined under the Company’s applicable policies) all merchandise discounts
available to the Company’s employees immediately prior to the Change of
Control.

 

 

(f)            Equity Incentive Awards.  Any time periods, conditions or contingencies
relating to the exercise or realization of, or lapse of restrictions under, any
outstanding equity incentive award then held by such Eligible Employee, if not
previously accelerated or waived pursuant to Section 3, shall be automatically
accelerated or waived effective as of the effective date of Employee’s
termination of employment.

 

(g)           Restrictive Covenants.  In consideration of the provision of the
foregoing benefits provided in this Section 2 and as otherwise set forth
in the Plan, Employee hereby agrees to be bound by the restrictive covenants
set forth in Exhibit A attached hereto.

 

Section 3.               Treatment of Equity Incentive
Awards.  Upon the occurrence of a Change of Control
during the period in which this Plan is effective, any time periods, conditions
or contingencies relating to the exercise or realization of, or lapse of restrictions
under, any outstanding equity incentive award then held by the Eligible
Employee shall be automatically accelerated or waived effective as of the date
of the Change of Control; provided, however, that in the event
any such outstanding equity incentive award is replaced as of the occurrence of
the Change of Control by comparable types of awards of greater or at least
substantially equivalent value, as determined in the sole discretion of the
administrator of the equity incentive award plan under which the outstanding
award was granted, no such automatic acceleration or waiver shall occur, except
to the extent the administrator of the applicable equity incentive award plan,
in its sole discretion, provides for such acceleration or waiver, or unless such
acceleration or waiver is expressly provided for in connection with such
replacement or under the terms of the applicable award agreement.

 

Section 4.               Form and Time of Payment.  The cash severance pay benefits payable to an
Eligible Employee by his or her Employer under Section 2 shall be paid to
such Eligible Employee in a single lump sum less applicable withholdings,
except as provided pursuant to Section 5, within the later of (i) 15
business days after the Eligible Employee’s date of termination or (ii) the
expiration of the revocation period, if applicable, under the Release.

 

Section 5.               Tax Withholding and Deferral.  Each Employer shall withhold from any amount
payable to an Eligible Employee pursuant to this Plan, and shall remit to the
appropriate governmental authority, any income, employment or other tax the
Employer is required by applicable law to so withhold from and remit on behalf
of such Eligible Employee. 
Notwithstanding any other provision of this Plan or certain compensation
and benefit plans of the Employer, any payments or benefits due under this Plan
or such Employer compensation and benefit plans upon or in connection with a
termination of Employee’s employment shall be deferred and paid no earlier than
six months following such termination of Employee’s employment, if, and only to
the extent, required to comply with Section 409A of the Code.

 

 

Section 6.               Limitation of Certain Payments.

 

(a)           In the event the Employer determines, based upon the advice
of the independent public accountants for the Employer, that part or all of the
consideration, compensation or benefits to be paid to Employee under this Plan
constitute “parachute payments” under Section 280G(b)(2) of the Code, as
amended, then, if the aggregate present value of such parachute payments,
singularly or together with the aggregate present value of any consideration,
compensation or benefits to be paid to Employee under any other plan,
arrangement or agreement which constitute “parachute payments” (collectively,
the “Parachute Amount”) exceeds 2.99 times the Employee’s “base
amount”, as defined in Section 280G(b)(3) of the Code (the “Employee
Base Amount”), the amounts constituting “parachute payments” which would
otherwise be payable to or for the benefit of Employee shall be reduced to the
extent necessary so that the Parachute Amount is equal to 2.99 times the
Employee Base Amount (the “Reduced Amount”).

 

(b)           If the determination made pursuant to clause (a) of
this Section 6 results in a reduction of the payments that would otherwise
be paid to Employee except for the application of clause (a) of this
Section 6, Employee may then elect, in his sole discretion, which and how
much of any particular entitlement shall be eliminated or reduced and shall
advise the Employer in writing of his election within ten days of the
determination of the reduction in payments. 
If no such election is made by Employee within such ten-day period, the
Employer may elect which and how much of any entitlement shall be eliminated or
reduced and shall notify Employee promptly of such election.  Within ten days following such determination
and the elections hereunder, the Employer shall pay to or distribute to or for
the benefit of Employee such amounts as are then due to Employee under this
Plan and shall promptly pay to or distribute to or for the benefit of Employee
in the future such amounts as become due to Employee pursuant to this Plan.

 

(c)           As a result of the uncertainty in the application of
Section 280G of the Code at the time of a determination hereunder, it is
possible that payments will be made by the Employer which should not have been
made under clause (a) of this Section 6 (“Overpayment”) or
that additional payments which are not made by the Employer pursuant to
clause (a) of this Section 6 should have been made (“Underpayment”).  In the event that there is a final
determination by the Internal Revenue Service, or a final determination by a
court of competent jurisdiction, that an Overpayment has been made, any such
Overpayment shall be repaid by the Employee to the Employer together with
interest at the applicable Federal rate provided for in Section 7872(f)(2)
of the Code.  In the event that there is
a final determination by the Internal Revenue Service, a final determination by
a court of competent jurisdiction or a change in the provisions of the Code or
regulations pursuant to which an Underpayment arises under this Plan, any such
Underpayment shall be promptly paid by the Employer to or for the benefit of
Employee, together with interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code.

 

 

Section 7.               Plan Administration.  This Plan shall be administered by the
Compensation Committee of the Board.  The
Committee shall have discretionary and final authority to interpret and
implement the provisions of this Plan and to determine eligibility for benefits
under the Plan.  The Committee shall
perform all of the duties and exercise all of the powers and discretion that the
Committee deems necessary or appropriate for the proper administration of this
Plan.  Every interpretation, choice,
determination or other exercise by the Committee of any power or discretion
given either expressly or by implication to it shall be conclusive and binding
upon all parties having or claiming to have an interest under this Plan or
otherwise directly or indirectly affected by such action, without restriction,
however, upon the right of the Committee to reconsider or redetermine such
action.  The Committee may adopt such
rules and regulations for the administration of this Plan as are consistent
with the terms hereof, and shall keep adequate records of its proceedings and
acts.  The Committee may employ such
agents, accountants and legal counsel (who may be agents, accountants and legal
counsel for an Employer) as may be appropriate for the administration of the
Plan.  All reasonable administration
expenses incurred by the Committee in connection with the administration of the
Plan shall be paid by the Employer.

 

Section 8.               Claims Procedure.  If any person (hereinafter called the “Claimant”)
feels he or she is being denied a benefit to which he or she is entitled under
this Plan, such Claimant may file a written claim for said benefit with the
Chairman of the Committee.  Within
60 days of the receipt of such claim the Committee shall determine and
notify the Claimant as to whether he or she is entitled to such benefit.  Such notification shall be in writing and, if
denying the claim for benefit, shall set forth the specific reason or reasons
for the denial, make specific reference to the pertinent Plan provisions, and
advise the Claimant that he or she may, within 60 days of the receipt of
such notice, request in writing to appear before the Committee or its
designated representative for a hearing to review such denial.  Any such hearing shall be scheduled at the
mutual convenience of the Committee or its designated representative and the
Claimant, and at such hearing the Claimant and/or his or her duly authorized
representative may examine any relevant documents and present evidence and
arguments to support the granting of the benefit being claimed.  The final decision of the Committee with
respect to the claim being reviewed shall be made within 60 days following
the hearing thereon, and the Committee shall in writing notify the Claimant of
its final decision, again specifying the reasons therefor and the pertinent
Plan provisions upon which such decision is based.  The final decision of the Committee shall be
conclusive and binding upon all parties having or claiming to have an interest
in the matter being reviewed.

 

Section 9.               Plan Amendment and Termination.  The Company shall have the right and power at
any time and from time to time to amend this Plan, in whole or in part, by
written document executed by its duly authorized representative and at any time
to terminate this Plan; provided, however, that no such amendment
or termination shall reduce the amount of severance pay payable under this Plan
to a former Employee whose employment with an Employer terminated prior to the
date of such amendment or termination, or defer the date for the payment of
such former Employee’s benefit hereunder except as provided pursuant to
Section 5, without the consent of such former Employee.  Any provision of this Plan to the contrary
notwithstanding, any action to amend or terminate this Plan on or after the
date on which a Change of Control occurs shall not be effective prior to the
end of the two-year period beginning on the effective date of the Change of
Control.

 

 

Section 10.             Nature of Plan and Rights.  This Plan is an unfunded employee welfare
benefit plan and no provision of this Plan shall be deemed or construed to
create a trust fund of any kind or to grant a property interest of any kind to
any Employee or former Employee.  Any
payment which becomes due under this Plan to an Eligible Employee shall be made
by his or her Employer out of its general assets, and the right of any Eligible
Employee to receive a payment hereunder from his or her Employer shall be no
greater than the right of any unsecured general creditor of such Employer.

 

Section 11.             Entire Agreement; Offset;
Modification.

 

(a)           This Plan constitutes the entire agreement between the
parties and, except as expressly provided herein, supersedes the provisions of
all other prior agreements expressly concerning the payment of severance
benefits upon a termination of employment of an Employee in connection with or
following a Change of Control (the “Prior Agreements”).  In all other respects, any Prior Agreement
shall remain in full force and effect, including with respect to any amounts
payable or benefits to be provided prior to and otherwise not in connection
with a Change of Control; provided, that in no event shall payments or
benefits provided pursuant to any Prior Agreement or any other severance
agreement or policy entitle Employee to a duplication of payments and benefits
pursuant to this Plan and, in the event of an Anticipatory Termination, any
amount payable hereunder shall be offset and reduced by the amount of any
termination payments or benefits previously provided to Employee under any
Prior Agreement.

 

(b)           Except as expressly provided herein, this Plan shall not
interfere in any way with the right of the Company to reduce Employee’s
compensation or other benefits or terminate Employee’s employment, with or
without Cause.  Any rights that Employee
shall have in that regard shall be as set forth in any applicable employment
agreement between Employee and the Company.

 

Section 12.             Spendthrift Provision.  No right or interest of an Eligible Employee
under this Plan may be assigned, transferred or alienated, in whole or in part,
either directly or by operation of law, and no such right or interest shall be
liable for or subject to any debt, obligation or liability of such Eligible
Employee.

 

Section 13.             Applicable Law.  This Plan shall be governed and construed in
accordance with applicable federal law.

 

Section 14.             Effectiveness.  This Plan shall be effective as of the date of
adoption by the Board and shall remain in effect until terminated pursuant to
Section 9 of this Plan.

 

IN WITNESS WHEREOF, this Plan has been executed this 1st day
of April, 2005, to be effective as of April 1, 2005.

 

 

	
   

  	
   

  	
  THE NEIMAN MARCUS GROUP, IN.C

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nelson a. Bangs

  	
   

  
	
   

  	
   

  	
  Nelson A. Bangs

  
	
   

  	
   

  	
  Senior Vice President & General Counsel

  

 

 

SCHEDULE A

 

	
  Position
  Classification

  	
   

  	
  “Minimum Weeks

  of Severance”

  (for under 2

  Years of Service)

  	
   

  	
  “Additional Weeks

  of Severance”

  (for each year over 2

  Years of Service)

  	
   

  	
  “Maximum

  Weeks of

  Severance”

  	
   

  	
  Outplacement

  Benefit Level

  
	
  * Div. SVP (Benefit Levels 57, 47, 45);

  * NMG Officer (Benefit Levels 56, 53)

  	
   

  	
  16

  	
   

  	
  4

  	
   

  	
  52

  	
   

  	
  Executive

  
	
  Div. VP (Benefit Levels 54, 56, 44, 46)

  	
   

  	
  12

  	
   

  	
  3

  	
   

  	
  52

  	
   

  	
  Executive

  
	
  NMG or Div. Director (Benefit Levels 53, 43)

  	
   

  	
  10

  	
   

  	
  3

  	
   

  	
  36

  	
   

  	
  Executive

  
	
  All Other Exempt (Benefit Levels 52, 42, 51)

  	
   

  	
  8

  	
   

  	
  2

  	
   

  	
  26

  	
   

  	
  2-Day Workshop

  
	
  Hourly (Benefit Levels 50, 40)

  	
   

  	
  6

  	
   

  	
  2

  	
   

  	
  26

  	
   

  	
  2-Day Workshop

  

 

* The division and subsidiary Senior Vice Presidents and Officers of
the Company that are eligible to receive benefits under this Plan are those
individuals who are not otherwise entitled to receive benefits under The Neiman
Marcus Group, Inc. Executive Change of Control Severance Plan.

 

 

Exhibit A

 

CONFIDENTIALITY AND RESTRICTIVE COVENANTS

 

I.              Employee
acknowledges and agrees that (a) the Company is engaged in a highly
competitive business; (b) the Company has expended considerable time and
resources to develop goodwill with its customers, vendors, and others, and to
create, protect, and exploit Confidential Information (as defined in Section V
below); (c) the Company 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, Employee’s participation in or direction of the
Company’s day-to-day operations and strategic planning are and will be an
integral part of the Company’s continued success and goodwill; (e) given
Employee’s position and responsibilities, Employee necessarily will be creating
Confidential Information that belongs to the Company and enhances the Company’s
goodwill, and in carrying out Employee’s responsibilities Employee in turn will
be relying on the Company’s goodwill and the disclosure by the Company to him
of Confidential Information; (f) Employee will have access to Confidential
Information that could be used by any competitor of the Company in a manner
that would irreparably harm the Company’s competitive position in the
marketplace and dilute its goodwill; and (g) Employee necessarily would
use or disclose Confidential Information if Employee were to engage in
competition with the Company.  The
Company acknowledges and agrees that Employee must have and continue to have
throughout Employee’s employment the benefits and use of its goodwill and
Confidential Information in order to properly carry out Employee’s
responsibilities.  The Company
accordingly promises upon execution and delivery of the Plan to provide
Employee immediate access to new and additional Confidential Information and
authorize him to engage in activities that will create new and additional
Confidential Information.  The Company
and Employee thus acknowledge and agree that upon execution and delivery of the
Plan Employee (x) has received, will receive, and will continue to
receive, Confidential Information that is unique, proprietary, and valuable to
the Company, (y) has created, will create, and will continue to create, Confidential
Information that is unique, proprietary, and valuable to the Company, and
(z) has benefited, will benefit, and will continue to benefit, including
without limitation by way of increased earnings and earning capacity, from the
goodwill the Company has generated and from the Confidential Information.  Accordingly, Employee acknowledges and agrees
that at all times during Employee’s employment by the Company and thereafter:

 

(i)            all Confidential
Information shall remain and be the sole and exclusive property of the Company;

 

(ii)           Employee will protect
and safeguard all Confidential Information;

 

(iii)          Employee 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 the Company to the extent
necessary for the proper performance of Employee’s responsibilities unless
authorized to do so by the Company or compelled to do so by law or valid legal
process;

 

 

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

 

(v)           at the end of Employee’s
employment with the Company for any reason or at the request of the Company at
any time, Employee will return to the Company all Confidential Information and
all copies thereof, in whatever tangible form or medium (including electronic);
and

 

(vi)          absent the promises and
representations of Employee in this Section I and in Section II below, the
Company would require him immediately to return any tangible Confidential
Information in Employee’s possession, would not provide Employee with new and
additional Confidential Information, would not authorize Employee to engage in
activities that will create new and additional Confidential Information, and
would not enter or have entered into the Plan.

 

II.            In
consideration of the Company’s promises to provide Employee with new and
additional Confidential Information and to authorize him to engage in
activities that will create new and additional Confidential Information upon
execution and delivery of the Plan, and the other promises and undertakings of
the Company in the Plan, Employee agrees that, while Employee is employed by
the Company and for a period of 12 months following the end of that employment
for any reason, Employee shall not engage in any of the following activities
(the “Restricted Activities”):

 

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

 

(b)           Employee will not,
whether on Employee’s 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 the Company or its Affiliates to leave that
employment or cease performing those services; and

 

(c)           Employee will not,
whether on Employee’s 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 the Company or any of its Affiliates to cease being a customer,
supplier, or vendor of the Company or any of its Affiliates or to divert all or
any part of such person’s or entity’s business from the Company or any of its
Affiliates.

 

Employee acknowledges and agrees that the restrictions contained in
this Section II are ancillary to an otherwise enforceable agreement, including
without limitation the mutual promises and undertakings set forth in Section
II; that the Company’s promises and undertakings set forth in Section II, and
Employee’s position and responsibilities with the Company, give rise to the
Company’s interest in restricting Employee’s post-employment activities; that
such

 

A-2

 

restrictions are designed to enforce Employee’s promises and
undertakings set forth in this Section II and Employee’s common-law obligations
and duties owed to the Company; 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 the Company’s goodwill,
Confidential Information, and other legitimate business interests; that
Employee will immediately notify the Company in writing should Employee believe
or be advised that the restrictions are not valid or enforceable under Texas
law or the law of any other state that Employee contends or is advised is applicable;
that the mutual promises and undertakings of the Company and Employee under
Section I and Section II are not contingent on the duration of Employee’s
employment with the Company; and that absent the promises and representations
made by Employee in Section I and Section II, the Company would require him to
return any Confidential Information in Employee’s possession, would not provide
Employee with new and additional Confidential Information, would not authorize
Employee to engage in activities that will create new and additional
Confidential Information, and would not enter or have entered into the Plan.

 

III.           Employee
acknowledges and agrees that the Company would not have an adequate remedy at
law and would be irreparably harmed in the event that any of the provisions of
Section I or Section II were not performed in accordance with their specific
terms or were otherwise breached. 
Accordingly, Employee agrees that the Company shall be entitled to
equitable relief, including preliminary and permanent injunctions and specific
performance, in the event Employee 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 the provisions of Section I or Section II by
Employee, but shall be in addition to all other remedies available to the
Company at law or equity.  Employee
acknowledges and agrees that the Company 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 Employee breaches the provisions of
Section I or Section II.  Employee
acknowledges and agrees that no breach by the Company of this Plan or failure
to enforce or insist on its rights under this Plan shall constitute a waiver or
abandonment of any such rights or defense to enforcement of such rights.

 

IV.           If
the provisions of Section I or Section II are ever deemed by a court to exceed
the limitations permitted by applicable law, Employee and the Company agree
that such provisions shall be, and are, automatically reformed to the maximum
limitations permitted by such law.

 

V.            Definitions:

 

“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 plan; 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 Section I or Section II above or other
unauthorized disclosure by Employee.

 

A-3Exhibit 10.1

 

INDEMNIFICATION AGREEMENT

 

This
INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into
this              
day of             ,
2005 by and between Restoration Hardware, Inc., a Delaware corporation (the “Company”),
and                             (the
“Indemnitee”).

 

WHEREAS, the
Company believes it is essential to retain and attract qualified directors and
officers;

 

WHEREAS, the
Indemnitee is a director and/or officer of the Company;

 

WHEREAS, both
the Company and the Indemnitee recognize the increased risk of litigation and
other claims being asserted against directors and officers of public companies;

 

WHEREAS, the
Company’s Second Amended and Restated Certificate of Incorporation, as amended
(the “Certificate of Incorporation”), allows, and the Company’s Amended
and Restated Bylaws (the “Bylaws”) require, the Company to indemnify and
advance expenses to its directors and officers to the extent permitted by the
DGCL (as hereinafter defined);

 

WHEREAS, the
Indemnitee has been serving and intends to continue serving as a director
and/or officer of the Company in part in reliance on the indemnification
provisions of the Certificate of Incorporation and Bylaws; and

 

WHEREAS, in
recognition of the Indemnitee’s need for (i) substantial protection
against personal liability, (ii) specific contractual assurance that the
protection promised by the Certificate of Incorporation and Bylaws will be
available to the Indemnitee, regardless of, among other things, any amendment
to or revocation of the Bylaws or any change in the composition of the Company’s
Board of Directors (the “Board”) or acquisition transaction relating to
the Company, and (iii) an inducement to continue to provide effective
services to the Company as a director and/or officer thereof, the Company
wishes to provide for the indemnification of the Indemnitee and to advance
expenses to the Indemnitee to the fullest extent permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained by the Company,
to provide for the continued coverage of the Indemnitee under the Company’s
directors’ and officers’ liability insurance policies.

 

NOW,
THEREFORE, in consideration of the premises contained herein and of the
Indemnitee continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties
hereto agree as follows:

 

1.             Certain Definitions.

 

(a)           A “Change in Control” shall be
deemed to have occurred if:

 

(i)            any “person,” as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the “Exchange Act”),
other than (a) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company; (b) a corporation owned, directly or
indirectly, by the stockholders 

 

1

 

of the Company in substantially the same proportions
as their ownership of stock of the Company; or (c) any current beneficial stockholder
or group, as defined by Rule 13d-5 of the Exchange Act, including the heirs,
assigns and successors thereof, of beneficial ownership, within the meaning of
Rule 13d-3 of the Exchange Act, of securities possessing more than 50% of the
total combined voting power of the Company’s outstanding securities; hereafter
becomes the “beneficial owner,” as defined in Rule 13d-3 of the Exchange
Act, directly or indirectly, of securities of the Company representing 20% or
more of the total combined voting power represented by the Company’s then
outstanding Voting Securities;

 

(ii)           during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and
any new director whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds of the
directors then in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or

 

(iii)          the stockholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) at least 80% of the total voting power
represented by the Voting Securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company, in one transaction or a
series of transactions, of all or substantially all of the Company’s assets.

 

(b)           “DGCL” shall mean the General
Corporation Law of the State of Delaware, as the same exists or may hereafter
be amended or interpreted; provided, however, that in the case of any
such amendment or interpretation, only to the extent that such amendment or
interpretation permits the Company to provide broader indemnification rights
than were permitted prior thereto.

 

(c)           “Expense” shall mean attorneys’
fees and all other costs, expenses and obligations paid or incurred in
connection with investigating, defending, being a witness in or participating
in (including on appeal), or preparing for any of the foregoing, any Proceeding
relating to any Indemnifiable Event.

 

(d)           “Indemnifiable Event” shall
mean any event or occurrence that takes place either prior to or after the
execution of this Agreement, by reason of the fact that the Indemnitee is or
was a director or officer of the Company, or is or was serving at the request
of the Company as a director, officer, employee, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, or by reason of
anything done or not done by the Indemnitee while serving the Company in any
such capacity.

 

(e)           “Potential Change in Control”
shall be deemed to occur if (i) the Company enters into an agreement or
arrangement, the consummation of which would result in the occurrence of a
Change in Control; (ii) any person (including the Company) publicly announces

 

2

 

an intention to take or to consider taking actions
which, if consummated, would constitute a Change in Control; (iii) any person
(other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company acting in such capacity or a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company) who is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company’s then
outstanding Voting Securities, increases his or her beneficial ownership of
such securities by 5% or more over the percentage so owned by such person on
the date hereof; or (iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.

 

(f)            “Proceeding” shall mean any
threatened, pending or completed action, suit, investigation or proceeding, and
any appeal thereof, whether civil, criminal, administrative or investigative
and/or any inquiry or investigation, whether conducted by the Company or any
other party, that the Indemnitee in good faith believes might lead to the
institution of any such action.

 

(g)           “Reviewing Party” shall mean
any appropriate person or body consisting of a member or members of the Company’s
Board or any other person or body appointed by the Board (including the special
independent counsel referred to in Section 6) who is not a party to the
particular Proceeding with respect to which the Indemnitee is seeking
indemnification.

 

(h)           “Voting Securities” shall mean
any securities of the Company which vote generally in the election of
directors.

 

2.             Indemnification.  In the event the Indemnitee was or
is a party to or is involved (as a party, witness, or otherwise) in any
Proceeding by reason of (or arising in part out of) an Indemnifiable Event,
whether the basis of the Proceeding is the Indemnitee’s alleged action in an
official capacity as a director or officer or in another capacity while serving
as a director or officer, the Company shall indemnify the Indemnitee to the
fullest extent permitted by the DGCL, the Certificate of Incorporation, and the
Bylaws, against any and all Expenses, liability, and loss (including judgments,
fines, ERISA excise taxes or penalties, and amounts paid or to be paid in
settlement, and any interest, assessments, or other charges imposed thereon,
and any federal, state, local, or foreign taxes imposed on any director or
officer as a result of the actual or deemed receipt of any payments under this
Agreement) (collectively, “Liabilities”) reasonably incurred or suffered
by such person in connection with such Proceeding.  The Company shall provide indemnification
pursuant to this Section 2 as soon as practicable, but in no event later than
30 days after it receives written demand from the Indemnitee.  Notwithstanding anything in this Agreement to
the contrary and except as provided in Section 5 below, the Indemnitee
shall not be entitled to indemnification pursuant to this Agreement (i) in
connection with any Proceeding initiated by the Indemnitee against the Company
or any director or officer of the Company unless the Company has joined in or
consented to the initiation of such Proceeding or (ii) on account of any suit
in which judgment is rendered against the Indemnitee pursuant to Section 16(b)
of the Exchange Act for an accounting of profits made from the purchase or sale
by the Indemnitee of securities of the Company.

 

3

 

3.             Advancement of
Expenses.  The Company shall
advance Expenses to the Indemnitee within 30 business days of such request (an “Expense
Advance”); provided, however (a) that such Expenses shall be
advanced only upon delivery to the Company of an undertaking by or on behalf of
the Indemnitee to repay such amount if it is ultimately determined that the
Indemnitee is not entitled to be indemnified by the Company; (b) that the
Company shall make such advances only to the extent permitted by law, and (c)
that the Company shall not be required to advance expenses to the Indemnitee if
the Indemnitee is a party to a Proceeding brought by the Company and approved
by a majority of the Board which alleges willful misappropriation of the
Company’s assets by such Indemnitee, disclosure of confidential information in
violation of such Indemnitee’s fiduciary or contractual obligations to the
Company, or any other willful and deliberate breach in bad faith of such
Indemnitee’s duty to the Company or its stockholders.  Expenses incurred by the Indemnitee while not
acting in his/her capacity as a director or officer, including service with
respect to employee benefit plans, may be advanced upon such terms and
conditions as the Board, in its sole discretion, deems appropriate.

 

4.             Review Procedure for
Indemnification.  Notwithstanding
the foregoing, (a) the obligations of the Company under Sections 2
and 3 above shall be subject to the condition that the Reviewing Party shall
not have determined (in a written opinion, in any case in which the special
independent counsel referred to in Section 6 hereof is involved) that the Indemnitee
would not be permitted to be indemnified under applicable law, and (b) the
obligation of the Company to make an Expense Advance pursuant to Section 3
above shall be subject to the condition that, if, when and to the extent that
the Reviewing Party determines that the Indemnitee would not be permitted to be
so indemnified under applicable law, the Company shall be entitled to be
reimbursed by the Indemnitee (who hereby agrees to reimburse the Company) for
all such amounts theretofore paid; provided, however, that if the
Indemnitee has commenced legal proceedings in a court of competent jurisdiction
pursuant to Section 5 below to secure a determination that the Indemnitee
should be indemnified under applicable law, any determination made by the Reviewing
Party that the Indemnitee would not be permitted to be indemnified under
applicable law shall not be binding and the Indemnitee shall not be required to
reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or have lapsed). 
To the extent permitted by law, the Indemnitee’s obligation to reimburse
the Company for Expense Advances pursuant to this Section 4 shall be unsecured
and no interest shall be charged thereon. 
If there has not been a Change in Control, the Reviewing Party shall be
selected by the Board, and if there has been such a Change in Control, other
than a Change in Control which has been approved by a majority of the Company’s
Board who were directors immediately prior to such Change in Control, the
Reviewing Party shall be the special independent counsel referred to in
Section 6 hereof.

 

5.             Enforcement of
Indemnification Rights.  If
the Reviewing Party determines that the Indemnitee substantively would not be
permitted to be indemnified in whole or in part under applicable law, or if the
Indemnitee has not otherwise been paid in full pursuant to Sections 2 and 3
above thirty (30) days after a written demand has been received by the Company,
the Indemnitee shall have the right to commence litigation in any court in the
State of Delaware having subject matter jurisdiction thereof and in which venue
is proper to recover the unpaid amount of the demand (an “Enforcement Proceeding”)
and, if successful in whole or in part, the Indemnitee shall be entitled to be
paid any and all Expenses in connection with such

 

4

 

Enforcement Proceeding.  The Company hereby consents to service of process
for such Enforcement Proceeding and to appear in any such Enforcement
Proceeding.  Any determination by the
Reviewing Party otherwise shall be conclusive and binding on the Company and
the Indemnitee.

 

6.             Change in Control.  The Company agrees that if there is a Change
in Control of the Company, other than a Change in Control which has been
approved by a majority of the Company’s Board who were directors immediately
prior to such Change in Control, then with respect to all matters thereafter
arising concerning the rights of the Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or under
applicable law or the Company’s Certificate of Incorporation or Bylaws now or
hereafter in effect relating to indemnification for Indemnifiable Events, the
Company shall seek legal advice only from special independent counsel selected
by the Indemnitee and approved by the Company, which approval shall not be
unreasonably withheld.  Such special
independent counsel shall not have otherwise performed services for the Company
or the Indemnitee, other than in connection with such matters, within the last
five years.  Such independent counsel
shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or the Indemnitee in an action to determine the
Indemnitee’s rights under this Agreement. 
Such counsel, among other things, shall render its written opinion to
the Company and the Indemnitee as to whether and to what extent the Indemnitee
would be permitted to be indemnified under applicable law.  The Company agrees to pay the reasonable fees
of the special independent counsel referred to above and to indemnify fully such
counsel against any and all expenses (including attorneys’ fees), claims,
liabilities and damages arising out of or relating to this Agreement or the
engagement of special independent counsel pursuant to this Agreement.

 

7.             Establishment of Trust.  In the event of a Potential Change in
Control, the Company shall, upon written request by the Indemnitee, create a
trust (the “Trust”) for the benefit of the Indemnitee, and from time to
time upon written request of the Indemnitee shall fund such Trust, to the
extent permitted by law, in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for and defending any Proceeding
relating to an Indemnifiable Event, and any and all judgments, fines, penalties
and settlement amounts of any and all Proceedings relating to an Indemnifiable
Event from time to time actually paid or claimed, reasonably anticipated or
proposed to be paid.  The amount or
amounts to be deposited in the Trust pursuant to the foregoing funding
obligation shall be determined by the Reviewing Party, in any case in which the
special independent counsel referred to in Section 6 is involved.  The terms of the Trust shall provide that
upon a Change in Control (i) the Trust shall not be revoked or the principal
thereof invaded, without the written consent of the Indemnitee, (ii) the
trustee of the Trust (the “Trustee”) shall advance, within ten business
days of a request by the Indemnitee, any and all Expenses to the Indemnitee, to
the extent permitted by law, (and the Indemnitee hereby agrees to reimburse the
Trust under the circumstances under which the Indemnitee would be required to
reimburse the Company under Section 4 of this Agreement), (iii) the Trust shall
continue to be funded by the Company in accordance with the funding obligation
set forth above, (iv) the Trustee shall promptly pay to the Indemnitee all
amounts for which the Indemnitee shall be entitled to indemnification pursuant to
this Agreement or otherwise, and (v) all unexpended funds in the Trust shall
revert to the Company upon a final determination by the Reviewing Party

 

5

 

or a court of competent jurisdiction, as the case may be, that the
Indemnitee has been fully indemnified under the terms of this Agreement.  The Trustee shall be a bank or trust company
or other individual or entity chosen by the Indemnitee and acceptable to and
approved of by the Company.  Nothing in
this Section 7 shall relieve the Company of any of its obligations under
this Agreement.  All income earned on the
assets held in the Trust shall be reported as income by the Company for
federal, state, local and foreign tax purposes.

 

8.             Partial Indemnity.  If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses and Liabilities, but not, however, for all of the total
amount thereof, the Company shall nevertheless indemnify the Indemnitee for the
portion thereof to which the Indemnitee is entitled.  Moreover, notwithstanding any other provision
of this Agreement, to the extent that the Indemnitee has been successful on the
merits or otherwise in defense of any or all Proceedings relating in whole or
in part to an Indemnifiable Event or in defense of any issue or matter therein,
including dismissal without prejudice, the Indemnitee shall be indemnified
against all Expenses incurred in connection therewith.  In connection with any determination by the
Reviewing Party or otherwise as to whether the Indemnitee is entitled to be
indemnified hereunder, the burden of proof shall be on the Company to establish
that the Indemnitee is not so entitled.

 

9.             Non-exclusivity.  The rights of the Indemnitee hereunder shall
be in addition to any other rights the Indemnitee may have under any statute,
provision of the Company’s Certificate of Incorporation or Bylaws, vote of
stockholders or disinterested directors or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office.  To the extent that a change in the DGCL
permits greater indemnification by agreement than would be afforded currently
under the Company’s Certificate of Incorporation and Bylaws and this Agreement,
it is the intent of the parties hereto that the Indemnitee shall enjoy by this
Agreement the greater benefits so afforded by such change.

 

10.           Liability Insurance.  To the extent the Company maintains an
insurance policy or policies providing directors’ and officers’ liability
insurance, the Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any director or officer of the Company.

 

11.           Settlement of Claims.  The Company shall not be liable to indemnify
the Indemnitee under this Agreement (a) for any amounts paid in settlement of
any action or claim effected without the Company’s written consent, which
consent shall not be unreasonably withheld; or (b) for any judicial award if
the Company was not given a reasonable and timely opportunity, at its expense,
to participate in the defense of such action.

 

12.           No Presumption.  For purposes of this Agreement, to the
fullest extent permitted by law, the termination of any Proceeding, action,
suit or claim, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that the Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.

 

6

 

13.           Period of Limitations.  No legal action shall be brought and no cause
of action shall be asserted by or on behalf of the Company or any affiliate of
the Company against the Indemnitee, the Indemnitee’s spouse, heirs, executors
or personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, or such longer period as may be
required by state law under the circumstances, and any claim or cause of action
of the Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such period; provided,
however, that if any shorter period of limitations is otherwise applicable
to any such cause of action, such shorter period shall govern.

 

14.           Consent and Waiver by
Third Parties.  The Indemnitee
hereby represents and warrants that he or she has obtained all waivers and/or
consents from third parties which are necessary to execute and perform this
Agreement without being in conflict with any other agreement, obligation or
understanding with any such third party. 
The Indemnitee represents that he or she is not bound by any agreement
or any other existing or previous business relationship which conflicts with,
or may conflict with, the performance of his or her obligations hereunder or
prevent the full performance of his or her duties and obligations hereunder.

 

15.           Amendment of this
Agreement.  No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. 
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver.  Except as specifically provided herein, no
failure to exercise or any delay in exercising any right or remedy hereunder
shall constitute a waiver thereof.

 

16.           Subrogation.  In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.

 

17.           No Duplication of Payments.  The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent the Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaw, vote, agreement or otherwise) of the
amounts otherwise indemnifiable hereunder.

 

18.           Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns (including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company), spouses, heirs, and personal and legal
representatives.  The Company shall
require and cause any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all, substantially all, or a substantial
part, of the business and/or assets of the Company, by written agreement in
form and substance satisfactory to the Indemnitee, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken
place.  This Agreement shall continue in
effect regardless of whether the Indemnitee continues to serve as a director or
officer of the Company or of any other enterprise at the Company’s request.

 

7

 

19.           Severability.  The provisions of this Agreement shall be
severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted
by law.  Furthermore, to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.

 

20.           Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such State without giving
effect to the principles of conflicts of laws.

 

21.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

22.           Notices.  All notices, demands, and other
communications required or permitted hereunder shall be made in writing and
shall be deemed to have been duly given if delivered by hand, against receipt,
or mailed, postage prepaid, certified or registered mail, return receipt
requested, and addressed to the Company at:

 

	
   

  	
  Restoration Hardware, Inc.

  
	
   

  	
  15 Koch Road, Suite J

  
	
   

  	
  Corte Madera, California 94925

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Facsimile: (415) 945-4679

  
	
   

  	
   

  
	
  and to the Indemnitee at:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Notice of
change of address shall be effective only when done in accordance with this
Section.  All notices complying with this
Section shall be deemed to have been received on the date of delivery or on the
third business day after mailing.

 

8

 

IN WITNESS
WHEREOF, the parties hereto have duly executed and delivered this Agreement as
of the day first set forth above.

 

 

	
   

  	
  THE COMPANY:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RESTORATION HARDWARE, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  INDEMNITEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
						

 

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]