SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

Table of Contents

 

 

ARTICLE			PAGE
Article	I.-DEFINITIONS		5
	1.1. “Augmentation Plan”		5
	1.2. “Basic Plan”		5
	1.3. “Board of Directors”		5
	1.4. “CHH Plan”		5
	1.5. “Code”		5
	1.6. “Committee”		5
	1.7. “Company”		5
	1.8 “Compensation		6
	1.9. “Effective Date”		6
	1.10. “Eligible Employee”		6
	1.11. “Individual Pension Agreement”		7
	1.12. “Minimum Salary”		7
	1.13. “Normal Form”		7
	1.14 “Participant”		7
	1.15. “Participating Employer”		7
	1.16. “Plan”		7
	1.17. “Plan Year”		7
	1.18. “Service”		8
	1.19. “Social Security Benefit”		8
	1.20. “Spouse”		6
Article	2.-PARTICIPATION		10
	2.1. Commencement of Participation		10
	2.2. Duration of Participation		10
	2.3. Reduction in Participants		10
Article	3.-SOURCE OF BENEFIT PAYMENTS		12
Article	4.-RETIREMENTBENEFITS		13
	4.1. Normal or Late Retirement Benefit		13
	4.2. Early Retirement Benefit		13
	4.3. Vested Termination Benefit		15
	4.4. Other Teffi1ination of Employment; Death		15
	4.5. Optional Forms of Benefits		16
	4.6. Forfeiture of Benefits		17
	4.7. Surviving Spouse Benefit		17
	4.8. Disability		17
	4.9. No Reduction in Accrued Benefit Under CHH Plan		18

 

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	4.10. Lump Sum Settlements	18
	4.11. Reemployment After Retirement	18
Article	5.-COMMITTEE	20
	5.1. Plan Administration and Interpretation	20
	5.2. Powers, Duties, Procedures, etc.	20
	5.3. Information	21
	5.4. Indemnification of Committee	21
Article	6. –AMENDMENTANDTERMINATION	22
	6.1. Amendments	22
	6.2. Termination of Plan	22
Article	7.-MISCELLANEOUS	23
	7.1. Nonassignability	23
	7.2. Limitation on Participants’ Rights	23
	7.3. Participants Bound	23
	7.4. Receipt and Release	23
	7.5. Governing Law	24
	7.6. Headings and Subheadings	24

 

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THE NEIMAN MARCUS GROUP, INC.

 

SUPPLEMENTAL EXECUTIVE

 

RETIREMENT PLAN

 

Purpose

 

The Company originally adopted this Plan, effective August 7, 1987, for a select group of management personnel in order to

 

(a) attract, retain and motivate qualified management personnel;

 

(b) facilitate the retirement of management personnel; and

 

(c) provide survivor income for the spouses of management personnel.

 

The Company hereby amends and restates the Plan to make certain changes and clarifications. The Plan is intended to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2) and 301(a)(3) of ERISA, and shall be interpreted and administered to the extent possible in a manner consistent with that intent.

 

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Article 1. - Definitions

 

Wherever used herein the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:

 

1.1. “Augmentation Plan” means the Augmentation to Pension Plan for Employees of Carter Hawley Hale Stores, Inc.

 

1.2. “Basic Plan” means The Neiman Marcus Group, Inc. Retirement Plan as amended from time to time. Reference to any Article or Section of the Basic Plan shall include reference to any comparable or successor provisions of the Basic Plan as amended from time to time.

 

1.3. “Board of Directors” means the Board of Directors of the Company.

 

1.4. “CHH Plan” means the Supplemental Executive Retirement Plan of Carter Hawley Hale Stores, Inc, as in effect on the day before the Effective Date.

 

I.5.  “Code” means the Internal Revenue Code of 1986, as amended from time to time. Reference to any Section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such Section or subsection.

 

1.6. “Committee” means the Employee Benefits Committee appointed by the Board of Directors or its Executive Committee.

 

1.7. “Company” means The Neiman Marcus Group, Inc., a Delaware corporation and any successor to all or substantially all of its assets or business which assumes the obligations of the Company.

 

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1.8. “Compensation” means, with respect to any given period, the aggregate compensation, exclusive of any bonuses, paid to an Eligible Employee by one or more Participating Employers during such period, whether before or after he or she becomes an Eligible Employee. “Compensation” shall be determined before any reduction under Section 125 or 40 1 (k) of the Code or under any other deferred compensation plan or arrangement, but shall not otherwise include any Participating Employer contributions under retirement or other benefit plans or arrangements, or any expense reimbursements, imputed compensation, property, or payments of compensation previously deferred. In the case of an Eligible Employee who was, immediately prior to the Effective Date, employed by Carter Hawley Hale Stores, Inc. (“CHH”) or any of its affiliates, the term “Participating Employer” shall, for purposes of this Section 1.7, include CHH and its affiliates.

 

1.9. “Effective Date” means August 2, 1987.

 

1.10. “Eligible Employee” means each employee of a Participating Employer who, on any August 1,

 

(a) is employed in an executive, administrative, or professional capacity as defined in Section 13(a)(I) of the Fair Labor Standards Act, as amended, and the regulations thereunder,

 

(b) participates in the Basic Plan,

 

(c) had a base salary on the immediately preceding December 31 at least equal to the Minimum Salary, and

 

(d) is not employed as a salesperson.

 

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1.11. “Individual Pension Agreement” means a deferred compensation agreement between a Participating Employer and an Eligible Employee which provides for payment by the Participating Employer of supplementary retirement benefits, but shall not include any agreement to defer compensation under The Neiman Marcus Group, Inc. Key Employee Deferred Compensation Plan or any similar plan or arrangement.

 

1.12. “Minimum Salary” means:

 

(a) for December 31 of each of the years 1992 through 1995, the amount in effect under Section 414(q)(1)(B) of the Code for the year following such December 31; and

 

(b) for December 31, 1996, and each December 31 thereafter, $100,000.

 

1.13. “Normal Form” means a form of benefit payable monthly to an individual during his or her lifetime, the first payment to be due on the date of the commencement of his or her benefits under the Plan, and the last payment to be due for the calendar month in which his or her death occurs.

 

1.14. “Participant” means any individual who participates in the Plan in accordance with Article 2.

 

1.15. “Participating Employer” means the Company and any affiliate or subsidiary of the Company which is a Participating Employer as defined in the Basic Plan.

 

1.16. “Plan” means The Neiman Marcus Group, Inc. Supplemental Executive Retirement Plan as set forth herein and in all subsequent amendments hereto.

 

1.17. “Plan Year” means the 52 or 53 week period ending on the Saturday nearest to July 31 of each year.

 

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1.18. “Service” means the period measured in years equal to years of Vesting Service determined under the Basic Plan, subject to the following special rules:

 

(a) Years of Vesting Service, if any, prior to the Effective Date shall be determined in accordance with the rules of the Pension Plan for Employees of Carter Hawley Hale Stores, Inc. that applied on August 1, 1987 to employees hired after June 30, 1980; and

 

(b) A Participant shall be credited with a full year of Service for each partial year of Vesting Service interrupted by a Period of Severance, provided that (i) the Participant is credited with at least 1,000 Hours of Service during such partial year of Vesting Service, and (ii) no more than one year of Service shall be credited during any 12-month period.

 

1.19. “Social Security Benefit” means, in the case of each Participant, the estimated amount of the monthly primary old age insurance benefit available to him at age 65 under the Social Security Act as in effect on the earliest of his or her Normal Retirement Date, Termination of Employment or death. The amount shall be computed upon the assumption that the Participant has been continuously covered under said Act since the later of 1951 or his or her 21st birthday, and that his or her remuneration for employment for the calendar year preceding the date of his or her Normal Retirement, Termination of Employment or death, whichever is earliest, was equal to that portion of his compensation for such year that would be subject to tax under Section 3101(a) of the Code without the dollar limitation of Code Section 3121(a)(l), and his or her remuneration for each prior calendar year was equal to the assumed remuneration for the subsequent year divided by 1.06. If a Participant has a Termination of Employment

 

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for any reason, or becomes Totally and Permanently Disabled, prior to his or her Normal Retirement Date, in determining his or her Social Security Benefit, earnings for the calendar year of such termination or disability and each subsequent calendar year prior to his or her Normal Retirement Date shall be assumed to be equal to that portion of his or her compensation for the calendar year prior to the year of termination or disability that would be subject to tax under Section 3101(a) of the Code without the dollar limitation of Code Section 3121(a)(1). 1.20. “Spouse” means the lawfully married husband or wife of a Participant, determined at the time of the Participant’s death or, if earlier, as of the first day of the first month for which benefits are payable under the Plan.

 

Unless defined herein, any capitalized word, phrase or term used in this Plan shall have the meaning given to it in the Basic Plan.

 

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Article 2. - PARTICIPATION

 

2.1. Commencement of Participation. Any individual who was a Participant in the Plan on July 31, 1993 will, subject to Sections 2.2 and 2.3, continue to be a Participant under this restatement of the Plan. Any other individual who is an Eligible Employee on August 1, 1993 or any subsequent August 1 shall become a Participant on such August.

 

1. 2.2. Duration of Participation. Subject to Section 2.3, an individual who has become a Participant in the Plan shall continue to be a Participant as long as he or she remains an employee of a Participating Employer or is entitled to a benefit under the Plan, even though his or her base salary after becoming a Participant later falls below the then applicable base salary level specified in Section 1.10. A Participant will cease to be a Participant when he or she is neither employed by a Participating Employer nor entitled to receive a benefit under the Plan.

 

2.3. Reduction in Participant.   Notwithstanding any other provision of the Plan to the contrary, the Committee may terminate the right of any Participant or Eligible Employee to participate in the Plan if the Committee deems such action to be necessary to preserve the status of the Plan as “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201 (2) and 301(a)(3) of ERISA. In the event a Participant’s participation is terminated under this Section 2.3, the Participant shall not be entitled to any benefits under the Plan except to the extent such benefits would be protected under Section 6.2 if the Plan were then terminated.

 

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The Committee may, in its discretion, direct the Participant’s Participating Employer to pay to the Participant the present value of any such protected benefits, or to provide for payment of such benefits through another plan, or may direct a combination of the foregoing, in lieu of providing such benefits under this Plan, and such payment or provision (or both) shall be in complete satisfaction of the Participant’s rights under this Plan.

 

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Article 3. - SOURCE OF BENEFIT PAYMENTS

 

Nothing in this Plan will be construed to create a trust or to obligate the Participating Employers or any other person to segregate a fund, purchase an insurance contract, or in any other way currently to fund the future payment of any benefits hereunder, nor will anything herein be construed to give any employee or any other person rights to any specific assets of the Participating Employers or of any other person. Any benefits which become payable hereunder shall be paid from the general assets of the Participating Employers. .

 

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Article 4. - RETIREMENT BENEFITS

 

4.1. Normal or Late Retirement Benefit. The amount of the monthly retirement benefit payable under the Plan to a Participant who retires on or after his or her Normal Retirement Date, commencing on the first day of the month coinciding with or next following his or her retirement and payable in the Normal Form, will be equal to (a) minus (b), but not less than zero, where

 

(a) is 50% of the Participant’s average monthly Compensation for the highest sixty consecutive months preceding retirement, less 60% of the Participant’s Social Security Benefit, the result multiplied by a fraction the numerator of which is the Participant’s years of Service (not in excess of 25) and the denominator of which is 25; and

 

(b) is the monthly normal or late retirement benefit payable to the Participant under the Basic Plan (increased by his or her monthly benefit, if any, under the Augmentation Plan and any Individual Pension Agreement), calculated as though payable in the Normal Form.

 

4.2. Early Retirement Benefit.

 

(a) The amount of the monthly retirement benefit under this Plan payable in the Normal Form to a Participant who has attained age 55 with at least 10 years of Service, and who retires thereafter (but prior to his or her Normal Retirement Date), shall equal (1) minus (2), but not less than zero, where

 

(1) is the amount determined under Section 4.1(a) above, unreduced for early commencement if the benefit starting date is on or after the Participant’s 62nd birthday, reduced by 1/600th for each month

 

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between the Participant’s 60th and 62nd birthday by which the benefit starting date precedes the month in which the Participant attains age 62, and reduced further by 1/240th for each month by which the benefit starting date precedes the month in which the Participant attains age 60; and

 

(2) is the Participant’s monthly early retirement benefit, if any, under the Basic Plan (increased by his or her monthly early retirement benefit, if any, under the Augmentation Plan and any Individual Pension Agreement