THE AMENDED AND RESTATED NEIMAN MARCUS GROUP, INC. DEFINED CONTRIBUTION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

ARTICLE I PURPOSE				1
ARTICLE II DEFINITIONS				2
Section 2-1		“Affiliate”		2
Section 2-2		“Amended Enrollment Agreement”		2
Section 2-3		“Base Pay”		2
Section 2-4		“Beneficiary”		2
Section 2-5		“Board”		2
Section 2-6		“Cause”		2
Section 2-7		“Change of Control”		2
Section 2-8		“Claimant”		4
Section 2-9		“Code”		4
Section 2-10		“Committee”		4
Section 2-11		“Company”		4
Section 2-12		“Compensation Limitation”		4
Section 2-13		“DB SERP”		4
Section 2-14		“Defined Contribution”		4
Section 2-15		“Defined Contribution Account”		4
Section 2-16		“Disabled”		4
Section 2-17		“Effective Date”		4
Section 2-18		“Eligible Compensation”		4
Section 2-19		“Eligible Employee”		6
Section 2-20		“Employee”		6
Section 2-21		“Employer”		6
Section 2-22		“Enrollment Agreement”		7
Section 2-23		“ERISA”		7
Section 2-24		“Exchange Act”		7
Section 2-25		“Hour of Service”		7
Section 2-26		“Identification Date”		7
Section 2-27		“Key Employee”		7
Section 2-28		“Non-Transitional Defined Contribution”		7
Section 2-29		“Participant”		7
Section 2-30		“Plan”		7
Section 2-31		“Plan Year”		7
Section 2-32		“Separation Date”		7
Section 2-33		“Separation From Service”		8
Section 2-34		“Specified Distribution Date”		8
Section 2-35		“Specified Employee”		8
Section 2-36		“Transitional Defined Contribution”		8
Section 2-37		“Year of Service”		8
ARTICLE III ADMINISTRATION OF THE PLAN AND DISCRETION				9
Section 3-1		Administration		9
Section 3-2		Compensation of Committee; Expenses		9
Section 3-3		Indemnification		9
Section 3-4		Interpretations		9

 

 

ARTICLE IV PARTICIPATION				10
Section 4-1		Defined Contributions		10
Section 4-2		Time of Distribution		11
Section 4-3		Form of Distribution		11
Section 4-4		Modifications of Distribution Timing		11
Section 4-5		Characterization of Payments for 409A Purposes		11
Section 4-6		Change in Status		11
ARTICLE V INVESTMENT CREDITS AND FUNDING				13
Section 5-1		Theoretical Rate of Return		13
Section 5-2		Notional Investment Alternatives		13
Section 5-3		Changes of Notional Investment Alternatives, if Applicable		13
Section 5-4		Unfunded Status		13
Section 5-5		Valuation		14
Section 5-6		Defined Contribution Account Statement		14
ARTICLE VI VESTING				15
ARTICLE VII DISTRIBUTIONS				16
Section 7-1		Distributions		16
Section 7-2		Distributions on Separation From Service for Participants Who Are Deemed Specified Employees		16
Section 7-3		Death of Participant		16
Section 7-4		Disability of Participant		16
Section 7-5		Change of Control		17
Section 7-6		Change in Time		17
ARTICLE VIII AMENDMENT AND TERMINATION				18
ARTICLE IX CLAIMS PROCEDURES				19
Section 9-1		Claim		19
Section 9-2		Claim Decision		19
Section 9-3		Request for Review		19
Section 9-4		Review of Decision		19
ARTICLE X MISCELLANEOUS				20
Section 10-1		Designation of Beneficiary		20
Section 10-2		Limitation of Participant’s Right		20
Section 10-3		No Limitation on Employer Actions		20
Section 10-4		Obligations to the Employer		20
Section 10-5		Non-alienation of Benefits		20
Section 10-6		Protective Provisions		21
Section 10-7		Withholding Taxes		21
Section 10-8		Unfunded Status of Plan		21
Section 10-9		Severability		21
Section 10-10		Governing Law		21
Section 10-11		Headings		21
Section 10-12		Gender, Singular and Plural		21
Section 10-13		Notice		21

 

 

Section 10-14		Missing Participants		21
Section 10-15		Incapacity		21
Section 10-16		Section 409A		22

 

 

THE NEIMAN MARCUS GROUP, INC.
DEFINED CONTRIBUTION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

ARTICLE I
PURPOSE

 

The Neiman Marcus Group, Inc. (the “Company”) adopted The Neiman Marcus Group, Inc. Defined Contribution Supplemental Executive Retirement Plan (the “Plan”), effective as of the Effective Date (such term, together with all other capitalized terms set forth in this Plan having the meanings set forth in ARTICLE II below), in recognition of the services provided by certain key management employees or other highly compensated employees of the Company and its Affiliates. Subsequent to the adoption of the Plan, but also effective as of the Effective Date, the Plan was amended and restated to resolve minor scrivener’s errors and formatting issues that were discovered following the adoption of the Plan.

 

The Plan is intended to provide Eligible Employees with the opportunity to receive deemed contributions from the Company for a portion of their Compensation that exceeds the limit on compensation under Section 401(a)(17)(A) of the Code, as adjusted pursuant to section 401(a)(17)(B) (the “Compensation Limitation”). The Company intends that the Plan shall at all times be maintained on an unfunded basis for federal income tax purposes under the Code and administered as a non-qualified “top-hat” plan exempt from the substantive requirements of ERISA. The Company also intends that the Plan be operated and maintained in accordance with the requirements of Section 409A of the Code and the regulations and rulings thereunder.

 

 

ARTICLE II
DEFINITIONS

 

For purposes of this Plan, the following terms shall have the meanings indicated, unless the context clearly indicates otherwise:

 

Section 2-1                                      “ Affiliate ” means any corporation or organization that together with the Company is treated as a single employer under Section 414(b) or (c) of the Code.

 

Section 2-2                                      “ Amended Enrollment Agreement ” means a new Enrollment Agreement executed by a Participant that satisfies the requirements of Section 7-6 below and that changes the time and/or form of a distribution for a particular Plan Year.

 

Section 2-3                                      “ Base Pay ” means the base salary payable by an Employer to an Employee, including amounts that would have been payable to the Employee as base salary but for an election under:

 

(a)                                   Section 125 of the Code

 

(b)                                  Section 401(k) of the Code, including catch-up contributions and Roth 401(k) contributions, if any, or

 

(c)                                   a deferral election under a nonqualified deferred compensation plan.

 

Section 2-4                                      “ Beneficiary ” means the person or persons (natural or otherwise) designated by the Participant as such in accordance with Section 10-1 below.

 

Section 2-5                                      “ Board ” means the Board of Directors of The Neiman Marcus Group, Inc.

 

Section 2-6                                      “ Cause ”

 

(a)                                   The term “Cause” means:

 

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

 

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

 

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

 

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

 

Section 2-7                                      “ Change of Control ”

 

(a)                                   The term “Change of Control” means the occurrence of any of the following events after the Effective Date:

 

(1)                                   any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the

 

 

Company on a consolidated basis to any Person or group of related persons for purposes of Section 13(d) of the Securities Exchange Act of 1934 (a “Group”), together with any CIC Affiliates thereof other than to a Majority Stockholder;

 

(2)                                   the approval by the holders of the outstanding voting power of the Company of any plan or proposal for the liquidation or dissolution of the Company;

 

(3)                                   the occurrence of both of the following:

 

(A)                               any Person or Group (other than the Majority Stockholder) becoming the beneficial owner (within the meaning of Section 13(d) of the Exchange Act), directly or indirectly, of Common Stock representing more than 40% of the aggregate outstanding voting power of the Company and such Person or Group actually having the power to vote such Common Stock in any such election, and

 

(B)                                 the Majority Stockholder beneficially owning (within the meaning of Section 13(d) of the Securities Exchange Act of 1934), directly or indirectly, in the aggregate a lesser percentage of the voting power of the Company than such other Person or Group described in Section 2-7(a)(3)(A) above;

 

(4)                                   the replacement of a majority of the members of the Board over a two-year period from the members who constituted the Board at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the members of the Board then still in office who either were members of such Board at the beginning of such period or whose election as a member of such Board was previously so approved or who were nominated by, or designees of, a Majority Stockholder; or

 

(5)                                   consummation of a merger or consolidation of the Company with another entity in which holders of the Common Stock of the Company immediately prior to the consummation of the transaction hold, directly or indirectly, immediately following the consummation of the transaction, less than 50% of the common equity interest in the surviving corporation in such transaction and the Majority Stockholder does not hold a sufficient amount of voting power (or similar securities) to elect a majority of the surviving entity’s board of directors.

 

(b)                                  For purposes of this Section 2-7, the following terms shall have the following meanings:

 

(1)                                   “ CIC Affiliate ” shall mean, 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)                                   “ Common Stock ” shall mean the common stock of the Company, $0.01 par value per share.

 

(3)                                   “ Majority Stockholder ” shall mean, collectively or individually as the context requires, Newton Holding, LLC, TPG Newton III, LLC, TPG Partners IV, L.P., TPG Newton Co-Invest I, LLC, Warburg Pincus Private Equity VIII, L.P., Warburg Pincus Netherlands Private Equity VIII C.V. I, Warburg

 

 

Pincus Germany Private Equity VIII K.G, Warburg Pincus Private Equity IX, L.P and/or their respective CIC Affiliates.

 

(4)                                   “ Person ” shall mean an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

 

Section 2-8                                      “ Claimant ” means a person who believes that he or she is being denied a benefit to which he or she is entitled under the Plan.

 

Section 2-9                                      “ Code ” means the Internal Revenue Code of 1986, as amended.

 

Section 2-10                                “ Committee ” means The Neiman Marcus Group, Inc. Employee Benefits Committee or any successor committee appointed by the Board.

 

Section 2-11                                “ Company ” means The Neiman Marcus Group, Inc. a Delaware corporation, and any successor, including a successor to all or substantially all of the Company’s assets or business which assumes the obligations of the Company.

 

Section 2-12                                “ Compensation Limitation ” means the dollar limitation in effect under Section 401(a)(17)(A) of the Code with respect to a Plan Year, as adjusted pursuant to Section 401(a)(17)(B) of the Code.

 

Section 2-13                                “ DB SERP ” means The Neiman Marcus Group, Inc. Defined Benefit Supplemental Executive Retirement Plan.

 

Section 2-14                                “ Defined Contribution ” means the amounts credited to the Plan on behalf of an Eligible Employee by the Company pursuant to Section 4-1(a) or Section 4-1(b) below.

 

Section 2-15                                “ Defined Contribution Account ” means the bookkeeping account established by the Company to which are credited Transitional Defined Contributions and Non-Transitional Defined Contributions, and notational earnings and losses thereon.

 

Section 2-16                                “ Disabled ” means:

 

(a)                                   subject to Section 2-16(b) below, a condition:

 

(1)                                   in which the Committee, in its sole and absolute discretion, determines has rendered the Participant unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

 

(2)                                   for which the Participant, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s Employer.

 

(b)                                  Notwithstanding Section 2-16(a) above, a Participant shall be deemed to be Disabled if such Participant is determined to be totally disabled by the Social Security Administration.

 

Section 2-17                                “ Effective Date ” means January 1, 2008.

 

Section 2-18                                “ Eligible Compensation ” means all of the items reflected in Section 2-18(a) below and excluding the items reflected in Section 2-18(b) below:

 

(a)                                   Subject to the exclusions enumerated in Section 2-18(b) below, the term “Eligible Compensation” includes:

 

 

(1)                         wages, within the meaning of Section 3401(a) of the Code, and all other payments of remuneration to a Participant by an Employer for which the Employer is required to furnish the Participant a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Code, but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Code),

 

(2)                         any contributions made by an Employer on behalf of the Participant to a qualified cash or deferred arrangement (as defined in Section 401(k) of the Code) maintained by the Employer,

 

(3)                         any compensation reduction amounts elected by such Participant for the purchase of benefits pursuant to a cafeteria plan (within the meaning of Section 125(d) of the Code) maintained the Employer, and

 

(4)                         any elective amounts not includable in a Participant’s gross income by reason of Section 132(f)(4) of the Code.

 

(b)                                  Notwithstanding the compensatory items enumerated in Section 2-18(a) above, the term “Eligible Compensation” excludes:

 

(1)                                   moving or other expense reimbursements,

 

(2)                                   imputed compensation,

 

(3)                                   property,

 

(4)                                   tips,

 

(5)                                   allowances,

 

(6)                                   fringe benefits (both cash and noncash),

 

(7)                                   severance payments,

 

(8)                                   service awards and prizes other those paid in cash through an Employer’s payroll system,

 

(9)                                   contributions to a nonqualified plan of deferred compensation made by the an Employer to the extent that the contributions are not includible in the gross income of the Participant for the taxable year in which contributed,

 

(10)                             distributions from any other plan of deferred compensation, regardless of whether such amounts are includible in the gross income of the Participant when distributed,

 

(11)                             amounts received in connection with or otherwise attributable to awards or grants under any stock option plan, restricted stock plan, restricted stock unit plan, performance share plan, or similar plan,

 

(12)                             other amounts which receive special tax benefits, including premiums for group-term life insurance,

 

(13)                             incentive payments earned through a wellness or similar program sponsored by an Employer, and

 

(14)                             any other extraordinary remuneration.

 

 

Section 2-19                                “ Eligible Employee ”

 

(a)                                   Subject to Section 2-19(b) below, the term “Eligible Employee” means each Employee who, as of the Effective Date or the first day of any Plan Year thereafter:

 

(1)                                   has completed at least one Year of Service, or such shorter period of service as may be specified by the Committee, in its sole and absolute discretion; and

 

(2)                                   in the sole and absolute discretion of the Committee:

 

(A)                               is or was a member of a group of “key management or other highly compensated employees” of the Employer, within the meaning of Sections 201, 301 and 401 of ERISA,

 

(B)                                 is actively employed on a full-time basis,

 

(C)                                 is not classified as an hourly employee,

 

(D)                                is, or has been, designated as being eligible to participate in the Plan, and

 

(E)                                  either:

 

(i)                                      had in effect on August 1 of the preceding calendar year (or, if later, on the Employee’s date of hire) a rate of Base Pay of at least 80% of the Compensation Limitation applicable to such preceding calendar year, or

 

(ii)                                   was both:

 

(I)                                     participating in the DB SERP on December 31, 2007, and

 

(II)                                 either:

 

(a)                                   elected to both cease participating in the DB SERP and commence participation in this Plan, or

 

(b)                                  ceased to be eligible to participate in the DB SERP solely as a result of the partial freezing of eligibility under the DB SERP.

 

(b)                                  Notwithstanding Section 2-19(a) above, an Eligible Employee shall remain an Eligible Employee notwithstanding any reduction in his or her annual rate of Base Pay below the applicable minimum reflected in Section 2-19(a)(2)(E)(i) above; provided, however, that the Committee in its sole and absolute discretion may withdraw an Employee’s designation under Section 2-19(a)(2)(D) above, as an Eligible Employee at any time and for any reason effective with respect to any subsequent Plan Year.

 

Section 2-20                                “ Employee ” means any individual who is employed by the Employer whose earnings are reported on Form W-2.

 

Section 2-21                                “ Employer ” means the Company and each Affiliate. An Affiliate may revoke its acceptance of such designation at any time, but until such acceptance has been revoked, all of the provisions of the Plan and amendments thereto shall apply to the Eligible

 

 

Employees of the Affiliate. In the event the designation is revoked by an Affiliate, the Plan shall be deemed terminated only with respect to such Affiliate.

 

Section 2-22                                “ Enrollment Agreement ” means the authorization form which an Eligible Employee timely files with the Committee to designate the time of distributions from the Plan, pursuant to the terms set forth in Section 4-2 below.

 

Section 2-23                                “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

Section 2-24                                “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

Section 2-25                                “ Hour of Service ” means each hour for which an Employee is paid or entitled to payment for the performance of duties for an Employer or an Affiliate.

 

Section 2-26                                “ Identification Date ” means December 31.

 

Section 2-27                             “ Key Employee ”

 

(a)                                   The term “Key Employee” means an Employee who is one of the following:

 

(1)                                   an officer of the Employer having annual compensation greater than $140,000 (adjusted for inflation pursuant to Section 416(i) of the Code and limited to the top 50 Employees),

 

(2)                                   a five percent owner of the Employer, or

 

(3)                                   a one percent owner of the Employer having annual compensation from the Employer of more than $150,000, subject to such other determinations made by the Committee, in its sole discretion, in a manner consistent with the regulations issued under Section 409A of the Code.

 

(b)                                  For purposes of this definition, the term “compensation” shall have the meaning under Treas. Reg. § 1.415(c)-2(a), without using the safe harbor provided in Treas. Reg. § 1.415(c)-2(d), any of the special timing rules provided in Treas. Reg. § 1.415(c)-2(e), and any special rules provided in Treas. Reg. § 1.415(c)-2(g).

 

Section 2-28                                “ Non-Transitional Defined Contribution ” means the amounts credited to the Plan on behalf of an Eligible Employee by the Company pursuant to Section 4-1(a) below.

 

Section 2-29                                “ Participant ” means each Eligible Employee who is participating in the Plan in accordance with the provisions of ARTICLE IV below. In the event of a Participant’s death, the term Participant shall mean the Participant’s Beneficiary. In the case of a Participant’s incompetency, the term Participant shall include an individual with a duly authorized power of attorney or, in the absence of a duly authorized power of attorney, the Participant’s personal representative or guardian. An individual shall remain a Participant until that individual has received full distribution of any amount credited to the Participant’s Defined Contribution Account.

 

Section 2-30                                “ Plan ” means this plan, called The Neiman Marcus Group, Inc. Defined Contribution Supplemental Executive Retirement Plan.

 

Section 2-31                                “ Plan Year ” means the 12 month period beginning on each January 1 and ending on the following December 31.

 

Section 2-32                                “ Separation Date ” means the date on which a Participant incurs a Separation From Service.

 

 

Section 2-33                                “ Separation From Service ” means a Participant’s separation from service with the Employer within the meaning of Section 409A of the Code and the regulations issued thereunder.

 

Section 2-34                                “ Specified Distribution Date ” means a specific time, within the meaning of Section 409A of the Code and the regulations promulgated thereunder, that is designated by the Participant in his or her Enrollment Agreement or Amended Enrollment Agreement, as applicable; provided, however, that the Specified Distribution Date cannot be sooner than the date on which the Participant has:

 

(a)                                   vested in all of the amounts credited to his or her Defined Contribution Account pursuant to ARTICLE VI below, and

 

(b)                                  either:

 

(1)                                   attained age fifty-five (55),

 

(2)                                   died, or

 

(3)                                   determined to be Disabled.

 

Section 2-35                                “ Specified Employee ” means an Employee who at any time during the 12-month period ending on an Identification Date is a Key Employee. If an Employee would be deemed a Key Employee as of an Identification Date, the Employee is treated as a “Specified Employee” for the 12-month period beginning on the fourth month following the end of the 12- month period following the Identification Date. Notwithstanding the foregoing, unless otherwise provided under Section 409A of the Code and its corresponding regulations, no Participant shall be deemed a Specified Employee if at the time of the Participant’s Separation From Service no stock of the Employer, or any entity required to be aggregated with the Employer pursuant to Section 414(b) or 414(c) of the Code, is publicly traded on an established securities market or otherwise.

 

Section 2-36                                “ Transitional Defined Contribution ” means the amounts credited to the Plan on behalf of an Eligible Employee by the Company pursuant to Section 4-1(b) below.

 

Section 2-37                                “ Year of Service ” means completion of the twelve consecutive month period beginn