CONFIDENTIALITY,
NON-COMPETITION AND TERMINATION BENEFITS
AGREEMENT
This Confidentiality,
Non-Competition and Termination Benefits Agreement ("Agreement") is
entered into effective as of September 9, 2004 between Steven P.
Dennis ("Executive") and The Neiman Marcus Group, Inc., a Delaware
corporation ("NMG"). All capitalized terms used but not defined
herein shall have the meanings assigned to them in Appendix A,
which is attached hereto and incorporated fully herein by
reference.
WHEREAS, Executive is employed "at
will" as Senior Vice President, Strategy, Business Development and
Multi-Channel Marketing of NMG, and either Executive or NMG may
terminate Executive's employment at any time, with or without
notice, and for any reason; and
WHEREAS, in connection with the
restructuring of the compensation and benefits provided to senior
executives of NMG, including Executive, the Board of Directors of
NMG has determined that stock option and restricted stock awards
should be combined with appropriate post-employment and other
restrictions designed to protect the legitimate business interests
of NMG and its Affiliates; and
WHEREAS, in connection with the
hiring of Executive, NMG and Executive have entered (or will enter)
into separate stock option and restricted stock agreements (the
"Incentive Agreements") that set forth the rights and obligations
of NMG and Executive with respect to such awards; and
WHEREAS, by virtue of his position
and responsibilities, Executive has (and will have) unique access
to and knowledge of NMG's trade secrets and other confidential and
proprietary business information; and
WHEREAS, Executive's association with
NMG to the exclusion of its competitors will enhance NMG's goodwill
and Executive's earning capacity; and
WHEREAS, NMG and Executive mutually
desire to protect NMG's goodwill created by Executive's association
with NMG and NMG's trade secrets and other confidential and
proprietary business information and in recognition of the possible
interruption of Executive's earnings after the end of his NMG
employment;
NOW, THEREFORE, in consideration of
the Incentive Agreements and the promises and undertakings of the
parties set out herein, and intending to be legally bound,
Executive and NMG agree as follows:
1. (a) While
Executive is employed at-will by NMG, if NMG terminates Executive's
employment for any reason other than for "Cause," his "Total
Disability," or his death, NMG shall, subject to paragraphs 1(c)
and 1(d) below, provide Executive with benefits ("Termination
Benefits") consisting of:
(1) an
amount equivalent to 1.5 times his then-current annual base salary,
less required withholding, which amount would be paid over an
18-month period (hereinafter, the "Salary Continuance Period") in
regular, bi-weekly installments following such termination; and
(2) if,
at the time of his termination, Executive participates in a group
medical insurance plan offered by NMG and Executive is eligible for
and elects to receive continued coverage under such plan in
accordance with the Consolidated Omnibus Budget Reconciliation Act
of 1985 ("COBRA") or any successor law, NMG will reimburse
Executive during the Salary Continuance Period or, if shorter, the
period of such actual COBRA continuation coverage, for the total
amount of the monthly COBRA medical insurance premiums actually
paid by Executive for such continued medical insurance
benefits.
For the purposes of determining whether or not NMG has terminated
Executive's employment under this paragraph 1(a), any material,
adverse change in the terms and conditions of his employment,
including but not limited to a relocation of Executive's place of
business 50 miles or more from the current location (other than
Executive's move to the Dallas, Texas area), which change causes
Executive to resign his employment with NMG within 60 days of
learning of the change, will be deemed a termination by NMG. A
transfer of employment between NMG and its Affiliates shall not be
considered as a termination of employment for purposes of this
Agreement.
(b) NMG
shall require any successor or assignee (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all
or substantially all the business and/or assets of NMG, by
agreement in writing in form and substance reasonably satisfactory
to Executive, expressly, absolutely, and unconditionally to assume
and agree to perform this Agreement in the same manner and to the
same extent that NMG would be required to perform it if no such
succession or assignment had taken place. If NMG fails to obtain
such agreement by the effective time of any such succession or
assignment, such failure shall be considered a material, adverse
change in the terms and conditions of Executive's employment and
will be deemed a termination by NMG for purposes of paragraph 1(a)
of this Agreement if such failure causes Executive to resign his
employment with NMG within 60 days of learning of the failure;
provided that the Termination Benefits to which Executive would be
entitled after such resignation pursuant to paragraph 1(a) of this
Agreement shall be the sole remedy of Executive for any failure by
NMG to obtain such agreement. As used in this Agreement, "NMG"
shall include any successor or assignee (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all
or substantially all the business and/or assets of NMG that
executes and delivers the agreement provided for in this paragraph
1(b) or that otherwise becomes obligated under this Agreement by
operation of law.
(c) If,
in the reasonable judgment of NMG, Executive engages in any of the
Restricted Activities described in paragraph 3 of this Agreement,
NMG's obligation to provide the Termination Benefits shall end as
of the date NMG so notifies Executive in writing.
(d) If
Executive is arrested or indicted for any felony, other serious
criminal offense, or any violation of federal or state securities
laws, or has any civil enforcement action brought against him by
any regulatory agency, for actions or omissions related to his
employment with NMG, or if NMG reasonably believes in its sole
judgment that Executive has committed any act or omission that
would have entitled NMG to terminate his employment for Cause,
whether such act or omission was committed during his employment
with NMG or during the Salary Continuance Period, NMG may suspend
any payments remaining pursuant to paragraph 1(a) of this Agreement
until the final resolution of such criminal or civil proceedings or
until NMG has made a final determination in its sole judgment as to
whether Executive committed such an act or omission. If Executive
is found guilty or enters into a plea agreement, consent decree or
similar arrangement with respect to any such criminal or civil
proceedings, or if NMG determines in its sole judgment that
Executive has committed such an act or omission, (1) NMG's
obligation to provide the Termination Benefits shall immediately
end, and (2) Executive shall repay to NMG any amounts paid to him
pursuant to paragraph 1(a) of this Agreement within 30 days after a
written request to do so by NMG. If any such criminal or civil
proceedings do not result in a finding of guilt or the entry of a
plea agreement or consent decree or similar arrangement, or NMG
determines in its sole judgment that Executive has not committed
such an act or omission, NMG shall pay to Executive any payments
pursuant to paragraph 1(a) of this Agreement that it has suspended,
with interest on such suspended payments at its cost of funds, and
shall make any remaining payments due thereunder.
2. Executive
acknowledges and agrees that (a) NMG is engaged in a highly
competitive business; (b) NMG has expended considerable time and
resources to develop goodwill with its customers, vendors, and
others, and to create, protect, and exploit Confidential
Information; (c) NMG must continue to prevent the dilution of its
goodwill and unauthorized use or disclosure of its Confidential
Information to avoid irreparable harm to its legitimate business
interests; (d) in the specialty retail business, his participation
in or direction of NMG's day-to-day operations and strategic
planning are and will be an integral part of NMG's continued
success and goodwill; (e) given his position and responsibilities,
he necessarily will be creating Confidential Information that
belongs to NMG and enhances NMG's goodwill, and in carrying out his
responsibilities he in turn will be relying on NMG's goodwill and
the disclosure by NMG to him of Confidential Information; (f) he
will have access to Confidential Information that could be used by
any competitor of NMG in a manner that would irreparably harm NMG's
competitive position in the marketplace and dilute its goodwill;
and (g) he necessarily would use or disclose Confidential
Information if he were to engage in competition with NMG. NMG
acknowledges and agrees that Executive must have and continue to
have throughout his employment the benefits and use of its goodwill
and Confidential Information in order to properly carry out his
responsibilities. NMG accordingly promises upon execution and
delivery of this Agreement to provide Executive immediate access to
new and additional Confidential Information and authorize him to
engage in activities that will create new and additional
Confidential Information. NMG and Executive thus acknowledge and
agree that upon execution and delivery of this Agreement he (a) has
received, will receive, and will continue to receive, Confidential
Information that is unique, proprietary, and valuable to NMG, (b)
has created, will create, and will continue to create, Confidential
Information that is unique, proprietary, and valuable to NMG, and
(c) has benefited, will benefit, and will continue to benefit,
including without limitation by way of increased earnings and
earning capacity, from the goodwill NMG has generated and from the
Confidential Information. Accordingly, Executive acknowledges and
agrees that at all times during his employment by NMG and
thereafter:
(a) &n
