EXHIBIT 10.3
TERMINATION AND CHANGE OF CONTROL AGREEMENT
1. This Termination and Change of Control Agreement ("Agreement")
is entered into as of 10/06/99 between Xxxxxx Xxxxxxx ("Xx.
Xxxxxxx" or the "Executive") and The Neiman Marcus Group, Inc.
("NMG").
2. Xx. Xxxxxxx is employed "at-will" as President, Neiman Marcus
Stores, and Xx. Xxxxxxx or NMG may terminate Xx. Xxxxxxx'x
employment at any time, with or without notice, for any reason.
Notwithstanding this at-will employment, NMG wishes to provide some
protection to Xx. Xxxxxxx if the Executive's employment ends under
certain circumstances.
3. a. While Xx. Xxxxxxx is employed at-will, if NMG terminates
Xx. Xxxxxxx'x employment other than "for cause" or other than
due to "total disability" or death, NMG agrees to provide Xx.
Xxxxxxx with a termination package consisting of (a) 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 in regular, bi-weekly installments
following such termination; and (b) continuation of the
medical and dental insurance coverage in which he
participates at the time of such termination (or as such
coverage may be changed from time-to-time for employees
generally) for 18 months or until he starts full-time
employment, whichever is sooner. Xx. Xxxxxxx will be
responsible for paying his portion of monthly premiums for
the medical and dental insurance coverage at the same rate
paid by active employees, and Xx. Xxxxxxx authorizes NMG to
deduct such amounts from the payments it makes to him. For
the purposes of determining whether or not NMG has terminated
the Executive's employment, any material, adverse change in
the terms and conditions of his employment, which change
causes the Executive to resign his employment, will be deemed
a termination.
b. If Xx. Xxxxxxx'x services are terminated by a successor
to NMG other than "for cause" or other than due to "total
disability" or death within two years of a change of control
of NMG, as a change of control is defined in Appendix A, or
if the Executive resigns his employment within two years of
such a change of control because he is not permitted to
continue in a position comparable in duties and
responsibilities to that which he held before such a change
of control, Xx. Xxxxxxx shall receive the termination package
set forth in paragraph 3.a.
4. For the purposes of determining Xx. Xxxxxxx'x eligibility for
the termination package set forth in this Agreement:
a. "For cause" means, in NMG's reasonable judgment, a
breach of duty by Xx. Xxxxxxx in the course of his employment
involving fraud, acts of dishonesty (other than inadvertent
acts or omissions), or moral turpitude, repeated
insubordination, failure to devote his full working time and
best efforts to the performance of his duties, or conviction
of a felony or other serious criminal offense. Provided
that, with respect to insubordination or devotion of his
working time, Xx. Xxxxxxx has been provided prior written
notice of the problem and afforded a reasonable opportunity
to correct same.
b. "Total Disability" means that, in NMG's reasonable
judgment, Xx. Xxxxxxx is unable to perform his duties for (a)
80% or more of the normal working days during six consecutive
calendar months or (b) 50% or more of the normal working days
during twelve consecutive calendar months.
c. "Change of Control" has the meaning set forth in
Appendix A.
5. Payment by NMG of the termination package set forth in
paragraph 3 constitutes full satisfaction of NMG's obligations to
Xx. Xxxxxxx, if any, (including the right to any severance
payments) which arise from or relate in any way to the termination
of Xx. Xxxxxxx'x employment. However, nothing in this Agreement
is intended to limit any earned, vested benefits (other than any
entitlement to severance pay) that Xx. Xxxxxxx may have under the
applicable provisions of any benefit plan in which Xx. Xxxxxxx is
participating at the time of his termination of employment or
resignation.
6. The unenforceability of any provision of this Agreement shall
not affect the enforceability of any other provision of this
Agreement.
7. This Agreement contains the entire agreement between the
parties and supersedes all prior agreements and understandings,
oral or written, with respect to the termination of Xx. Xxxxxxx'x
at-will employment and the subject matter of the Agreement. This
Agreement may not be changed orally. It may be changed only by
written agreement signed by the party against whom any waiver,
change amendment, modification or discharge is sought.
8. The validity, performance and enforceability of this Agreement
will be determined and governed by the laws of the Massachusetts
without regard to its conflict of laws principles.
The Neiman Marcus Group, Inc.
By: s/ Xxxxxx Xxxxxxx By: s/ Xxxxxx X. Xxxxxx
Xx. Xxxxxx Xxxxxxx
Appendix A
A Change of Control will occur for purposes of this Agreement:
(i) 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 which would
result in the shareholders of the Company immediately prior thereto
continuing to own (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than
50% of the combined voting power of the voting securities of the
Company, the acquiring entity or such surviving entity outstanding
immediately after such merger or consolidation in substantially the
same proportion such shareholders held the voting securities of the
company immediately prior to the merger or consolidation;
(ii) if any person or group (as used in section 13(d) of the
Securities Exchange Act of 1934, as amended (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 shareholders 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 total voting power
(other than in the election of directors) of all securities of the
Company then outstanding; or
(iii) if, during any period of twenty-four consecutive months,
individuals who at the beginning of such period constitute the
Board of Directors, and any new director whose election or
nomination for election by the Company's shareholders 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
(iv) 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.
Date: November 17, 1999
To: Xxxxxx Xxxxxxx
From: Xxxxxx X. Xxxxxx
Subject: SERP Benefit
As we discussed today, the Compensation Committee of The Neiman
Marcus Group Board of Directors approved an enhanced SERP benefit
for you.
The Committee has agreed that if NMG terminates your employment
other than for cause or if you resign your employment under
circumstances entitling you to payments under your Termination and
Change of Control Agreement (e.g., material adverse change in
responsibilities) before you reach age 65, NMG will determine your
pension benefit using 20/13 x years of service with NMG as your
credited service.
Further, should your employment be terminated other than for cause
or you resign following a material adverse change in
responsibilities or you resign because you are not permitted to
continue in an position comparable in duties and responsibilities,
within 24 months of a Change of Control of NMG, NMG will determine
your pension benefit using 20/13 x years of service with NMG as
your credited service.
One other note related to a Change of Control: The Compensation
Committee approved accelerated vesting of unvested stock options
and accelerated lapsing of restrictions on restricted stock (both
time-lapse and performance accelerated) upon a Change of Control
of NMG. Xxxx Xxxxxx will provide the precise terms of the
acceleration to option/restricted stockholders.
