EXHIBIT 10.26
TERMINATION AND CHANGE OF CONTROL AGREEMENT
1. This Termination and Change of Control Agreement ("Agreement") is entered
into as of June 28, 2001 between Xxxxx X. Xxxxxxx ("Xx. Xxxxxxx" or the
"Executive") and The Neiman Marcus Group, Inc. ("NMG").
2. Xx. Xxxxxxx is employed "at-will" as Senior Vice President and Chief
Financial Officer of NMG, 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 (including the relocation of
Executive's place of business 50 miles or more from the current location),
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 this 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.
/s/ XXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXX
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Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxxx, President
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 this
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.
