Exhibit 10.12
THE NEIMAN MARCUS GROUP, INC.
KEY EMPLOYEE DEFERRED COMPENSATION PLAN
(Effective January 1, 1994)
TABLE OF CONTENTS
ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . 1
1.1. Purpose of Plan . . . . . . . . . . . . . . . . . 1
1.2. Status of Plan . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
2.1. "Account" . . . . . . . . . . . . . . . . . . . . 1
2.2. "Base Pay" . . . . . . . . . . . . . . . . . . . . 1
2.3. "Bonus" . . . . . . . . . . . . . . . . . . . . . 2
2.4. "Code" . . . . . . . . . . . . . . . . . . . . . . 2
2.5. "Committee" . . . . . . . . . . . . . . . . . . . 2
2.6. "Company" . . . . . . . . . . . . . . . . . . . . 2
2.7. "Compensation" . . . . . . . . . . . . . . . . . . 2
2.8. "Effective Date" . . . . . . . . . . . . . . . . . 2
2.9. "Elective Deferral" . . . . . . . . . . . . . . . 2
2.10. "Eligible Employee" . . . . . . . . . . . . . . . 3
2.11. "ERISA" . . . . . . . . . . . . . . . . . . . . . 3
2.12. "Financial Hardship" . . . . . . . . . . . . . . 3
2.13. "Matching Deferral" . . . . . . . . . . . . . . . 4
2.14. "Participant" . . . . . . . . . . . . . . . . . . 4
2.15. "Plan" . . . . . . . . . . . . . . . . . . . . . 4
2.16. "Plan Year" . . . . . . . . . . . . . . . . . . . 4
2.17. "Retirement" . . . . . . . . . . . . . . . . . . 4
2.18. "Savings Plan" . . . . . . . . . . . . . . . . . 5
2.19. "Year of Service" . . . . . . . . . . . . . . . . 5
ARTICLE 3. PARTICIPATION . . . . . . . . . . . . . . . . . . 5
3.1. Commencement of Participation . . . . . . . . . . 5
3.2. Continued Participation . . . . . . . . . . . . . 5
ARTICLE 4. ELECTIVE AND MATCHING DEFERRALS . . . . . . . . . 5
4.1. Elective Deferrals . . . . . . . . . . . . . . . . 5
4.2. Matching Deferrals . . . . . . . . . . . . . . . . 7
ARTICLE 5. ACCOUNTS; INTEREST . . . . . . . . . . . . . . . 7
5.1. Accounts . . . . . . . . . . . . . . . . . . . . . 7
5.2. Interest . . . . . . . . . . . . . . . . . . . . . 7
5.3. Payments . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6. PAYMENTS . . . . . . . . . . . . . . . . . . . . 8
6.1. Time and Form of Payment . . . . . . . . . . . . . 8
6.2. Termination of Employment . . . . . . . . . . . . 9
6.3. Death . . . . . . . . . . . . . . . . . . . . . . 9
6.4. Reduction in Shareholders' Equity . . . . . . . . 10
6.5. Change in Control . . . . . . . . . . . . . . . . 10
6.6. Hardship . . . . . . . . . . . . . . . . . . . . . 11
6.7. Changes in Time and Form of Payment . . . . . . . 11
6.8. Payment Dates . . . . . . . . . . . . . . . . . . 12
6.9. Withholding . . . . . . . . . . . . . . . . . . . 12
ARTICLE 7. COMMITTEE . . . . . . . . . . . . . . . . . . . . 12
7.1. Plan Administration and Interpretation . . . . . . 12
7.2. Powers, Duties, Procedures, Etc . . . . . . . . . 13
7.3. Information . . . . . . . . . . . . . . . . . . . 13
7.4. Indemnification of Committee . . . . . . . . . . . 13
ARTICLE 8. AMENDMENT AND TERMINATION . . . . . . . . . . . . 14
8.1. Amendments . . . . . . . . . . . . . . . . . . . . 14
8.2. Termination of Plan . . . . . . . . . . . . . . . 14
8.3. Existing Rights . . . . . . . . . . . . . . . . . 14
ARTICLE 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 15
9.1. No Funding . . . . . . . . . . . . . . . . . . . . 15
9.2. Nonassignability . . . . . . . . . . . . . . . . . 15
9.3. Limitation of Participants' Rights . . . . . . . . 15
9.4. Participants Bound . . . . . . . . . . . . . . . . 16
9.5. Receipt and Release . . . . . . . . . . . . . . . 16
9.6. Governing Law . . . . . . . . . . . . . . . . . . 16
9.7. Headings and Subheadings . . . . . . . . . . . . . 16
THE NEIMAN MARCUS GROUP, INC.
KEY EMPLOYEE DEFERRED COMPENSATION PLAN
ARTICLE 1. INTRODUCTION
1.1. Purpose of Plan. The Company has adopted this Key
Employee Deferred Compensation Plan, effective January 1, 1994,
to provide a means by which certain employees who are not
eligible to participate in the Savings Plan may elect to defer
receipt of designated percentages of their Compensation.
1.2. Status of Plan. 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.
ARTICLE 2. DEFINITIONS
Wherever used herein, the following terms have the meanings
set forth below, unless a different meaning is clearly required
by the context:
2.1. "Account" means, for each Participant, the account
established for his or her benefit under Section 5.1.
2.2. "Base Pay" means the base salary payable by the
Company to an employee, including amounts that would have been
payable to the employee as base salary but for an election under
Section 125 of the Code or a deferral election under this Plan.
2.3. "Bonus" means any cash bonus payable by the Company to
an employee, including any portion of such a bonus that would
have been payable to the employee but for an election under
Section 125 of the Code or a deferral election under this Plan.
However, the term "Bonus" shall not include any amount paid under
or in connection with a stock appreciation right or stock option
plan or arrangement.
2.4. "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.
2.5. "Committee" means The Neiman Marcus Group, Inc.
Employee Benefits Committee or any successor committee appointed
by the Board of Directors of The Neiman Marcus Group, Inc. or its
delegate.
2.6. "Company" means The Neiman Marcus Group, Inc., a
Delaware corporation, its directly or indirectly wholly owned
subsidiaries, and any successor to all or substantially all of
the Company's assets or business which assumes the obligations of
the Company.
2.7. "Compensation" means Base Pay and any Bonus payable by
the Company to an employee.
2.8. "Effective Date" means January 1, 1994.
2.9. "Elective Deferral" means the portion of Compensation
which is deferred by a Participant under Section 4.1.
2.10. "Eligible Employee" means each employee of the
Company who, on the Effective Date or the first day of any month
thereafter,
(a) has completed at least one Year of Service, or
such shorter period of service as may be specified by the
Chief Executive Officer of The Neiman Marcus Group, Inc. in
such Officer's sole discretion; and
(b) had in effect on August 1 of the preceding
calendar year (or, if later, on the employee's date of hire)
an annual rate of Base Pay of at least $300,000.
An Eligible Employee shall remain an Eligible Employee
notwithstanding any reduction in his or her annual rate of Base
Pay below the applicable minimum under (b) above.
2.11. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time. Reference to any
section or subsection of ERISA includes reference to any
comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection.
2.12. "Financial Hardship" means an immediate and heavy
financial need resulting from
(a) major medical expenses incurred to obtain, or
necessary to obtain, medical care (described in Section
213(d) of the Code) with respect to the Participant or his
or her spouse or dependent which are not covered by
insurance;
(b) costs directly related to the purchase of a
principal residence of the Participant (excluding mortgage
payments);
(c) the payment of tuition and related educational
fees for the next 12 months of post-secondary education for
the Participant or his or her spouse, children, or
dependents;
(d) payments necessary to prevent the eviction of the
Participant from his or her principal residence or
foreclosure on the mortgage of the Participant's principal
residence; or
(e) any other circumstance that is determined by the
Committee in its sole discretion to constitute a severe
hardship need.
2.13. "Matching Deferral" means a deferral made for the
benefit of a Participant under Section 4.2.
2.14. "Participant" means any individual who participates
in the Plan in accordance with Article 3.
2.15. "Plan" means The Neiman Marcus Group, Inc. Key
Employee Deferred Compensation Plan set forth herein and all
subsequent amendments hereto.
2.16. "Plan Year" means the calendar year.
2.17. "Retirement" means retirement in accordance with the
normal, late, or early retirement provisions of The Neiman Marcus
Group, Inc. Retirement Plan.
2.18. "Savings Plan" means The Neiman Marcus Group, Inc.
Savings and Investment Plan, as amended from time to time.
2.19. "Year of Service" means a twelve month period,
beginning on the date the employee first performs an hour of
service or on any January 1 thereafter, in which the employee is
credited with 1,000 or more hours of service. For this purpose,
an "hour of service" shall have the same meaning as under the
Savings Plan.
ARTICLE 3. PARTICIPATION
3.1. Commencement of Participation. Any Eligible Employee
shall become a Participant on the effective date of an election
to defer Compensation in accordance with Section 4.1.
3.2. Continued Participation. An individual who has become
a Participant in the Plan shall continue to be a Participant so
long as any amount remains credited to his or her Account.
ARTICLE 4. ELECTIVE AND MATCHING DEFERRALS
4.1. Elective Deferrals.
(a) An individual who is an Eligible Employee on any
January 1 may elect to defer a designated whole percentage,
not to exceed 15 percent, of all Base Pay that is payable to
the individual for services to be performed on or after that
date, and all Bonuses payable to the individual for Company
fiscal years ending after that date, by filing an election
with the Committee prior to that January 1. In addition, an
individual may elect before the date he or she becomes an
Eligible Employee, or within 30 days thereafter, to defer a
designated whole percentage, not to exceed 15 percent, of
all Base Pay that is payable to the individual for services
to be performed after such election (or, if later, after the
date he or she becomes an Eligible Employee), and all
Bonuses payable to the individual for Company fiscal years
ending thereafter.
(b) Each election under paragraph (a) shall be made in
writing on a form approved or prescribed by the Committee,
and shall specify the time and form of distribution of the
amounts deferred and of related Matching Deferrals as
provided in Section 6.1. The same deferral percentage shall
apply to each payment of Compensation covered by the
election, and the amount of each such payment that is
deferred hereunder shall be credited to the Participant's
Account as of the date such amount would otherwise have been
paid to the Participant.
(c) A Participant may revoke his or her deferral
election with respect to Base Pay earned on or after the
first day of any pay period, and with respect to Bonuses
payable for fiscal years ending on or after that day, by
giving written notice to the Committee before that day (or
by such earlier date as the Committee may prescribe).
However, except as otherwise provided in Section 6.6, a
Participant may otherwise modify an existing election, or
may make another deferral election, only as of a January 1,
and only with respect to Base Pay earned thereafter, and
Bonuses payable for fiscal years ending thereafter, in
accordance with paragraphs (a) and (b) above.
4.2. Matching Deferrals. As of the last day of each
calendar month, the Company shall credit to each Participant's
Account a Matching Deferral equal to 25% of the Participant's
Elective Deferrals for the month which do not exceed the first
six percent of his or her Compensation payable during the month.
ARTICLE 5. ACCOUNTS; INTEREST
5.1. Accounts. The Committee shall establish an Account
for each Participant reflecting Elective Deferrals and Matching
Deferrals for the Participant's benefit and any adjustments
hereunder. Within 45 days after the end of each calendar
quarter, the Committee shall provide the Participant with a
statement of his or her Account.
5.2. Interest. As of the last day of each calendar
quarter, the Committee shall credit each Participant's Account
with interest on the balance of such Account from time to time
during the calendar quarter at an annual rate equal to the
average prime interest rate published in the Eastern Edition of
The Wall Street Journal on the last business day of the calendar
quarter (or, if two or more such rates are published, the mean of
such rates), increased by two percentage points. In addition,
any payment under Article 6 which is not made on the first day of
a calendar quarter shall be increased by interest on the amount
of such payment, from the end of the preceding calendar quarter,
at the interest rate applicable for the preceding calendar
quarter.
5.3. Payments. Each Participant's Account shall be reduced
by the amount of any payment made to or on behalf of the
Participant under Article 6 (including any interest paid with
respect to such payment) as of the date such payment is made.
ARTICLE 6. PAYMENTS
6.1. Time and Form of Payment. When a Participant elects
to defer Compensation in accordance with Section 4.1, the
Participant shall also elect the time at which the Elective
Deferrals and related Matching Deferrals (including interest
attributable thereto) will be paid or begin to be paid to the
Participant, from among the following options:
(a) 5, 10, 15 or 20 years after the end of the Plan
Year in which the Compensation deferred would otherwise have
been paid;
(b) attainment of age 65; or
(c) retirement.
The Participant shall also elect the form of payment of such
amounts, from among the following options:
(i) a single lump sum payment; or
(ii) annual installments over a period elected by
the Participant up to 10 years, the amount of each
installment to equal the balance of his or her Account
immediately prior to the installment divided by the
number of installments remaining to be paid.
The foregoing elections shall be made on a form approved or
prescribed by the Committee. Each such election shall be
irrevocable with respect to amounts deferred while the election
remains in effect (and with respect to related Matching Deferrals
and interest), except as otherwise provided in Section 6.2, 6.3,
6.4, 6.5, 6.6 or 6.7.
6.2. Termination of Employment. Upon termination of a
Participant's employment with the Company for any reason other
than death or Retirement, the Participant's Account shall be paid
to the Participant in a single lump sum payment as soon as
practicable following the date of such termination.
6.3. Death. If a Participant dies prior to the complete
distribution of his or her Account, the balance of the Account
shall be paid as soon as practicable to the Participant's
designated beneficiary or beneficiaries, in the form elected by
the Participant from among the following options:
(a) a single lump sum payment; or
(b) subject to Section 6.7, annual installments over a
period elected by the Participant up to 10 years, the amount
of each installment to equal the balance of the Account
immediately prior to the installment divided by the number
of installments remaining to be paid.
Any designation of beneficiary and form of payment shall be made
by the Participant in writing on a form approved or prescribed by
the Committee, and may be changed by the Participant at any time.
If there is no such designation or no designated beneficiary
survives the Participant, payment shall be made to the
Participant's surviving spouse or, if none, to his or her issue
per stirpes, in a single lump sum payment. If no spouse or issue
survives the Participant, payment shall be made in a single lump
sum to the Participant's estate.
6.4. Reduction in Shareholders' Equity. If at any time the
shareholders' equity of the Company, as shown on the Company's
consolidated balance sheet reported in its then most recent
annual or quarterly report filed with the U.S. Securities and
Exchange Commission, falls below $100 million, each Participant's
Account shall be paid as soon as practicable to the Participant
(or, if the Participant has died, to his or her beneficiary) in a
single lump sum.
6.5. Change in Control. In the event that the aggregate
direct or indirect beneficial ownership by Harcourt General, Inc.
and any of its affiliates of capital stock of the Company
decreases to less than 20 percent of the combined voting power of
the Company's then outstanding capital stock entitled to vote for
the election of directors of the Company, each Participant's
Account shall, immediately prior to such change in control, be
paid to the Participant (or, if the Participant has died, to his
or her beneficiary) in a lump sum. Notwithstanding the
foregoing, a Participant may elect, at any time prior to date of
the change in control, to have his or her Account distributed
under the Plan without regard to this Section 6.5. "Affiliate"
shall have the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as in effect on January 1, 1994.
6.6. Hardship. If a Participant suffers a Financial
Hardship, the Committee, in its sole discretion, may pay to the
Participant that portion, if any, of his or her Account which the
Committee determines is necessary to satisfy the hardship need,
including any amounts necessary to pay any federal, state or
local income taxes reasonably anticipated to result from the
hardship payment, but only to the extent such need cannot
reasonably be relieved by the liquidation of the Participant's
assets (to the extent that such liquidation would not in itself
cause hardship) or by cessation of Elective Deferrals. A
Participant who has a Financial Hardship may also cease or reduce
future Elective Deferrals with the consent of the Committee. A
Participant requesting a distribution, or a cessation or
reduction of future Elective Deferrals, on account of a Financial
Hardship shall apply in writing in a letter submitted to the
Committee and shall provide such information as the Committee may
require.
6.7. Changes in Time and Form of Payment. The Committee
may, in its sole discretion, at the request of or with the
consent of the Participant, change the time at which any Elective
Deferral or Matching Deferral will be paid or begin to be paid to
the Participant under Section 6.1, or the form of such payment,
or both, provided that (a) no such change may be made less than
24 months prior to the date such Elective Deferral or Matching
Deferral would otherwise have been paid or commenced to be paid,
and (b) the form of payment shall be a form described in clause
(i) or (ii) of Section 6.1.
6.8. Payment Dates. Each payment under Section 6.1, 6.2,
6.3 or 6.7 shall be made on or about the first day of a calendar
quarter.
6.9. Withholding. Each payment otherwise due under the
Plan shall be reduced by withholding taxes and other legally
required deductions.
ARTICLE 7. COMMITTEE
7.1. Plan Administration and Interpretation. The Committee
shall oversee the administration of the Plan. The Committee
shall have complete control and authority to determine the rights
and benefits and all claims, demands and actions arising out of
the provisions of the Plan of any Participant, beneficiary,
deceased Participant, or other person having or claiming to have
any interest under the Plan. The Committee shall have the
exclusive power to interpret the Plan and to decide all matters
under the Plan. Such interpretation and decision shall be final,
conclusive and binding on all Participants and any person
claiming under or through any Participant, in the absence of
clear and convincing evidence that the Committee acted
arbitrarily and capriciously. Any individual serving on the
Committee who is a Participant will not vote or act on any matter
relating solely to himself or herself. When making a
determination or calculation, the Committee shall be entitled to
rely on information furnished by a Participant, a beneficiary, or
the Company. The Committee shall be deemed to be the Plan
administrator with responsibility for complying with any
reporting and disclosure requirements of ERISA.
7.2. Powers, Duties, Procedures, Etc. The Committee shall
have such powers and duties, may adopt such rules and tables, may
act in accordance with such procedures, may appoint such officers
or agents, may delegate such powers and duties, may receive such
reimbursements and compensation, and shall follow such claims and
appeal procedures with respect to the Plan as are permitted or
required under the terms of the Savings Plan.
7.3. Information. To enable the Committee to perform its
functions, the Company shall supply full and timely information
to the Committee on all matters relating to the compensation of
Participants, their employment, retirement, death, termination of
employment, and such other pertinent facts as the Committee may
require.
7.4. Indemnification of Committee. The Company agrees to
indemnify and to defend to the fullest extent permitted by law
any officer or employee who serves as a member of the Committee
(including any such individual who formerly served as a member of
the Committee) against all liabilities, damages, costs and
expenses (including attorneys' fees and amounts paid in
settlement of any claims approved by the Company) occasioned by
any act or omission to act in connection with the Plan, if such
act or omission is in good faith.
ARTICLE 8. AMENDMENT AND TERMINATION
8.1. Amendments. The Neiman Marcus Group, Inc. shall have
the right to amend this Plan from time to time, subject to
Section 8.3, by an instrument in writing which has been executed
by its duly authorized officer.
8.2. Termination of Plan. This Plan is strictly a
voluntary undertaking on the part of the Company and shall not be
deemed to constitute a contract between the Company and any
employee or a consideration for, or an inducement or condition of
employment for, the performance of services by any employee. The
Neiman Marcus Group, Inc. reserves the right to terminate this
Plan at any time, subject to Section 8.3, by an instrument in
writing which has been executed by its duly authorized officer.
8.3. Existing Rights. No amendment or termination of the
Plan shall adversely affect the rights of any Participant with
respect to amounts credited to his or her Account that are
attributable to Elective Deferrals or Matching Deferrals credited
prior to the date of such amendment or termination.
ARTICLE 9. MISCELLANEOUS
9.1. No Funding. Nothing in this Plan will be construed to
create a trust or to obligate the Company 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
Company or of any other person. Any benefits which become
payable hereunder shall be paid from the general assets of the
Company.
9.2. Nonassignability. None of the benefits, payments,
proceeds or claims of any Participant or beneficiary shall be
subject to any claim of any creditor and, in particular, the same
shall not be subject to attachment or garnishment or other legal
process by any creditor, nor shall any Participant or beneficiary
have any right to alienate, anticipate, commute, pledge, encumber
or assign any of the benefits or payments or proceeds which he
may expect to receive, contingently or otherwise, under this
Plan.
9.3. Limitation of Participants' Rights. Participation in
this Plan shall not give any Eligible Employee the right to be
retained in the employ of the Company or any right or interest in
the Plan other than as herein provided. The Company reserves the
right to dismiss any Eligible Employee without any liability for
any claim against the Company, except to the extent provided
herein.
9.4. Participants Bound. Any action with respect to this
Plan taken by the Committee or the Company or any action
authorized by or taken at the direction of the Committee or the
Company shall be conclusive upon all Participants and any other
persons who claim entitlement to benefits under the Plan.
9.5. Receipt and Release. Any payment to any Participant
or beneficiary in accordance with the provisions of this Plan
shall, to the extent thereof, be in full satisfaction of all
claims against the Company and the Committee under this Plan, and
the Committee may require such Participant or beneficiary, as a
condition precedent to such payment, to execute a receipt and
release to such effect. If any Participant or beneficiary is
determined by the Committee to be incompetent by reason of
physical or mental disability (including minority) to give a
valid receipt and release, the Committee may cause the payment or
payments becoming due to such person to be made to another person
for his or her benefit without responsibility on the part of the
Committee or the Company to follow the application of such funds.
9.6. Governing Law. This Plan shall be construed,
administered, and governed in all respects under and by the laws
of the Commonwealth of Massachusetts. If any provision shall be
held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to
be fully effective.
9.7. Headings and Subheadings. Headings and subheadings in
this Plan are inserted for convenience only and are not to be
considered in the construction of the provisions hereof.
IN WITNESS WHEREOF, The Neiman Marcus Group, Inc. has caused
this Plan to be executed by its duly authorized officer this
______ day of _______________, 1994.
THE NEIMAN MARCUS GROUP, INC.
By: ____________________________