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NEIMAN MARCUS GROUP INC

10-K

Annual report pursuant to section 13 and 15(d)

Filed on 09/29/2004

Filed Period 07/31/2004

Page 1
NEIMAN MARCUS GROUP INC 10-K Annual report pursuant to section 13 and 15(d) Filed on 09/29/2004 Filed Period 07/31/2004

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... SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission file no. 1-9659 to The Neiman Marcus Group, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) One Marcus Square 1618 Main Street Dallas, Texas...

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DOCUMENTS INCORPORATED BY REFERENCE. Part III of this report incorporates information from the registrant's definitive Proxy Statement relating to the registrant's Annual Meeting of Shareholders to be held on January 14, 2005, which will be filed on or about November 22, 2004.

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... on Form 8-K. Signatures. 1 Directors and Executive Officers of the Registrant. Executive Compensation. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. Certain Relationships and Related Transactions. Principal Accountant Fees and Services. Market for...

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... and the Bergdorf Goodman stores are in New York City. Both Neiman Marcus and Bergdorf Goodman stores offer high-end fashion apparel and accessories, primarily from leading designers. Neiman Marcus Direct, the Company's upscale direct marketing operation, conducts catalog and online sales through...

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...media programs, the Company mails various publications to its customers communicating upcoming in-store events, new merchandise offerings and fashion trends. In connection with these programs, Neiman Marcus produces The BookÂ® approximately eight to nine times each year. The BookÂ® is a high-quality...

Page 7
...the "Neiman Marcus" and "Bergdorf Goodman" names. Credit is granted based upon credit worthiness and the Company's credit cards carry no annual fee. Credit statements are mailed monthly indicating the outstanding balance as well as the minimum payment due. In the event the customer elects to pay the...

Page 8
...plans to continue to expand this program to deliver goods to its customers more timely and to enhance the allocation of goods to the Company's stores. Capital Investments The Company makes capital investments annually to support its long-term business goals and objectives. Capital is invested in new...

Page 9
...of its Bergdorf Goodman store in New York City and Neiman Marcus stores in San Francisco, California; Newport Beach, California; and Las Vegas, Nevada; the expansion of its distribution facilities; new point-of-sale system in the Company's retail stores; and new financial systems and non-merchandise...

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... to monitor changes in these laws and believes that it is in material compliance with all applicable state and federal regulations with respect to such practices. ITEM 2. PROPERTIES The Company's corporate headquarters are located at the Downtown Neiman Marcus store location in Dallas, Texas. The...

Page 11
... stock repurchases of equity securities in the fourth quarter of 2004: Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs Fourth Quarter 2004 Total Number of Shares Purchased Average Price...

Page 12
... 2, 2003 Years Ended August 3, 2002 July 28, 2001 July 29, 2000 OPERATING RESULTS Revenues Gross margin Operating earnings Earnings before income taxes, minority interest and change in accounting principle Net earnings Basic earnings per share: Earnings before change in accounting principle Change...

Page 13
...high-end specialty retailer. The Company's operations include the Specialty Retail Stores segment and the Direct Marketing segment. The Specialty Retail Stores segment consists primarily of Neiman Marcus and Bergdorf Goodman stores. The Direct Marketing segment conducts both print catalog and online...

Page 14
... be limited. This can result in lost sales to the Company in the event of higher than anticipated demand of the fashion goods offered by the Company or a higher than anticipated level of consumer spending. Conversely, in the event the Company buys fashion goods that are not accepted by the customer...

Page 15
... Years Ended August 2, 2003 August 3, 2002 Revenues Cost of goods sold including buying and occupancy costs Selling, general and administrative expenses Effect of change in vacation policy Impairment and other charges Operating earnings Interest expense, net Earnings before income taxes, minority...

Page 16
... Marketing Other (1) Effect of change in vacation policy Impairment and other charges Total OPERATING EARNINGS MARGIN Specialty Retail Stores Direct Marketing Total COMPARABLE REVENUES (2) Specialty Retail Stores Direct Marketing Total STORE COUNT (3) Neiman Marcus and Bergdorf Goodman stores: Open...

Page 17
... on both inventory management and full-price selling. For Specialty Retail Stores, full-price sales increased in 2004 compared to 2003. Consistent with industry business practice, the Company receives allowances from certain of its vendors in support of the merchandise purchased by the Company for...

Page 18
... to the higher level of revenues. The Company opened no new stores in 2004. In 2003, the Company incurred preopening expenses of $8.0 million in connection with the opening of two Neiman Marcus stores in Florida in the first quarter of 2003, the opening of a new clearance center store in the Denver...

Page 19
... a 71,000 square foot expansion and remodel of the Las Vegas Neiman Marcus store. In the fourth quarter of 2003, the Company opened another new clearance center in Miami, Florida (May 2003). Sales derived from new stores for 2003 were $79.6 million. Gross margin. Gross margin was 33.1 percent...

Page 20
...the adoption of new accounting rules effective beginning in the third quarter of 2003 and 3) increased preopening costs incurred in connection with the opening of two Neiman Marcus stores in the first quarter of 2003, the opening of a new clearance store in the second quarter of 2003, the completion...

Page 21
... funding of its accounts receivable and merchandise purchases, 2) capital expenditures for new store growth, store renovations and upgrades of its management information systems, 3) debt service requirements and 4) obligations related to its Pension Plan. The Company's working capital requirements...

Page 22
...100.0 million in 2003. In 2004, the Company's primary capital expenditures related to 1) the on-going expansions and renovations of the Company's stores in San Francisco, California and Newport Beach, California, 2) the renovation of the main Bergdorf Goodman store in New York City, 3) the expansion...

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... balance sheet as of July 31, 2004 and were paid in August 2004. In prior years, the Company's Board of Directors authorized various stock repurchase programs and increases in the number of shares subject to repurchase. In 2004, the Company repurchased 175,600 shares at an average purchase price...

Page 24
... of its business, the Company issues purchase orders to vendors/suppliers for merchandise. The Company's purchase orders are not unconditional commitments but, rather represent executory contracts requiring performance by the vendors/suppliers, including the delivery of the merchandise prior to...

Page 25
... to qualify for Off-Balance Sheet Accounting beginning in December 2003 and were recorded as secured borrowings by the Company (Financing Accounting). As a consequence, the credit card receivables generated after November 2003 remained on the Company's consolidated balance sheet. The transition...

Page 26
... and general economic conditions or changes in such conditions; terrorist activities in the United States; political, social, economic, or other events resulting in the short or long-term disruption in business at the Company's stores, distribution centers or offices; Customer Demographic Issues...

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Page 28
... and services, net commissions earned from leased departments in the Company's retail stores and shipping and handling revenues related to merchandise sold. Revenues from the Company's retail operations are recognized at the later of the point of sale or the delivery of goods to the customer...

Page 29
.... Website design costs are expensed as incurred. Loyalty Programs. The Company maintains customer loyalty programs in which customers receive points annually for qualifying purchases. Upon reaching certain levels, customers may redeem their points for gifts. Generally, points earned in a given year...

Page 30
...the loyalty programs require the Company to make assumptions related to customer purchasing levels, redemption rates and costs of awards to be chosen by its customers. Pension Plan. The Company sponsors a noncontributory defined benefit pension plan covering substantially all full-time employees. In...

Page 31
... legal action. The Company's accruals may change in the future due to new developments in these matters. Recent Accounting Pronouncements In December 2003, the Financial Accounting Standards Board (FASB), revised SFAS No. 132, "Employers' Disclosures about Pensions and other Postretirement Benefits...

Page 32
... contractually-defined rate of one month LIBOR plus 0.27 percent annually. The distributions to the Class A Certificate holders are payable from the finance charge income generated by the credit card receivables held by the Trust. At July 31, 2004, the Company estimates a 100 basis point increase in...

Page 33
... Commission's rules and forms. In the ordinary course of business, the Company routinely enhances its information systems by either upgrading its current systems or implementing new systems. No change occurred in the Company's internal controls concerning financial reporting during the quarter ended...

Page 34
...L. Hoffman - 36 President and Chief Executive Officer of Neiman Marcus Direct since December 2002. Mr. Hoffman served as Vice President of the Neiman Marcus Last Call Clearance Division from August 2000 to December 2002 and as a Divisional Merchandise Manager of Bergdorf Goodman from October 1998 to...

Page 35
... for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are not applicable. 3. Reports on Form 8-K On May 3, 2004, the Company filed a Current Report on Form 8-K under Item 9 to disclose under...

Page 36
... reference to the Company's Annual Report on Form 10-K for the fiscal year ended August 3, 2002. The Neiman Marcus Group, Inc. 1997 Incentive Plan, as amended, incorporated herein by reference to the Company's Form S-8 dated May 28, 2003. Employment Agreement between the Company and Burton M. Tansky...

Page 37
...Chase Manhattan Bank and The Bank of New York, incorporated herein by reference to the Company's Annual Report on Form 10-K for the fiscal year ended July 29, 2000. Amended and Restated Agreement and Plan of Merger, dated as of July 1, 1999, among The Neiman Marcus Group, Inc., Harcourt General, Inc...

Page 38
.... Description of annual incentives set by the Compensation Committee of the Board of Directors for the 2005 fiscal year, incorporated herein by reference to the Company's Current Report on Form 8-K dated September 24, 2004. The Neiman Marcus Group, Inc. Key Employee Bonus Plan, incorporated herein...

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Earnings Consolidated Statements of Cash Flows Consolidated Statements of Shareholders' Equity Notes to Consolidated Financial Statements F-1

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... REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders The Neiman Marcus Group, Inc. Dallas, Texas We have audited the accompanying consolidated balance sheets of The Neiman Marcus Group, Inc. and subsidiaries as of July 31, 2004 and August 2, 2003, and the related consolidated...

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THE NEIMAN MARCUS GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except shares) July 31, 2004 August 2, 2003 ASSETS CURRENT ASSETS Cash and cash equivalents Undivided interests in NMG Credit Card Master Trust Accounts receivable, net of allowance of $10,078 and $424 Merchandise inventories ...

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THE NEIMAN MARCUS GROUP, INC. CONSOLIDATED STATEMENTS OF EARNINGS July 31, 2004 Years Ended August 2, 2003 August 3, 2002 (in thousands, except per share data) Revenues Cost of goods sold including buying and occupancy costs Selling, general and administrative expenses Effect of change in vacation...

Page 43
... NEIMAN MARCUS GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS July 31, 2004 Years Ended August 2, 2003 August 3, 2002 (in thousands) CASH FLOWS - OPERATING ACTIVITIES Net earnings Change in accounting - non-cash writedown of intangible assets, net of taxes Earnings before change in accounting...

Page 44
... pension liability, net of tax Other, net of tax Total comprehensive income BALANCE AT AUGUST 2, 2003 Issuance of 781 shares under stock option plan Acquisition of treasury stock Cash dividends declared ($0.13 per share) Other equity transactions Comprehensive income: Net earnings Unrealized loss on...

Page 45

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...Group, Inc. and subsidiaries (the Company) have been prepared in accordance with generally accepted accounting principles. The Company's businesses consist of Specialty Retail Stores (Specialty Retail Stores), primarily Neiman Marcus Stores and Bergdorf Goodman, and Neiman Marcus Direct, the Company...

Page 47
...of the acquired merchandise and are recognized as an increase to gross margin at the time the goods are sold. The amounts of vendor reimbursements received by the Company did not have a significant impact on the year-over-year change in gross margin in 2004, 2003 or 2002. The Company obtains certain...

Page 48
... events (e.g., opening a new store near an existing store or announcing plans for a store closing). The recoverability assessment requires judgment and estimates of future store generated cash flows. The underlying estimates of cash flows include estimates for future revenues, gross margin rates...

Page 49
... average rate of compensation increase by plan participants. These actuarial assumptions are reviewed annually based upon currently available information. Self-insurance and Other Employee Benefit Reserves. Management uses estimates in the determination of the required accruals for general liability...

Page 50
...programs in which customers receive points annually for qualifying purchases. Upon reaching certain levels, customers may redeem their points for gifts. Generally, points earned in a given year must be redeemed no later than ninety days subsequent to the end of the annual program period. The Company...

Page 51
...-Scholes option-pricing model for 2004, 2003 and 2002: July 31, 2004 Years Ended August 2, 2003 August 3, 2002 (in thousands, except per share data) Net earnings: As reported Less: stock-based employee compensation expense determined under fair value based method, net of related taxes Pro forma...

Page 52
... Postretirement Plan. NOTE 2. Securitization of Credit Card Receivables Pursuant to a revolving credit card securitization program (the Credit Card Facility), the Company transfers substantially all of its credit card receivables to a wholly-owned subsidiary, Neiman Marcus Funding Corporation, which...

Page 53
...July 31, 2004 August 2, 2003 Credit card receivables Other receivables Less: Sold Interests originally qualifying for Off-Balance Sheet Accounting Net balance Amounts reflected in the Company's balance sheet: Undivided interests in NMG Credit Card Master Trust Accounts receivable Current portion of...

Page 54
...of the Company's Direct Marketing segment required upon adoption of SFAS No. 142 is reflected as a change in accounting principle ($14.8 million, net of taxes) in the accompanying consolidated statements of earnings. The additional writedowns of $0.8 million in 2003 (included in selling, general and...

Page 55
... liabilities are as follows: (in thousands) July 31, 2004 August 2, 2003 Accrued salaries and related liabilities Amounts due customers Self-insurance reserves Sales returns Loyalty program liability Sales tax Income taxes payable Other Total NOTE 5. Long-term Debt $ $ 63,452 40,318 39,067 31...

Page 56
...all other respects. Holders of common stock have no cumulative voting, conversion, redemption or preemptive rights. Cash dividend program. In the second quarter of 2004, the Company's Board of Directors initiated a quarterly cash dividend of $0.13 per share. The Company declared dividends on January...

Page 57
... years, the Company's Board of Directors authorized various stock repurchase programs and increases in the number of shares subject to repurchase. In 2004, the Company repurchased 175,600 shares at an average purchase price of $40.01 during the first quarter and 10,450 shares at an average price...

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...Company's 1997 and 1987 Stock Incentive Plans as of July 31, 2004, August 2, 2003 and August 3, 2002 and changes during the fiscal years ended on those dates are presented in the following table: July 31, 2004 WeightedAverage Exercise Shares Price August 2, 2003 WeightedAverage Exercise Shares Price...

Page 59
... Harcourt General is a member, against all federal, state and local taxes incurred by Harcourt General or any member of such group as a result of the failure of the Spin-off to qualify as a tax-free transaction under Section 355(a) of the Internal Revenue Service Code (Code) or the application of...

Page 60
... 2, 2003. This increase was comprised of the deferred tax provision of $23.3 million charged to earnings in 2004 as well as amounts charged directly to other comprehensive loss in the statement of shareholders' equity, primarily related to the increase in the funded position of the Pension Plan in...

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Costs of Benefits. The components of the expenses incurred by the Company under its Pension Plan, SERP Plan and Postretirement Plan are as follows: July 31, 2004 Years Ended August 2, 2003 August 3, 2002 (in thousands) Pension Plan: Service cost Interest cost Expected return on plan assets Net ...

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...-term rate of return on assets held by the Pension Plan, the average rate of compensation increase by Pension Plan and SERP Plan participants and the health care cost trend rate for the Postretirement Plan. These actuarial assumptions are reviewed annually based upon currently available information...

Page 63
... Company's estimate of the annual rates of change in the costs of the health care benefits currently provided by the Postretirement Plan. The health care cost trend rate implicitly considers estimates of health care inflation, changes in health care utilization and delivery patterns, technological...

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... and timing of the expected benefit payments. Changes in the assets held by the Pension Plan in 2004 and 2003 are as follows: (in thousands) 2004 2003 Fair value of assets at beginning of year Actual return on assets Company contributions Benefits paid Fair value of assets at end of year $ $ 183...

Page 65
... increased by $2.2 million and reduced shareholders' equity by $1.8 million, net of tax. The projected benefit obligation of the Pension Plan exceeded the plan's assets by $38.3 million in 2004 and by $62.0 million in 2003. The underfunded status is reflected in the Company's consolidated balance...

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NOTE 9. Effect of Change in Vacation Policy During the third quarter of 2002, the Company terminated its prior vacation plan and the Board of Directors of the Company approved a new policy related to vacation pay for its employees. The new policy was communicated to employees during the third ...

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... letters of credit relating to purchase commitments and insurance and other liabilities at July 31, 2004. The Company had approximately $2.8 million in surety bonds at July 31, 2004 relating primarily to merchandise imports, state sales tax and utility requirements. NOTE 12. Earnings Per Share The...

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... tables set forth the information for the Company's reportable segments: July 31, 2004 Years Ended August 2, 2003 August 3, 2002 (in thousands) REVENUES Specialty Retail Stores Direct Marketing Other Total OPERATING EARNINGS Specialty Retail Stores Direct Marketing Other Subtotal Effect of change...

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...$ $ First Quarter Year Ended August 2, 2003 Fourth Third Quarter Quarter Total Revenues Gross profit Earnings before change in accounting principle Change in accounting principle Net earnings Basic earnings per share: Earnings before change in accounting principle Change in accounting principle...

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..., thereunto duly authorized. THE NEIMAN MARCUS GROUP, INC. By: /s/ Nelson A. Bangs Nelson A. Bangs Senior Vice President and General Counsel Dated: September 29, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons...

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SCHEDULE II The Neiman Marcus Group, Inc. Valuation and Qualifying Accounts and Reserves (in thousands) Three years ended July 31, 2004 Column B Balance at Beginning of Period Column C Additions Charged to Charged to Costs and Other Expenses Accounts Column E Balance at End of Period Column A ...

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... Law of the State of Delaware) The Neiman Marcus Group, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the "Company"), hereby certifies that the following resolution was duly adopted by the Board of Directors of the Company...

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... to receive, when, as and if declared by the Board of Directors out of funds legally available for such purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being referred to herein as a "Dividend Payment Date"), commencing...

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... Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares...

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...A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and...

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... to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Company shall at any time after October 18, 1999 declare or pay any dividend on the Class A Common Stock payable in shares of Class A Common Stock, or effect...

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... by the General Corporation Law of the State of Delaware. Section 11. Fractional Shares. The Series A Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate...

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IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Company by its Secretary this 15th day of October, 1999. Name: Title:

Page 79
... Law of the State of Delaware) The Neiman Marcus Group, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the "Company"), hereby certifies that the following resolution was duly adopted by the Board of Directors of the Company...

Page 80
... to receive, when, as and if declared by the Board of Directors out of funds legally available for such purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being referred to herein as a "Dividend Payment Date"), commencing...

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... Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares...

Page 82
... Company may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Company ranking junior (as to dividends and upon dissolution, liquidation or winding up) to the Series B Preferred Stock or rights, warrants or options to acquire...

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...B Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and...

Page 84
... aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Class B Common Stock is converted, exchanged or converted. In the event the Company shall at any time after October 18, 1999 declare or pay any dividend...

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... holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series B Stock. IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Company by its Secretary this 15th day...

Page 86
... Law of the State of Delaware) The Neiman Marcus Group, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the "Company"), hereby certifies that the following resolution was duly adopted by the Board of Directors of the Company...

Page 87
... to receive, when, as and if declared by the Board of Directors out of funds legally available for such purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being referred to herein as a "Dividend Payment Date"), commencing...

Page 88
... Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares...

Page 89
... to 1,000 times the number of votes which each share of Class C Common Stock is entitled to vote, on all matters upon which the holders of the Class C Common Stock of the Company are entitled to vote. In the event the Company shall at any time after October 18, 1999 declare or pay any dividend on...

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...C Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and...

Page 91
... aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Class C Common Stock is converted, exchanged or converted. In the event the Company shall at any time after October 18, 1999 declare or pay any dividend...

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... by the General Corporation Law of the State of Delaware. Section 11. Fractional Shares. The Series C Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate...

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EXHIBIT 4.2 The Neiman Marcus Group, Inc. and The Bank of New York Trustee INDENTURE Dated as of May 27, 1998 Providing for issuance of Securities in Series

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... of a Global Security The Securities General Title; General Limitations; Issuable in Series; Terms of Particular Series Denominations Execution, Authentication and Delivery and Dating Temporary Securities Registration, Transfer and Exchange Mutilated, Destroyed, Lost and Stolen Securities Payment of...

Page 95
...' Lists and Reports by Trustee and Company Section 701. Company To Furnish Trustee Names and Addresses of Securityholders Section 702. Preservation of Information; Communications to Securityholders Section 703. Reports by Trustee Section 704. Reports by Company ARTICLE 8. Consolidation, Merger...

Page 96
... for Security Payments To Be Held in Trust Section 1004. Statement as to Compliance Section 1005. Legal Existence Section 1006. Limitation on Liens Section 1007. Limitation on Sale and Leasebacks Section 1008. Waiver of Certain Covenants Section 1009. Calculation of Original Issue Discount ARTICLE...

Page 97
...316(a) (a)(1)(A) (a)(1)(B) (a)(2) (b) (c) Section 317(a)(1) (a)(2) (b) Section 318(a) 609 609 Not Applicable Not Applicable 609 608; 610 Not Applicable 613 613 703 701; 702 702 702 703 703 703 703 704 704 704 1004 Not Applicable 102 102 Not Applicable Not Applicable 102 601 602; 703 601 601 601 601...

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THIS INDENTURE between THE NEIMAN MARCUS GROUP, INC., a Delaware corporation (hereinafter called the "Company"), having its principal office at 27 Boylston Street, Box 1000, Chestnut Hill, MA 02167, and THE BANK OF NEW YORK, a New York banking corporation, as trustee (hereinafter called the "Trustee...

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... by law or executive order to be closed. "Capital Stock" means, with respect to any corporation, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation. "Commission" means...

Page 100
... within one year. "Corporate Trust Office" means the office of the Trustee in New York, New York at which at any particular time its corporate trust business shall be principally administered, which office at the date hereof is located at 101 Barclay Street, Floor 21 West, New York, New York 10286...

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...", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date", when used with respect to any series of Securities, means the Stated Maturity of any installment of interest on...

Page 102
..., and (ii) any other Security deemed an Original Issue Discount Security for United States Federal income tax purposes. "Outstanding", when used with respect to Securities or Securities of any series, means, as of the date of determination, all such Securities theretofore authenticated and delivered...

Page 103
..." means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" means with respect to any series of Securities issued hereunder the city or political...

Page 104
... years, (2) leases between the Company and a Restricted Subsidiary or between Restricted Subsidiaries and (3) arrangements pursuant to any provision of law with an effect similar to the former Section 168(f)(8) of the Internal Revenue Code of 1954. "Security" or "Securities" means any note or notes...

Page 105
... without limitation, an assistant vice president. Section 1.12. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that...

Page 106
... is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the...

Page 107
..., by Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so. Such record date shall be not more than 30 days prior to...

Page 108
... in the Security carrying the right to repayment) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument, Attention: General Counsel, or at any other address previously furnished...

Page 109
...them as may be affected thereby), any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.112. Governing Law. This Indenture and the Securities shall be construed in accordance with and governed by the laws of the State of New York, without regard to conflicts of...

Page 110
... of any series, to the rules of any securities exchange on which such Securities are listed. Section 2.12. Forms of Securities. Each Security shall be in one of the forms approved from time to time by or pursuant to a Board Resolution, or established in one or more indentures supplemental hereto...

Page 111
...NEW YORK, as Trustee, By: Authorized Signatory Section 2.14. Securities Issuable in the Form of a Global Security. (a) If the Company shall establish pursuant to Sections 202 and 301 that the Securities of a particular series are to be issued..., exchange, or payment, and any certificate issued is...

Page 112
... time and in its sole discretion determine that the Securities of any series or portion thereof issued or issuable in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt...

Page 113
... the Board of Directors. All Securities of each series under this Indenture shall in all respects be equally and ratably entitled to the benefits hereof with respect to such series without preference, priority or distinction on account of the actual time of the authentication and delivery or Stated...

Page 114
... of such series, if not set forth herein, and any additions, deletions or other changes to the Events of Default set forth herein that shall be applicable to the Securities of such series; (8) any covenant solely for the benefit of the Securities of such series and any additions, deletions or other...

Page 115
...or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication; and the Trustee shall, upon Company Order, authenticate and...

Page 116
... moratorium or other laws and legal principles affecting creditors' rights generally from time to time in effect and to general equitable principles, whether applied in an action at law or in equity) and, if the authentication and delivery relates to Securities of a series issued pursuant to Section...

Page 117
... Securities of such series at the office or agency of the Company in a Place of Payment, without charge to the Holder; and upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange...

Page 118
... to issue, transfer or exchange any Security of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of such series selected for redemption under Section 1103 and ending at the close of business on the date of...

Page 119
... in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses...

Page 120
...expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to the Holder of each such Security at his address as it appears in the Security Register, not less than 10 days prior to such...

Page 121
... provision herein, if all Securities of a series are not to be originally issued at one time, it shall not be necessary for the Company to deliver to the Trustee an Officers' Certificate, Board Resolution, supplemental indenture, Opinion of Counsel or Company Order otherwise required pursuant to...

Page 122
...except as to any surviving rights of conversion or transfer or exchange of Securities of such series expressly provided for herein or in the form of Security for such series), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction...

Page 123
... to pay the Securities with respect to which such U.S. Government Obligations were deposited as provided in Section 4.01 or 4.03 shall be paid over to the Company upon receipt of a Company Request together with the opinion of a nationally recognized firm of independent public accountants expressed...

Page 124
...point and to the foregoing effect: (i) a public ruling of the Internal Revenue service, (ii) a private ruling of the Internal Revenue Service issued to the Company with respect to the securities, (iii) a provision of the Internal Revenue Code, or (iv) a final regulation promulgated by the Department...

Page 125
... indenture or Board Resolution creating such series of Securities or in the form of Security for such series: (1) default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or (2) Maturity...

Page 126
...for the benefit of creditors or the admission by it in writing of its inability to pay its debts generally as they become due; or (8) any other Event of Default provided in or pursuant to the supplemental indenture or Board Resolution under which such series of Securities is issued or in the form of...

Page 127
... or rates prescribed therefor by the terms of the Securities of such series to the extent that payment of such interest is lawful, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel...

Page 128
... by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to any series of Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders...

Page 129
... judgment shall after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel and any other amounts due the Trustee under Section 607, be for the ratable benefit of the Holders of the Securities of the series in respect of...

Page 130
... shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities of such series and the notation thereon of the payment if only partially...

Page 131
...in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case...

Page 132
...; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 5.114. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its...

Page 133
... taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising...

Page 134
... by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by...

Page 135
...6.15. May Hold Securities. The Trustee, any Paying Agent, the Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it...

Page 136
... and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the...

Page 137
.... There shall at all times be a Trustee hereunder with respect to each series of Securities, which shall be either (i) a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers and subject...

Page 138
... at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities of that series, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such...

Page 139
... such event by firstclass mail, postage prepaid, to the Holders of Securities of that series as their names and addresses appear in the Security Register. Each notice shall include the name of the successor Trustee and the address of its principal Corporate Trust office. Section 6.111. Acceptance of...

Page 140
... and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Securities and the holders of other indenture securities (as defined in Subsection (c) of this Section): (1) an amount equal to any and...

Page 141
... and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, but after crediting thereon receipts on account of the indebtedness...

Page 142
... to account, if such Trustee had continued as Trustee, occurred after the beginning of such 3-month period; and (ii) removal. (b) from (1) the ownership or acquisition of securities issued under any indenture or any security or securities having a maturity of one year or more at the time of...

Page 143
...held in such special account. (3) The term "cash transaction" means any transaction in which full payment for goods or securities sold is made within 7 days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand. (4) The...

Page 144
... on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such...

Page 145
The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the ...

Page 146
... semi-annually not later than December 1 and June 1 in each year in such form as the Trustee may reasonably require, a list of the names and addresses of the Holders of Securities of each series as of a date not more than 15 days prior to the date such list is furnished, and (2) at such other times...

Page 147
... of such applicants, mail to each Holder of a Security of such series or to all Securityholders, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), a copy of the form of proxy or other communication which is...

Page 148
... in this Section means April 1. Within 60 days after the reporting date in each year, beginning in 1999, the Trustee shall transmit by mail to all Securityholders, as their names and addresses appear in the Security Register, a brief report dated as of such reporting date with respect to any of the...

Page 149
... the Securities are listed on any stock exchange, or any delisting thereof. Section 7.14. Reports by Company. The Company will (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents...

Page 150
...after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; and (c) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and, if a supplemental...

Page 151
... another corporation to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities contained; or (2) to add to the covenants of the Company, or to surrender any right or power herein conferred upon the Company, for the benefit of the Holders of...

Page 152
... of principal thereof or interest thereon on any date or change any Place of Payment where any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Maturity or the Stated Maturity, as the case may be...

Page 153
... by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may...

Page 154
... served. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations...

Page 155
...Company free of the trust formerly impressed upon it. Section 10.14. Statement as to Compliance. The Company will deliver to the Trustee, within 120 days of the end of each fiscal year, a written statement signed by the principal executive officer, principal financial officer or principal accounting...

Page 156
... stock, property or assets for the purpose of financing all or any part of the purchase price thereof; (6) any Lien to secure any debt incurred prior to, at the time of, or within 180 days after, or pursuant to financing arrangements for which a firm commitment is made by a bank, insurance company...

Page 157
...an agreement or commitment to exchange securities of a Subsidiary for other securities of the Company, whether or not such securities of a Subsidiary are placed in escrow for such purpose; (13) any Lien in favor of the United States of America or any State thereof or any other country, or any agency...

Page 158
... be of such character that no violation of any of the provisions of Section 1006 would result, or (2) the Company during the 180 days immediately following the effective date of such Sale and Leaseback Transaction causes to be applied to either (i) the voluntary retirement of Funded Debt (whether by...

Page 159
... information relating to such original issue discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time. ARTICLE 11. Redemption of Securities. Section 11.11. Applicability of Article. The Company may reserve the right to redeem and pay before Stated...

Page 160
...prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: (1) (2) (3) the Redemption Date; the Redemption Price; the CUSIP number; (4) if...

Page 161
.... Section 11.15. Deposit of Redemption Price. On or prior to 10:00 a.m., New York City time, on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an...

Page 162
...60th day next preceding each sinking fund Redemption Date with respect to such series of Securities, the Company will deliver to the Trustee (A) an Officers' Certificate specifying the portions of such sinking fund payment to be satisfied by payment of cash and by delivery or credit of Securities of...

Page 163
... interest, if any, to the date fixed for redemption on Securities to be redeemed on such sinking fund Redemption Date pursuant to this Section 1108; provided that such cash shall be so deposited with the Trustee in time for the Trustee to make the payment of such accrued interest in accordance...

Page 164
... have caused this Indenture to be duly executed as of the day and year first above written. THE NEIMAN MARCUS GROUP, INC. By: Name: Title: s/ Richard A. Smith Richard A. Smith Chairman and Chief Executive Officer THE BANK OF NEW YORK as Trustee, By: Name: Title: 67 s/ Mary Jane Schmalzel Mary Jane...

Page 165
...,000 at the office or agency of the Company in the Borough of Manhattan, The City of New York, on June 1, 2028 in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on said principal...

Page 166
... which may include the Company, and to approve any change in the office through which any Paying Agent or Security Registrar acts; provided, that there will at all times be a Paying Agent in the City of New York. This Debenture is one of the duly authorized issue of debentures, notes, bonds or other...

Page 167
... date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. New York time on the third business day...

Page 168
... at the office or agency of the Company in the Borough of Manhattan, The City of New York designated for such purpose, a new Debenture or Debentures of authorized denominations for a like aggregate principal amount and Stated maturity will be issued to the transferee in exchange therefor, subject...

Page 169
... of New York. Unless the certificate of authentication hereon has been manually executed by or on behalf of the Trustee under the Indenture, this Debenture shall not be entitled to any benefits under the Indenture, or be valid or obligatory for any purpose IN WITNESS WHEREOF, THE NEIMAN MARCUS GROUP...

Page 170
TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. The Bank of New York, as Trustee, By: Dated: May 27, 1998 6 s/ Mary Jane Schmalzel Authorized Signatory

Page 171
...,000 at the office or agency of the Company in the Borough of Manhattan, The City of New York, on June 1, 2008 in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on said principal...

Page 172
..., which may include the Company, and to approve any change in the office through which any Paying Agent or Security Registrar acts; provided, that there will at all times be a Paying Agent in the City of New York. This Note is one of the duly authorized issue of debentures, notes, bonds or other...

Page 173
... date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. New York time on the third business day...

Page 174
... of this Note at the office or agency of the Company in the Borough of Manhattan, The City of New York designated for such purpose, a new Note or Notes of authorized denominations for a like aggregate principal amount and Stated maturity will be issued to the transferee in exchange therefor, subject...

Page 175
...State of New York. Unless the certificate of authentication hereon has been manually executed by or on behalf of the Trustee under the Indenture, this Note shall not be entitled to any benefits under the Indenture, or be valid or obligatory for any purpose IN WITNESS WHEREOF, THE NEIMAN MARCUS GROUP...

Page 176
TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. The Bank of New York, as Trustee, By: s/ Mary Jane Schmalzel Authorized Signatory Dated: May 27, 1998

Page 177
...,000 at the office or agency of the Company in the Borough of Manhattan, The City of New York, on June 1, 2028 in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on said principal...

Page 178
... which may include the Company, and to approve any change in the office through which any Paying Agent or Security Registrar acts; provided, that there will at all times be a Paying Agent in the City of New York. This Debenture is one of the duly authorized issue of debentures, notes, bonds or other...

Page 179
... date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. New York time on the third business day...

Page 180
... at the office or agency of the Company in the Borough of Manhattan, The City of New York designated for such purpose, a new Debenture or Debentures of authorized denominations for a like aggregate principal amount and Stated maturity will be issued to the transferee in exchange therefor, subject...

Page 181
... of New York. Unless the certificate of authentication hereon has been manually executed by or on behalf of the Trustee under the Indenture, this Debenture shall not be entitled to any benefits under the Indenture, or be valid or obligatory for any purpose IN WITNESS WHEREOF, THE NEIMAN MARCUS GROUP...

Page 182
TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. The Bank of New York, as Trustee, By: Dated: May 27, 1998 s/ Mary Jane Schmalzel Authorized Signatory

Page 183
EXHIBIT 10.9 THE NEIMAN MARCUS GROUP, INC. DEFERRED COMPENSATON PLAN FOR NON-EMPLOYEE DIRECTORS Effective January 17, 1997 As Amended and Restated June 8, 1998

Page 184
THE NEIMAN MARCUS GROUP, INC. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS Table of Contents ARTICLE I Introduction ARTICLE 2 Definitions ARTICLE 3 Participation ARTICLE 4 Elective Deferrals ARTICLE 5 Non-Elective Deferrals ARTICLE 6 Administration ARTICLE 7 Amendment and Termination ...

Page 185
... benefit under Section 4.2 or 5.1. "Board" means the Board of Directors of the Company. "Committee" means the Compensation Committee of the Board. "Common Stock" means the Common Stock, $.01 par value, of the Company. 2.5. "Company" means The Neiman Marcus Group, Inc., a Delaware corporation, and...

Page 186
... shall have occurred on such date, on the next previous date on which trading shall have occurred), as reported on the New York Stock Exchange Composite Tape. 2.9. "Non-Employee Director" means a member of the Board who is not an officer or employee of the Company or Harcourt General, Inc. or any of...

Page 187
... quarter of the Company, at a rate equal to the average of the top rates paid by major New York banks on primary new issues of three-month negotiable certificates of deposit (usually on amounts of $1,000,000 or more) as quoted in the Wall Street Journal on the last business day of the fiscal quarter...

Page 188
... number of such units reflected in such Account on the day before the dividend payment date. At the end of the period of deferral elected by the Participant, the Common Stock equivalent units will be valued for payment by multiplying the applicable number of units by the average of the Market Prices...

Page 189
...average of the top rates paid by major New York banks on primary new issues of three-month negotiable certificates of deposit (usually on amounts of $1,000,000 or more) as quoted in the Wall Street Journal on the last business day of the fiscal quarter. The foregoing election shall be made on a form...

Page 190
...day of any fiscal year of the Company, by an election filed before such date. Moreover, a majority of the disinterested members of the Committee may, at their discretion, at the request or with the consent of a Participant, change the form (or, in the case of elective deferrals, the time) of payment...

Page 191
... 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 Participant or any other person rights to any specific assets of the Company or of any other person. The Plan constitutes...

Page 192
... benefits or payments or proceeds which he or she may expect to receive, contingently or otherwise, under the Plan. 8.4. Limitation of Participants' rights. Participation in the Plan shall not give any Participant the right to be retained as a member of the Board or any right or interest in the Plan...

Page 193
... provisions hereof. IN WITNESS WHEREOF, The Neiman Marcus Group, Inc. has caused the Plan to be amended and restated by its duly authorized officer this 8th day of June, 1998. THE NEIMAN MARCUS GROUP, INC. By: /s/ Eric P. Geller Eric P. Geller, Senior Vice President, General Counsel and Secretary 9

Page 194
... and Termination Benefits Agreement ("Agreement") is entered into effective as of May 3, 2004 between James J. Gold ("Executive") and Bergdorf Goodman, Inc., a New York corporation ("Bergdorf') and a wholly-owned subsidiary of The Neiman Marcus Group, Inc., a Delaware corporation ("NMG"). All...

Page 195
... time of his termination, Executive participates in a group medical insurance plan offered by Bergdorf and Executive is eligible for and elects to receive continued coverage under such plan in accordance with the Consolidated I Omnibus Budget Reconciliation Act of 1985 ("COBRA") or any successor law...

Page 196
... of funds, and shall make any remaining payments due thereunder. 2. Executive acknowledges and agrees that (a) Bergdorf is engaged in a highly competitive business; (b) Bergdorf has expended considerable time and resources to develop goodwill with its customers, vendors, and others, and to create...

Page 197
...opportunity to defend, limit, or otherwise protect its interests against such disclosure; (e) at the end of his employment with Bergdorf for any reason or at the request of Bergdorf at any time, he will return to Bergdorf all Confidential Information and all copies thereof, in whatever tangible form...

Page 198
... of its Affiliates listed on a national securities exchange or actively traded in the over-the-counter market if he and the members of his immediate family do not, directly or indirectly, hold more than a total of one (1) percent of all such shares of stock or other securities issued and outstanding...

Page 199
...this Agreement is intended to limit any earned, vested benefits (other than any entitlement to severance or separation pay, if any) that Executive may have under the applicable provisions of any benefit plan of Bergdorf in which Executive is participating at the time of his termination of employment...

Page 200
... this Agreement shall survive the end of his employment with Bergdorf, and such promises and obligations shall inure to the benefit of any Affiliates, subsidiaries, divisions, successors, or assigns of Bergdorf. BERGDORF GOODMAN, INC. /S/ James J. Gold By: /s/ Nelson A. Bangs Nelson A. Bangs, Vice...

Page 201
... documents or information, in whatever form or medium, concerning or evidencing sales; costs; pricing; strategies; forecasts and long range plans; financial and tax information; personnel information; business, marketing and operational projections, plans and opportunities; and customer, vendor, and...

Page 202
Exhibit 10.12 $350,000,000 CREDIT AGREEMENT dated as of June 9, 2004 among THE NEIMAN MARCUS GROUP, INC., THE LENDERS PARTY HERETO, BANK OF AMERICA, N.A. as Syndication Agent WACHOVIA BANK, N.A., WELLS FARGO BANK NATIONAL ASSOCIATION, and BNP PARIBAS, as Documentation Agents and JPMORGAN CHASE BANK,...

Page 203
... 4.07. Full Disclosure Section 4.08. Compliance with ERISA Section 4.09. Taxes Section 4.10. Environmental Matters ARTICLE V Covenants Section 5.01. Furnishing of Financial Data and Certificates Section 5.02. Payment of Taxes Section 5.03. Maintenance of Corporate Existence; Compliance with Laws. i

Page 204
... Leases Insurance Accounts and Reports Inspection Coverage of Consolidated Fixed Charges Leverage Ratio Restrictions on Liens Restrictions on Sales, Consolidations and Mergers. Transactions with Affiliates Restriction on Debt of Subsidiaries Use of Proceeds Restricted Payments Restrictive Agreements...

Page 205
... BORROWING FORM OF COMPETITIVE BID QUOTE REQUEST FORM OF INVITATION FOR COMPETITIVE BID QUOTES FORM OF COMPETITIVE BID QUOTE OPINION OF COUNSEL FOR THE BORROWER OPINION OF BAKER BOTTS L.L.P., SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT ASSIGNMENT AND ASSUMPTION AGREEMENT DESIGNATION AGREEMENT iii

Page 206
...to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this Agreement no individual shall be deemed to be an Affiliate solely by reason of the fact that such individual is a director or...

Page 207
..." means The Neiman Marcus Group, Inc., a Delaware corporation, and its successors. "Borrower's 2003 10-K" means the Borrower's annual report on Form 10-K for the fiscal year ended August 2, 2003, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934...

Page 208
... United States generally accepted accounting principles, subject to Section 1.02(b); provided, however, Consolidated Adjusted Net Income shall not include (a) extraordinary gains or extraordinary losses, (b) the net income or losses of any corporation or other enterprise accrued prior to the date...

Page 209
... of the Borrower on the date hereof and (ii) future members of such Board of Directors who were nominated or appointed by a majority of the Continuing Directors at the date of their nomination or appointment. "Credit Exposure" means, with respect to any Lender at any time, (i) the amount of its...

Page 210
...in their capacity as documentation agents in connection with the credit facility provided under this Agreement. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York, or Dallas, Texas are authorized or required by law to close. 8

Page 211
... Revenue Code. "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. "Euro-Dollar Lending Office" means, as to each Lender, its office, branch or affiliate located at its address set...

Page 212
...Securities Exchange Act of 1934, as amended. "Existing Credit Agreement" means the $300,000,000 Three-Year Credit Agreement dated as of August 26, 2002 among the Borrower, the banks party thereto and J.P. Morgan Chase Bank, as administrative agent, as amended. "Federal Funds Rate" means, for any day...

Page 213
... the Termination (3) with respect to each Competitive Bid Absolute Rate Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than 5 days) as the Borrower may elect in accordance with Section 2.03...

Page 214
... Termination Date shall end on the Termination "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "Investment" means all loans, advances, extensions of credit, guarantees, purchases of stock (other than stock of the Borrower) or other securities...

Page 215
..." means, at any time, an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes...

Page 216
... employees of any Person which was at such time a member of the ERISA Group. "Pricing Schedule" means the Pricing Schedule attached hereto. "Prime Rate" means the rate of interest publicly announced by JPMorgan Chase Bank in New York City from time to time as its Prime Rate. "Quarterly Payment Dates...

Page 217
... of such accounts receivable, or both, whether or not accounted for as a sale under United States generally accepted accounting principles. "Significant Subsidiary" means at any time (i) Bergdorf Goodman, Inc. and its respective successors, and (ii) any other Subsidiary whose consolidated assets are...

Page 218
... prepared, in accordance with United States generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants) with the most recent audited consolidated financial statements of the...

Page 219
.... The Borrower shall give the Administrative Agent a written notice substantially in the form of Exhibit B (a "Notice of Committed Borrowing") not later than 12:00 Noon (New York City time) on (y) the date of each Base Rate Borrowing and (z) the third Euro-Dollar Business Day before each Euro-Dollar...

Page 220
... a Competitive Bid Quote Request substantially in the form of Exhibit C hereto (each, a "Competitive Bid Quote Request"), so as to be received not later than 10:30 A.M. (New York City time) on (x) the fourth Euro-Dollar Business Day before the date of Borrowing proposed therein, in the case of...

Page 221
... 9.01 not later than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction or (y) 10:00 A.M. (New York City time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in either case...

Page 222
... may be accepted. (f) Acceptance and Notice by Borrower. Not later than 11:00 A.M. (New York City time) on (x) the third Euro-Dollar Business Day before the proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of Borrowing, in the case of an Absolute Rate Auction (or...

Page 223
... Not later than 2:00 P.M. (New York City time) on the date of each Borrowing, each Lender participating therein shall make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Administrative Agent at its address specified in or pursuant to...

Page 224
...Agent shall have received notice from a Lender before the date of any Borrowing (or, in the case of a Base Rate Borrowing, prior to 2:00 P.M. (New York City time) on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing...

Page 225
... such Loan is made until it becomes due, at a rate per annum equal to the sum of the Base Rate plus the Base Rate Margin for such day. Such interest shall be payable quarterly in arrears on each Quarterly Payment Date and on the Termination Date and, with respect to the principal amount of any Base...

Page 226
...12:00 Noon (New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans...

Page 227
... 2.09. (a) The Borrower shall pay to the Administrative Agent, for the account of the Lenders ratably in proportion to their Credit Exposures, a facility fee calculated for each day at the Facility Fee Rate for such day (determined in accordance with the Pricing Schedule) on the aggregate amount of...

Page 228
... all Letters of Credit issued by such Issuing Bank at a rate per annum as mutually agreed between the Borrower and such Issuing Bank. (c) Fees accrued for the account of the Lenders under this Section shall be payable quarterly in arrears on each Quarterly Payment Date and on the day on which the...

Page 229
... is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. (b) Unless the Borrower...

Page 230
... such other instruments and agreements relating to such Letter of Credit as the Issuing Bank shall have reasonably requested. The Borrower shall also pay to the Issuing Bank for its own account issuance, drawing, amendment and extension charges in the amounts and at the times as agreed between the...

Page 231
... be due from the Borrower any earlier than the date of receipt by it of notice of its obligation to make such payment (or, if such notice is received by the Borrower after 9:00 A.M. (New York City time) on any date, on the next succeeding Domestic Business Day); provided further that if and to the...

Page 232
... on such amount for each day from the date of the Issuing Bank's demand for such payment (or, if such demand is made after 1:00 P.M. (New York City time) on such date, from the next succeeding Domestic Business Day) to the date of payment by such Lender of such amount at a rate of interest per annum...

Page 233
... Issuing Bank) nor the Administrative Agent nor any of their officers or directors or employees or agents shall be liable or responsible, by reason of or in connection with the execution and delivery or transfer of or payment or failure to pay under any Letter of Credit, including without limitation...

Page 234
... loans by a nonUnited States office of any Lender to United States residents). Section 2.18. Increased Commitments; Additional Lenders. (a) Subsequent to the Effective Date (but not more than twice in any calendar year), the Borrower may, from time to time, upon at least 30 days notice to the...

Page 235
..., (i) the respective Letter of Credit Liabilities of the Lenders shall be redetermined as of the effective date of such increase and (ii) within five Domestic Business Days, in the case of any Group of Base Rate Loans then outstanding, and at the end of the then current Interest Period with respect...

Page 236
... mutually agreed; (e) the Administrative Agent shall have received all documents the Administrative Agent may reasonably request relating to the existence of the Borrower, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in...

Page 237
... Borrowers quarterly report for the fiscal quarter ended January 31, 2004 as filed with the Securities and Exchange Commission on Form 10-Q, a copy of which has been delivered to each of the Lenders, fairly present, in conformity with United States generally accepted accounting principles applied on...

Page 238
... proceedings. The United States Federal income tax returns of the Borrower and its Subsidiaries for the fiscal years through July 29, 2000 are not under examination by the United States Internal Revenue Service. The statute of limitations period for assessment of such returns has closed and no...

Page 239
... Borrower within the time period specified above of its Quarterly Reports on Form 10-Q shall be deemed compliance with this provision; (b) As soon as practicable, and in any event within 90 days after the close of each fiscal year of the Borrower, (i) the consolidated balance sheet of the Borrower...

Page 240
... currently be contested in good faith and if the Borrower or a Subsidiary shall have set aside on its books adequate reserves with respect thereto in accordance with United States generally accepted accounting principles. Section 5.03. (a) Maintenance of Corporate Existence; Compliance with Laws...

Page 241
...keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to its businesses and affairs, in accordance with United States generally accepted accounting principles consistently applied. Section 5.07. Inspection. Each Lender...

Page 242
... with or within 180 days after the acquisition or completion of construction thereof; (d) Liens incurred in connection with Guarantees of bonds, notes or other similar obligations of a state, city, town or other governmental agency or entity which obligations are issued in order to finance property...

Page 243
... of the Loans made under this Agreement will be used by the Borrower for general corporate purposes. None of such proceeds will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any "margin stock" within the meaning of Regulation U. 41

Page 244
... that is to be sold and such sale is permitted hereunder, (4) clause (a) of this Section shall not apply to restrictions or conditions imposed by any agreement relating to secured Debt permitted by this Agreement if such restrictions or conditions apply only to the property securing such Debt and...

Page 245
... undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Borrower or any Significant Subsidiary under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due an amount or amounts (other than...

Page 246
... Family Group, if such person or group of persons is also the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of at least 30% of either the voting stock or total equity capital of the Borrower or (ii) more than half of the members of the Board of Directors of...

Page 247
... in proportion to their Credit Exposures, indemnify each Agent and Issuing Bank, their respective affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense (including counsel fees and disbursements), claim...

Page 248
... 30 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent and Issuing Bank, which shall be a commercial bank organized or licensed under the laws of the United States or...

Page 249
... excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. Section 8.02. Illegality. If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the...

Page 250
...) of making or maintaining any Fixed Rate Loan or of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Lender (or its Applicable Lending Office) under this Agreement or under its Notes with respect thereto, by an amount...

Page 251
... its Applicable Lending Office is located and (ii) in the case of each Lender, any United States withholding tax imposed with respect to any payment by the Borrower pursuant to this Agreement or under any Note, but only up to the rate (if any) at which United States withholding tax would apply to...

Page 252
...is entitled to benefits under an income tax treaty to which the United States is a party which exempts such Lender from United States withholding tax or reduces to zero the rate of withholding tax on payments under this Agreement or under any Note or certifying that the income receivable pursuant to...

Page 253
..., (v) if given by facsimile, when transmitted to the facsimile number referred to in this Section and confirmation of receipt is received, (vi) if given by mail or by any other means, when delivered at the address referred to in this Section; provided that notices to the Administrative Agent under...

Page 254
...respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind, including, without limitation, reasonable fees and disbursements of counsel, which...

Page 255
... 9.05. Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Lenders (and, if the rights or duties of any Issuing Bank or Agent are affected thereby, by it...

Page 256
...deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement... acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits...

Page 257
... to hold its Note as agent for its Designated Lender to the extent of the Loans or portion thereof funded by such Designated Lender. Each Designating Lender shall act as administrative agent for its Designated Lender and give and receive notices and other communications on its behalf. Any payments...

Page 258
... District of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it...

Page 259
... or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. THE NEIMAN MARCUS GROUP, INC. By...

Page 260
...: THE BANK OF NEW YORK By: /s/ Lucille C. Madden Vice President COMMERCEBANK, N.A. By: /s/ Francisco Rivero Senior Vice President By: /s/ Lance Shermin Ramesh Assistant Vice President FIRST COMMERCIAL BANK, NEW YORK AGENCY By: /s/ Bruce M. J. Ju Vice President and General Manager FIRST HAWAII BANK...

Page 261
... COMPANY By: /s/ Paul H. Theiss Vice President SOUTHWEST BANK OF TEXAS, N.A. By: /s/ Melinda N. Jackson Senior Vice President UFJ BANK LIMITED, NEW YORK BRANCH By: /s/ John T. Feeney Vice President UNION BANK OF CALIFORNIA, N.A. By: /s/ Theresa L. Rocha Vice President U.S. BANK NATIONAL ASSOCIATION...

Page 262
... Bank Malayan Banking Berhad Mellon Bank, N.A. The Northern Trust Company Southwest Bank Of Texas, N.A. UFJ Bank Limited, New York Branch Union Bank of California, N.A. U.S. Bank National Association Wachovia Bank N.A. Wells Fargo Bank National Association Total 60 40,000,000 40,000,000 20,000...

Page 263
PRICING SCHEDULE Each of "Facility Fee Rate", "Euro-Dollar Margin" and "Base Rate Margin" means, for any day, the rate (in basis points per annum) set forth below in the row and column corresponding to the Status and Utilization that apply on such day: Level I Level II Level III Level IV Level V ...

Page 264
... assigned to any other debt security of the Borrower shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date. In the case of split ratings from S&P or Moodys, the rating to be used to determine which Pricing Level applies is the higher of the...

Page 265
EXHIBIT A NOTE New York, New York , For value received, THE NEIMAN MARCUS GROUP, INC., a Delaware corporation (the "Borrower"), promises to pay to the order of (the "Lender"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Lender to the ...

Page 266
LOANS AND PAYMENTS OF PRINCIPAL Date Amount of Loan Amount of Principal Repaid Notation Made By

Page 267
EXHIBIT B FORM OF NOTICE OF COMMITTED BORROWING [Date] To: From: Re: JPMorgan Chase Bank, as Administrative Agent The Neiman Marcus Group, Inc. (the "Borrower") Credit Agreement (as amended from time to time, the "Credit Agreement") dated as of June 9, 2004 among the Borrower, the Lender's party ...

Page 268
EXHIBIT C FORM OF COMPETITIVE BID QUOTE REQUEST [Date] To: JPMorgan Chase Bank (the "Administrative Agent") From: Re: The Neiman Marcus Group, Inc. (the "Borrower") Credit Agreement (the "Credit Agreement") dated as of June 9, 2004 among the Borrower, the Lender's party thereto and the Agents party ...

Page 269
THE NEIMAN MARCUS GROUP, INC. By: Name: Title:

Page 270
...a Competitive Bid [Margin] [Absolute Rate]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [2:00 P.M.] [9:30 A.M.] (New York City time) on [date]. JPMORGAN CHASE BANK, as Administrative Agent By: Authorized Officer (3) Amount must...

Page 271
EXHIBIT E FORM OF COMPETITIVE BID QUOTE To: Re: JPMorgan Chase Bank, as Administrative Agent Competitive Bid Quote to The Neiman Marcus Group, Inc. (the "Borrower") , , we hereby make the following Competitive Bid In response to your invitation on behalf of the Borrower dated Quote on the following...

Page 272
... York, New York 10017 Ladies and Gentlemen: In my capacity as Senior Vice President and General Counsel of The Neiman Marcus Group, Inc. (the "Borrower"), I, together with , have acted as counsel to the Borrower in connection with the preparation, execution and delivery of the Credit Agreement dated...

Page 273
... for the filing of the Credit Agreement with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and the Credit Agreement and the Notes do not contravene, or constitute a default under, any provision of applicable law or of the Restated Certificate...

Page 274
... York, the federal laws of the United States and the General Corporation Law of the State of Delaware. In giving the foregoing opinion, we express no opinion as to the effect (if any) of any law of any jurisdiction (except the State of New York) in which any Lender is located which limits the rate...

Page 275
... and [NAME OF ASSIGNEE] (the WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to the Credit Agreement dated as of June 9, 2004 (as amended from time to time, the "Credit Agreement") among The Neiman Marcus Group, Inc., the Lender's party thereto, Bank of America, N.A., as...

Page 276
...shall be governed by and construed in accordance with the laws of the State of New York. Section 8. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument...

Page 277
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. The undersigned consent to the foregoing assignment.

Page 278
... NEIMAN MARCUS GROUP, INC. PURCHASED RESTRICTED STOCK UNIT AGREEMENT ISSUED PURSUANT TO 1997 INCENTIVE PLAN THIS AGREEMENT is made as of the Delaware corporation (the "Corporation"), and (the "Employee"). day of , 20 , by and between THE NEIMAN MARCUS GROUP, INC., a , an employee of the Corporation...

Page 279
... (the "Vesting Date"). On the Vesting Date, the Corporation shall issue to the Employee a certificate representing a number of shares of Common Stock equal to the number of Purchased Restricted Stock Units then subject to this Award; provided, however, that the Employee shall have the right to elect...

Page 280
... number of Purchased Restricted Stock Units multiplied by the average of the closing prices of a share of Common Stock on the New York Stock Exchange over the ten most recent trading days preceding the date of termination of employment. (c) If the Employee dies while in the employ of the Corporation...

Page 281
... of the Employee's employment with the Corporation and all of its subsidiaries on or after the date as of which the Employee (i) is eligible for a normal retirement benefit on account of reaching normal retirement age under the terms of The Neiman Marcus Group, Inc. Retirement Plan (or a successor...

Page 282
..., the Employee shall have the right (by delivering written notice to the Secretary of the Corporation no less than 30 days nor more than 60 days prior to the date of distribution) to have a number of whole shares of Common Stock withheld by the Corporation from the shares to be issued upon...

Page 283
RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By Nelson A. Bangs, Senior Vice President & General Counsel , Employee 6

Page 284
... MARCUS GROUP, INC. PURCHASED RESTRICTED STOCK UNIT AGREEMENT ISSUED PURSUANT TO 1997 INCENTIVE PLAN THIS AGREEMENT is made as of the day of INC., a Delaware corporation (the "Corporation"), and subsidiaries (the "Employee"). Recitals: 1. On January 17, 1997, the Corporation adopted for the benefit...

Page 285
... (the "Vesting Date"). On the Vesting Date, the Corporation shall issue to the Employee a certificate representing a number of shares of Common Stock equal to the number of Purchased Restricted Stock Units then subject to this Award; provided, however, that the Employee shall have the right to elect...

Page 286
... number of Purchased Restricted Stock Units multiplied by the average of the closing prices of a share of Common Stock on the New York Stock Exchange over the ten most recent trading days preceding the date of termination of employment. (c) If the Employee dies while in the employ of the Corporation...

Page 287
... any violation of federal or state securities laws; provided, however, that with respect to items (iv) and (v), the Employee has been provided prior written notice of the failure and afforded a reasonable opportunity to correct. 5. No Guarantee of Employment. Nothing in the Plan or in this Agreement...

Page 288
...or to tender to the Corporation, other whole shares of Common Stock, with a value not to exceed the statutory minimum tax withholding obligation. In addition, the Employee and/or his or her beneficiary (including his or her estate) shall bear all taxes on amounts paid under the Plan to the extent no...

Page 289
... RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By Nelson A. Bangs, Senior Vice President & General Counsel , Employee...

Page 290
....29 THE NEIMAN MARCUS GROUP, INC. RESTRICTED STOCK UNIT AGREEMENT ISSUED PURSUANT TO 1997 INCENTIVE PLAN THIS AGREEMENT is made as of the day of INC., a Delaware corporation (the "Corporation"), and (the "Employee"). , 20 , by and between THE NEIMAN MARCUS GROUP, , an employee of the Corporation or...

Page 291
... the name of the Employee all shares of Common Stock previously credited to such account pursuant to the 2002 Restricted Stock Agreement effective as of the date hereof. 2. Grant of Restricted Stock Units. The Corporation hereby grants to the Employee Restricted Stock Units (the "Award"), subject to...

Page 292
... of the Employee's employment with the Corporation and all of its subsidiaries on or after the date as of which the Employee (i) is eligible for a normal retirement benefit on account of reaching normal retirement age under the terms of The Neiman Marcus Group, Inc. Retirement Plan (or a successor...

Page 293
..., the Employee shall have the right (by delivering written notice to the Secretary of the Corporation no less than 30 days nor more than 60 days prior to the date of distribution) to have a number of whole shares of Common Stock withheld by the Corporation from the shares to be issued upon...

Page 294
... JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By Nelson A. Bangs, Senior Vice President & General Counsel Burton M. Tansky, Employee 5

Page 295
... 10.30 THE NEIMAN MARCUS GROUP, INC. RESTRICTED STOCK UNIT AGREEMENT ISSUED PURSUANT TO 1997 INCENTIVE PLAN THIS AGREEMENT is made as of the INC., a Delaware corporation (the "Corporation"), and subsidiaries (the "Employee"). day of , 20 , by and between THE NEIMAN MARCUS GROUP, , an employee of the...

Page 296
...the number of shares of Common Stock represented by the Restricted Stock Units been issued and outstanding in the name of the Employee on the record date established for such dividend. 4. Retirement. Vesting of Restricted Stock Units and Distribution of Common Stock; Termination of Employment; Death...

Page 297
... of the Employee's employment with the Corporation and all of its subsidiaries on or after the date as of which the Employee (i) is eligible for a normal retirement benefit on account of reaching normal retirement age under the terms of The Neiman Marcus Group, Inc. Retirement Plan (or a successor...

Page 298
..., the Employee shall have the right (by delivering written notice to the Secretary of the Corporation no less than 30 days nor more than 60 days prior to the date of distribution) to have a number of whole shares of Common Stock withheld by the Corporation from the shares to be issued upon...

Page 299
... RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By Nelson A. Bangs, Senior Vice President & General Counsel , Employee...

Page 300
... for the benefit of key employees The Neiman Marcus Group, Inc. 1997 Incentive Plan (the "Plan"), and the Plan was approved by its stockholders on that date. 2. The Plan is administered by the Compensation Committee (the "Committee") of the Corporation's Board of Directors (the "Board"). 3. The...

Page 301
... may be exercised from time to time by written notice to the Corporation stating the number of Shares with respect to which the Option is being exercised, and the time of the delivery thereof, which time shall be at least 15 days after the giving of such notice unless an earlier date shall have been...

Page 302
... Optionee's employment with the Corporation or any of its subsidiaries on or after the date as of which the Optionee (i) is eligible for a normal retirement benefit on account of reaching normal retirement age under the terms of The Neiman Marcus Group, Inc. Retirement Plan (or a successor plan); or...

Page 303
...date of death. (c) If the Optionee dies within twelve months after termination of employment as the result of an Eligible Retirement as defined in Section 4(b) at a time... Option so transferred and the Shares covered thereby, to all of Optionee's rights, promises, restrictions and obligations hereunder. A...

Page 304
...Shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 10. Withholding. The Corporation or any subsidiary that employs the Optionee shall have the right to deduct any sums that federal, state or local tax law...

Page 305
...WAIVE THEIR RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By: Nelson A. Bangs Senior Vice President and General Counsel...

Page 306
... for the benefit of key employees The Neiman Marcus Group, Inc. 1997 Incentive Plan (the "Plan"), and the Plan was approved by its stockholders on that date. 2. The Plan is administered by the Compensation Committee (the "Committee") of the Corporation's Board of Directors (the "Board"). 3. The...

Page 307
... dispose of the Shares, subject to applicable securities laws and the policies of the Corporation then in effect. (b) Subject to the provisions of paragraphs (c) and (d) of this Section, upon termination of the Employee's employment with the Corporation and any of its subsidiaries at a time when the...

Page 308
... be issued in accordance with the provisions of Section 3(a) applicable to Shares with respect to which the Restrictions have been removed. 4. No Guarantee of Employment. Nothing in the Plan or in this Agreement shall (i) confer on the Employee any right to continue in the employ of the Corporation...

Page 309
...RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By: Nelson A. Bangs Senior Vice President and General Counsel , Employee...

Page 310
... STOCK AGREEMENT ISSUED PURSUANT TO 1997 INCENTIVE PLAN THIS AGREEMENT is made as of the day of GROUP, INC., a Delaware corporation (the "Corporation"), and subsidiaries (the "Employee"). Recitals: 1. On January 17, 1997, the Corporation adopted for the benefit of key employees The Neiman Marcus...

Page 311
... or otherwise dispose of such Shares, subject to applicable securities laws and the policies of the Corporation then in effect. (b) Subject to the provisions of paragraphs (c) and (d) of this Section, upon termination of the Employee's employment with the Corporation and any of its subsidiaries...

Page 312
... be issued in accordance with the provisions of Section 3(a) applicable to Shares with respect to which the Restrictions have been removed. 4. No Guarantee of Employment. Nothing in the Plan or in this Agreement shall (i) confer on the Employee any right to continue in the employ of the Corporation...

Page 313
... RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By Nelson A. Bangs, Senior Vice President & General Counsel , Employee...

Page 314
...MARCUS GROUP, INC. PURCHASED RESTRICTED STOCK AGREEMENT ISSUED PURSUANT TO 1997 INCENTIVE PLAN THIS AGREEMENT is made as of the day of GROUP, INC., a Delaware corporation (the "Corporation"), and subsidiaries (the "Employee"). Recitals: 1. On January 17, 1997, the Corporation adopted for the benefit...

Page 315
... the Employee paid for the Shares pursuant to Section 1 and (B) an amount equal to the number of Shares multiplied by the average of the closing prices of a share of Common Stock on the New York Stock Exchange over the ten most recent trading days preceding the date of termination of employment. 2

Page 316
... be issued in accordance with the provisions of Section 3(a) applicable to Shares with respect to which the Restrictions have been removed. 4. No Guarantee of Employment. Nothing in the Plan or in this Agreement shall (i) confer on the Employee any right to continue in the employ of the Corporation...

Page 317
...RIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREBY. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By: Nelson A. Bangs Senior Vice President and General Counsel , Employee...

Page 318
...THE NEIMAN MARCUS GROUP, INC. NON-QUALIFIED STOCK OPTION AGREEMENT ISSUED PURSUANT TO 1997 INCENTIVE PLAN AGREEMENT made as of this day of , , by and between THE NEIMAN MARCUS GROUP, INC., a corporation duly organized under the laws of the State of Delaware (the "Corporation"), and Name, an employee...

Page 319
... the expiration of 10 years and one day from the date hereof. 3. METHOD OF EXERCISE. Stock purchased under the Option shall at the time of exercise be paid for in full. The Option may be exercised from time to time by written notice to the Corporation stating the number of shares with respect to...

Page 320
... for a retirement benefit under the terms of a retirement plan of the Corporation or its subsidiaries applicable to the Optionee in effect at the time of such retirement and (ii) the Optionee is not less than age 55 and has not less than twenty (20) years of vesting or credited service under the...

Page 321
... shares or other change affecting the Corporation's common stock, the Committee shall make such adjustments as it may deem appropriate in the number and kind of securities to be subject to the Option. Any such adjustment made by the Committee shall be conclusive. The Plan shall not affect the right...

Page 322
...shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 10. WITHHOLDING. The Corporation or any subsidiary that employs the Optionee shall have the right to deduct any sums that federal, state or local tax law...

Page 323
... claim that any such proceeding brought in such a court has been brought in an inconvenient forum. EXECUTED at Dallas, Texas, as of the date appearing in the first paragraph of this Agreement. THE NEIMAN MARCUS GROUP, INC. By Nelson A. Bangs Senior Vice President & General Counsel Name, Optionee 6

Page 324
...2003 Years Ended August 3, 2002 (1) July 28, 2001 July 29, 2000 (in thousands, except ratios) Fixed Charges: Interest on debt Amortization of debt discount and expense Interest element of rentals Total fixed charges Earnings: Earnings before income taxes, minority interest and change in accounting...

Page 325
Exhibit 14.1 CODE of ETHICS and CONDUCT THE NEIMAN MARCUS GROUP, INC.

Page 326
... TO EMPLOYEES OF THE NEIMAN MARCUS GROUP, INC. THE CODE CONSEQUENCES OF NON-COMPLIANCE DUTY TO REPORT COMPLIANCE WITH LAWS AND RELATED POLICIES GENERAL OBLIGATION TO DEAL FAIRLY ANTITRUST LAWS INSIDER TRADING EMPLOYMENT LAWS Equal Employment Opportunity Sexual Harassment Reporting Discrimination...

Page 327
... of Records E-MAIL, VOICE MAIL AND THE INTERNET Appropriate Use Privacy Creation and Retention of Messages CONFLICTS OF INTEREST Gifts Entertainment DRUG AND ALCOHOL USE AND TESTING ENVIRONMENTAL COMPLIANCE IMPLEMENTATION OF THE CODE THE COMPLIANCE COMMITTEE DISSEMINATION OF INFORMATION TRAINING AND...

Page 328
... high standards, and each of us shares responsibility for maintaining them. Through its operating units, NMG does business in many communities throughout the United States. All employees are ambassadors of the Company, whose conduct, both within and outside their employment context, has a direct...

Page 329
...recognition that only employees who abide by the Code and the Company's policies have a place with us. Working together, we can take personal pride in being part of an organization that is second to none in its pursuit of excellence through commitment to the highest legal and ethical values. Richard...

Page 330
... with applicable laws and Company policies. For purposes of this Code, (i) all references to the employees of The Neiman Marcus Group, Inc. or the "Company" shall also include all employees of Neiman Marcus Stores, Neiman Marcus Direct, Neiman Marcus Online, Bergdorf Goodman, Inc., Bergdorf Graphics...

Page 331
... with individual policies and laws to employees for whom such guidelines are particularly relevant. Employees are bound by such guidelines and should retain a copy for their reference. GENERAL OBLIGATION TO DEAL FAIRLY Employees shall endeavor to deal fairly with the Company's customers, suppliers...

Page 332
... such as prices charged, sale dates or percentages, business or marketing strategies, profit margins or credit and billing practices. To avoid any appearance of indirect communications with competitors, vendors and distributors should be discouraged from sharing with the Company any sensitive...

Page 333
...shares of stock or other securities of the Company (or puts, calls, options or other rights to buy or sell such securities) until a reasonable time after public disclosure of such inside information. Employees also shall not disclose such inside information to individuals not employed by the Company...

Page 334
... is free of sexual harassment or other types of illegal harassment or misconduct. EQUAL EMPLOYMENT OPPORTUNITY The Company is an equal employment opportunity employer. The Company's policy is to deal with each employee and each job applicant without regard to race, religion, national origin, gender...

Page 335
... the Human Resources Department, Associate Relations, his or her designated Compliance Officer, the Compliance Committee, or the Legal Department. Any manager or executive to whom discrimination or harassment is reported must immediately forward that information to the Human Resources Department for...

Page 336
... initiative in preparing agreements. To this end, the Legal Department should be conferred with at the earliest opportunity, even at the earliest stages of negotiation, so that it may function in a timely manner to anticipate legal problems and to work constructively with management personnel rather...

Page 337
... cotton terry cloth. In addition, stricter standards apply for fabrics used in children's sleepwear. Employees involved in buying apparel made from such fabrics are responsible for obtaining from vendors copies of test results indicating that the fabrics used in clothing sold to the Company meet the...

Page 338
...disclosure is authorized or legally mandated. Employees shall not, at any time, either directly or indirectly, divulge, disclose or communicate to any person, firm, or corporation any confidential or non-public information concerning or relating to the business of the Company, including the names of...

Page 339
...policy of the Company to comply fully with the laws of the United States and regulations of the United States Customs Service ("Customs") and those of any other applicable Federal agencies relating to, or governing, the importation or exportation of goods and technology to and from the United States...

Page 340
... letters of credit containing boycott provisions. As the Company is required to report boycott requests, employees must inform their designated Compliance Officer, the Compliance Committee, or the Legal Department of any such requests. U.S. EMBARGOES Employees shall conduct the Company's business in...

Page 341
... their supervisor, their designated Compliance Officer, the Compliance Committee or the Legal Department any request by a government or regulatory official for an improper payment. Company policy also prohibits employees from giving or receiving excessive or uncustomary gifts or services to or from...

Page 342
...the laws that the states have put into place. An employee shall never offer a customer the option or opportunity to ship a purchase in order to avoid paying sales tax. The Point of Sale (POS) system has been programmed to collect the proper sales tax in each store and account for most tax exceptions...

Page 343
... AND GOVERNMENT AGENTS Employees who are contacted by attorneys, government agents (e.g., from the Department of Justice, the Federal Trade Commission, the Equal Employment Opportunity Commission, the Securities Exchange Commission, or other federal, state or local agencies), investigators, or other...

Page 344
... Officer, the Vice President of Finance, and the General Counsel are authorized to respond to requests for copies of public reports, including financial reports filed with the Securities and Exchange Commission, reports regarding meetings with members of the financial community and previously issued...

Page 345
..., there are laws and regulations that apply to particular types of advertising and/or the advertisement of specific products or services. Employees involved in the preparation or publication of advertising must seek advice from the Legal Department regarding specific laws and regulations before...

Page 346
...other official communications, e-mail messages sent via the Internet must responsibly represent the Company. Employees must not post confidential or sensitive Company information on the Internet, including websites, news groups, chat rooms, and other similar locations. Employees shall not develop or...

Page 347
... or services from a supplier of the Company at less than retail price (other than the normal discount available to all employees of the Company or to the general public). In addition, an employee has a conflict if he or she, or a member of his or her family, may benefit from the employee's position...

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... including but not limited to officers and directors are of special concern and must be disclosed to and approved by the Board of Directors. In general, no employee should: (a) accept a gift from; (b) be employed by, consult, serve as a director, volunteer or otherwise render services to; (c) own or...

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... with personal problems. Information regarding the EAP is available from the Human Resources Department. An employee whose job performance or behavior indicates that he or she may be unfit for duty shall not be permitted to work. If allowed under applicable state laws, the Company may require...

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... of the Company who are accessible at a local level and to whom employees may address questions and report violations. DISSEMINATION OF INFORMATION All employees receive a copy of the Code and are required to sign a Certification representing that they have received and reviewed it, understand...

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... authorize or participate directly in actions that violate the law or the Code; Employees who fail to report a violation of the law or the Code, or who withhold relevant and material information concerning a violation of which they are aware or should be aware; The violator's supervisor(s), to the...

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..., my designated Compliance Officer, the Compliance Committee, or Associate Relations. The Company reserves the right to update, amend or modify the Code at any time without prior notice. Signature Print name Associate # Title Company Date Please return this form to your Department Manager or Human...

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... COMPANY JURISDICTION OF SUBSIDIARY/AFFILIATE INCORPORATION SHAREHOLDER Bergdorf Goodman, Inc. Bergdorf Graphics, Inc. BergdorfGoodman.com, LLC Chef's Catalog, Inc. Ermine Trading Corporation Gurwitch Products, LLC New York New York Delaware Delaware California Delaware Neiman Marcus Holdings...

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...105604 on Form S-8, and No. 333-49893 on Form S-3 of The Neiman Marcus Group, Inc. and subsidiaries of our report, dated September 27, 2004, appearing in the Annual Report on Form 10-K of The Neiman Marcus Group, Inc. for the year ended July 31, 2004. /s/DELOITTE & TOUCHE LLP Dallas, Texas September...

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... Act of 2002 I, Burton M. Tansky, certify that: 1. I have reviewed this annual report on Form 10-K of The Neiman Marcus Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made...

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... Act of 2002 I, James E. Skinner, certify that: 1. I have reviewed this annual report on Form 10-K of The Neiman Marcus Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made...

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...Neiman Marcus Group, Inc. (the Company) hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the fiscal year ended July 31, 2004 (the Report) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities...

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