Exhibit 10.31

 

THE NEIMAN MARCUS GROUP, INC.

 

NON-QUALIFIED STOCK OPTION AGREEMENT

ISSUED PURSUANT TO 1997 INCENTIVE PLAN

 

THIS AGREEMENT is made as of the           day of            , 20   , by and
between THE NEIMAN MARCUS GROUP, INC., a Delaware corporation (the
“Corporation”), and                         , an employee of the Corporation or
one of its subsidiaries (the “Optionee”).

 

Recitals:

 

1.             On January 17, 1997, the Corporation adopted 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 Committee has selected the Optionee to participate in the
Plan by the grant of a stock option which it is understood and agreed will not
qualify as an incentive stock option under the provisions of Section 422 of the
Internal Revenue Code of 1986, as amended.

 

Agreement:

 

For and in consideration of the mutual covenants hereinafter set forth and for
other good and valuable consideration, it is agreed as follows:

 

1.             Grant of Option.  The Corporation hereby grants to the Optionee a
non-qualified stock option (the “Option”) to purchase up to                
shares (the “Shares”) of its Class A Common Stock, par value $.01 per share
(“Common Stock”) at $                  per share, being equal to 100% of the
fair market value of one share of Common Stock on the date hereof.  The
Optionee’s right to purchase the Shares shall be exercised in the manner and
subject to the terms and conditions hereinafter provided.  The Corporation
shall, at all times while the Option is in force, reserve such number of shares
of Common Stock as will be sufficient to satisfy the requirements of this
Agreement.

 

2.             Time of Exercise of the Option.  During the first three years the
Option is outstanding it may not be exercised with respect to any of the Shares,
except to the extent provided under the Plan in the event of a Change of Control
of the Corporation.  Subject to the provisions of Sections 4 and 5 of this
Agreement, during the fourth year and thereafter the Option may be exercised as
to all or any of the Shares, less the number of Shares previously purchased
thereunder, but it shall not be exercisable after the expiration of six years
from the date hereof.

 

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3.             Method of Exercise.  Shares 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 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 mutually agreed upon.  At the time
specified in such notice, the Corporation shall deliver to the Optionee (or
other person entitled to exercise the Option) at the main office of the
Corporation, or such other place as shall be mutually acceptable, a certificate
or certificates for such Shares out of theretofore authorized but unissued
shares of Common Stock or reacquired shares of Common Stock, as the Corporation
may elect, against payment of the Option price in full for the number of Shares
to be delivered by certified or bank cashier’s check or the equivalent thereof
acceptable to the Corporation (including, but not limited to, shares of capital
stock of the Corporation); provided, however, that the time of such delivery may
be postponed by the Corporation for such period as may be required for it with
reasonable diligence to comply with any applicable listing requirements of any
national securities exchange.  If the Optionee (or other person entitled to
exercise the Option) fails to accept delivery of and pay for all or any part of
the number of Shares specified in such notice upon tender or delivery thereof,
his or her right to exercise the Option with respect to such undelivered Shares
may be terminated by the Committee.

 

4.             Termination of Employment; Retirement.

 

(a)           Subject to the last paragraph of this Section 4(a), the Optionee
or a Permitted Transferee (as defined in Section 11) or Transferees, if any,
may, at any time within three months after the date of termination of the
Optionee’s employment with the Corporation and its subsidiaries, but not later
than the date of expiration of the Option, exercise the Option to the extent the
Optionee was entitled to do so on the date of termination; provided that the
Optionee or the Permitted Transferee or Transferees, if any, shall not be deemed
to be so entitled on the date of termination if the Committee shall find that
the Optionee’s employment was terminated for Cause or because of any activity on
the Optionee’s part in competition with, or detrimental to, the Corporation or
any of its subsidiaries or that the Optionee terminated such employment of the
Optionee’s own volition in order to engage or because the Optionee had engaged
in such activity (in any such case, a “Cause Termination”).  If the Option or
any portion of the Option is not so exercised, or if the Optionee shall be
deemed not to be entitled to exercise it, the Option or unexercised portion
thereof shall terminate.  However, the Option shall not be affected by any
change in the duties or position of the Optionee (including transfer to or from
a subsidiary) so long as the Optionee continues in the employ of the Corporation
or one of its subsidiaries.

 

For purposes of this Agreement, “Cause” shall mean, in the Committee’s
reasonable judgment, (i) a breach of duty by Optionee in the course of his or
her employment involving fraud, acts of dishonesty (other than inadvertent acts
or omissions), disloyalty, or moral turpitude, (ii) conduct that is materially
detrimental to the Corporation or any of its subsidiaries, monetarily or
otherwise, or reflects unfavorably on the Corporation or any of its subsidiaries
or Optionee, (iii) Optionee’s failure to comply with or enforce the
Corporation’s or any of its subsidiaries’ policies concerning equal employment
opportunity, including engaging in sexually or otherwise harassing conduct, (iv)
Optionee’s repeated insubordination

 

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or failure to comply with or enforce other personnel policies of the Corporation
or any of its subsidiaries, (v) Optionee’s failure to devote his or her full
working time and best efforts to the performance of his or her responsibilities
to the Corporation or its subsidiaries, or (vi) Optionee’s conviction of or
entry of a plea agreement or consent decree or similar arrangement with respect
to, a felony, other serious criminal offense, or any violation of federal or
state securities laws; provided, however, that with respect to items (iv) and
(v), Optionee has been provided prior written notice of the failure and afforded
a reasonable opportunity to correct.

 

In the event of the death or Eligible Retirement, as defined in Section 4(b), of
the Optionee, the Option may be exercised beyond three months after the date of
termination of employment.  The time during which the Option may be exercised in
the case of an Eligible Retirement is described in Section 4(b), and the time
during which the Option may be exercised in the event of the death of the
Optionee is described in Section 5.  The Optionee’s death or Eligible Retirement
shall be the only circumstances that shall result in an extension of the
exercise period beyond three months after the date of the Optionee’s termination
of employment with the Corporation and its subsidiaries, regardless of whether
such termination is voluntary or involuntary or for reasons of disability or
otherwise.

 

(b)           The Optionee or the Permitted Transferee or Transferees, if any,
may, at any time within twelve months after the date of the Optionee’s Eligible
Retirement from the Corporation or any of its subsidiaries, but not later than
the date of expiration of the Option, exercise the Option to the extent the
Optionee was entitled to do so on the date of Eligible Retirement.  If the
Option or any portion of the Option is not so exercised, or if the Optionee or
the Permitted Transferee or Transferees, if any, shall be deemed not to be
entitled to exercise it, the Option or unexercised portion thereof shall
terminate.  As used herein, “Eligible Retirement” shall mean the termination of
the 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 (ii) is not
less than age 55 and has not less than twenty (20) years of vesting or credited
service under the terms of The Neiman Marcus Group, Inc. Retirement Plan (or a
successor plan); provided that the Optionee’s termination of employment shall
not be an “Eligible Retirement” if the Committee shall find that the Optionee
was terminated on account of a “Cause Termination” as defined in Section 4(a).

 

(c)           Nothing in the Plan or in this Agreement shall (i) confer on the
Optionee any right to continue in the employ of the Corporation or any of its
subsidiaries; (ii) affect the right of the Optionee or the Corporation or any of
its subsidiaries to terminate the employment relationship at any time; (iii) be
deemed a waiver or modification of any provision contained in any agreement
between the Optionee and the Corporation or any of its subsidiaries; (iv) be
construed as part of Optionee’s entitlement to remuneration or benefit pursuant
to a contract of employment or otherwise or as compensation for past services
rendered; (v) afford Optionee any rights or additional rights to compensation or
damages in consequence of the loss or termination of his or her office,
employment, or service with the Corporation or any of its subsidiaries; or (vi)
entitle Optionee to any compensation or damages for any loss or potential loss
which he or she may suffer by reason of being or becoming unable to exercise the
Option in consequence of the loss or termination of his or her office,
employment, or

 

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services with the Corporation or any of its subsidiaries.  A cessation of the
Optionee’s employment by reason of a leave of absence of not more than six
months approved by the Corporation shall not be deemed a termination of
employment.

 

5.             Exercise by Representative, Etc.

 

(a)           If the Optionee dies while in the employ of the Corporation or one
of its subsidiaries and while this Option remains outstanding without having
previously been exercised in full, the person or persons to whom the Option is
transferred by will or the laws of descent and distribution (the
“Representative”), or the Permitted Transferee or Transferees, if any may at any
time within twelve months after the date of death, but not later than the date
of expiration of the Option provided in Section 3, exercise any remaining
unexercised portion of the entire Option, including those Shares that have not
yet become exercisable pursuant to Section 3.

 

(b)           If the Optionee dies within three months after his or her
termination of employment (other than a termination as the result of Eligible
Retirement as defined in Section 4(b)) at a time when all or a portion of this
Option remains outstanding and exercisable without having previously been
exercised in full, the Representative, or the Permitted Transferee or
Transferees, if any, may at any time within twelve months after the date of
death, but not later than the date of expiration of the Option, exercise any
remaining unexercised portion of this Option but only to the extent the Optionee
was entitled to do so on the 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 when all or a portion of this Option remains outstanding and exercisable
without having previously been exercised in full, the Representative, or the
Permitted Transferee or Transferees, if any, may, at any time during the period
ending on the later of (i) twelve months after the date of Eligible Retirement
or (ii) three months after the date of death, but not later than the date of
expiration of the Option provided in Section 3, exercise any remaining
unexercised portion of this Option but only to the extent the Optionee was
entitled to do so on the date of death.

 

If the Option or any portion of the Option of the deceased Optionee is not so
exercised within the above time limits, it shall terminate.

 

6.             Restrictions on Transferability of Option.  The Option shall not
be transferred except to one or more Permitted Transferees, or except by will or
the laws of descent and distribution, nor may it be otherwise assigned,
transferred, pledged, hypothecated or disposed of in any way (by operation of
law or otherwise) and it shall not be subject to execution, attachment or
similar process.  The Option may be exercised only by the Optionee, by a
Permitted Transferee, or by the Optionee’s or Permitted Transferee’s duly
appointed guardian or personal representative.  The Optionee may transfer all or
part of the Option to one or more Permitted Transferees at any time prior to the
exercise of the Option in full.  Upon any such transfer, a Permitted Transferee
shall succeed and be subject, to the extent of the Option or part of the Option
so transferred and the Shares covered thereby, to all of Optionee’s rights,
promises, restrictions and obligations hereunder.  A Permitted Transferee to
whom all or a

 

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portion of the Option is transferred may transfer such portion (or any part
thereof) to another person or entity who or which is a Permitted Transferee with
respect to the Optionee.

 

The Corporation shall be entitled to treat the Option as belonging to the
Optionee unless the Optionee or a Permitted Transferee, as the case may be,
shall inform the Secretary of the Corporation, in writing, of the identity of
any Permitted Transferee or Transferees, and the Secretary, after consultation
with legal counsel if the Secretary deems it appropriate, has concluded that all
legal requirements in connection with the transfer of the Option have been
satisfied.

 

7.             Changes in Common Stock.  In the event of any reorganization,
recapitalization, stock split, stock dividend, merger, consolidation,
combination of shares or other change affecting the 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.

 

8.             Restriction on Issuance of Shares.  The Corporation shall not be
obligated to sell or issue any Shares pursuant to the Option unless the offering
and sale of such Shares have at that time been effectively registered or are
exempt from registration under the Securities Act of 1933, as amended, and all
applicable state securities laws.

 

9.             Rights as a Stockholder.  The Optionee and all Permitted
Transferees shall have no rights as a stockholder with respect to any Shares
until the date of issuance of a stock certificate for such 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 requires to be withheld with respect to the exercise of the Option.  If
the Option or any portion thereof is transferred to a Permitted Transferee, the
tax withholding obligations with respect to such Option or portion thereof shall
remain with the Optionee.  In the alternative, the Optionee or other person
exercising the Option may elect to pay such sums to the employer corporation
either by check or with capital stock of the Corporation by delivering written
notice to the Secretary of the employer corporation no less than 30 days nor
more than 60 days prior to exercise.  There is no obligation hereunder that the
Optionee be advised of the amount the employer corporation will be required to
withhold.

 

11.           Interpretation of Plan and Option.  This Agreement is being
entered into pursuant to the Plan and shall be governed in all respects by the
terms and provisions of the Plan, which are incorporated herein by this
reference.  In the case of any inconsistency between the Plan and this
Agreement, the Plan provisions shall control.  Capitalized terms used and not
otherwise defined in this Agreement shall have the respective meanings given
them in the Plan.  As used herein the term “employee” shall mean an employee of
the Corporation or of any subsidiary of the Corporation, and members of the
Board, and the term “subsidiary of the Corporation” shall mean a subsidiary
corporation as defined in Section 424 of the Internal Revenue Code of 1986, as
amended; provided that with respect to an Optionee who is a member of the Board
but not an employee of the Corporation or of any subsidiary of the Corporation,
references herein to such Optionee’s “employment” in respect of the

 

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Corporation or one of its subsidiaries shall be deemed to refer to such
Optionee’s service on the Board.  As used herein the term “Permitted Transferee”
shall mean the child (natural or adopted) or grandchild (natural or adopted) of
the Optionee, a trust or custodian for the benefit of any such child or
grandchild, or any other legal entity created for the benefit of the children or
grandchildren of the Optionee, which the Committee determines, in its sole
discretion, is an appropriate holder of the Option consistent with the purposes
and objectives of the Plan.  In the event of a Permitted Transferee’s death
prior to the expiration of the Option, the person or persons to whom the Option
is transferred by will of the Permitted Transferee or the laws of descent and
distribution shall have all of the rights transferred to such Permitted
Transferee hereunder, subject to the restrictions and performance of the
obligations set forth herein.  In all respects, questions of interpretation and
application of the Plan and of this Agreement shall be determined by a majority
of the Committee, as may from time to time be constituted, and the
determinations of such majority shall be final and binding upon all persons.

 

12.           Choice of Law; Exclusive Forum; Consent to Jurisdiction; Waiver of
Right to Contest Removal and to Jury Trial.  The validity, performance and
enforceability of this Agreement shall be determined and governed by the laws of
the State of Texas, without regard to its conflict of laws principles. The
exclusive forum for any action concerning this Agreement or the transactions
contemplated hereby shall be in a court of competent jurisdiction in Dallas
County, Texas, with respect to a state court, or the Dallas Division of the
United States District Court for the Northern District of Texas, with respect to
a federal court.  OPTIONEE HEREBY CONSENTS TO THE EXERCISE OF JURISDICTION OF A
COURT IN THE EXCLUSIVE FORUM AND WAIVES ANY RIGHT HE OR SHE MAY HAVE TO
CHALLENGE OR CONTEST THE REMOVAL AT ANY TIME BY THE CORPORATATION TO FEDERAL
COURT OF ANY SUCH ACTION HE OR SHE MAY BRING AGAINST IT IN STATE COURT. 
OPTIONEE AND THE CORPORATION FURTHER HEREBY MUTUALLY 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

 

 

 

 

 

 

 

 

 

 

 

 

, Optionee

 

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