**Exhibit 10.39**

 

**THE NEIMAN MARCUS GROUP, INC.**

 

**RESTRICTED STOCK UNIT AGREEMENT**

**ISSUED PURSUANT TO 1997 INCENTIVE PLAN**

 

 

THISAGREEMENT is made as of the              day of                     ,20     , by and between THE NEIMAN MARCUS GROUP, INC., a Delawarecorporation (the “Corporation”), and                                                                     ,an employee of the Corporation or one of its affiliates (the “Employee”).

 

**Recitals:**

 

1.                                       OnJanuary 17, 1997, the Corporation adopted for the benefit of key employeesThe Neiman Marcus Group, Inc. 1997 Incentive Plan (the “Plan”), and the Planwas approved by its stockholders on that date.

 

2.                                       ThePlan is administered by the Compensation Committee (the “Committee”) of theCorporation’s Board of Directors (the “Board”).

 

3.                                       TheCommittee has selected the Employee to participate in the Plan by the grant ofRestricted Stock Units, each of which represents a fictional interest in ashare of Class A Common Stock of the Corporation, par value $.01 per share (“CommonStock”), that shall be subject to the vesting, distribution and otherprovisions specified herein.

 

**Agreement:**

 

Forand in consideration of the mutual covenants hereinafter set forth and forother good and valuable consideration, it is agreed as follows:

 

1.                                       **Grant of Restricted Stock Units.**  The Corporation hereby grants to the Employee                       Restricted Stock Units (the “Award”), subject to the vesting schedule describedin Section 4 and the requirement that the Restricted Stock Units may beforfeited to the Corporation under the circumstances set forth in that Section.

 

2.                                       **No Rights as Equity Owner. **ThisAward shall not entitle the Employee to any voting rights, rights uponliquidation or other rights of owners of the Corporation with respect to anyRestricted Stock Units or Dividend Units unless and until shares of CommonStock are issued to the Employee in respect of such Units as provided herein.

 

3.                                       **Dividend Units. **Inthe event a cash dividend is paid on the Common Stock while the Employee holdsundistributed Restricted Stock Units pursuant to this Award that have not been

 

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forfeited, whether or notthen vested, the Corporation shall credit to the account of the Employee anadditional fractional unit representing a fictional interest in a share ofCommon Stock (a “Dividend Unit”) with respect to each such Restricted StockUnit, with a numerator equal to the amount of the per share cash dividenddeclared on the Common Stock and a denominator equal to the closing price of ashare of Common Stock on the New York Stock Exchange on the date the cashdividend is paid. Dividend Units shall be subject to all other terms andconditions of this Agreement, provided that no additional Dividend Units shallbe credited with respect to outstanding Dividend Units.

 

4.                                       **Vesting of Restricted Stock Units and Dividend Units and Distributionof Common Stock; Separation from Service; Death; Disability; or Retirement.**

 

(a)                                  TheRestricted Stock Units granted hereunder and all Dividend Units with respectthereto shall vest on the third anniversary of the date of this Agreement (the “VestingDate”) if and only if the Employee remains an employee of the Corporation orone of its affiliates through the Vesting Date. On the Vesting Date, the Corporation shall issue to the Employee acertificate representing a number of shares of Common Stock equal to the numberof Restricted Stock Units and Dividend Units then subject to this Award;provided, however, that pursuant to the irrevocable election made by theEmployee prior to the execution of this Agreement, distribution of                   % of the shares of Common Stock otherwise issuable to the Employee on theVesting Date (rounded down to the nearest whole share) shall be deferred beyondthe Vesting Date for distribution on                              ,20       (the “DeferredDistribution Date”) or, if earlier, as soon as practicable following the dateof the Employee’s death after the Vesting Date, or six months following theEmployee’s separation from service with the Corporation and all of itsaffiliates for any reason after the Vesting Date, at which time the Corporationshall issue a certificate representing the number of shares of Common Stocksubject to such deferral election.

 

(b)                                 Subjectto the provisions of Sections 4(c), 4(d) and 4(e), upon the Employee’sseparation from service with the Corporation and all of its affiliates at atime when the Restricted Stock Units and Dividend Units have not vested,(i) the Employee shall have no rights whatsoever in and to any of theRestricted Stock Units or Dividend Units; (ii) all the Restricted StockUnits and Dividend Units shall be forfeited to the Corporation and shall nolonger be outstanding as of the date of such separation from service; and(iii) neither the Employee nor any of his or her heirs, beneficiaries,executors, administrators or other personal representatives shall have anyrights with respect thereto.

 

(c)                                  Ifthe Employee dies while in the employ of the Corporation or any of its affiliates,the Restricted Stock Units and Dividend Units then subject to this Award shallvest if not yet vested. The person or persons to whom the Employee’s rightsunder this Agreement are transferred by will or the laws of descent anddistribution (collectively, the “Transferee”) shall be entitled to receive,within 30 days after presentation to the Secretary of the Corporation ofdocumentation acceptable to the Secretary establishing the Transferee’s legalrights, a certificate representing a number of shares of Common Stock equal tothe number of Restricted Stock Units and Dividend Units then subject to thisAward.

 

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(d)                                 Ifwhile in the employ of the Corporation or any of its affiliates the Employee shallbecome permanently disabled such that the Employee will be unable to return tohis or her employment with the Corporation or its affiliates (as shall beconclusively determined by the Employee Benefits Committee of the Corporation),the Restricted Stock Units and Dividend Units then subject to this Award shallvest if not yet vested.  The Corporationshall issue to the Employee a certificate representing a number of shares ofCommon Stock equal to the number of Restricted Stock Units and Dividend Unitsthen subject to this Award six months following the Employee’s separation fromservice with the Corporation and all of its affiliates on account of disabilityor, if earlier, the Vesting Date or the Deferred Distribution Date, whicheveris applicable.

 

(e)                                  Inthe event of the Employee’s separation from service with the Corporation andall of its affiliates prior to the Vesting Date on account of his or herEligible Retirement, then a portion of the Restricted Stock Units and DividendUnits then subject to this Award shall vest, with the number to be determinedby multiplying the number of Restricted Stock Units and Dividend Units thensubject to this Award by a fraction, the numerator of which is the number ofcompleted months from the date of this Agreement through the date of EligibleRetirement and the denominator of which is 36. Six months following the date of such separation from service, theCorporation shall issue to the Employee a certificate representing a number ofshares of Common Stock equal to such number of vested Restricted Stock Unitsand vested Dividend Units.  The remainingRestricted Stock Units and Dividend Units subject to this Agreement shall betreated in the same manner as unvested Restricted Stock Units and unvestedDividend Units subject to the provisions of Section 4(b).  For purposes of this Agreement, “EligibleRetirement” shall mean the Employee’s separation from service with theCorporation and all of its affiliates on or after the date as of which theEmployee (i) is eligible for a normal retirement benefit on account of reachingnormal 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 hasnot less than 20 years of vesting or credited service under the terms of TheNeiman Marcus Group, Inc. Retirement Plan (or a successor plan); provided,however, that the Employee’s separation from service shall not be an “EligibleRetirement” if the Committee shall find that the Employee was terminated on accountof “Cause.”  For purposes of thisAgreement, “Cause” shall mean, in the Committee’s reasonable judgment, (i) abreach of duty by the Employee in the course of his or her employment involvingfraud, acts of dishonesty (other than inadvertent acts or omissions),disloyalty, or moral turpitude; (ii) conduct that is materially detrimental tothe Corporation or any of its affiliates, monetarily or otherwise, or reflectsunfavorably on the Corporation or any of its affiliates or the Employee; (iii)the Employee’s failure to comply with or enforce the Corporation’s or any ofits affiliates’ policies concerning equal employment opportunity, includingengaging in sexually or otherwise harassing conduct; (iv) the Employee’srepeated insubordination or failure to comply with or enforce other personnelpolicies of the Corporation or any of its affiliates; (v) the Employee’sfailure to devote his or her full working time and best efforts to theperformance of his or her responsibilities to the Corporation or its affiliates;or (vi) the Employee’s conviction of or entry of a plea agreement

 

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orconsent decree or similar arrangement with respect to, a felony, other seriouscriminal offense, or any violation of federal or state securities laws;provided, however, that with respect to items (iv) and (v), the Employee hasbeen provided prior written notice of the failure and afforded a reasonableopportunity to correct.

 

5.                                       **No Guarantee of Employment.** Nothing in the Plan or in this Agreement shall (i) confer on theEmployee any right to continue in the employ of the Corporation or any of itsaffiliates; (ii) affect the right of the Employee or the Corporation orany of its affiliates to terminate the employment relationship at any time;(iii) be deemed a waiver or modification of any provision contained in anyagreement between the Employee and the Corporation or any of its affiliates;(iv) be construed as part of the Employee’s entitlement to remuneration orbenefit pursuant to a contract of employment or otherwise or as compensationfor past services rendered; (v) afford the Employee any rights or additionalrights to compensation or damages as a consequence of the loss or terminationof his or her office; or (vi) entitle the Employee to any compensation ordamages for any loss or potential loss he or she may suffer by reason of beingor becoming unable to vest in the Restricted Stock Units and any Dividend Unitsattributable thereto as a consequence of the loss or termination of his or heroffice, employment, or service with the Corporation or any of itsaffiliates.  A cessation of the Employee’semployment by reason of a leave of absence of not more than six months approvedby the Corporation shall not be deemed a separation from service.

 

6.                                       **Changes in Common Stock.** In the event of any reorganization, recapitalization, stock split, stockdividend, merger, consolidation, combination of shares or other changeaffecting the Common Stock, the Committee shall make such adjustments as it maydeem appropriate with respect to the Restricted Stock Units and Dividend Units.

 

7.                                       **Fractional Units; Optional Issuance in Book-Entry Form.** Notwithstanding the foregoing, (i) anyfractional Restricted Stock Unit or Dividend Unit will be paid in cash in lieuof Common Stock, with the amount of such payment to be based on the closingprice of a share of Common Stock on the New York Stock Exchange on the lasttrading day prior to the date the payment amount is calculated; and (ii) anyshares of Common Stock that under the terms of this Agreement are issuable inthe form of a stock certificate may instead be issued in book-entry form if theperson in whose name the certificate would otherwise be issued so requests inwriting.

 

8.                                       **Tax Withholding. **TheCorporation shall take any steps it deems necessary or desirable to satisfy anyobligations imposed by a Federal, state, local or other governmental entity towithhold taxes; provided, however, that in furtherance of satisfying suchwithholding obligations, the Employee shall have the right (by deliveringwritten notice to the Secretary of the Corporation no less than 30 days normore than 60 days prior to the date of distribution) to have a number of wholeshares of Common Stock withheld by the Corporation from the shares to be issuedupon distribution, or to tender to the Corporation other whole shares of CommonStock, with a value not to exceed the statutory minimum tax withholdingobligation.  In addition, the Employeeand/or his or her beneficiary (including his or her estate) shall bear alltaxes on amounts paid under the Plan to the extent no taxes are withheld,irrespective of whether withholding is required.

 

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9.                                       **Interpretation of Plan and this Agreement.**  This Agreement is being entered into pursuantto the Plan and shall be governed in all respects by the terms and provisionsof the Plan, which are incorporated herein by this reference.  In the case of any inconsistency between thePlan and this Agreement, the Plan provisions shall control.  Capitalized terms used and not defined inthis Agreement shall have the respective meanings given them in the Plan.  As used herein (i) the term “employee” shallmean an employee of the Corporation or of any affiliate of the Corporation;(ii) the term “affiliate” as used with respect to the Corporation shall meanany corporation or other entity in which the Corporation or any such othercorporation or entity owns, directly or indirectly, 50% or more of theoutstanding capital stock (determined by aggregate voting rights) or othervoting interests, or that is considered to be under common control with theCorporation pursuant to Section 414(b) or (c) of the Internal Revenue Codeof 1986, as amended (the “Code”); and (iii) the phrase “separation from service”shall be interpreted in a manner consistent with the distribution requirementsof Section 409A of the Code.  In allrespects, questions of interpretation and application of the Plan and of thisAgreement shall be determined by a majority of the Committee, as it may fromtime to time be constituted, and the determinations of such majority shall befinal and binding upon all persons.

 

10.                                 **Choice of Law; Exclusive Forum; Consent to Jurisdiction; Waiver of Rightto Contest Removal and to Jury Trial.** The validity, performance and enforceabilityof this Agreement shall be determined and governed by the laws of the State ofTexas, without regard to its conflict of laws principles. The exclusive forumfor any action concerning this Agreement or the transactions contemplatedhereby 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 StatesDistrict Court for the Northern District of Texas, with respect to a federalcourt.  THE EMPLOYEE HEREBY CONSENTS TOTHE EXERCISE OF JURISDICTION OF A COURT IN THE EXCLUSIVE FORUM AND WAIVES ANYRIGHT HE OR SHE MAY HAVE TO CHALLENGE OR CONTEST THE REMOVAL AT ANY TIME BY THECORPORATION OR ANY OF ITS AFFILIATES TO FEDERAL COURT OF ANY SUCH ACTION HE ORSHE MAY BRING AGAINST IT IN STATE COURT. THE EMPLOYEE AND THE CORPORATION FURTHER HEREBY MUTUALLY WAIVE THEIRRIGHT TO TRIAL BY JURY IN ANY ACTION CONCERNING THIS AGREEMENT OR THETRANSACTION CONTEMPLATED HEREBY.

 

EXECUTEDat Dallas, Texas, as of the date appearing in the first paragraph of thisAgreement.

 
|   | THE NEIMAN  MARCUS GROUP, INC. |
|--------|--------------------------------|
|   |                           |   |
|   |                           |   |
|   | By                             |   |   |
|   |                           |   Nelson  A. Bangs, |
|   |                           |   Senior  Vice President & General Counsel |
|   |                           |   |
|   |                           |   |   |
|   |                           |   | , Employee |
|        |                                |  |  |  |  |

 

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