**Exhibit 10.32**

 

THE NEIMAN MARCUS GROUP, INC.

 

SUPPLEMENTAL EXECUTIVE

 

RETIREMENT PLAN

 

As amended through December 31, 2007

 

 

**THE NEIMAN MARCUS GROUP, INC.**

 

**SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN**

 

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**Table of Contents**

 

 
| **ARTICLE**   | ** **                                           | **PAGE** |
|---------------|------------------------------------------------------|----------|
|          |                                                 |     |   |
| Article  | I.-DEFINITIONS                                       |     | 5 |
|          | 1.1.  “Augmentation Plan”                  |     | 5 |
|          | 1.2.  “Basic Plan”                         |     | 5 |
|          | 1.3.  “Board of Directors”                 |     | 5 |
|          | 1.4.  “CHH Plan”                           |     | 5 |
|          | 1.5.  “Code”                               |     | 5 |
|          | 1.6.  “Committee”                          |     | 5 |
|          | 1.7.  “Company”                            |     | 5 |
|          | 1.8  “Compensation                              |     | 6 |
|          | 1.9.  “Effective Date”                     |     | 6 |
|          | 1.10.  “Eligible Employee”                 |     | 6 |
|          | 1.11.  “Individual Pension Agreement”      |     | 7 |
|          | 1.12.  “Minimum Salary”                    |     | 7 |
|          | 1.13.  “Normal Form”                       |     | 7 |
|          | 1.14  “Participant”                        |     | 7 |
|          | 1.15.  “Participating Employer”            |     | 7 |
|          | 1.16.  “Plan”                              |     | 7 |
|          | 1.17.  “Plan Year”                         |     | 7 |
|          | 1.18.  “Service”                           |     | 8 |
|          | 1.19.  “Social Security Benefit”           |     | 8 |
|          | 1.20.  “Spouse”                            |     | 6 |
|          |                                                 |     |   |
| Article  | 2.-PARTICIPATION                                     |     | 10 |
|          | 2.1.  Commencement of Participation                  |     | 10 |
|          | 2.2.  Duration of Participation                      |     | 10 |
|          | 2.3.  Reduction in Participants                      |     | 10 |
|          |                                                 |     |   |
| Article  | 3.-SOURCE  OF BENEFIT PAYMENTS                       |     | 12 |
|          |                                                 |     |   |
| Article  | 4.-RETIREMENTBENEFITS                                |     | 13 |
|          | 4.1.  Normal or Late Retirement Benefit              |     | 13 |
|          | 4.2.  Early Retirement Benefit                       |     | 13 |
|          | 4.3.  Vested Termination Benefit                     |     | 15 |
|          | 4.4.  Other Teffi1ination of Employment; Death       |     | 15 |
|          | 4.5.  Optional Forms of Benefits                     |     | 16 |
|          | 4.6.  Forfeiture of Benefits                         |     | 17 |
|          | 4.7.  Surviving Spouse Benefit                       |     | 17 |
|          | 4.8.  Disability                                     |     | 17 |
|          | 4.9.  No Reduction in Accrued Benefit Under CHH Plan |     | 18 |

 

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|          | 4.10.  Lump Sum Settlements                   | 18     |
|---------------|-----------------------------------------------|--------|
|          | 4.11.  Reemployment After Retirement          | 18     |
|          |                                          |   |
| Article  | 5.-COMMITTEE                                  | 20     |
|          | 5.1.  Plan Administration and Interpretation  | 20     |
|          | 5.2.  Powers, Duties, Procedures, etc.        | 20     |
|          | 5.3.  Information                             | 21     |
|          | 5.4.  Indemnification of Committee            | 21     |
|          |                                          |   |
| Article  | 6.  –AMENDMENTANDTERMINATION             | 22     |
|          | 6.1.  Amendments                              | 22     |
|          | 6.2.  Termination of Plan                     | 22     |
|          |                                          |   |
| Article  | 7.-MISCELLANEOUS                              | 23     |
|          | 7.1.  Nonassignability                        | 23     |
|          | 7.2.  Limitation on Participants’ Rights | 23     |
|          | 7.3.  Participants Bound                      | 23     |
|          | 7.4.  Receipt and Release                     | 23     |
|          | 7.5.  Governing Law                           | 24     |
|          | 7.6.  Headings and Subheadings                | 24     |

 

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**THE NEIMAN MARCUS GROUP, INC.**

 

**SUPPLEMENTAL EXECUTIVE**

 

**RETIREMENT PLAN**

 

Purpose

 

TheCompany originally adopted this Plan, effective August 7, 1987, for aselect group of management personnel in order to

 

(a) attract,retain and motivate qualified management personnel;

 

(b) facilitatethe retirement of management personnel; and

 

(c) providesurvivor income for the spouses of management personnel.

 

TheCompany hereby amends and restates the Plan to make certain changes andclarifications. The Plan is intended to be “a plan which is unfunded and ismaintained by an employer primarily for the purpose of providing deferredcompensation for a select group of management or highly compensated employees”within the meaning of Sections 201(2) and 301(a)(3) of ERISA, andshall be interpreted and administered to the extent possible in a mannerconsistent with that intent.

 

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Article 1. - Definitions

 

Whereverused herein the following terms have the meanings set forth below, unless adifferent meaning is clearly required by the context:

 

1.1.“Augmentation Plan” means the Augmentation to Pension Plan for Employees ofCarter Hawley Hale Stores, Inc.

 

1.2.“Basic Plan” means The Neiman Marcus Group, Inc. Retirement Plan asamended from time to time. Reference to any Article or Section of theBasic Plan shall include reference to any comparable or successor provisions ofthe Basic Plan as amended from time to time.

 

1.3.“Board of Directors” means the Board of Directors of the Company.

 

1.4.“CHH Plan” means the Supplemental Executive Retirement Plan of Carter HawleyHale Stores, Inc, as in effect on the day before the Effective Date.

 

I.5.  “Code” means the Internal Revenue Code of1986, as amended from time to time. Reference to any Section or subsectionof the Code includes reference to any comparable or succeeding provisions ofany legislation which amends, supplements or replaces such Section orsubsection.

 

1.6.“Committee” means the Employee Benefits Committee appointed by the Board ofDirectors or its Executive Committee.

 

1.7.“Company” means The Neiman Marcus Group, Inc., a Delaware corporation andany successor to all or substantially all of its assets or business whichassumes the obligations of the Company.

 

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1.8.“Compensation” means, with respect to any given period, the aggregatecompensation, exclusive of any bonuses, paid to an Eligible Employee by one ormore Participating Employers during such period, whether before or after he orshe becomes an Eligible Employee. “Compensation” shall be determined before anyreduction under Section 125 or 40 1 (k) of the Code or under anyother deferred compensation plan or arrangement, but shall not otherwiseinclude any Participating Employer contributions under retirement or otherbenefit plans or arrangements, or any expense reimbursements, imputedcompensation, property, or payments of compensation previously deferred. In thecase of an Eligible Employee who was, immediately prior to the Effective Date,employed by Carter Hawley Hale Stores, Inc. (“CHH”) or any of itsaffiliates, the term “Participating Employer” shall, for purposes of this Section 1.7,include CHH and its affiliates.

 

1.9.“Effective Date” means August 2, 1987.

 

1.10.“Eligible Employee” means each employee of a Participating Employer who, on anyAugust 1,

 

(a) is employed in an executive, administrative, or professionalcapacity as defined in Section 13(a)(I) of the Fair Labor StandardsAct, as amended, and the regulations thereunder,

 

(b) participates in the Basic Plan,

 

(c) had a base salary on the immediately preceding December 31at least equal to the Minimum Salary, and

 

(d) is not employed as a salesperson.

 

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1.11.“Individual Pension Agreement” means a deferred compensation agreement betweena Participating Employer and an Eligible Employee which provides for payment bythe Participating Employer of supplementary retirement benefits, but shall notinclude any agreement to defer compensation under The Neiman Marcus Group, Inc.Key Employee Deferred Compensation Plan or any similar plan or arrangement.

 

1.12.“Minimum Salary” means:

 

(a) for December 31 of each of the years 1992 through 1995,the amount in effect under Section 414(q)(1)(B) of the Code for theyear following such December 31; and

 

(b) forDecember 31, 1996, and each December 31 thereafter, $100,000.

 

1.13.“Normal Form” means a form of benefit payable monthly to an individual duringhis or her lifetime, the first payment to be due on the date of thecommencement of his or her benefits under the Plan, and the last payment to bedue for the calendar month in which his or her death occurs.

 

1.14.“Participant” means any individual who participates in the Plan in accordancewith Article 2.

 

1.15.“Participating Employer” means the Company and any affiliate or subsidiary ofthe Company which is a Participating Employer as defined in the Basic Plan.

 

1.16.“Plan” means The Neiman Marcus Group, Inc. Supplemental ExecutiveRetirement Plan as set forth herein and in all subsequent amendments hereto.

 

1.17.“Plan Year” means the 52 or 53 week period ending on the Saturday nearest to July 31of each year.

 

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1.18.“Service” means the period measured in years equal to years of Vesting Servicedetermined under the Basic Plan, subject to the following special rules:

 

(a) Years of Vesting Service, if any, prior tothe Effective Date shall be determined in accordance with the rules of thePension Plan for Employees of Carter Hawley Hale Stores, Inc. that appliedon August 1, 1987 to employees hired after June 30, 1980; and

 

(b) A Participant shall be credited with a fullyear of Service for each partial year of Vesting Service interrupted by aPeriod of Severance, provided that (i) the Participant is credited with atleast 1,000 Hours of Service during such partial year of Vesting Service, and (ii) nomore than one year of Service shall be credited during any 12-month period.

 

1.19.“Social Security Benefit” means, in the case of each Participant, the estimatedamount of the monthly primary old age insurance benefit available to him at age65 under the Social Security Act as in effect on the earliest of his or herNormal Retirement Date, Termination of Employment or death. The amount shall becomputed upon the assumption that the Participant has been continuously coveredunder said Act since the later of 1951 or his or her 21st birthday, and thathis or her remuneration for employment for the calendar year preceding the dateof his or her Normal Retirement, Termination of Employment or death, whicheveris earliest, was equal to that portion of his compensation for such year thatwould be subject to tax under Section 3101(a) of the Code without thedollar limitation of Code Section 3121(a)(l), and his or her remunerationfor each prior calendar year was equal to the assumed remuneration for thesubsequent year divided by 1.06. If a Participant has a Termination ofEmployment 

 

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forany reason, or becomes Totally and Permanently Disabled, prior to his or herNormal Retirement Date, in determining his or her Social Security Benefit,earnings for the calendar year of such termination or disability and eachsubsequent calendar year prior to his or her Normal Retirement Date shall beassumed to be equal to that portion of his or her compensation for the calendaryear prior to the year of termination or disability that would be subject totax under Section 3101(a) of the Code without the dollar limitationof Code Section 3121(a)(1). 1.20. “Spouse” means the lawfully marriedhusband or wife of a Participant, determined at the time of the Participant’sdeath or, if earlier, as of the first day of the first month for which benefitsare payable under the Plan.

 

Unlessdefined herein, any capitalized word, phrase or term used in this Plan shallhave the meaning given to it in the Basic Plan.

 

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Article 2. - PARTICIPATION

 

2.1. Commencement of Participation. Any individual who was a Participant in thePlan on July 31, 1993 will, subject to Sections 2.2 and 2.3, continue tobe a Participant under this restatement of the Plan. Any other individual whois an Eligible Employee on August 1, 1993 or any subsequent August 1shall become a Participant on such August.

 

1.2.2. Duration of Participation. Subject to Section 2.3, anindividual who has become a Participant in the Plan shall continue to be aParticipant as long as he or she remains an employee of a ParticipatingEmployer or is entitled to a benefit under the Plan, even though his or herbase salary after becoming a Participant later falls below the then applicable basesalary level specified in Section 1.10. A Participant will cease to be aParticipant when he or she is neither employed by a Participating Employer norentitled to receive a benefit under the Plan.

 

2.3.Reduction in Participant. Notwithstanding any other provision of the Plan to the contrary, theCommittee may terminate the right of any Participant or Eligible Employee toparticipate in the Plan if the Committee deems such action to be necessary topreserve the status of the Plan as “a plan which is unfunded and is maintainedby an employer primarily for the purpose of providing deferred compensation fora select group of management or highly compensated employees” within themeaning of Sections 201 (2) and 301(a)(3) of ERISA. In the event aParticipant’s participation is terminated under this Section 2.3, theParticipant shall not be entitled to any benefits under the Plan except to theextent such benefits would be protected under Section 6.2 if the Plan werethen terminated.

 

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TheCommittee may, in its discretion, direct the Participant’s ParticipatingEmployer to pay to the Participant the present value of any such protectedbenefits, or to provide for payment of such benefits through another plan, ormay direct a combination of the foregoing, in lieu of providing such benefitsunder this Plan, and such payment or provision (or both) shall be in completesatisfaction of the Participant’s rights under this Plan.

 

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Article 3. - SOURCE OF BENEFIT PAYMENTS

 

Nothingin this Plan will be construed to create a trust or to obligate theParticipating Employers or any other person to segregate a fund, purchase aninsurance contract, or in any other way currently to fund the future payment ofany benefits hereunder, nor will anything herein be construed to give anyemployee or any other person rights to any specific assets of the ParticipatingEmployers or of any other person. Any benefits which become payable hereundershall be paid from the general assets of the Participating Employers. .

 

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Article 4. - RETIREMENT BENEFITS

 

4.1.Normal *or*Late RetirementBenefit. The amount of the monthly retirement benefit payable under thePlan to a Participant who retires *on or*afterhis or her Normal Retirement Date, commencing on the first day of the monthcoinciding with or next following his *or*herretirement and payable in the Normal Form, will be equal to (a) minus (b),but not less than zero, where

 

(a) is 50% of the Participant’s average monthly Compensation forthe highest sixty consecutive months preceding retirement, less 60% of theParticipant’s Social Security Benefit, the result multiplied by a fraction thenumerator of which is the Participant’s years of Service (not in excess of 25)and the denominator of which is 25; and

 

(b) is the monthly normal or late retirement benefit payable tothe Participant under the Basic Plan (increased by his *or*her monthly benefit, if any, under theAugmentation Plan and any Individual Pension Agreement), calculated as thoughpayable in the Normal Form.

 

4.2.Early Retirement Benefit.

 

(a) The amount of the monthly retirement benefit under this Planpayable in the Normal Form to a Participant who has attained age 55 withat least 10 years of Service, and who retires thereafter (but prior to his orher Normal Retirement Date), shall equal (1) minus (2), but not less thanzero, where

 

(1) is the amount determined under Section 4.1(a) above,unreduced for early commencement if the benefit starting date is on or afterthe Participant’s 62nd birthday, reduced by 1/600th for each month 

 

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betweenthe Participant’s 60th and 62nd birthday by which the benefit starting dateprecedes the month in which the Participant attains age 62, and reduced furtherby 1/240th for each month by which the benefit starting date precedes the monthin which the Participant attains age 60; and

 

(2) is the Participant’s monthly earlyretirement benefit, if any, under the Basic Plan (increased by his or hermonthly early retirement benefit, if any, under the Augmentation Plan and anyIndividual Pension Agreement), calculated as though payable in the Normal Form.

 

Ifthe Participant is not eligible for an early retirement benefit under the BasicPlan (or, if applicable, the Augmentation Plan or any Individual PensionAgreement) at the time a benefit becomes payable under this Plan, the monthlybenefit under this Plan will be determined without reduction for such earlyretirement benefit until such time as the Participant could begin to receive abenefit under the Basic Plan (or Augmentation Plan or Individual PensionAgreement), and will then be reduced by the amount of each such benefitcalculated as though payable in the Normal Form.

 

(b) Themonthly benefit payable to a Participant under this Section 4.2 shallcommence at the same time as the early retirement benefit payable under theBasic Plan. However, if no benefit is payable to a Participant under the BasicPlan before his or her Normal Retirement Date, the benefit payable under this Section 4.2shall commence on the first day of the month coinciding with or next followingthe Participant’s retirement, or such later month (up to the Participant’sNormal Retirement Date) as the Participant may elect. Such election must bemade at least 90 days before 

 

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benefitswould otherwise commence. In each case the reductions applicable underparagraph (a)(l) shall reflect the actual date as of which benefitscommence.

 

4.3.Vested Termination Benefit. Any Participant who has a Termination ofEmployment after he or she has completed at least 5 years of Service, butbefore he or she has satisfied the requirements for early retirement hereunder,shall be entitled to a monthly benefit payable in the Normal Form*,*commencing at the same time as theParticipant’s vested benefit under the Basic Plan, in an amount equal to (a) below(reduced by the applicable factor set forth in Section 4.2(a)(1) above)minus (b) below, but not less than zero, where

 

(a) is 50% of the Participant’s average monthly Compensation forthe highest sixty consecutive months preceding the Termination of Employment,less 60% of the Participant’s Social Security Benefit, the result multiplied bya fraction the numerator of which is the Participant’s years of Service and thedenominator of which is the greater of 25 years or the number of years ofService the Participant would have had if he or she continued employment with aParticipating Employer without interruption until his or her Normal RetirementDate; and

 

(b) is the Participant’s monthly benefit under the Basic Plan(increased by his or her monthly benefit, if any, under the Augmentation Planand any Individual Pension Agreement), calculated as though payable in theNormal Form.

 

4.4.Other Termination of Employment; Death. If a Participant has aTermination of Employment for any reason prior to the time he or she iseligible for a retirement or 

 

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vestedbenefit under Section 4.1, 4.2 or 4.3, no benefit shall be payable underthis Plan. In the event a Participant dies prior to the commencement of benefitpayments hereunder, then except as provided in Section 4.7 no benefitsshall be payable hereunder following the Participant’s death. In the event aParticipant dies after the commencement of benefit payments hereunder, paymentsshall continue to be made following his or her death only if the Participanthas chosen an optional form of benefit under Section 4.5 and then only tothe extent, if any, provided under such optional form of benefit.

 

4.5.Optional Forms of Benefits. A Participant may elect to receive, in lieuof the retirement benefit otherwise payable to him or her in the Normal Form pursuantto Section 4.1, 4.2 or 4.3, retirement benefits of Actuarial Equivalentvalue payable in any of the optional forms available under the Basic Plan,provided that no optional form of benefit shall be available to a marriedParticipant, other than a 50% contingent annuity form protecting theParticipant’s Spouse, without the written consent of such Spouse. The Committeeshall notify each Participant of the options available to him and shall provideforms for election of such options. The Participant shall be entitled to electone of the foregoing options (or to revoke any such election) within the 90-dayperiod prior to the commencement of benefits. The election of one of theoptions provided for in this Section 4.5 shall become effective as of thefirst day of the first month for which benefits are payable to the Participantunder the Plan, and may not be rescinded or modified thereafter. Should theParticipant’s Spouse or other beneficiary die prior to such effective date, theParticipant’s election will be void and the Participant’s retirement benefitwill be paid to him as though he or she had made no election unless the 

 

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Participantmakes a new election prior to such effective date.

 

4.6.Forfeiture of Benefits. Notwithstanding any provision of this Plan tothe contrary, no benefits shall be payable under this Plan with respect to anyParticipant who confesses to, or is convicted of, any act of fraud, theft ordishonesty arising in the course of, or in connection with, his or heremployment with a Participating Employer. The Committee’s decision as to theapplicability of this Section 4.6 in any case shall be fixed and bindingon all persons.

 

4.7.Surviving Spouse Benefit. In the event a Participant dies on or afterthe earliest date as of which he or she becomes eligible for a benefit under Section 4.1,4.2 or 4.3 but prior to the first day of the first month for which benefits arepayable to him or her under this Plan, and such Participant is survived by aSpouse, a monthly surviving spouse benefit shall be payable to such Spousecommencing as of the month the pre-retirement death benefit under the BasicPlan commences to be paid to the Spouse (the “survivor benefit commencementdate”) and ending with the month in which the Spouse’s death occurs. Themonthly surviving spouse benefit shall be computed as though the Participanthad terminated employment on the date of his or her death (if not alreadyterminated), had chosen to have benefit payments commence in the 50% contingentannuity form described in Section 4.5 on the survivor benefit commencementdate, and had survived to and died on the day following such commencement date.

 

4.8.Disability.  Any Participant whobecomes Totally and Permanently Disabled at a time when he or she has ten ormore years of Service but before Normal Retirement Age shall continue to haveService credited on his or her behalf until the earlier of his or her NormalRetirement Date or the date on which he or she is no longer 

 

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Totallyand Permanently Disabled (or, if he or she returns to work at that time for aParticipating Employer, until his or her subsequent retirement or othertermination of employment).

 

4.9.No Reduction in Accrued Benefit Under CHH Plan. Notwithstanding anyother provision of the Plan, in the case of a Participant who was a participantin the CHH Plan on the day before the Effective Date, any benefit payable tothe Participant under Section 4.1 ~ 4.2~ or 4.3 in the Normal Form willnot be less than the benefit that would have been payable to the Participant inthe Normal Form, commencing at the same time, under the CHH Plan as in effecton the day before the Effective Date if the Participant’s employment hadterminated on that date. For purposes of the preceding sentence, a Participantwill be deemed to have satisfied the age and service requirements forentitlement to benefits under the CHH Plan and from the Pension Plan forEmployees of Carter Hawley Hale Stores, Inc. on the day before theEffective Date, but the Participant’s actual age and Service will be taken intoaccount in computing the amount of benefit that would have been payable to theParticipant under the CHH Plan.

 

4.10.Lump Sum Settlements. Notwithstanding any other provisions of the Planto the contrary, if any benefit payable under the Plan is less than $50 permonth, such benefit shall instead be paid in a single lump sum of ActuarialEquivalent value.

 

4.11.Reemployment After Retirement. Any benefit payable under the Plan to aParticipant shall cease as of the date of rehire if the Participant isreemployed by a Participating Employer and shall resume following subsequentretirement or other Termination of Employment in accordance with the applicableprovisions of this Article 4. The retirement benefit subsequently payableshall be computed in accordance with 

 

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thisArticle 4 on the basis of service and compensation to the time of suchsubsequent Termination of Employment, but shall be reduced by the ActuarialEquivalent of any payments previously made under the Plan, including lump sumpayments or amounts applied to purchase annuity contracts. In no event shallthe aggregate benefits of any rehired Participant be greater than the benefithe or she would have received if all his or her service had been one continuousperiod of employment.

 

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Article 5. -COMMITTEE

 

5.1. Plan Administration and Interpretation. The Committee shallhave complete control over the administration of the Plan. The Committee shallhave complete control and authority to determine the rights and benefits andall claims, demands and actions arising out of the provisions of the Plan ofany Participant, beneficiary, deceased Participant, or other person having orclaiming to have any interest under the Plan. All rules and decisions ofthe Committee shall be uniformly and consistently applied to all Participantsand other claimants in similar circumstances. When making a determination orcalculation, the Committee shall be entitled to rely on information furnishedby a Participant, a beneficiary, the Participating Employers, the legal counselof a Participating Employer or the Committee, or the Actuary. Subject toapplicable laws and regulations, for all purposes of administration andinterpretation of the Plan, the Committee shall consider the Plan as if it weremaintained by a single employer for the benefit of all Participants by whomeveremployed. The Committee shall be deemed to be the Plan administrator withresponsibility for complying with any reporting and disclosure requirements ofERISA.

 

5.2. Powers, Duties, Procedures, etc. The Committee shall havesuch powers and duties, may adopt such rules and tables, may act inaccordance with such procedures, may appoint such officers or agents, maydelegate such powers and duties, may receive such reimbursements and compensation,and shall follow such claims and appeal procedures with respect to the Plan asare permitted or required under the terms of the Basic Plan.

 

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5.3. Information. To enable the Committee to perform itsfunctions, the Participating Employers shall supply full and timely informationto the Committee on all matters relating to the compensation of Participants,their employment, retirement, death, the cause for termination of employment,and such other pertinent facts as the Committee may require.

 

5.4. Indemnification of Committee. The Company agrees toindemnify and to defend to the fullest extent permitted by law any officer oremployee of any Participating Employer who serves as a member of the Committee(including any such individual who formerly served as a member of theCommittee) against all liabilities, damages, costs and expenses (includingattorneys’ fees and amounts paid in settlement of any claims approved by theCompany) occasioned by any act or omission to act in connection with the Plan,if such act or omission is in good faith.

 

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Article 6. - AMENDMENT AND TERMINA TTON

 

6.1. Amendments. The Company shall have the right to amend thisPlan from time to time by resolution of the Board of Directors or its ExecutiveCommittee and to amend or cancel any amendments. Any such amendment shall bestated in an instrument in writing, executed by the Company in the same manneras this Plan.

 

6.2. Termination of Plan. This Plan is strictly a voluntaryundertaking on the part of the Company and shall not be deemed to constitute acontract between the Company and any Eligible Employee (or any other employee)or a consideration for, or an inducement or condition of employment for, theperformance of services by any Eligible Employee (or other employee). TheCompany reserves the right to terminate this Plan at any time and, in the eventof such termination, to pay no benefits to any Participant who has neither completed5 years of Service nor attained age 65. No such termination shall result in thereduction of (a) benefits that have commenced before the date oftermination, (b) benefits accrued as of that date by any Participant whohas completed at least 5 years of Service or attained age 65 by that date, or (c) benefitsaccrued under the CHH Plan as of the day before the Effective Date by anyParticipant who was a participant in the CHH Plan on that day.

 

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Article 7. - MISCELLANEOUS

 

7.1.Nonassignability. None of the benefits, payments, proceeds or claims ofany Participant or beneficiary shall be subject to any claim of any creditorand, in particular, the same shall not be subject to attachment or garnishmentor other legal process by any creditor, nor shall any Participant orbeneficiary have any right to alienate, anticipate, commute, pledge, encumberor assign any of the benefits or payments or proceeds which he or she mayexpect to receive, contingently or otherwise, under this Plan.

 

7.2. Limitation on Participants’ Rights. Participation in thisPlan shall not give any Eligible Employee the right to be retained in theemploy of a Participating Employer or any right or interest in the Plan otherthan as herein provided. Each Participating Employer reserves the right todismiss any Eligible Employee without any liability for any claim against theParticipating Employer, except to the extent provided herein.

 

7.3. Participants Bound. Any action with respect to this Plantaken by the Committee, the Company, or any other Participating Employer, orany action authorized by or taken at the direction of the Committee, theCompany, or any other Participating Employer, shall be conclusive upon allParticipants and beneficiaries entitled to benefits under the Plan.

 

7.4. Receipt and Release. Any payment to any Participant orbeneficiary in accordance with the provisions of this Plan shall, to the extentthereof, be in full satisfaction of all claims against the Company, any otherParticipating Employer, and the Committee, and the Committee may require suchParticipant or beneficiary, as a condition precedent to such payment, toexecute a receipt and release to such effect. If

 

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anyParticipant or beneficiary is determined by the Committee to be incompetent byreason of physical or mental disability (including minority) to give a validreceipt and release, the Committee may cause the payment or payments becomingdue to such person to be made to another person for his or her benefit withoutresponsibility on the part of the Committee, the Company, or any otherParticipating Employer to follow the application of such funds.

 

7.5. Governing Law. This Plan shall be construed, administered,and governed in all respects under and by the laws of the Commonwealth ofMassachusetts. If any provision shall be held by a court of competentjurisdiction to be invalid or unenforceable, the remaining provisions hereofshall continue to be fully effective.

 

7.6. Headings and Subheadings. Headings and subheadings in thisPlan are inserted for convenience only and are not to be considered in theconstruction of the provisions hereof.

 

IN WITNESS WHEREOF, the Company has caused this Plan to be executed byits duly authorized officer, effective as of the first day of August, 1993.

 

 
|   |   | THE  NEIMAN MARCUS GROUP, INC. |
|--------|--------|--------------------------------|
|   |   |                           |
|   |   |                           |
|   | By:    | /s/ Gerald T. Hughes           |

 

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FIRST AMENDMENT

 

Pursuant to Section 6.1 of The Neiman Marcus Group, Inc.Supplemental Executive Retirement Plan, as amended and restated effective August 1,1993, The Neiman Marcus Group, Inc. hereby amends said Plan as followseffective August 1, 1998:

 

1.  Section 1.12(b) isamended to read in its entirety as follows:

 

“(b) for December 31, 1996, $100,000; and

 

2.  A new paragraph (c) isadded to the end of Section 1.2, as amended, to read in its entirety asfollows:

 

“(c) for December 31, 1997, and each December 31thereafter, $160,000.”

 

IN WITNESS WHEREOF, The Neiman Marcus Group, Inc. has caused thisinstrument to be executed by its duly authority officer this 31stday of July, 1998.

 

 
|   |   | THE  NEIMAN MARCUS GROUP, INC. |
|--------|--------|--------------------------------|
|   |   |                           |
|   |   |                           |
|   | By:    | /s/ Gerald T. Hughes           |

 

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**SECOND AMENDMENT**

 

Pursuant to Section 6.1 of The Neiman Marcus Group, Inc.Supplement Executive Retirement Plan, said Plan is hereby amended, effective January 1,2000 by inserting the following at the end of Section 4.10 thereof:

 

“TheCommittee may, in its discretion, pay any other benefit in a single lump sum ofActuarial Equivalent value with the consent of the individual entitled to suchbenefit (and, if such individual is a married Participant, the consent of hisor her Spouse).”

 

IN WITNESS WHEREOF, The Neiman Marcus Group, Inc. has caused thisinstrument to be executed in its name and on its behalf by its duly authorizedofficer this 30th day of October, 2000.

 

 
|   |   | THE  NEIMAN MARCUS GROUP, INC.   |
|--------|--------|----------------------------------|
|   |   |                             |
|   |   |                             |
|   | By:    | /s/ Gerald T. Hughes             |
|   |   | Vice  President, Human Resources |

 

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**THIRD AMENDMENT**

 

Pursuant to the provisions of Section 6.1 thereof, The NeimanMarcus Group, Inc. Supplemental Executive Retirement Plan (the “Plan”) ishereby amended in the following respect only:

 

Effective July 29, 2007, Section 1.8 of the Plan is herebyamended by restatement in its entirety to read as follows:

 

1.8                                 “Compensation”means, with respect to any given period, the aggregate compensation, exclusiveof any bonuses, paid to an Eligible Employee by one or more ParticipatingEmployers during such period, whether before or after he becomes an “EligibleEmployee.”  “Compensation” shall bedetermined before any reduction under Section 125 or 401(k) of theCode or under any deferred compensation plan or arrangement, but shall nototherwise include any Participating Employer contributions under retirement orother benefit plans or arrangements, or any expense reimbursements, imputedcompensation, property, payments of compensation previously deferred, orincentive payments earned through a wellness or similar program sponsored by aParticipating Employer.  In the case ofan Eligible Employee who was, immediately prior to the Effective Date, employedby Carter Hawley Hale Stores, Inc. (“CHH”) or any of its affiliates, theterm “Participating Employer” shall, for purposes of this Section 1.7,include CHH and its affiliates.

 

IN WITNESS WHEREOF, this Amendment is executed this 20th dayof July, 2007.

 

 
|   |   | THE  NEIMAN MARCUS GROUP, INC.         |
|--------|--------|----------------------------------------|
|   |   |                                   |
|   |   |                                   |
|   | By:    | /s/ Marita O’Dea                  |
|   |   | Senior  Vice President Human Resources |

 

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**FOURTH AMENDMENT**

 

Pursuant to Section 6.1of The Neiman Marcus Group, Inc.Supplemental Executive Retirement (the “Plan”) is hereby amended, effective asof December 31, 2007, in the following respects only:

 

FIRST:  Article Iof the Plan is hereby amended by adding the following new Sections 1.21 and1.22 to the end thereof:

 

1.21  “GrandfatheredRule of 65 Employee” means a Rule of 65 Employee who either:  (i) expressly elected to remain eligibleto participate in the Basic Plan in accordance with an election made n 2007, or(ii) implicitly elected to remain eligible to participate in the BasicPlan by failing to make a timely election to the contrary and therebyacquiescing to such an election by default.

 

1.22  “Rule of65 Employee” means an Eligible Employee as of December 31, 2007 whose ageas of December 31, 2007 when added to the number of his or her years ofVesting Service under the Basic Plan as of December 31, 2007 was equal toor in excess of 65.

 

SECOND:  Article 2of the Plan is hereby amended by adding the following new Section 2.4 tothe end thereof:

 

2.4  ParticipationAfter December 31, 2007.  AParticipant who is a Grandfathered Rule of 65 Employee as of December 31,2007 shall continue to be a Participant under the Plan thereafter, subject toand in accordance with the terms of the Plan; provided, however, that if aGrandfathered Rule of 65 Employee has a Termination of Employment after December 31,2007, such employee shall not be treated as a Grandfathered Rule of 65Employee upon any later reemployment by a Participating Employer.  Any provisions of the Plan to the contrarynotwithstanding, no individual shall become an Eligible Employee on or after January 1,2008 who was not an Eligible Employee on December 31, 2007 and, thus,there shall be no new Participants in the Plan on and after such date, and aParticipant who is not a Grandfathered Rule of 65 Employee shall remain aParticipant in the Plan after December 31, 2007 as provided in Section 2.2as long as he or she is entitled to receive a benefit under the Plan, but noadditional benefit shall accrue for any Participant who is not a Grandfathered Rule of65 Employee under the Plan after December 31, 2007, subject to thefollowing:

 

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(i)  the amount of benefit payable under thePlan after December 31, 2007 with respect to a Participant who is anEligible Participant as of such date but who is not a Grandfathered Rule of65 Employee shall be determined as if such Participant had a Termination ofEmployment effective as of December 31, 2007, provided, however, that anysuch Participant shall not be treated as having a Termination of Employment forpurposes of determining whether he or she has attained Normal Retirement Ageuntil his or her actual Termination of Employment and benefit payments shallnot commence to any such Participant until payments would otherwise commence tosuch Participant under the terms of the Plan; and

 

(ii)  a Participant who is not a Grandfathered Rule of65 Employee shall continue to be entitled to credit for Service after December 31,2007 for purposes of determining whether such Participant has attained therequired years of Service to vest in a benefit or to commence receiving abenefit prior to Normal Retirement Date, but not for purposes of thecalculation of the amount of such benefit.

 

IN WITNESS WHEREOF, this Amendment has been executed this 20thday of December, 2007 to be effective as provided herein.

 

 
|   |   | THE NEIMAN MARCUS GROUP, INC.         |
|--------|--------|---------------------------------------|
|   |   |                                  |
|   |   |                                  |
|   | By:    | /s/ Marita O’Dea                 |
|   |   | Senior Vice President and Chief Human |
|   |   | Resource Officer                      |

 

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