**Exhibit 10.30**

 

**THE NEIMAN MARCUSGROUP, INC.**

 

**KEY EMPLOYEEDEFERRED COMPENSATION PLAN**

 

**(Amended andRestated Effective January 1, 2008)**

 

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**TABL**E OF CONTENTS

 
| ARTICLE 1. INTRODUCTION                          | 1                                             |
|--------------------------------------------------|-----------------------------------------------|
|                                             |                                          |
| 1.1                                              | Purpose of Plan                               | 1 |
| 1.2                                              | Status of Plan                                | 1 |
|                                             |                                          |   |
| ARTICLE 2. DEFINITIONS                           | 1                                             |
|                                             |                                          |
| 2.1                                              | “Account”                           | 1 |
| 2.2                                              | “Affiliate”                         | 1 |
| 2.3                                              | “Base Pay”                          | 1 |
| 2.4                                              | “Bonus”                             | 2 |
| 2.5                                              | “Cause”                             | 2 |
| 2.6                                              | “Change in Control”                 | 3 |
| 2.7                                              | “Code”                              | 5 |
| 2.8                                              | “Committee”                         | 5 |
| 2.9                                              | “Company”                           | 5 |
| 2.10                                             | “Compensation”                      | 5 |
| 2.11                                             | “Effective Date”                    | 5 |
| 2.12                                             | “Elective Deferral”                 | 5 |
| 2.13                                             | “Eligible Employee”                 | 5 |
| 2.14                                             | “Employer”                          | 6 |
| 2.15                                             | “ERISA”                             | 6 |
| 2.16                                             | “Fiscal Year”                       | 6 |
| 2.17                                             | “Matching Deferral”                 | 6 |
| 2.18                                             | “Maximum 401(k) Plan Deferral” | 6 |
| 2.19                                             | “Maximum 401(k) Plan Match”    | 6 |
| 2.20                                             | “Participant”                       | 7 |
| 2.21                                             | “Plan”                              | 7 |
| 2.22                                             | “Plan Year”                         | 7 |
| 2.23                                             | “Retirement”                        | 7 |
| 2.24                                             | “Retirement Savings Plan”           | 7 |
| 2.25                                             | “Savings Plan”                      | 7 |
| 2.26                                             | “Separation from Service”           | 7 |
| 2.27                                             | “Year of Service”                   | 10 |
|                                             |                                          |   |
| ARTICLE 3. PARTICIPATION                         | 11                                            |
|                                             |                                          |
| 3.1                                              | Commencement of Participation                 | 11 |
| 3.2                                              | Continued Participation                       | 11 |
|                                             |                                          |   |
| ARTICLE 4. DEFERRALS AND CREDITS                 | 11                                            |
|                                             |                                          |
| 4.1                                              | Elective Deferrals                            | 11 |
| 4.2                                              | Matching Deferrals                            | 15 |
|                                             |                                          |   |
| ARTICLE 5. ACCOUNTS; INTEREST; PAYMENT;  VESTING | 15                                            |
|                                             |                                          |
| 5.1                                              | Accounts                                      | 15 |

 

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| 5.2                                  | Interest                                     | 16     |
|--------------------------------------|----------------------------------------------|--------|
| 5.3                                  | Payments                                     | 16     |
| 5.4                                  | Vesting                                      | 16     |
|                                 |                                         |   |
| ARTICLE 6. PAYMENTS                  | 17                                           |
|                                 |                                         |
| 6.1                                  | Election of Time and Form of Payment    | 17     |
| 6.2                                  | Retirement and Other Separation from Service | 19     |
| 6.3                                  | Death                                        | 19     |
| 6.4                                  | Change in Control                            | 19     |
| 6.5                                  | Hardship Distributions                       | 20     |
| 6.6                                  | Changes in Time and Form of Payment     | 21     |
| 6.7                                  | Withholding                                  | 22     |
| 6.8                                  | Specified Employees                          | 22     |
| 6.9                                  | 409A Income Inclusion                        | 22     |
|                                 |                                         |   |
| ARTICLE 7. COMMITTEE                 | 23                                           |
|                                 |                                         |
| 7.1                                  | Plan Administration and Interpretation       | 23     |
| 7.2                                  | Powers, Duties, Procedures, Etc.             | 23     |
| 7.3                                  | Information                                  | 24     |
| 7.4                                  | Indemnification of Committee                 | 24     |
| 7.5                                  | Claims Procedure                             | 25     |
|                                 |                                         |   |
| ARTICLE 8. AMENDMENT AND TERMINATION | 26                                           |
|                                 |                                         |
| 8.1                                  | Amendments                                   | 26     |
| 8.2                                  | Termination of Plan                          | 26     |
| 8.3                                  | Existing Rights                              | 26     |
|                                 |                                         |   |
| ARTICLE 9. MISCELLANEOUS             | 27                                           |
|                                 |                                         |
| 9.1                                  | No Funding; Source of Payments               | 27     |
| 9.2                                  | Nonassignability; Domestic Relations Order   | 27     |
| 9.3                                  | Limitation of Participants’ Rights      | 27     |
| 9.4                                  | Participants Bound                           | 28     |
| 9.5                                  | Receipt and Release                          | 28     |
| 9.6                                  | Governing Law                                | 28     |
| 9.7                                  | No Guarantee of Tax Consequences             | 28     |
| 9.8                                  | Adoption by Other Employers                  | 29     |
| 9.9                                  | Headings and Subheadings                     | 29     |

 

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**THE NEIMAN MARCUSGROUP, INC.KEY EMPLOYEE DEFERRED COMPENSATION PLAN**

 

**(Amended andRestated Effective January 1, 2008)**

 

# ARTICLE 1.  INTRODUCTION

#  

1.1           Purposeof Plan.  The Employers adopted TheNeiman Marcus Group, Inc. Key Employee Deferred Compensation Plan (the “Plan”)effective January 1, 2006 as a nonqualified deferred compensationarrangement to provide a means by which certain eligible employees may deferCompensation.  The Plan is being amendedand restated effective as of January 1, 2008 to make changes designed tobring the Plan into compliance with Code Section 409A and to make certainother changes.

 

1.2           Statusof Plan.  The Plan is intended to be “aplan which is unfunded and is maintained by an employer primarily for the purposeof providing deferred compensation for a select group of management or highlycompensated employees” within the meaning of Sections 201(2) and 301(a)(3) ofERISA and is intended to comply with the requirements of Code Section 409A,and shall be interpreted and administered in a manner consistent with thoseintentions.

 

# ARTICLE 2.  DEFINITIONS

#  

Wherever used herein, the following terms have the meanings set forthbelow, unless a different meaning is clearly required by the context:

 

2.1           **“Account”** means, for each Participant, the accountestablished for his or her benefit under Section 5.1.

 

2.2           **“Affiliate”** means any corporation or organization thattogether with an Employer is treated as a single employer under Section 414(b) or(c) of the Code.

 

2.3           **“Base Pay”** means the base salary payable by an Employer toan employee, including amounts that would have been payable to the employee asbase salary but for an 

 

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election under Section 125 of the Code, a deferral election underthe Savings Plan or the Retirement Savings Plan, or a deferral election underthis Plan.

 

2.4           **“Bonus”** means an annual cash bonus payable by an Employer toan employee, including any portion of such a bonus that would have been payableto the employee but for an election under Section 125 of the Code, adeferral election under the Savings Plan or the Retirement Savings Plan, or adeferral election under this Plan, provided, however, that the Committee hasdesignated such amount as a “Bonus” eligible for an Elective Deferral underthis Plan prior to the deadline for making such election.  Notwithstanding the preceding sentence, theterm “Bonus” shall not include any amount arising from, or paid under or inconnection with a long-term incentive program, or a stock appreciation right,stock option, restricted stock or stock unit, or other equity-based incentiveaward, plan or arrangement.  A “**Fiscal Year Bonus**” means any Bonus that satisfies therequirements to be fiscal year compensation within the meaning of TreasuryRegulation Section 1.409A-2(a)(6). A “**Performance Bonus**” means any Bonus thatsatisfies the requirements to be performance-based compensation within themeaning of Treasury Regulation Section 1.409A-1(e).

 

2.5           **“Cause”** means:

 

(a)  the willful and continued failureby the Participant to substantially perform duties consistent with theParticipant’s position with the Employer (other than any such failure resultingfrom incapacity due to physical or mental illness), after a demand forsubstantial performance is delivered to the Participant, and the Participanthas failed to resume substantial performance of his or her duties on acontinuous basis within 14 days of receiving such demand;

 

(b)           thewillful engaging by the Participant in conduct that is demonstrably andmaterially injurious to an Employer, monetarily or otherwise; or

 

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(c)           theParticipant’s commission of a felony, commission of a misdemeanor involvingassets of an Employer, or violation of an Employer’s merchandise discountpolicy.

 

For purposes of this definition, no act, or failure to act, on theParticipant’s part shall be deemed “willful” unless done, or omitted to bedone, by the Participant not in good faith and without reasonable belief thathis or her action or omission was in the best interest of the Employer.

 

2.6           **“Change in Control”** shall be deemed to have taken place forpurposes of the Plan upon the occurrence of any of the following events afterthe Effective Date: (i) any sale, lease, exchange or other transfer (inone transaction or a series of related transactions) of all or substantiallyall of the assets of the Company on a consolidated basis to any Person or groupof related persons for purposes of Section 13(d) of the SecuritiesExchange Act of 1934 (a “Group”), together with any CIC Affiliates thereofother than to a Majority Stockholder; (ii) the approval by the holders ofthe outstanding voting power of the Company of any plan or proposal for theliquidation or dissolution of the Company; (iii) (A) any Person orGroup (other than the Majority Stockholder) shall become the beneficial owner(within the meaning of Section 13(d) of the Exchange Act), directlyor indirectly, of Common Stock representing more than 40% of the aggregateoutstanding voting power of the Company and such Person or Group actually hasthe power to vote such Common Stock in any such election and (B) theMajority Stockholder beneficially owns (within the meaning of Section 13(d) ofthe Securities Exchange Act of 1934), directly or indirectly, in the aggregatea lesser percentage of the voting power of the Company than such other Personor Group; (iv) the replacement of a majority of the Board of Directors ofthe Company over a two-year period from the directors who constituted the Boardof Directors of the Company at the beginning of such period, and suchreplacement shall not have been approved by a vote of at least a majority ofthe Board of Directors of the Company then still in 

 

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office who either were members of such Board of Directors at thebeginning of such period or whose election as a member of such Board ofDirectors was previously so approved or who were nominated by, or designees of,a Majority Stockholder; or (v) consummation of a merger or consolidationof the Company with another entity in which holders of the Common Stock of theCompany immediately prior to the consummation of the transaction hold, directlyor indirectly, immediately following the consummation of the transaction, lessthan 50% of the common equity interest in the surviving corporation in suchtransaction and the Majority Stockholder does not hold a sufficient amount ofvoting power (or similar securities) to elect a majority of the survivingentity’s board of directors.

 

For purposes of this Section 2.6 only, the following terms shallhave the following meanings:

 

(a)           “**CIC Affiliate**” shall mean, with respect to any entity, anyother corporation, organization, association, partnership, sole proprietorshipor other type of entity, whether incorporated or unincorporated, directly orindirectly controlling or controlled by or under direct or indirect commoncontrol with such entity.

 

(b)           “**Common Stock**” shall mean the common stock of the Company,$0.01 par value per share.

 

(c)           “**Company**” shall mean Neiman Marcus, Inc. or The NeimanMarcus Group, Inc.

 

(d)           “**Majority Stockholder**” shall mean, collectively orindividually as the context requires, Newton Holding, LLC, TPG Newton III, LLC, TPG Partners IV, L.P., TPG NewtonCo-Invest I, LLC, Warburg Pincus Private Equity VIII, L.P., Warburg Pincus Netherlands Private EquityVIII C.V. I, Warburg Pincus Germany Private Equity VIII K.G , Warburg PincusPrivate Equity IX, L.P and/or their respective CIC Affiliates.

 

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(e)           “**Person**” shall mean an individual, partnership, corporation,limited liability company, unincorporated organization, trust or joint venture,or a governmental agency or political subdivision thereof.

 

2.7           **“Code”** means the Internal Revenue Code of 1986, as amendedfrom time to time.  Reference to anysection or subsection of the Code includes reference to any comparable orsucceeding provisions of any legislation which amends, supplements or replacessuch section or subsection.  Similarly,reference to any Treasury Regulation includes reference to any succeedingprovisions of any regulation or other applicable guidance that amends,supplements or replaces such regulation.

 

2.8           **“Committee”** means The Neiman Marcus Group, Inc.Employee Benefits Committee or any successor committee appointed by the Boardof Directors of The Neiman Marcus Group, Inc. or its delegate.

 

2.9           **“Company”** means The Neiman Marcus Group, Inc., aDelaware corporation, and any successor, including a successor to all orsubstantially all of the Company’s assets or business which assumes theobligations of the Company with regard to the Plan.

 

2.10         **“Compensation”** means Base Pay and any Bonus payable by anEmployer to an employee.

 

2.11         **“Effective Date”** means January 1, 2006.

 

2.12         **“Elective Deferral”** means the portion of Compensation whichis deferred by a Participant under Section 4.1.

 

### 2.13         **“Eligible Employee”**           means each employee of an Employer who was eligible toparticipate in the Plan as of January 1, 2007.  No other persons shall become EligibleEmployees and in the event of an Eligible Employee’s Separation from Serviceafter January 1, 2007, such Eligible Employee shall not again become anEligible Employee hereunder.  TheCommittee in

###  

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### its discretion may withdraw an employee’sstatus as an Eligible Employee at any time and for any reason effective withrespect to any subsequent Plan Year.

###  

2.14         **“Employer”**means the Company and any Affiliate that adopts the Plan with the consent ofthe Company as provided in Section 9.8.

 

2.15         **“ERISA”**means the Employee Retirement Income Security Act of 1974, as amended from timeto time.  Reference to any section orsubsection of ERISA includes reference to any comparable or succeedingprovisions of any legislation which amends, supplements or replaces suchsection or subsection.

 

2.16         **“Fiscal Year”** means the fiscal year of the Company.

 

2.17         **“Matching Deferral”** means a deferral made for the benefit ofa Participant under Section 4.2.

 

2.18         **“Maximum 401(k) Plan Deferral”** means a Participant’smaximum permissible elective deferral under the Savings Plan or the RetirementSavings Plan, as applicable, at the time in question assuming the maximumpermissible elective deferrals have been made under the Savings Plan orRetirement Savings Plan, as applicable, for prior periods during such PlanYear, regardless of whether the Participant actually made any such electivedeferrals.  The determination of whetherthe Savings Plan or the Retirement Savings Plan is applicable to a Participantfor this purpose for a particular Plan Year shall be by reference to the planin which the Participant is eligible to participate as of the beginning of saidPlan Year.

 

2.19         **“Maximum 401(k) Plan Match”** means a Participant’smaximum permissible matching contribution under the Savings Plan or theRetirement Savings Plan, as applicable, at the time in question and assumingthe maximum permissible elective deferrals have been made under the SavingsPlan or the Retirement Savings Plan, as applicable, for prior periods duringsuch Plan Year, regardless of whether the Participant actually made any suchelective deferrals.  

 

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The determination of whether the Savings Plan or the Retirement SavingsPlan is applicable to a Participant for this purpose shall be by reference tothe plan in which the Participant is eligible to participate as of thebeginning of said Plan Year.

 

2.20         **“Participant”** means any individual who participates in thePlan in accordance with Article 3.

 

2.21         **“Plan”** means The Neiman Marcus Group, Inc. Key EmployeeDeferred Compensation Plan, originally effective as of January 1, 2006, asfrom time to time in effect and including all amendments hereto.

 

2.22         **“Plan Year”** means the calendar year.

 

2.23         **“Retirement”** means Separation from Service on or after thedate the Participant has attained age 55 and reached the fifth anniversary ofthe date he or she first performed an hour of service (as defined in Section 2.27below).

 

2.24         **“Retirement Savings Plan”** means The Neiman Marcus Group, Inc.Retirement Savings Plan, as amended from time to time.

 

2.25         **“Savings Plan”** means The Neiman Marcus Group, Inc.Employee Savings Plan, as amended from time to time.

 

2.26         **“Separation from Service”**means the termination of services provided by a Participant to his or herEmployer (as defined in (c) below), whether voluntary or involuntary, asdetermined by the Committee in accordance with Treasury Regulation Section 1.409A-1(h). In determining whether a Participant has experienced a Separation fromService, the following provisions shall apply:

 

(a)           Except as otherwise provided insubsection (b) below, a Separation from Service will occur when such Participanthas experienced a termination of employment 

 

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with the Employer.  A Participant willbe considered to have experienced a termination of employment when the factsand circumstances indicate that the Participant and his or her Employerreasonably anticipate that either (A) no further services will beperformed for the Employer after a certain date, or (B) that the level ofbona fide services the Participant will perform for the Employer after such date(whether as an employee or as an independent contractor) will permanentlydecrease to no more than 20% of the average level of bona fide servicesperformed by the Participant (whether as an employee or an independentcontractor) over the immediately preceding 36-month period (or the full periodof services to the Employer if the Participant has been providing services tothe Employer less than 36 months).

 

If aParticipant is on military leave, sick leave, or other bona fide leave ofabsence, the employment relationship between the Participant and the Employerwill be treated as continuing, provided that the period of the leave of absencedoes not exceed six months, or if longer, so long as the Participant has aright to reemployment with the Employer under an applicable statute or bycontract.  If the period of a military leave, sick leave, or other bonafide leave of absence exceeds six months and the Participant does not have aright to reemployment under an applicable statute or by contract, the employmentrelationship will be considered to be terminated for purposes of this Plan asof the first day immediately following the end of such six-month period. In applying the provisions of this paragraph, a leave of absence will beconsidered a bona fide leave of absence only if there is a reasonableexpectation that the Participant will return to perform services for theEmployer.

 

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(b)                                 For aParticipant who provides services to an Employer as both an employee and anindependent contractor*,*aSeparation from Service generally will not occur until the Participant hasceased providing services for the Employer as both an employee and anindependent contractor.  Except asotherwise provided herein, in the case of an independent contractor aSeparation from Service will occur upon the expiration of the contract (or inthe case of more than one contract, all contracts) under which services areperformed for the Employer, provided that the expiration of such contract orcontracts is determined by the Employer to constitute a good-faith and completetermination of the contractual relationship between the Participant and theEmployer.  If a Participant ceases providing services for an Employer asan employee and begins providing services for such Employer as an independentcontractor, the Participant will not be considered to have experienced aSeparation from Service until the Participant has ceased providing services forthe Employer in both capacities, as determined in accordance with theapplicable provisions set forth in subsections (a) and (b) of thisSection.

 

Notwithstandingthe foregoing provisions in this subsection, if a  Participant provides services for an Employeras both an employee and as a member of the board of directors of an Employer,to the extent permitted by Treasury Regulation Section 1.409A-1(h)(5), the services provided by the Participant as adirector will not be taken into account in determining whether the Participanthas experienced a Separation from Service as an employee

 

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(c)                                  For purposes ofthis Section only, “**Employer**”means:

 

(i)                                     The entity forwhom the Participant performs services and with respect to which the legallybinding right to the payment of benefits under this Plan arises; and

 

(ii)                                  All otherentities with which the entity described in (i) above would be aggregatedand treated as a single employer under Code Section 414(b) (controlledgroup of corporations) and Code Section 414(c) (group of trades orbusinesses under common control), as applicable; provided, however, thatan  ownership threshold of 50% shall beused as a substitute for the 80% minimum ownership threshold that appears in,and otherwise must be used when applying, the applicable provisions of (1) CodeSection 1563 and the regulations thereunder for determining a controlledgroup of corporations under Code Section 414(b), and (2) TreasuryRegulation Section 1.414(c)-2 for determining the trades or businessesthat are under common control under Code Section 414(c).

 

2.27                           **“Yearof Service”** means completion of the twelve consecutive monthperiod beginning on the date the employee first performs an hour of serviceupon initial employment with an Employer or an Affiliate during which theemployee is continuously employed by an Employer or an Affiliate or, withrespect to an employee who terminates employment prior to completing a Year ofService, completion of the twelve consecutive month period beginning on thedate the employee first performs an hour of service upon reemployment with anEmployer or an Affiliate during which the employee is continuously employed byan Employer or an Affiliate.  For thispurpose and for purposes of Section 2.23 defining the term “Retirement”,an “**hour of service**” shall mean each hourfor which an employee is paid or entitled to payment for the performance ofduties for an Employer or an Affiliate.

 

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# ARTICLE3.  PARTICIPATION

#  

3.1                                 Commencement ofParticipation.  An EligibleEmployee shall become a Participant on the effective date of an election todefer Compensation in accordance with Section 4.1.

 

3.2                                 Continued Participation.  An individual who has become a Participant inthe Plan shall continue to be a Participant so long as any amount remainscredited to his or her Account.

 

# ARTICLE4.  DEFERRALS AND CREDITS

#  

## 4.1                                 Elective Deferrals.

##  

### (a)                                  Base Pay.  An individual who is or will be an EligibleEmployee as of any January 1 may elect to defer a designated wholepercentage, not to exceed 15 percent, of all Base Pay that is payable to theindividual for services to be performed on or after that date by filing anelection with the Committee prior to that January 1 (or such earlier dateas the Committee may prescribe).  Anysuch election shall be irrevocable as of the December 31 immediately priorto such January 1 (or such earlier date as the Committee mayprescribe).  Notwithstanding thepreceding provisions of this paragraph, a Participant may revoke or otherwisemodify an existing election, or make a new deferral election, effective as ofany January 1 subsequent to the date of such revocation, modifiedelection, or new election, but only with respect to Base Pay earnedthereafter.  Such revocation,modification or new election must be delivered to the Committee no later thanthe December 31 immediately preceding the effective date of the election(or such earlier date as the Committee may prescribe).  The same deferral percentage shall apply toeach payment of Base Pay covered by the election.

 

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### (b)                                 Bonuses.  An individual who is an Eligible Employee mayelect to defer a designated whole percentage, not to exceed 15 percent, of aBonus payable to the individual with respect to a Fiscal Year beginning in acalendar year after the calendar year in which the election is made, by filingan irrevocable election with the Committee on or before December 31 ofsuch calendar year (or such earlier date as the Committee may prescribe).  A Participant may revoke or otherwise modifyan existing election, or make a new deferral election, effective with respectto a Bonus to be paid for a fiscal year beginning in a calendar year after thecalendar year in which occurs the date of such revocation, modified election,or new election, by filing an irrevocable election with the Committee on orbefore December 31 of such calendar year (or such earlier date as theCommittee may prescribe).

###  

### (i)                                     Fiscal Year Bonus.  Notwithstanding the preceding provisions ofthis subparagraph (b), if permitted by the Committee, an individual who is anEligible Employee may elect to defer a designated whole percentage, not toexceed 15 percent, of any Fiscal Year Bonus payable to the individual withrespect to a Fiscal Year beginning after the date on which the election is madeby filing an irrevocable election with the Committee before the first day ofsuch Fiscal Year (or such earlier date as the Committee may prescribe).  A Participant may revoke or otherwise modifyan existing election, or make a new deferral election, effective with respectto a Fiscal Year Bonus to be paid for a Fiscal Year beginning after the date ofsuch revocation, modified election, or new election, by filing an irrevocableelection with the Committee before the first day of such Fiscal Year (or suchearlier date as the Committee may prescribe).

 

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### (ii)                                  Performance Bonus.                                     Notwithstanding the preceding provisions of thissubparagraph (b), if permitted by the Committee, an individual who is anEligible Employee may elect to defer a designated whole percentage, not toexceed 15 percent, of any Performance Bonus for a performance period endingafter the date of the election, by filing an irrevocable election with theCommittee at least six months prior to the end of any such performance period(or such earlier date as the Committee may prescribe); provided, however, thatthe Eligible Employee performs services continuously from the later of thebeginning of the performance period or the date the performance criteria areestablished through the date the deferral election is made and that in no eventmay a deferral election be made after the Performance Bonus has become readilyascertainable as determined in accordance with Treasury Regulation Section 1.409A-2(a)(8).  A Participant may revoke or otherwise modifyan existing election, or make a new deferral election, effective with respectto a Performance Bonus to be paid for any performance period ending more thansix months subsequent to the date of such revocation, modified election, or newelection by filing an irrevocable election with the Committee at least sixmonths prior to the end of any such performance period (or such earlier date asthe Committee may prescribe); provided, however, that the Eligible Employeeperforms services continuously from the later of the beginning of theperformance period or the date the performance criteria are established throughthe date of the revocation, modified election, or new election, and that in noevent may such a revocation, modified, election or new election be made afterthe Performance Bonus has become readily ascertainable as determined inaccordance with Treasury Regulation Section 1.409A-2(a)(8).

 

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### (c)                                  The provisions of paragraphs (a) and (b) to thecontrary notwithstanding, in the event that an employee receives a hardshipdistribution from the Savings Plan or the Retirement Savings Plan, asapplicable, at a time at which the Savings Plan or the Retirement Savings Plan,as applicable, requires the suspension of all elective contributions and deferralsunder all plans maintained by an Employer upon the receipt of such a hardshipwithdrawal, then (i) any election to defer Base Pay pursuant to this Planin effect at the time of such hardship distribution shall be revoked at thetime the employee receives such distribution and such employee shall not beeligible to make a new election to defer Base Pay prior to a date that is morethan six months after the date such hardship distribution was made, and (ii) anyelection to defer a Bonus pursuant to this Plan shall be revoked at the timethe employee receives such hardship distribution and such employee shall not beeligible to make a new election to defer a Bonus prior to a date that is morethan six months after the date such hardship distribution was made.

###  

### (d)                                 Each election under this Section 4.1 shall be made atthe time and in the manner approved or prescribed by the Committee.  The amount of each payment that is deferredhereunder shall be credited to the Participant’s Account as of the pay datesuch amount would otherwise have been paid to the Participant.

###  

### (e)                                  For purposes ofthis Plan, any amount of Base Pay that is payable after the end of the PlanYear solely for services performed during the final payroll period (describedin Code Section 3401(b)) containing the last day of the Plan Year, wherethe amount is payable pursuant to the timing arrangement under which theEmployer normally compensates the Participant for services performed during apayroll period (described in Code Section 3401(b)), shall be treated asBase Pay for services performed in the subsequent Plan Year in which the BasePay is actually payable.

 

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4.2                                 MatchingDeferrals.  As of eachpay date on which a credit is made to a Participant’s Account with respect tosuch Participant’s election to defer Base Pay or Bonus pursuant to Section 4.1,such Participant’s Employer shall credit to the Participant’s Account aMatching Deferral equal to:

 

### (a)                                  100% of the sumof (i) the Participant’s Elective Deferrals for such pay date and (ii) theParticipant’s Maximum 401(k) Plan Deferrals for such pay date, to theextent that such sum does not exceed the first two percent (2%) of his or herCompensation for such pay date, plus

 

### (b)                                 25% of the sumof (i) the Participant’s Elective Deferrals for such pay date and (ii) theParticipant’s Maximum 401(k) Plan Deferrals for such pay date, to theextent that such sum does not exceed the next four percent (4%) of his or herCompensation for such pay date, minus

 

### (c)                                  the Participant’sMaximum 401(k) Plan Match for such pay date.

 

### ARTICLE5.  ACCOUNTS; INTEREST; PAYMENT; VESTING

#  

5.1                                 Accounts.  An Employer shall establish and maintain onits books an Account for each Participant employed by such Employer.  Each such Account shall be designated by thename of the Participant for whom it is established.  An Employer shall continue to maintain aParticipant’s Account as long as a positive balance remains credited to suchAccount.  A Participant’s Account shallbe credited with the amounts of Elective Deferrals and Matching Deferrals asprovided in the Plan and any adjustments hereunder.  Within 45 days after the end of each calendarquarter, the Committee shall provide the Participant with a statement of his orher Account.

 

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5.2                                 Interest.  As of the last day of each calendar month,the Committee shall credit each Participant’s Account with interest on thebalance of such Account as of the last day of the preceding calendar month lessany distributions or withdrawals made during such calendar month, plus intereston any amounts credited to such Account during such calendar month from thedate such amounts were credited.  Inaddition, payments under Article 6 shall include interest on the amount ofsuch payment from the end of the preceding calendar month (except that withrespect to the portion of the payment attributable to an amount credited to theAccount after the end of the preceding calendar month, such portion of thepayment shall include interest only from the later date as of which the amountwas credited to the Account).  Theinterest to be credited pursuant to this Section shall be at an annualrate equal to the prime interest rate published in The Wall Street Journalon the last business day of the preceding calendar quarter (or, if two or moresuch rates are published, the average of such rates).

 

5.3                                 Payments.  Each Participant’s Account shall be reducedby the amount of any payment made to or on behalf of the Participant under thePlan as of the date such payment is made.

 

5.4                                 Vesting.  All amounts credited to the Accounts shall befully vested and nonforfeitable at all times; provided, however, that in theevent of a Participant’s Separation from Service on account of a termination ofthe Participant’s employment by the Employer for Cause, as determined by theCommittee in its discretion, any amounts credited to such Participant’sAccounts that are attributable to Matching Deferrals made on or after January 1,2008, along with all interest credits thereon, shall be forfeited.

 

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#  

# ARTICLE 6.  PAYMENTS

#  

6.1                                 Election ofTime and Form of Payment.

 

(a)                                  Prior to January 1,2008 (or such earlier date as the Committee may prescribe), each Participant,and each individual who is or will be an Eligible Employee as of January 1,2008 and who makes an election pursuant to Section 4.1(a) or (b) tocommence making Elective Deferrals to the Plan effective as of January 1,2008, shall elect the time and form of payment from among the options set forthin this Section for the amounts credited to his or her Account.  Each other individual who is or will be anEligible Employee as of January 1, 2008 but is not a Participant and whodoes not elect to commence making Elective Deferrals to the Plan effective asof January 1, 2008 but who makes an initial election subsequent to January 1,2008 to commence making Elective Deferrals to the Plan pursuant to Section 4.1(a) or(b) shall, on or before the deadline applicable to his or her initialelection to begin making Elective Deferrals to the Plan, elect the time andform of payment from among the options set forth in this Section for theamounts credited to his or her Account.

 

(b)                                 The options available forthe commencement of payment from a Participant’s Account are:

 

### (i)                                     the first calendar quarter following the calendar quarter inwhich the Participant has a Separation from Service; or

###  

### (ii)                                  the first calendar quarter of the calendar year immediatelyfollowing the calendar year in which the Participant has a Separation fromService or any of the next nine (9) calendar years thereafter, asdesignated by the Participant in such election.

 

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(c)                                  The options available forthe form of payment from a Participant’s Account are:

 

#### (i)                                     a single lumpsum payment; or

####  

#### (ii)                                  annualinstallments to be paid in the same calendar quarter each year over a periodelected by the Participant up to ten (10) years, the amount of eachinstallment to equal the balance of his or her Account immediately prior to theinstallment divided by the number of installments remaining to be paid.

####  

(d)                                 The foregoing electionsshall be made at the time and in the manner approved or prescribed by theCommittee.  Each such election shall beirrevocable as of the deadline for making such election as provided above,except as otherwise provided in Section 6.6.  In the event a Participant fails to make avalid election by the time provided in this Section, the Participant shall bedeemed to have elected options (b)(i) and (c)(i) above.

 

(e)                                  Notwithstanding thepreceding provisions of this Section, if the total amount credited to aParticipant’s Account and any other plans required to be aggregated with thisPlan, including all agreements, methods, programs, or other arrangements withrespect to which deferrals of compensation are treated as having been deferredunder a single nonqualified deferred compensation plan under TreasuryRegulation Section 1.409A-1(c)(2), is less than the applicable dollaramount under Code Section 402(g)(1)(B), the Committee may require adistribution of the entire Account in the form of a single lump sumpayment.  Any payment made pursuant tothis provision must result in the termination and liquidation of the entiretyof the Participant’s interest under the Plan and any other plans required to beaggregated with this Plan, including all agreements, methods, programs, orother arrangements with respect to which deferrals of

 

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compensation are treated as having been deferredunder a single nonqualified deferred compensation plan under TreasuryRegulations Section 1.409A-1(c)(2). Any determination by the Committee to require a distribution pursuant tothis paragraph must be evidenced in writing no later than the date of anypayment hereunder.

 

6.2                                 Retirement andOther Separation from Service.  Upon a Participant’s Separation from Serviceon account of the Participant’s Retirement, the Participant’s Account shall bepaid to the Participant at the time and in the form elected pursuant to Section 6.1.  Upon a Participant’s Separation from Servicefor any reason other than death or Retirement, the Participant’s Account shallbe paid to the Participant in a single lump sum payment during the calendarquarter immediately following the calendar quarter in which such Separationfrom Service occurs.

 

6.3                                 Death.  If a Participant dies prior to the completedistribution of his or her Account, the balance of the Account shall be paid ina single lump sum payment in the first calendar quarter following the calendarquarter in which the Participant died to the Participant’s designatedbeneficiary or beneficiaries.  Anydesignation of beneficiary shall be made by the Participant in a mannerapproved or prescribed by the Committee, shall be effective upon receipt by theCommittee or its designee, and may be changed by the Participant at anytime.  If there is no such designation orno designated beneficiary survives the Participant, payment shall be made tothe Participant’s estate.

 

6.4                                 Change in Control.  In the event of a Change in Control on orafter January 1, 2006, all amounts credited to a Participant’s Accountshall be distributed in a single lump sum payment at the time of such Change inControl or within five business days thereafter.  Notwithstanding the preceding, a Change inControl shall not be deemed to have occurred with respect to the Account of aParticipant for purposes of this Section unless such Change in

 

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Control also satisfies the requirements for apermitted distribution event with respect to such Participant for purposes ofCode Section 409A(a)(2)(A)(v).

 

6.5                                 HardshipDistributions.  If aParticipant encounters an unforeseeable emergency, as determined by theCommittee, the Committee shall direct the Employer maintaining such Participant’sAccount to pay to such Participant and deduct from such Account such portion ofthe vested amount then credited to such Account (including, if appropriate, theentire amount) as the Committee shall determine to be necessary to alleviatethe severe financial hardship of such Participant caused by such unforeseeableemergency (which may include amounts necessary to pay any Federal, state, orlocal income taxes or penalties reasonably anticipated to result from thedistribution).  For this purpose, an “unforeseeableemergency” shall be a severe financial hardship of the Participant resultingfrom an illness or accident of the Participant, the Participant’s spouse, theParticipant’s beneficiary, or the Participant’s dependent (as defined in Code Section 152without regard to Code Section 152(b)(1), (b)(2), and (d)(1)(B)), loss ofthe Participant’s property due to casualty (including the need to rebuild ahome following damage to a home not otherwise covered by insurance), or othersimilar extraordinary and unforeseeable circumstances arising as a result ofevents beyond the control of the Participant, including the need to pay for thefuneral expenses of a spouse, a beneficiary, or a dependent (as defined in CodeSection 152, without regard to Section 152(b)(1), (b)(2), and(d)(1)(B)).  The circumstances that willconstitute an unforeseeable emergency will depend upon the facts of each case,but in any case, payment may not be made to the extent that such hardship is ormay be relieved (i) through reimbursement or compensation by insurance orotherwise or (ii) by liquidation of the Participant’s assets, to theextent liquidation of such assets would not itself cause severe financialhardship.  No distribution shall be madeto a Participant pursuant to this Section unless such Participant requestssuch a distribution in such manner as the Committee

 

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may prescribe and provides to the Committee suchinformation and documentation with respect to his or her unforeseeableemergency as may be requested by the Committee. This Section shall be interpreted in a manner consistent with thedistribution requirements of Section 409A of the Code.

 

6.6                                 Changes in Timeand Form of Payment.  AParticipant may change his or her previous payment elections under Section 6.1regarding the time at which his or her Account will be paid or begin to bepaid, or the form of such payment, or both, after commencing participation in thePlan provided that (i) no such change shall be effective until at least 12months after the date on which such modified election is made, (ii) nochange may be made less than twelve months prior to the date the payment isscheduled to be paid or, in the case of installment payments elected pursuantto Section 6.1(c)(ii) (which shall be treated for purposes of thisPlan as a “single payment”), twelve months prior to the date the first amountwas scheduled to be paid, and (iii) the payment made pursuant to any suchsubsequent election is deferred for a period of not less than five years fromthe date such payment was scheduled to be paid or, in the case of installmentpayments elected pursuant to Section 6.1(c)(ii) (which shall betreated for purposes of this Plan as a “single payment”), five years from thedate the first amount was scheduled to be paid. A Participant’s election pursuant to this Section to change his orher previous payment elections shall be made in the manner prescribed by theCommittee and shall become effective and be deemed to be “made” for purposes ofthe above provisions of this Section at the time received by the Committeeor its designee, and shall be irrevocable upon such receipt.  In the case of a payment that is scheduled tobe made during a calendar quarter or such other time period longer than oneday, such payment shall be deemed to be scheduled to be paid for purposes ofthis Section as of the first day of such time period.

 

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6.7                                 Withholding.  There shall be deducted from all amounts paidunder this Plan any taxes and other amounts required to be withheld by anyFederal, state, local or other government. The Participant and/or his or her beneficiary (including his or herestate) shall bear all taxes on amounts paid under this Plan to the extent thatno taxes are withheld, irrespective of whether withholding is required.  The Participant will be required to pay tohis or her Employer the amount of any federal, state or local taxes required bylaw to be withheld in connection with the Plan in the event that suchParticipant is not being paid by an Employer or amounts being paid by anEmployer to such Participant are insufficient to satisfy any such withholdingobligation.

 

6.8                                 SpecifiedEmployees.  Anyprovision of the Plan to the contrary notwithstanding, if a Participant is a “specifiedemployee” within the meaning of Section 409A(a)(2)(B)(i) of the Codeas of the date of the Participant’s termination of employment with the Employerand all Affiliates, no distribution shall be made or commence with respect tosuch Participant pursuant to this Section sooner than six months from thedate of such Participant’s termination of employment (or, if earlier, the dateof the Participant’s death).  In suchcase, all payments that were scheduled to be made within such six-month periodshall be accumulated (with interest as provided in Section 5.2) and paidin a single lump sum in the calendar quarter following the calendar quarter inwhich such six-month period ends. The determination of whether an individual isa “specified employee” shall be made in accordance with the applicableregulations and other guidance pursuant to Code Section 409A using thedefault provisions in such regulations and other guidance unless another methodpermitted pursuant to such regulations and other guidance has been prescribedfor such purpose by the Company for application to all plans subject to Code Section 409A.

 

6.9                                 409A IncomeInclusion.  Anyprovision of the Plan to the contrary notwithstanding, although the Plan isdesigned to comply in form and operation with the

 

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requirements of Code Section 409A, in the eventa Participant is required to include in income an amount attributable to thePlan prior to the payment of any such amount pursuant to this Plan on accountof a violation of Code Section 409A, the amount so required to be includedin income shall be paid to the Participant as soon as practicable.

 

# ARTICLE 7.  COMMITTEE

#  

7.1                                 PlanAdministration and Interpretation.  The Committee shall oversee theadministration of the Plan.  TheCommittee shall have complete control and authority to determine the rights andbenefits and all claims, demands and actions arising out of the provisions ofthe Plan of any Participant, beneficiary, deceased Participant, or other personhaving or claiming to have any interest under the Plan.  The Committee shall have the exclusive anddiscretionary power to interpret the Plan and to decide all matters under thePlan.  Such interpretation and decisionshall be final, conclusive and binding on all Participants and any personclaiming under or through any Participant, in the absence of clear andconvincing evidence that the Committee acted arbitrarily and capriciously.  Any individual serving on the Committee whois a Participant will not vote or act on any matter relating solely to himselfor herself.  When making a determinationor calculation, the Committee shall be entitled to rely on informationfurnished by a Participant, a beneficiary, or an Employer.  The Committee shall be deemed to be the Planadministrator with responsibility for complying with any reporting anddisclosure requirements of ERISA.

 

7.2                                 Powers, Duties,Procedures, Etc.  TheCommittee may adopt such rules and regulations as it deems necessary,desirable or appropriate in administering the Plan so long as they are notinconsistent with the terms of the Plan. Any act which this Plan authorizes or requires the Committee to do maybe done by a majority of the members of the Committee

 

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acting hereunder; and the action of such majority ofthe members of the Committee, expressed from time to time by a vote at a meetingor in writing without a meeting, shall constitute the action of the Committeeand shall have the same effect for all purposes as if assented to by all of themembers of the Committee at the time in a regular or special meeting.  A dissenting Committee member who, within areasonable time after he or she has knowledge of any action or failure to actby the majority, registers his or her dissent in writing delivered to the otherCommittee members and the Company shall not be responsible for any action or failureto act.  The Committee may elect one ofits members as chairman and it may appoint a secretary who may, but need notbe, a Committee member.  In addition, theCommittee may appoint other agents and representatives, who may but need not bein the employ of the Employer, to keep its records and assist it in doing otheracts or things to be done or performed by the Committee.  Any such person, corporation or firm sodesignated by the Committee may, when so authorized by the Committee, sign inthe name of the Committee all applications and other documents requiredhereunder. All usual and reasonable expenses of the Committee including,without limiting the generality thereof, the reasonable cost of record keeping,accountants’ fees, consultants’ fees, counsel fees, and administrative costsshall be paid by the Employers.

 

7.3                                 Information.  To enable the Committee to perform itsfunctions, the Employers shall supply full and timely information to theCommittee on all matters relating to the compensation of Participants, theiremployment, retirement, death, termination of employment, and such otherpertinent facts as the Committee may require.

 

7.4                                 Indemnificationof Committee.  TheEmployers agree to indemnify and to defend to the fullest extent permitted by lawany officer or employee who serves as a member of the Committee (including anysuch individual who formerly served as a member of the Committee) against allliabilities, damages, costs and expenses (including attorneys’ fees and amountspaid in

 

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settlement of any claims approved by the Company)occasioned by any act or omission to act in connection with the Plan, if suchact or omission is in good faith.

 

7.5                                 ClaimsProcedure.  If anyperson (hereinafter called the “Claimant”) feels that he or she is being denieda benefit to which he or she is entitled under this Plan, such Claimant mayfile a written claim for said benefit with the Committee.  Within sixty days following the receipt ofsuch claim the Committee shall determine and notify the Claimant as to whetherhe or she is entitled to such benefit. Such notification shall be in writing and, if denying the claim forbenefit, shall set forth the specific reason or reasons for the denial, makespecific reference to the pertinent provisions of this Plan, describe anyadditional information necessary for the Claimant to perfect the claim andexplain why the information is necessary, advise the Claimant that he or shemay, within sixty days following the receipt of such notice, in writing requestto appear before the Committee or its designated representative for a hearingto review such denial, and state that the Claimant has the right to bring acivil action under Section 502(a) of the Employee Retirement IncomeSecurity Act of 1974, as amended, (“ERISA”) following a denial of the claim onreview.  Any hearing shall be scheduledat the mutual convenience of the Committee or its designated representative andthe Claimant, and at any such hearing the Claimant and/or his or her dulyauthorized representative may examine any relevant documents and presentevidence and arguments to support the granting of the benefit beingclaimed.  The final decision of theCommittee with respect to the claim being reviewed shall be made within sixtydays following the hearing thereon, and Committee shall in writing notify theClaimant of said final decision, again specifying the reasons therefor and thepertinent provisions of this Plan upon which said final decision is based.  The written notice will also include astatement that the Claimant is entitled to receive, upon request and free ofcharge, reasonable access to, and copies of, all documents and otherinformation relevant to the claim and a statement that the Claimant has a

 

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right to bring a civil action under Section 502(a) ofERISA.  The final decision of theCommittee shall be conclusive and binding upon all parties having or claimingto have an interest in the matter being reviewed.

 

# ARTICLE 8.  AMENDMENT AND TERMINATION

#  

8.1                                 Amendments.  The Company shall have the right to amendthis Plan from time to time, subject to Section 8.3.

 

8.2                                 Termination ofPlan.  This Plan is strictly avoluntary undertaking on the part of the Employers and shall not be deemed toconstitute a contract between the Employers and any employee or a considerationfor, or an inducement or condition of employment for, the performance ofservices by any employee.  The Companyreserves the right to terminate this Plan at any time effective with respect toany Plan Year subsequent to the date action is taken by the Company toterminate this Plan, subject to Section 8.3.  In the event the Plan is terminated, nofurther contributions or credits shall be made after the effective date of thePlan’s termination other than interest credits made pursuant to Section 5.2,and payments shall be made in accordance with the payment provisions of Article 6.  The preceding provisions of this Section 8.2to the contrary notwithstanding, the Company may in its discretion terminatethe Plan effective as of a date that is prior to the first day of a subsequentPlan Year and provide for accelerated payments of all amounts credited toAccounts upon a termination of the Plan to the extent such termination andacceleration of payments satisfies the applicable requirements upon thetermination of a plan pursuant to Code Section 409A.

 

8.3                                 Existing Rights.  No amendment or termination of the Plan shalladversely affect the rights of any Participant with respect to amounts creditedto his or her Account prior to the date of such amendment or termination.

 

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# ARTICLE9.  MISCELLANEOUS

#  

9.1                                 No Funding;Source of Payments.  Nothing inthis Plan will be construed to create a trust or to obligate an Employer or anyother person to segregate a fund, purchase an insurance contract, or in anyother way currently to fund the future payment of any benefits hereunder, norwill anything herein be construed to give any employee or any other personrights to any specific assets of an Employer or of any other person.  Benefit payments to be made with respect to aParticipant’s Accounts shall be paid in cash from the general assets of theEmployer, and shall be the obligation solely of the Employer maintaining suchAccounts.

 

9.2                                 Nonassignability;Domestic Relations Order.  Noneof the benefits, payments, proceeds or claims of any Participant or beneficiaryshall be subject to any claim of any creditor of the Participant or beneficiaryand, in particular, the same shall not be subject to attachment or garnishmentor other legal process by any creditor of the Participant or beneficiary, norshall any Participant or beneficiary have any right to alienate, anticipate,commute, pledge, encumber or assign any of the benefits or payments or proceedswhich he may expect to receive, contingently or otherwise, under thisPlan.  Notwithstanding the preceding, theCommittee shall direct that all or any portion of the amount credited to aParticipant’s Account be paid to an individual other than the Participant tothe extent necessary to comply with an order that the Committee has determinedto be a “domestic relations order” as defined in Code Section 414(p)(1)(B).  Further, and any provision of the Plan to thecontrary notwithstanding, the payment of amounts credited to a Participant’sAccount to an individual other than the Participant shall be accelerated as maybe necessary to fulfill an order that the Committee has determined to be a “domesticrelations order” as defined in Code Section 414(p)(1)(B).

 

9.3                                 Limitation ofParticipants’ Rights. Participation in this Plan shall not give any Eligible Employee theright to be retained in the employ of an Employer or an Affiliate or any

 

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right or interest in the Plan other than as hereinprovided.  The Employers and theirAffiliates reserve the right to dismiss any Eligible Employee without anyliability for any claim against the Employer or Affiliate, except to the extentof benefit payments provided herein.

 

9.4                                 ParticipantsBound.  Any action with respect tothis Plan taken by the Committee or the Company or any action authorized by ortaken at the direction of the Committee or the Company shall be conclusive uponall Participants and any other persons who claim entitlement to benefits underthe Plan.

 

9.5                                 Receipt andRelease.  Any payment to any Participantor beneficiary in accordance with the provisions of this Plan shall, to theextent thereof, be in full satisfaction of all claims against the Employers andthe Committee under this Plan, and the Committee may require such Participantor beneficiary, as a condition precedent to such payment, to execute a receiptand release to such effect.  If 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 or the Employer to follow theapplication of such funds.

 

9.6                                 Governing Law.  This Plan shall be construed, administered,and governed in all respects under and by the internal laws (and not theprinciples relating to conflicts of laws) of the State of Texas, except wheresuperseded by federal law.  If anyprovision shall be held by a court of competent jurisdiction to be invalid orunenforceable, the remaining provisions hereof shall continue to be fullyeffective.

 

9.7                                 No Guarantee ofTax Consequences .  No personconnected with the Plan in any capacity, including, but not limited to, theEmployers and any Affiliate and their respective directors, officers, agentsand employees, makes any representation, commitment or guarantee

 

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that any tax treatment, including, but not limitedto, federal, state and local income, estate and gift tax treatment, will beapplicable with respect to any amounts deferred or payable under the Plan orthat such tax treatment will apply to or be available to a Participant onaccount of participation in the Plan.

 

9.8                                 Adoption byOther Employers .  With theconsent of the Board of Directors of the Company, this Plan may be adopted byany Affiliate, such adoption to be effective as of the date specified by suchAffiliate at the time of adoption.

 

9.9                                 Headings andSubheadings.  Headingsand subheadings in this Plan are inserted for convenience only and are not tobe considered in the construction of the provisions hereof.

 

IN WITNESS WHEREOF, The Neiman Marcus Group, Inc.has caused this Plan to be executed by its duly authorized officer this         day of December, 2007.

 

 
| ** ** | ** ** | **THE  NEIMAN MARCUS GROUP, INC.** |
|------------|------------|------------------------------------|
|       |       |                               |
|       |       |                               |
|       | By:        | /s/ Nelson A. Bangs                |
|       |       | Nelson  A. Bangs                   |

 

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