This Employment Agreement (this "Agreement"), effective as of the Effective Date, is by and between The Neiman Marcus Group, Inc., a Delaware corporation ("NMG"), Neiman Marcus, Inc., a Delaware Corporation ("NMI"), and James E. Skinner (the "Executive").

1  .Definitions. As used in this Agreement, the following terms have the following meanings:

(a)  "Affiliate" means, with respect to any entity, any other corporation, organization, association, partnership, sole proprietorship or other type of entity, whether incorporated or unincorporated, directly or indirectly controlling or controlled by or under direct or indirect common control with such entity. NMG and NMI are "Affiliates" of one another.

(b)  "Board" means the Board of Directors of NMG.

(c)  "Cause" means one or more of the following: (i) the Executive's willful and material failure to substantially perform his duties (other than as a result of physical or mental illness or injury), or other material breach of this Agreement; (ii) the Executive's (a) willful misconduct or (b) gross negligence, in each case which is materially injurious to NMG or its Affiliates; (iii) the Executive's willful breach of his fiduciary duty or duty of loyalty to NMG or its Affiliates; or (iv) the commission by the Executive of any felony or other serious crime involving moral turpitude. For purposes of the foregoing, no act or failure to act shall be treated as '"willful" unless done, or omitted to be done, by the Executive not in good faith and without the reasonable belief that the Executive's action or omission was in the best interest of NMG. Nor shall any failure to act be treated as "willful" if the failure to act was a result of the Executive's reasonable and good-faith belief that the failure to act would have been in violation of applicable law or generally accepted accounting principles and the Executive promptly brought that belief to the attention of the President and Chief Executive Officer of NMG and NMI or the Board.

(d)  "Competitor" means (i) the retail operations of any person or entity who, at any time during the Executive's employment with NMG was a vendor of NMG or any of its Affiliates and who during any consecutive 12-month period during the five years immediately preceding the Executive's termination of employment with NMG had annual gross sales to NMG and its Affiliates in the aggregate of $100 million or more at retail; (ii) Saks Incorporated, Nordstrom, Inc., Barneys New York, Inc., and Bloomingdale's, Inc., or, if those corporate names are not correct, the businesses commonly referred to as "Saks," "Nordstrom's," "Barneys," and "Bloomingdale's"; and (iii) the Affiliates of, successors to, and assigns of the persons or entities described in (i) and (ii).

(e)  "Confidential Information" means, without limitation, all documents or information, in whatever form or medium, concerning or evidencing sales; costs; pricing; strategies; forecasts and long range plans; financial and tax information; personnel information; business, marketing and operational projections, plans and opportunities; and customer, vendor, and supplier information; but excluding any such information that is or becomes generally available to the public other than as a result of any breach of this Agreement or other unauthorized disclosure by the Executive.

(f)  "Disability" means and shall be deemed to have occurred if the Executive has been determined under NMG's long-term disability plan to be eligible for long-term disability benefits. In the absence of the Executive's participation in such plan, "Disability" means that, in the Board's sole judgment, the Executive is unable to perform any of the material duties of his regular position because of an illness or injury for (i) 80% or more of the normal working days during six consecutive calendar months or (ii) 50% or more of the normal working days during twelve consecutive calendar months.

(g)  "Effective Date" means October 6, 2010.

(h)  "Employment Termination Date" means the effective date of termination of the Executive's employment as established under Paragraph 6(h).

(i)  "Good Reason" means any of the following actions if taken without the Executive's prior consent: (i) any material failure by NMG to comply with its obligations under Paragraph 5 (Compensation and Related Matters); (ii) any material failure by NMG to comply with its obligations under Paragraph 19 (Assumption by Successor); (iii) a material reduction in the Executive's responsibilities or duties as in effect on the Effective Date; (iv) a material change in the geographic location at which the Executive must perform services; (v) a material reduction in the Executive's title or reporting relationships as in effect on the Effective Date; or (vi) a material breach of this Agreement by NMG.

(j)  "Management Equity Incentive Plan" means the Neiman Marcus, Inc. Management Equity Incentive Plan (formerly known as the Newton Acquisition, Inc. Management Equity Incentive Plan), adopted November 29, 2005.

(k)  "Target Bonus" means the target bonus under NMG's annual incentive bonus program(s).

(l)  "Work Product" means all ideas, works of authorship, inventions and other creations, whether or not patentable, copyrightable, or subject to other intellectual-property protection, that are made, conceived, developed or worked on in whole or in part by the Executive while employed by NMG and/or any of its Affiliates, that relate in any manner whatsoever to the business, existing or proposed, of NMG and/or any of its Affiliates, or any other business or research or development effort in which NMG and/or any of its Affiliates engages during the Executive's employment. Work Product includes any material previously conceived, made, developed or worked on during the Executive's employment with NMG prior to the Effective Date.

2.  Employment; Prior Agreements. NMG agrees to continue to employ the Executive, and the Executive agrees to continue to be employed, for the period set forth in Paragraph 3, in the position and with the duties and responsibilities set forth in Paragraph 4, and upon the other terms and conditions set out in this Agreement. The Confidentiality, Non-Competition and Termination Benefits Agreement entered into between the Executive and NMG, effective November 20, 2002, as amended (the "Prior Agreement"), is hereby superseded effective October 6, 2010 and replaced in its entirety by this Agreement without further right or obligation thereunder on the part of either party thereto. The replacement of the Prior Agreement with this Agreement does not cause any right or obligation under the Prior Agreement to arise. The Executive acknowledges and agrees that the terms of the grant of an award pursuant to the Management Equity Incentive Plan shall be governed exclusively by the terms of such plan and award agreement, including, without limitation, the vesting provisions thereof. Accordingly, except as otherwise provided pursuant to such plan or award agreement, there shall be no acceleration of vesting as a result of a termination of employment for any reason.

3. Term. Unless sooner terminated as provided in this Agreement, the term of the Agreement shall commence on the Effective Date and extend until the fourth anniversary thereof (the "Employment Term"), provided that the Employment Term shall automatically be extended for successive one year periods thereafter, unless at least three months prior to the commencement of any such one year period, either party provides written notice to the other (a "Notice of Non-Renewal") that the Employment Term shall not be so extended. The Executive's employment will end upon the expiration of the Employment Term.

4. Position and Duties.

(a)  The Executive shall serve as the Executive Vice President, Chief Operating Officer, and Chief Financial Officer of NMG and NMI. In such capacities, the Executive shall report to and be accountable to the President and Chief Executive Officer of NMG and NMI, subject to the ultimate control and direction of the Board and the Board of Directors of NMI ("NMI Board"). The Executive shall have responsibility for the operational and financial activities involving NMI and its divisions and Affiliates as directed by the President and Chief Executive Officer of NMG and NMI. In addition, the Executive shall have such other duties, functions, responsibilities, and authority as are from time to time delegated to the Executive by the President and Chief Executive Officer of NMG and NMI; provided, however, that such duties, functions, responsibilities, and authority are reasonable and customary for a person serving in the same or similar capacity of an enterprise comparable to NMG and/or NMI. Notwithstanding anything to the contrary in this Agreement, the Executive, NMG, and NMI understand and agree that NMG and NMI may choose to assign the title and responsibilities of the position of Chief Financial Officer of NMG and/or NMI to another employee, and that such action shall not constitute either a violation of this Agreement or Good Reason as defined in this Agreement for so long as such other employee in his or her capacity as Chief Financial Officer is required to report to the Executive.

(b)  During the Employment Term, the Executive shall devote his full time, skill, and attention and his best efforts to the business and affairs of NMG and NMI to the extent necessary to discharge fully, faithfully, and efficiently the duties and responsibilities delegated and assigned to the Executive in or pursuant to this Agreement, except for usual, ordinary, and customary periods of vacation and absence due to illness or other disability. Notwithstanding the foregoing, the Executive may (i) subject to the approval of the Board and the NMI Board, serve as a director or as a member of an advisory board of a noncompeting company, (ii) serve as an officer or director or otherwise participate in non-profit educational, welfare, social, religious, professional, and civic organizations, including, without limitation, all such positions and participation in effect as of the Effective Date, and (iii) manage personal and family investments; provided, however, that any such activities as described in (i), (ii), or (iii) of the preceding provisions of this Paragraph 4(b) do not significantly interfere with the performance and fulfillment of the Executive's duties and responsibilities as an executive of NMG in accordance with this Agreement.

(c)  In connection with the Executive's employment by NMG under this Agreement, the Executive shall be based at the principal executive offices of NMG in Dallas, Texas, except for such reasonable travel as the performance of the Executive's duties in the business of NMG and NMI may require.

(d)  All services that the Executive may render to NMG or any of its Affiliates in any capacity during the Employment Term shall be deemed to be services required by this Agreement and the consideration for such services is that provided for in this Agreement.

5. Compensation and Related Matters.

(a)  Base Salary. During the Employment Term, NMG shall pay to the Executive for his services under this Agreement an annual base salary. The Executive's annual base salary, as in effect from time to time, is hereinafter referred to as the "Base Salary." The Base Salary on the Effective Date shall be $700,000. The Base Salary will be reviewed annually and is subject to increase at the discretion of the Board. The Base Salary may not be reduced, provided however that the Base Salary may be reduced, without such reduction constituting either a violation of this Agreement or Good Reason, if the reduction is pursuant to action of NMG reducing the annual salaries of all NMG senior executives by substantially equal amounts or substantially equal percentages of such executives' annual salaries. The Base Salary shall be payable in installments in accordance with the general payroll practices of NMG, or as otherwise mutually agreed upon.

(b)  Annual Incentives. The Executive will participate in NMG's annual incentive bonus program(s) applicable to the Executive's position, in accordance with the terms of such program(s), and shall have the opportunity to earn an annual bonus thereunder based on the achievement of performance objectives determined by the Board after consultation with the Executive. During each fiscal year, the minimum bonus payable to the Executive if the threshold bonus targets for such year are achieved will be 25% of the Executive's Base Salary for such fiscal year, the Target Bonus will be 75% of Base Salary, and the maximum bonus payable to the Executive will be 150% of Base Salary. The actual amount of any annual incentive bonus paid to the Executive will be determined according to the terms of the annual incentive bonus program(s), including any such terms that place the amount of any annual incentive bonus within the discretion of the Board.

(c)  Long-term Incentives. The Executive will participate in such long-term incentive programs as the NMI Board may determine. Effective as of September 30, 2010, NMI will grant to the Executive a stock option in or substantially in the form of the Stock Option Grant Agreement attached to this Agreement as Exhibit A with an exercise price per share of Common Stock equal to the Fair Market Value of a share of Common Stock as of the date of grant as determined in accordance with the provisions of the NMI Management Equity Incentive Plan. Upon the Executive's written request directed to the Chair of the NMI Board, made on or prior to the second anniversary of the Effective Date, and specifically referencing this Paragraph 5(c), the NMI Board shall consider, without obligation to act, whether to make an additional grant of options to the Executive, taking into account the Executive's performance and the performance of NMG and such other factors as the NMI Board may deem appropriate.

(d)  Employee Benefits. During the Employment Term, the Executive shall be entitled to participate in all employee benefit plans, programs, and arrangements that are generally made available by NMG to its senior executives, including without limitation NMG's life insurance, long-term disability, and health plans. NMG agrees that the employee benefit plans, programs and arrangements that are made available to the Executive during the Employment Term will not be materially diminished in the aggregate from those benefit plans, programs and arrangements made available immediately prior to the Effective Date. The Executive agrees to cooperate and participate in any medical or physical examinations as may be required by any insurance company in connection with the applications for such life and/or disability insurance policies.

(e)  Fringe Benefits. The Executive will be entitled for the Employment Term to the perquisites and other fringe benefits that are made available by NMG to its senior executives generally and to such perquisites and fringe benefits that are made available by NMG to the Executive in particular, subject to any applicable terms and conditions of any specific perquisite or other fringe benefit. NMG agrees that the perquisites and other fringe benefits that are made available to the Executive during the Employment Term will not be materially diminished in the aggregate from those perquisites and fringe benefits made available immediately prior to the Effective Date.

(f)  Financial Planning and Advice. The Executive shall be entitled to receive reimbursement for up to $5,000 per each calendar year during the Employment Term for fees and expenses incurred by him for personal financial and tax advice and planning, including without limitation fees and expenses covering services relating to personal financial and tax advice and planning arising from the Executive's compensation and benefits provided pursuant to this Agreement and otherwise by NMG. The Executive shall provide to NMG a request for reimbursement along with a reasonably detailed receipt indicating the nature of the services provided for any such fees and expenses within 30 days of the occurrence of such fees and expenses. Any such reimbursement shall be made as soon as administratively possible, but in any event no later than 30 days following receipt of such request and related receipt. The amount of expenses incurred that are eligible for reimbursement pursuant to this Paragraph 5(f) with respect to any calendar year shall not affect the amount eligible for reimbursement in any other calendar year.

(g)  Expenses. The Executive shall be entitled to receive reimbursement for all reasonable expenses incurred by the Executive in performing his duties and responsibilities under this Agreement, consistent with NMG's policies or practices for reimbursement of expenses incurred by other NMG senior executives. Without limiting the foregoing, reasonable business expenses shall include the following items in reasonable amounts: professional license fees, professional journals and books, professional educational materials in software format, and dues to professional organizations and societies; educational expenses incurred to maintain or improve the Executive's skills and for his actual and reasonable expenses for travel, room and meals for attending professional conventions, meetings, and education sessions.

(h)  Vacations. During the Employment Term, the Executive shall be eligible for 5 weeks of vacation, and shall be eligible for sick pay and other paid and unpaid time off in accordance with the policies and practices of NMG. The Executive agrees to use his vacation and other paid time off at such times that are (i) consistent with the proper performance of his duties and responsibilities and (ii) mutually convenient for NMG and the Executive.

(i)  Indemnification. The Executive will be entitled to indemnification on the same terms as indemnification is made available by NMG to its other senior executives, whether through NMG's bylaws or otherwise.

(j)  Legal Fees. NMG agrees to reimburse the Executive for, or to pay directly on his behalf, the reasonable legal fees and expenses incurred by the Executive in connection with the review, preparation, and negotiation of this Agreement, provided that the Executive or his counsel supplies NMG with reasonable written documentation with respect to such legal fees and that in no event shall NMG's obligation under this Paragraph 5(j) exceed $25,000. Such payment or reimbursement shall be made in a reasonable time following NMG's receipt of the documentation required by this Paragraph 5(j) and in no event later than March 15, 2011. Notwithstanding the foregoing, no payment or reimbursement for legal fees and expenses shall be due unless the required documentation is received by NMG no later than a reasonable period prior to March 15, 2011.

6. Termination of Employment.

(a)  Death. The Executive's employment shall terminate automatically upon his death.

(b)  Disability. In the event of the Executive's Disability during the Employment Term, NMG may notify the Executive of NMG's termination of the Executive's employment.

(c)  Termination by NMG for Cause. NMG may terminate the Executive' employment for Cause. To exercise its right to terminate the Executive's employment pursuant to clause (i), (ii) or (iii) of the definition of Cause, however, NMG must first provide the Executive with a reasonable period of time to correct the circumstances or events, to the extent that they may reasonably be corrected, that NMG contends give rise to the existence of Cause under such provision. Prior to terminating the Executive's employment for Cause under this Paragraph 6(c), NMG must provide the Executive with a written notice of its intent to terminate his employment for Cause. Such written notice must specify the particular act or acts or failure(s) to act that form(s) the basis for the decision to so terminate the Executive's employment for Cause. The Executive will be given the opportunity within 30 calendar days of his receipt of such notice to meet with the Board to defend himself with regard to the alleged act or acts or failure(s) to act. If at the conclusion of or following such a meeting, the Board decides to proceed with the termination of the Executive's employment for Cause, such a termination will be effected by providing the Executive with a Notice of Termination under Paragraph 6(g). Upon or after NMG's issuance of the notice of intent to terminate the Executive's employment for Cause, NMG may suspend the Executive with pay pending the Board's decision whether to proceed with the termination.

(d)  Termination by the Executive for Good Reason. The Executive may terminate his employment for Good Reason. To exercise his right to terminate for Good Reason, the Executive must provide written notice to NMG of his belief that Good Reason exists within 30 days of the initial existence of the circumstance(s) believed to constitute Good Reason, and such notice shall describe the circumstance(s) believed to constitute Good Reason. If such circumstance(s) may reasonably be remedied, NMG shall have 30 days to effect that remedy. If not remedied within that 30-day period, the Executive may submit a Notice of Termination; provided, however, that a termination for Good Reason must occur no later than 120 days after the initial existence of the circumstance(s) believed to constitute Good Reason; otherwise, the Executive is deemed to have accepted the circumstance(s) that may have given rise to the existence of Good Reason.

(e)  Termination by Either Party Without Cause or Without Good Reason. Either NMG or the Executive may terminate the Executive's employment without Cause or Good Reason upon at least three months' prior written notice to the other party.

(f)  Termination by Reason of Non-Renewal. The Executive's employment will terminate upon the expiration of the Employment Term if either party provides a Notice of Non-Renewal pursuant to Paragraph 3. Such a termination of employment shall not be considered to be a termination under Paragraph 6(e).

(g)  Notice of Termination. Any termination of the Executive's employment by NMG or by the Executive (other than a termination pursuant to Paragraph 6(a) or Paragraph 6(f)) shall be communicated by a Notice of Termination. A "Notice of Termination" is a written notice that must (i) indicate the specific termination provision in this Agreement relied upon; (ii) in the case of a termination for Disability, Cause, or Good Reason, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision invoked, including the particular act or acts or failure(s) to act that is or are the basis of any termination for Cause or Good Reason; and (iii) if the termination is by the Executive under Paragraph 6(e), or by NMG for any reason, specify the Employment Termination Date. The failure by NMG to set forth in the Notice of Termination any fact or circumstance that contributes to a showing of Cause shall not waive any right of NMG or preclude NMG from asserting such fact or circumstance in enforcing NMG's rights. The failure of the Executive to set forth in the Notice of Termination any fact or circumstances that contributes to a showing of Good Reason shall not waive any right of the Executive or preclude the Executive from asserting such fact or circumstance in enforcing his rights.

(h)  Employment Termination Date. The Employment Termination Date shall be as follows: (i) if the Executive's employment is terminated by his death, the date of his death; (ii) if the Executive's employment is terminated by NMG because of his Disability or for Cause, the date specified in the Notice of Termination, which date shall be no earlier than the date such notice is given; (iii) if the Executive's employment is terminated by the Executive for Good Reason, the date on which the Notice of Termination is given; (iv) if the termination is under Paragraph 6(e), the date specified in the Notice of Termination, which date shall be no earlier than three months after the date such notice is given if such Notice of Termination is given by the Executive; or (v) if a Notice of Non-Renewal is provided by either party pursuant to Paragraph 3, upon expiration of the Employment Term.

(i)  Resignation. In the event of termination of the Executive's employment (for any reason other than the death of the Executive), the Executive agrees that if at such time he is a member of the Board or is an officer of NMG or a director or officer of any of its Affiliates, he shall be deemed to have resigned from such position(s) effective on the Employment Termination Date.

7. Compensation Upon Termination of Employment.

(a)  Death. If the Executive's employment is terminated by reason of the Executive's death, NMG shall pay to the Executive's estate within 60 days of the Employment Termination Date (i) any unpaid portion of the Executive's Base Salary through the Employment Termination Date and any bonus payable for the preceding fiscal year that has otherwise not already been paid (together, the "Compensation Payment"), provided that the payment of any such bonus may not be delayed past the date the bonus is payable under the terms of any bonus plan, (ii) any accrued but unused vacation days (the "Vacation Payment"), (iii) any reimbursement for business travel and other expenses to which the Executive is entitled (the "Reimbursement"), and (iv) an amount of annual incentive pay, as described in Paragraph 5(b), equal to a prorated portion of the Target Bonus amount for the year in which the Employment Termination Date occurs (the "Prorated Bonus").  This Paragraph 7(a) does not limit the entitlement of the Executive's estate or beneficiaries to any death or other vested benefits to which the Executive may be entitled under any life insurance, stock ownership, stock options, or other benefit plan or policy that is maintained by NMG for the Executive's benefit.

(b)  Disability. If the Executive's employment is terminated by reason of the Executive's Disability, NMG shall pay to the Executive within 60 days of the Employment Termination Date (i) the Compensation Payment, provided that the payment of the bonus portion of the Compensation Payment may not be delayed past the date the bonus is payable under the terms of any bonus plan, (ii) the Vacation Payment, (iii) the Reimbursement, and (iv) the Prorated Bonus. This Paragraph 7(b) does not limit the entitlement of the Executive to any amounts payable pursuant to the terms of any applicable disability insurance plan, policy, or similar arrangement that is maintained by NMG for the Executive's benefit.

(c)  Termination by the Executive Without Good Reason or by Reason of Executive Non-Renewal. If the Executive's employment is terminated by the Executive pursuant to and in compliance with Paragraph 6(e) or by reason of the provision of a Notice of Non-Renewal by the Executive pursuant to Paragraph 3, NMG shall pay to the Executive within 60 days of the Employment Termination Date (i) the Compensation Payment, provided that the payment of the bonus portion of the Compensation Payment may not be delayed past the date the bonus is payable under the terms of any bonus plan, (ii) the Vacation Payment, and (iii) the Reimbursement.

(d)  Termination by NMG for Cause. If the Executive's employment is terminated by NMG for Cause, NMG shall pay to the Executive within 60 days of the Employment Termination Date (i) the Compensation Payment, provided that the payment of the bonus portion of the Compensation Payment may not be delayed past the date the bonus is payable under the terms of any bonus plan, (ii) the Vacation Payment, and (iii) the Reimbursement.

(e)  Termination Without Cause or With Good Reason or by Reason of NMG Non-Renewal:

(f).  No Mitigation. The Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor will the amount of any payment provided for under this Agreement be reduced by any profits, income, earnings, or other benefits received by the Executive from any source other than NMG or its successor.

(g)  Offset. The Executive agrees that NMG may set off against, and he authorizes NMG to deduct from, any payments due to the Executive, or to his heirs, legal representatives, or successors, as a result of the termination of the Executive's employment any specified amounts which may be due and owing to NMG by the Executive, whether arising under this Agreement or otherwise; provided, however, that no offset is allowed against payments to the Executive which are subject to Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").

9.  Noncompetition and Nondisparagement Obligations. In consideration of NMG's promises to provide the Executive with new and additional Confidential Information and to authorize him to engage in activities that will create new and additional Confidential Information upon execution and delivery of this Agreement, and the other promises and undertakings of NMG in this Agreement, the Executive agrees that, while he is employed by NMG and/or any of its Affiliates and for an 18-month period following the end of that employment for any reason, he shall not engage in any of the following activities (the "Restricted Activities"):

(a)  He will not directly or indirectly disparage NMG or its Affiliates, any products, services, or operations of NMG or its Affiliates, or any of the former, current, or future officers, directors, or employees of NMG or its Affiliates;

(b)  He will not, whether on his own behalf or on behalf of any other individual, partnership, firm, corporation or business organization, either directly or indirectly solicit, induce, persuade, or entice, or endeavor to solicit, induce, persuade, or entice, any person who is then employed by or otherwise engaged to perform services for NMG or its Affiliates to leave that employment or cease performing those services;

(c)  He will not, whether on his own behalf or on behalf of any other individual, partnership, firm, corporation or business organization, either directly or indirectly solicit, induce, persuade, or entice, or endeavor to solicit, induce, persuade, or entice, any person who is then a customer, supplier, or vendor of NMG or any of its Affiliates to cease being a customer, supplier, or vendor of NMG or any of its Affiliates or to divert all or any part of such person's or entity's business from NMG or any of its Affiliates; and

(d)  He will not associate directly or indirectly, as an employee, officer, director, agent, partner, stockholder, owner, member, representative, or consultant, with any Competitor unless (i) he has advised NMG in writing in advance of his desire to undertake such activities and the specific nature of such activities; (ii) NMG has received written assurances (that will be designed, among other things, to protect NMG's and its Affiliates' goodwill, Confidential Information, and other important commercial interests) from the Competitor and the Executive that are, in NMG's sole discretion, adequate to protect its interests; (iii) NMG, in its sole discretion, has approved in writing such association; and (iv) the Executive and the Competitor adhere to such assurances. This restriction (i) extends to the performance by the Executive, directly or indirectly, of the same or similar activities the Executive has performed for NMG or any of its Affiliates or such other activities that by their nature are likely to lead to the disclosure of Confidential Information, and (ii) with respect to the post-employment restriction, applies to any Competitor that has a retail store within 50 miles of, or in the same Metropolitan Statistical Area as, any retail store of NMG or any of its Affiliates. The Executive shall not be in violation of this Paragraph 9(d) solely as a result of his investment in stock or other securities of a Competitor or any of its Affiliates listed on a national securities exchange or actively traded in the over-the-counter market if he and the members of his immediate family do not, directly or indirectly, hold more than a total of one percent of all such shares of stock or other securities issued and outstanding. The Executive acknowledges and agrees that engaging in the activities restricted by this Paragraph 9(d) would result in the inevitable disclosure or use of Confidential Information for the Competitor's benefit or to the detriment of NMG or its Affiliates.

17.  Injunctive Relief. The Executive acknowledges and agrees that NMG would not have an adequate remedy at law and would be irreparably harmed in the event that any of the provisions of Paragraphs 8, 9, and 10 were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the Executive agrees that NMG shall be entitled to equitable relief, including preliminary and permanent injunctions and specific performance, in the event the Executive breaches or threatens to breach any of the provisions of such Paragraphs, without the necessity of posting any bond or proving special damages or irreparable injury. Such remedies shall not be deemed to be the exclusive remedies for a breach or threatened breach of this Agreement by the Executive, but shall be in addition to all other remedies available to NMG at law or equity.

18.  Binding Effect; No Assignment by the Executive; No Third Party Benefit. This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, legal representatives, successors, and assigns; provided, however, that the Executive shall not assign or otherwise transfer this Agreement or any of his rights or obligations herein. NMG is authorized to assign or otherwise transfer this Agreement or any of its rights or obligations herein to an Affiliate of NMG. The Executive shall not have any right to pledge, hypothecate, anticipate, or in any way create a lien upon any payments or other benefits provided under this Agreement; and no benefits payable under this Agreement shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law, except by will or pursuant to the laws of descent and distribution. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person other than the parties, and their respective heirs, legal representatives, successors, and permitted assigns, any rights, benefits, or remedies of any nature whatsoever under or by reason of this Agreement.

19.  Assumption by Successor. NMG shall require any successor or assignee (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all the business and/or assets of NMG, by agreement in writing in form and substance reasonably satisfactory to the Executive, expressly, absolutely, and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that NMG would be required to perform it if no such succession or assignment had taken place. Any material failure by NMG to comply with its obligations in the preceding sentence shall be considered Good Reason; provided, however, that the compensation to which the Executive would be entitled upon a termination for Good Reason pursuant to Paragraph 7(d) shall be the sole remedy of the Executive for any failure by NMG to comply with its obligations in the preceding sentence. As used in this Agreement, "NMG" shall include any successor or assignee (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all the business and/or assets of NMG that executes and delivers the agreement provided for in this Paragraph 19 or that otherwise becomes obligated under this Agreement by operation of law.

20.  Governing Law. This Agreement and the employment of the Executive shall be governed by the laws of the State of Texas except for its laws with respect to conflict of laws.

21.  Dispute Resolution: Arbitration; Jury-Trial Waiver.

(a)   All disputes arising under or in connection with this Agreement shall be settled by arbitration conducted before one arbitrator sitting in Dallas, Texas, or such other location agreed by the parties hereto, in accordance with the rules for expedited resolution of employment disputes of the American Arbitration Association then in effect. The determination of the arbitrator shall be made within thirty days following the close of the hearing on any dispute or controversy and shall be final and binding on the parties. Judgment may be entered on the award of the arbitrator in any court having proper jurisdiction.

(b)  Notwithstanding the foregoing, NMG and its Affiliates may seek such injunctive or other legal or equitable relief to which it may be entitled in any state or federal court of competent jurisdiction to enforce its rights under Paragraphs 7(e), 8, 9, 10 or 12 of this Agreement.

(c)  Alternative Waiver of Jury Trial: The parties agree that in the event the agreement to arbitrate contained in this Paragraph 21 is determined to be unenforceable, any dispute between the parties that otherwise would be subject to arbitration shall be heard by a court sitting without a jury, and the parties mutually waive any right they may have to a jury determination of any issue in such dispute.

22.  Costs of Proceedings. NMG shall pay all costs and expenses (including legal fees) incurred by the Executive in connection with any arbitration relating to the interpretation or enforcement of any provision of this Agreement. The Executive shall provide to NMG a receipt or voucher for any cost or expense reimbursable under this Paragraph 22 within 30 days of the occurrence of such cost or expense. NMG shall provide the reimbursement required under this Paragraph 22 within 30 days following the Executive's submission of such receipt or voucher. Notwithstanding the foregoing, if the Executive instituted the proceeding and the arbitrator or other individual presiding over the proceeding affirmatively finds that the Executive instituted the proceeding in bad faith, the Executive shall reimburse NMG for all costs and expenses of the Executive previously paid by NMG pursuant to this Paragraph 22. Further, the amount of expenses eligible for payment or reimbursement by NMG during the Executive's taxable year shall not affect the expenses eligible for payment or reimbursement in any other taxable year, and the right to reimbursement shall not be subject to liquidation or exchanged for another benefit.

23.  Entire Agreement. This Agreement contains the entire agreement between the parties concerning the subject matter hereof and supersedes all other prior agreements and understandings, written and oral, between the parties with respect to the subject matter of this Agreement.

24.  Modification; Waiver. No person, other than pursuant to a resolution duly adopted by the members of the Board, shall have authority on behalf of NMG to agree to modify, amend, or waive any provision of this Agreement. Further, this Agreement may not be changed orally, but only by a written agreement signed by the party against whom any waiver, change, amendment, modification or discharge is sought to be enforced. Each party to this Agreement acknowledges and agrees that no breach of this Agreement by the other party or failure to enforce or insist on its or his rights under this Agreement shall constitute a waiver or abandonment of any such rights or defense to enforcement of such rights.

25.  Construction. This Agreement is to be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties.

26.  Severability. If any provision of this Agreement shall be determined by a court to be invalid or unenforceable, the remaining provisions of this Agreement shall not be affected thereby, shall remain in full force and effect, and shall be enforceable to the fullest extent permitted by applicable law.

27.  Counterparts. This Agreement may be executed by the parties in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement.

28.  Section 162(m). The parties hereto recognize that NMG is not currently subject to Section 162(m) of the Code but that it may become subject to said section during the term of this Agreement.  In such event, NMG retains the right to amend the provisions of this Agreement that impact, relate to or reference NMG's annual bonus program if NMG determines that such an amendment would be necessary or appropriate to ensure that any performance-based compensation payable under a new bonus plan satisfies the requirements for exemption under Section 162(m) of the Code, provided, however, that any such amendment provides the Executive at least the same economic benefit under this Agreement as he had prior to the amendment.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, NMG and NMI have caused this Agreement to be executed on its behalf by its duly authorized officer, and the Executive has executed this Agreement, effective as of the Effective Date.

1. THIS AGREEMENT, made as of this _______ day of ______________ between Neiman Marcus, Inc., (the "Company") and James E. Skinner (the "Participant").
   
   WHEREAS, the Company has adopted and maintains the Neiman Marcus Group, Inc. Management Equity Incentive Plan (the "Plan") to promote the interests of the Company and its Affiliates and stockholders by providing the Company's key employees and others with an appropriate incentive to encourage them to continue in the employ of and provide services for the Company or its Affiliates and to improve the growth and profitability of the Company;
   
   WHEREAS, the Plan provides for the Grant to Participant in the Plan of Non-Qualified Stock Options to purchase shares of Common Stock of the Company.
   
   NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:
   
   1.  Grant of Options. Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the Company hereby grants to the Participant a NON-QUALIFIED STOCK OPTION (the "Option") with respect to 2,200 shares of Common Stock of the Company. 100% of the Option will be a Fair Value Option and 50% of the Option will be a Performance Option.
   
   2.  Grant Date. The Grant Date of the Option hereby granted is [September 30, 2010].
   
   3.  Incorporation of Plan. All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein. All capitalized terms used and not defined herein shall have the meaning given to such terms in the Plan.
   
   4.  Exercise Price. The exercise price of each share of Common Stock underlying the Option hereby granted is $_______.
   
   5.  Vesting. The Option shall become vested and exercisable as follows: twenty-five percent of the shares of Common Stock underlying such Option shall vest and become exercisable on the first anniversary of the Grant Date and the remaining portion of the Option shall vest and become exercisable in thirty-six equal monthly installments over the thirty-six (36) months following the first anniversary of the Grant Date, beginning on the one-month anniversary of such first anniversary, until 100% of the Option is fully vested and exercisable thereafter, provided that the Participant is still employed by the Company on each such anniversary.
   
   6.  Method of Exercise.  Pursuant to and consistent with Section 4.10 of the Plan which provides that in certain stated circumstances or as otherwise provided in a Stock Option Grant Agreement, the Participant shall be allowed to exercise all or any portion of his then-exercisable Option through net-physical settlement to satisfy both the exercise price and applicable withholding taxes (at the minimum statutory withholding rate), Participant shall be allowed to employ such net-physical settlement in all cases and at any time (other than following a termination of the Participant's Employment for Cause) for all or any portion of his then-exercisable Option, subject however to the further requirements of Section 4.10 of the Plan regarding the determination by the Company's Chief Financial Officer as to the absence of less favorable accounting consequences for the Company than if the exercise price were paid in cash.
   
   7.  Expiration Date. Subject to the provisions of the Plan, with respect to the Option or any portion thereof which has not become exercisable, the Option shall expire on the date the Participant's Employment is terminated for any reason, and with respect to any Option or any portion thereof which has become exercisable, the Option shall expire on the earlier of: (i) 90 days after the Participant's termination of Employment other than for Retirement, Cause, death or Disability; (ii) one year after termination of the Participant's Employment by reason of Retirement, death or Disability; (iii) the commencement of business on the date the Participant's Employment is, or is deemed to have been, terminated for Cause; or (iv) the seventh anniversary of the Grant Date.
   
   8.  Certain Rights on a Change of Control.  If (a) a Change of Control occurs, (b) the surviving corporation following such Change of Control is an entity for whose stock there is no Public Market, (c) the surviving corporation assumes the Participant's outstanding Options in connection with such Change of Control and such Options convert into options to purchase common stock or other equity interests of the surviving corporation (the "Assumed Options") and (d) the Participant thereafter experiences a Qualifying Termination at any time prior to the occurrence of an Initial Public Offering of the surviving corporation, the Participant will be entitled to sell to the Company or such surviving corporation, within ninety (90) days of such Qualifying Termination, all or any portion of the Assumed Options that the Participant had not exercised at the time of such sale and elects to sell to the Company or such surviving corporation (the "Eligible Assumed Options"), and the Company or such surviving corporation will be obligated to purchase from the Participant, in full satisfaction of the Participant's rights with respect to such Eligible Assumed Options, all such Eligible Assumed Options, for a price equal to the aggregate fair market value, as determined in accordance with Treas. Reg. Section 1.409A-1(b)(5)(iv), of the shares of common stock or other equity interests underlying such Eligible Assumed Options, minus the aggregate exercise price of such Eligible Assumed Options that such Participant would have been required to pay in order to exercise such Eligible Assumed Options.
   
   9.  Construction of Agreement. Any provision of this Agreement (or portion thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this section, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions thereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. No waiver of any provision or violation of this Agreement by the Company shall be implied by the Company's forbearance or failure to take action. It is intended that the Option be exempt from Code Section 409A, and this Agreement shall be administered and construed to the fullest extent possible to reflect and implement such intent.
   
   10.  Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of, or acquiescence in, any such breach or default, or any similar breach or default thereafter occurring nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, shall be in writing and shall be effective only to the extent specifically set forth in such writing.
   
   11.  Limitation on Transfer. The Option shall be exercisable only by the Participant or the Participant's Permitted Transferee(s), as determined in accordance with the terms of the Plan (including without limitation the requirement that the Participant obtain the prior written approval by the Board of any proposed Transfer to a Permitted Transferee during the lifetime of the Participant). Each Permitted Transferee shall be subject to all the restrictions, obligations, and responsibilities as apply to the Participant under the Plan and this Agreement and shall be entitled to all the rights of the Participant under the Plan, provided that in respect of any Permitted Transferee which is a trust or custodianship, the Option shall become exercisable and/or expire based on the employment and termination of employment of the Participant. All shares of Common Stock obtained pursuant to the Option granted herein shall not be transferred except as provided in the Plan and, where applicable, the Management Stockholders' Agreement.
   
   12.  Integration. This Agreement, and the other documents referred to herein or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and in the Plan. This Agreement, including without limitation the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter.
   
   13.  Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
   
   14.  Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to the provisions governing conflict of laws.
   
   15.  Participant Acknowledgment. The Participant hereby acknowledges receipt of a copy of the Plan. The Participant hereby acknowledges that all decisions, determinations and interpretations of the Board in respect of the Plan, this Agreement and the Option shall be final and conclusive. The Participant further acknowledges that, prior to the existence of a Public Market, no exercise of the Option or any portion thereof shall be effective unless and until the Participant has executed the Management Stockholders' Agreement and the Participant hereby agrees to be bound thereby.
   
   IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer and said Participant has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement, the Plan and the Management Stockholders' Agreement as of the day and year first written above.