# **Exhibit10.25**

#  

# **SEPARATIONAGREEMENT AND GENERAL RELEASE**

 

This Separation Agreement and General Release(“Agreement”) is entered into on this 1st day of January, 2003 byand between Gerald A. Sampson (“Mr. Sampson”) and The Neiman Marcus Group, Inc.(“NMG”).

 

RECITALS

 

WHEREAS, Mr. Sampson and NMG entered into a Termination and Change ofControl Agreement as of October 6, 1999 (the “Prior Agreement”) to provide forspecific terms and conditions in the event Mr. Sampson’s employment isterminated or if Mr. Sampson resigns under certain circumstances, all of whichare more particularly described in such Prior Agreement;

 

WHEREAS, Mr. Sampson and NMG desire to terminate the Prior Agreementand replace such Prior Agreement with this Agreement in lieu thereof;

 

WHEREAS, upon full execution of this Agreement, the Prior Agreementshall become null and void, and shall have no further force and effect; and

 

NOW, THEREFORE, in consideration of the terms and conditions set forthherein and other good and valuable consideration, the receipt and sufficiencyof which is hereby acknowledged, Mr. Sampson and NMG agree as follows:

 

1.                                      Uponfull execution of this Agreement, the parties agree that this Agreement shallsupersede the Prior Agreement and the Prior Agreement shall be terminated andhave no further force or effect.  Mr.Sampson’s employment with NMG will end as of December 31, 2002 (the“Termination Date”).  His salary andbenefits will also cease as of the Termination Date, except as required byfederal or state law, the terms of NMG’s benefit plans, or as otherwiseprovided herein.  Following theTermination Date, Mr. Sampson will have no power or authority to incur anydebt, liability, or obligation whatsoever for or on behalf of NMG.  Following the Termination Date, Mr. Sampsonwill have no right to incur any expenses for or on behalf of NMG and Mr.Sampson will have no right to reimbursement for any expenses incurred,thereafter, except as provided herein or as authorized in writing by the CEO ofNMG.

 

2.                                      NMGagrees to provide the following to Mr. Sampson in consideration for hisexecution of this Agreement and the performance of its terms and conditions.

 

(a)                                  NMGwill pay Mr. Sampson, or in the event of his death, to his estate, a severanceof One Million One Hundred and Seventy Four Thousand Dollars ($1,174,000.00),in regular monthly installments on or about the first day of each month over atwenty-four (24) month period commencing January 1, 2003.  All severance and benefits payments made toMr. Sampson pursuant to this Agreement shall be subject to applicable taxes,withholding and deductions as required by law and in accordance with NMG’sregular payroll practices.

 

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(b)                                 Withinthirty (30) days after the Termination Date, NMG will pay Mr. Sampson aprorated bonus for Fiscal Year 2003 in the amount of $97,833.33, based upon thetarget performance of NMG for Fiscal Year 2003 and Mr. Sampson’s actual serviceduring Fiscal Year 2003 from August 4, 2002 through the Termination Date.

 

(c)                                  Mr.Sampson’s pension benefit under the Neiman Marcus Group, Inc. SupplementalExecutive Retirement Plan will be calculated using 20/13 x 9 years and 9 monthsof credited service.  The amount of suchpension benefit is set forth on the Attachment 1 to this Agreement, ascalculated on November 22, 2002.

 

(d)                                 Withinthirty (30) days after Mr. Sampson’s submission of an invoice therefor, NMGwill pay for the reasonable costs up to $3,000.00 for Mr. Sampson’s 2002 incometax preparation.

 

(e)                                  Withinthirty (30) days after Mr. Sampson’s submission of an invoice therefor, NMGwill pay the reasonable cost up to $5,000.00 for financial planning servicesfor the 2002 tax year.

 

(f)                                    Mr.Sampson shall be entitled to retain a lifetime employee discount of 30%,subject to the normal terms and conditions applicable to non-employees whoreceive such a discount benefit and so long as such discounts continue to beoffered to non-employees.

 

(g)                                 Mr.Sampson shall be entitled to continuation of medical and dental insurancecoverage in which he currently participates (or as such coverage may be changedfrom time-to-time for employees generally) for 18 months or until he startsfull-time employment, whichever is sooner. Mr. Sampson will be responsible for paying his portion of monthlypremiums for the medical and dental insurance coverage at the same rate paid byactive employees, and Mr. Sampson authorizes NMG to deduct such amounts fromthe severance payments it makes to him under Paragraph 2(a) above.

 

(h)                                 Notwithstandingthe provisions of any stock option agreement or any plan or arrangement underwhich non-qualified options to purchase NMG stock have been granted to Mr.Sampson, the vested portion of all such outstanding non-qualified stock optionsas of the Termination Date shall be fully exercisable by Mr. Sampson (or hispersonal representative in the event of his death or incapacity) at any timeduring the twelve (12) month period following the Termination Date, and, to theextent necessary, each such agreement, plan and arrangement is hereby amendedto provide for such extended exercise period.

 

3.                                      Inconsideration of the aforementioned severance and other benefits, which Mr.Sampson acknowledges and agrees significantly exceeds the benefits available tohim under the Prior Agreement, Mr. Sampson voluntarily, irrevocably, andunconditionally agrees:

 

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(a)                                  Asof the close of business on the Termination Date, Mr. Sampson’s eligibility forshort term disability coverage, long term disability coverage, savingsincentive plan deductions, medical and dependent care savings accountdeductions, vacation accrual, pension accrual, and job travel insurance willpermanently discontinue.  Except asotherwise provided in this Agreement, Mr. Sampson’s eligibility forcontinuation of coverage under any group medical or dental insurance planoffered by NMG shall be governed exclusively by the Consolidated Omnibus BudgetReconciliation Act of 1985 (“COBRA”) or any successor law.

 

(b)                                 Torelease and discharge NMG from any and all claims, complaints, demands,contracts, liabilities, actions, causes of action, promises, or rights of anynature, whether known or unknown and whether in law or in equity, and from alllosses, damages, attorneys’ fees, and other costs arising therefrom, which hehas ever had, now has, or which he and his heirs, executors, administrators,representatives, agents or assigns, hereafter can, shall or may have againstNMG resulting from any act or omission by or on the part of NMG committed oromitted on or prior to the date of execution of this Agreement including, butnot limited to, those claims arising out of or in any way connected with hisemployment relationship with or separation from NMG. Without limiting thegenerality of the foregoing, this release includes: (i) any claim under TitleVII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act,the Americans with Disabilities Act, the Family Medical Leave Act, the FairLabor Standards Act, the Equal Pay Act of 1963, the Employee Retirement IncomeSecurity Act (except for vested, accrued benefits of Mr. Sampson under anyemployee benefit plan of NMG), the Civil Rights Act of 1866, the TexasCommission on Human Rights Act, and all other federal, state and local laws;and (ii) except for benefits and rights earned or accrued through theTermination Date or as otherwise provided in this Agreement, any claim forreinstatement, wages, severance pay, bonuses, sick leave, holiday pay, vacationpay, worker’s compensation, life insurance, medical or dental benefits,disability benefits, or any other fringe benefits.

 

(c)                                  Toreturn all property belonging to NMG within ten (10) days after the TerminationDate, including but not limited to, all credit cards and phone cards issued tohim, identification cards, access cards, business cards, business files,business supplies, business stationery, books, computer or electronicequipment, phone equipment, pagers, client lists, vendor lists, trainingmaterials, company-owned products or samples, vendor-owned products or samples,and any confidential information in his possession or under his control.

 

(d)                                 Toreasonably cooperate with NMG in any pending or future lawsuits in which histestimony may be relevant.  Suchcooperation may include, but is not limited to:  preparing affidavits; making himself available to be interviewedor prepared for deposition or trial by NMG’s in-house or outside counsel;making himself available to be deposed; and making himself available to testifyat trial or at any other court or administrative hearing.  NMG agrees to reimburse Mr. Sampson for anyreasonable

 

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expenses that he may incur in so cooperating with NMG,and shall compensate Mr. Sampson, if such cooperation is requested after theperiod during which Mr. Sampson receives the payments under Paragraph 2(a)hereof, at hourly rate of $282.21 for his services in connection with suchlawsuit.  The provisions of this Paragraph3(d) shall not apply to any lawsuit in which Mr. Sampson is, consistent withthe provisions of this Agreement, in an adverse position to NMG.   “Lawsuit” in this Paragraph includes, butis not limited to, claims asserted before any tribunal or government agency.

 

(e)                                  Thathe will not at any time, either directly or indirectly, divulge, disclose orcommunicate to any person, firm, or corporation in any manner any trade secretor confidential information concerning or relating to the business of NMG,including but not limited to, the names of or contact information for any ofits customers, the prices at which it sells its goods or services, or any otherinformation of, about or concerning NMG, its manner of operation, itsstrategies, its practices, or its business plans.  Mr. Sampson also agrees that he will neither directly norindirectly contact any communications media, including but not limited to anytelevision, radio or newspapers, or any of NMG’s employees regarding thecircumstances of his separation from NMG. Mr. Sampson agrees to keep the specific terms of this Agreementconfidential and further agrees not to divulge any  such terms to any person other than to his immediate familymembers, professional financial advisors, and attorneys (so long as suchperson(s) agree(s) to be bound by the confidential nature of this Agreement),except as required by court order or subpoena, or as may be necessary tocomplete and file required tax returns.

 

(f)                                    Notto make or induce others to make any negative, critical, or adverse remarks,whether written or oral, concerning NMG or its employees, officers, directors,operations, products, services, marketing strategies, pricing policies,management, affairs, or financial condition, except if testifying truthfullyunder oath pursuant to a lawful court order or subpoena, or if otherwiseallowed by law.  If Mr. Sampson receivessuch a court order or subpoena, or is otherwise required by court order orsubpoena to provide any documents, tapes, or other information to anyone whoseinterests are adverse to NMG’s, then either he or his attorney shall provideNMG with a copy of such court order or subpoena as soon as administrativelypracticable,  prior to the date ofcompliance.  Also, as soon as possibleprior to the date of compliance with such a court order or subpoena, Mr.Sampson shall notify NMG of the content of any testimony or information to beprovided pursuant to such court order or subpoena and give NMG copies of alldocuments to be produced.

 

(g)                                 Thathe will not at any time during the two (2) year period following theTermination Date, whether on his own behalf or on behalf of any other person orentity, directly or indirectly:  (i)solicit, divert or take away from NMG the business of any NMG customer, supplier,prospective customer, or prospective supplier; (ii) seek to induce any NMGcustomer, supplier, or any other entity or person to violate any agreement withNMG of which he is aware or assist any third party in doing so; or (iii)recruit or otherwise

 

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seek to induce any person that he knows to be anemployee of NMG to terminate their employment with NMG or to assist any thirdparty in doing so.

 

(h)                                 Thathe will not, at any time during the two (2) year period following theTermination Date, associate directly or indirectly, as an employee, officer,director, agent, partner, stockholder, owner, representative, or consultant,with any Competitor (as hereinafter defined) of NMG, unless: (A) Mr. Sampsonhas advised NMG in writing in advance of his desire to undertake suchactivities and the specific nature of such activities; (B) NMG has receivedwritten assurances (that will be designed, among other things, to protect NMG’sgoodwill, confidential information, and other important commercial interests)from the Competitor and Mr. Sampson that are, in NMG’s sole discretion,adequate to protect its interests; (C) NMG, in its sole discretion, hasapproved in writing such association; and (D) Mr. Sampson and the Competitoradhere to such assurances.  Thisrestriction extends to Mr. Sampson’s performance, whether directly orindirectly, of the same or similar activities that Mr. Sampson has performedfor NMG or such other activities that by their nature are likely to lead to thedisclosure of confidential information. Nothing in this Agreement shall prohibit Mr. Sampson from accepting anemployment, or other, position with an entity which provides consultingservices for entities within the retail industry; provided that, in fulfillingsuch position, Mr. Sampson does not violate the provisions in Paragraph 3(e) or3(g) hereof or provide such consulting services to a Competitor.  Mr. Sampson will not be deemed to haveviolated this Paragraph 3(h) solely as a result of Mr. Sampson’s investment instock or other securities of a Competitor listed on a national securitiesexchange or actively traded in the over-the-counter market if Mr. Sampson andthe members of the his immediate family do not, directly or indirectly, holdmore than a total of one percent (1%) of all such shares of stock or othersecurities issued and outstanding.  Forpurposes of this Agreement, a “Competitor” means: (i) Saks Incorporated,Nordstrom, Inc., Barneys New York, Inc., BCBG, Burberry, Brioni, GiorgioArmani, Chanel, St. John Sport, Loro Piana, Dolce & Gabbana, Yves SaintLaurent, Ermenegildo Zegna, Escada, Ralph Lauren, Prada, Gucci, Cole Haan,Tommy Bahama, Donna Karan, Calvin Klein, St. John, Christian Dior, Hugo Boss,Theory, Laundry, DKNY, LVMH, Versace, or any parent, affiliate, subsidiary,successor or assign of such person(s) or entities.  If, in the reasonable judgment of NMG, Mr. Sampson violates theprovisions of Paragraphs 3(e), 3(f), 3(g) or the preceding provisions ofParagraph 3(h), NMG’s obligation to provide the severance specified inParagraph 2(a) shall end as of the date NMG so notifies Mr. Sampson in writing.

 

(i)                                     NMGagrees to use reasonable efforts to keep the terms of this Agreementconfidential.

 

4.                                      Mr.Sampson acknowledges and agrees that:

 

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(a)                                  Heunderstands that the release set forth in Paragraph 3(b) above is a generalrelease of all claims described therein, whether known or unknown, and that hehas had sufficient time to consider the Agreement and to consult with anattorney about it before signing it.  Hefurther agrees that he is signing this Agreement knowingly and voluntarily andacknowledges that NMG is giving him money and other things of value that hewould not otherwise be entitled to receive. Mr. Sampson acknowledges and agrees that NMG would not have an adequateremedy at law and would be irreparably harmed in the event that any of theprovisions of Paragraphs 3(e), 3(f), 3(g), or 3(h) were not performed inaccordance with their specific terms or were otherwise breached.  Accordingly, Mr. Sampson agrees that NMGshall be entitled to equitable relief, including preliminary and permanentinjunctions and specific performance, in the event Mr. Sampson breaches orthreatens to breach any of the provisions of such Paragraphs, without thenecessity of posting any bond or proving special damages or irreparableinjury.  Such remedies shall not bedeemed to be the exclusive remedies for a breach or threatened breach of suchprovisions by Mr. Sampson but shall be in addition to all other remediesavailable to NMG at law or equity.  Mr.Sampson acknowledges and agrees that NMG shall be entitled to recover itsreasonable attorneys’ fees, expenses, and court costs, in addition to any otherremedies to which it may be entitled, in the event he breaches such provisions.

 

(b)                                 Paragraph3(h) is material, reasonable, and necessary, and is valid and enforceable underTexas law.  Mr. Sampson furtheracknowledges and agrees that he will immediately notify NMG in writing shouldhe believe or be advised that said Paragraph is not valid or enforceable underTexas law or the law of any other state that he contends or is advised isapplicable.  Mr. Sampson furtheracknowledges and agrees that NMG would not have entered into this Agreementabsent his acknowledgements and agreements hereto.

 

(c)                                  Byentering this Agreement, neither he nor NMG admit any wrongdoing, and agreethat this Agreement and the furnishing of the consideration for this Agreementshall not be deemed or construed to be an admission of any wrongdoing orliability of any kind.

 

(d)                                 Hehas been given twenty-one (21) days to consider and to sign this Agreement, andNMG hereby advises him to consult with or seek advice from an attorney prior tosigning it.  The signed Agreement shallbe delivered to Marita O’Dea at The Neiman Marcus Group, 1618 Main Street,Dallas, TX 75201. If he should sign this Agreement before the end of the entiretwenty-one (21) day period, his signature shall constitute notice to NMG of hisintent to forfeit his right to consider this Agreement for the full twenty-one(21) days.  If a signed, dated originalof this Agreement is not received by NMG by the end of the 22nd day followinghis receipt of the Agreement, this Agreement shall be cancelled and void, andneither he nor NMG shall have any rights or obligations under it.

 

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(e)                                  Fora period of up to and including seven (7) days after the date he signs thisAgreement, he may revoke his acceptance of this Agreement, and the Agreementshall not become effective or enforceable until the end of such seven (7) dayRevocation Period.  If he decides torevoke, he must send a signed notice of revocation to: Marita O’Dea, SeniorVice President, The Neiman Marcus Group, Inc., 1618 Main Street, Dallas, TX75201, on or before the end of this seven-day (7) period via hand delivery orcertified mail with return receipt. Upon delivery to Marita O’Dea of a timely notice of revocation, theAgreement shall be void, and neither he nor NMG shall have any rights orobligations under it.

 

(f)                                    Bysigning this Agreement, he is releasing and waiving all claims against NMG,including, without limitation, any rights or claims based on age discriminationarising under the Age Discrimination in Employment Act (29 U.S.C. § 621, etseq.). The release language in paragraph 3(b) does not apply to any rights orclaims that may arise after the date this Agreement is executed, until suchtime as Mr. Sampson has subsequently renewed and ratified this Agreement afterthe Termination Date as provided in Paragraph 3(i).  Upon such renewal and ratification of this Agreement, the releasein paragraph 3(b) will not apply to any rights or claims that may arise afterthe date the renewal and ratification is executed.

 

5.                                      Asused in this Agreement, the term “NMG” includes The Neiman Marcus Group, Inc.,its past and present parent, affiliate and subsidiary companies, and its andtheir past and present predecessors, successors, assigns, owners, stockholders,agents, directors, employees, attorneys, and officers, and all persons actingby, under, or in concert with any of them. It is expressly understood andagreed that this Agreement shall apply to, and be enforceable against, anysuccessor or assign of NMG regardless of the reason for such successorship orassignment and regardless of whether such successor or assignee expresslyassumes this Agreement.

 

6.                                      Mr.Sampson represents and warrants that he has the full power, capacity, andauthority to enter into this Agreement and has not transferred, assigned,pledged, encumbered or in any manner conveyed all or any portion of the rightsor claims covered by this Agreement. Mr. Sampson agrees that anyone who succeeds to any rights he may have,such as representatives, assigns, agents, administrators, heirs, or executors,are bound by the release and other terms contained herein.  Mr. Sampson represents that no charges,complaints or actions of any kind have been filed by him or on his behalfagainst NMG with any federal, state or local court, or agency.  Mr. Sampson agrees to the fullest extentpermitted by law that he will not file any charge or complaint at any timewhich relates in any way to his employment with or separation from NMG, exceptthis clause does not prohibit the filing of an EEOC charge under the AgeDiscrimination in Employment Act.  Mr.Sampson further agrees to the fullest extent permitted by law that if any courtassumes jurisdiction over any charge or complaint on his behalf against NMG, hewill not accept or share in any recovery or relief 

 

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obtained as a result of such action.  Mr. Sampson will also request such court towithdraw the matter with prejudice.

 

7.                                      Notwithstandingany other remedy NMG may have with respect to any breach of this Agreement byMr. Sampson, Mr. Sampson agrees and understands that any breach of the terms ofParagraphs 3 and 6 of this Agreement shall constitute a material breach of thisAgreement, and, in addition to any other legal or equitable remedy available toNMG, any such breach shall relieve NMG of any obligation to pay any of themonies not already paid to Mr. Sampson pursuant to Paragraph 2.  If a court of competent jurisdiction makes afinal, unappealable determination that, in the scope and course of hisemployment with NMG, Mr. Sampson knowingly violated federal securities laws orother laws on behalf of NMG which result in material liability to NMG, such aviolation(s) shall constitute a material breach of this Agreement, and, inaddition to any other legal or equitable remedy available to NMG, any suchbreach shall entitle NMG to recover any and all monies paid to Mr. Sampsonpursuant to Paragraph 2 from and after the effective date of this Agreement,and relieve NMG of any obligation to pay any of the monies not yet due andpayable to Mr. Sampson pursuant to Paragraph 2. Paragraphs 3 and 6 shallsurvive any expiration or early termination of this Agreement.

 

8.                                      Notwithstandingany other provision of this Agreement, nothing herein shall adverselyaffect:  (i) Mr. Sampson’s right, ifany, to salary earned but unpaid through the Termination Date; (ii) Mr.Sampson’s right, if any, to be paid for earned but unused vacation and personaldays accrued through the Termination Date; (iii) Mr. Sampson’s right, if any,to reimbursement for approved business expenses incurred but unreimbursedthrough the Termination Date; (iv) Mr. Sampson’s right, if any, to vestedretirement benefits to which he was entitled as of the Termination Date; (v)Mr. Sampson’s right, if any, to exercise stock options and restricted stockawarded to him by NMG in accordance with the terms of the agreements, asamended, issued with the awards; or (vi) any right Mr. Sampson might have tocontinuation of any insurance coverage pursuant to the terms of NMG-providedinsurance plans or applicable law.

 

9.                                      Theparties acknowledge that in executing this Agreement, neither has relied on anystatements, promises or representations made by the other party except asspecifically written in this Agreement. This Agreement is the complete agreement of the parties on or in any wayrelated to Mr. Sampson’s separation from employment and the subject matteraddressed in it.  It shall supersede andcancel all other previous agreements or understandings between the parties,including, but not limited to, the Prior Agreement.  This Agreement cannot be modified or rescinded except upon thewritten consent of both Mr. Sampson and an officer of NMG, and cannot berevoked except as provided in Paragraph 4(e).

 

10.                                Ifany provision of this Agreement is held to be unenforceable, such provisionshall be considered to be distinct and severable from the other provisions ofthis

 

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Agreement, and such unenforceability shall not affectthe validity and enforceability of the remaining provisions.

 

11.                                Thewaiver by either party of a breach of any of the provisions of this Agreementshall not operate or be construed as a waiver of any other provision of thisAgreement or a waiver of any subsequent breach of the same provision.

 

12.                                Thelanguage of all parts of this Agreement shall in all cases be construed as awhole, according to its fair meaning, and not strictly for or against any ofthe parties.

 

13.                                Thevalidity, performance and enforceability of this Agreement shall be determinedand governed by the laws of the State of Texas, without regard to its conflictof laws principles. The exclusive forum for any action concerning thisAgreement or the transactions contemplated hereby shall be in a court ofcompetent jurisdiction in Dallas County, Texas, with respect to a state court,or the Dallas Division of the United States District Court for the NorthernDistrict of Texas, with respect to a federal court.  MR. SAMPSON HEREBY CONSENTS TO THE EXERCISE OF JURISDICTION OF ACOURT IN THE EXCLUSIVE FORUM AND WAIVES ANY RIGHT HE MAY HAVE TO CHALLENGE ORCONTEST THE REMOVAL AT ANY TIME BY NMG TO FEDERAL COURT OF ANY SUCH ACTION HE MAYBRING AGAINST IT IN STATE COURT.  MR.SAMPSON AND NMG FURTHER HEREBY MUTUALLY WAIVE THEIR RIGHT TO TRIAL BY JURY INANY ACTION CONCERNING THIS AGREEMENT OR HIS EMPLOYMENT WITH OR SEPARATION FROMEMPLOYMENT WITH NMG.

 

The parties have executed this Agreement in Dallas,Texas, as of the date first written above.

 
| **GERALD  A. SAMPSON**                  |   | **THE  NEIMAN MARCUS GROUP, INC.**     |
|-----------------------------------------|--------|----------------------------------------|
|                                    |   |                                   |
|                                    |   |                                   |
| /s/  Gerald  A. Sampson            |   | /s/  Nelson  A. Bangs             |
|                                    |   |                                   |
| Date:    January 1, 2003 |   | Date:   January 7, 2003 |

 

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