Neiman Marcus 2004 Annual Report Download - page 135

(iii) sell or transfer all or substantially all of its assets (within the meaning of Rev. Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of
related transactions, (iv) redeem or otherwise repurchase any Neiman Marcus stock (other than as described in Section 4.05(1)(b) of Rev. Proc. 96-30,
1996-1 C.B. 696), or (v) take any other action or actions which in the aggregate (and taking into account the Recapitalization) would have the effect of
causing or permitting one or more persons to acquire directly or indirectly stock representing a 50 percent or greater interest (within the meaning of
Section 355(e) of the Code) in Neiman Marcus, unless prior to taking any such action set forth in the foregoing clauses (i) through (v), Neiman Marcus
has obtained (and provided to Harcourt General) a written opinion in form and substance reasonably acceptable to Harcourt General of a law firm
reasonably acceptable to Harcourt General, or Harcourt General has obtained (at the reasonable request and at the expense of Neiman Marcus) a
supplemental ruling from the Internal Revenue Service, that such action or actions will not result in (i) the Distribution failing to qualify under
Section 355(a) of the Code or (ii) the Neiman Marcus shares failing to qualify as qualified property for purposes of Section 355(c)(2) of the Code by
reason of Section 355(e) of the Code. Harcourt General agrees to cooperate with Neiman Marcus in obtaining such opinion or, as the case may be, to
use its commercially reasonable best efforts in obtaining any supplemental ruling reasonably requested by Neiman Marcus, including, where
appropriate, by providing written representations as to factual events that transpired prior to the Distribution Date.
(c) Notwithstanding anything to the contrary herein, if Neiman Marcus (or any of its Subsidiaries) fails to comply with any of its obligations
under Sections 2.4(a) and 2.4(b) above or takes or fails to take any action (including any action referred to in Section 2.4(a) or clauses (i) through (v) of
Section 2.4(b) without regard to when such action occurs) on or after the Distribution Date, and such failure to comply, action or omission contributes to
a determination that (i) the Distribution fails to qualify under Section 355(a) of the Code or (ii) the Neiman Marcus shares fail to qualify as qualified
property for purposes of Section 355(c)(2) of the Code by reason of Section 355(e) of the Code, then Neiman Marcus shall indemnify and hold harmless
Harcourt General and each member of the consolidated group of which Harcourt General is a member from and against any and all federal, state and
local taxes, including any interest, penalties or additions to tax, imposed upon or incurred by Harcourt General, any member of its group or any
stockholder of Harcourt General as a result of the failure of the Distribution to qualify under Section 355(a) of the Code or the application of
Section 355(e) (including any taxes payable by reason of any payment made pursuant to this Section 2.4(c)). The obligation of Neiman Marcus to
indemnify Harcourt General pursuant to the preceding sentence shall not be affected by the delivery of any legal opinion or supplemental ruling under
Section 2.4(b), unless the circumstances described in clause (i) or (ii) of this Section 2.4(c) shall occur solely by reason of (x) the failure of a
representation made by Harcourt General pursuant to the last sentence of Section 2.4(b) to be true and correct in all material respects, (y) a material
omission in any such representation or (z) a breach by Harcourt General or any of the Shared Representatives (as defined in Section 4.6) of any of the
covenants contained in Section 4.6; provided, however, that in the event that Harcourt General or any of the Shared Representatives shall have breached
any of such covenants, which breach shall have been disclosed to a director of Neiman Marcus that is not affiliated with Harcourt General (an
"Independent Director"), and notwithstanding such breach, a majority of the Independent Directors shall determine (as evidenced in writing) to proceed
with a Transaction Proposal (as defined in Section 4.6), the indemnity provided by this Section 2.4(c) shall not be affected.
SECTION 2.5 Certain Limitations on Actions by Harcourt General. Subject to the representations and undertakings required by Harcourt General to be
made in order to obtain the IRS Ruling, following the Distribution, in matters requiring a vote of the holders of Class A Common Stock, for such time as
Harcourt General holds the Retained Shares, Harcourt General will vote the Retained
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