Neiman Marcus 2008 Annual Report Download - page 237

Executive. As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that the
amount of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) the Executive
was lower than the amount actually due ("Underpayment"). In the event that NMG exhausts its remedies pursuant
to Paragraph 16(b) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by NMG to or for the benefit of Executive.
(iii) The Executive shall notify NMG in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by NMG of any Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall
apprise NMG of the nature of such claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the thirty day period following the date on which it gives such
notice to NMG (or such shorter period ending on the date that any payment of taxes with respect to such claim is
due). If NMG notifies the Executive in writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall (i) give NMG any information reasonably requested by NMG relating to such claim,
(ii) take such action in connection with contesting such claim as NMG shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by NMG, (iii) cooperate with NMG in good faith in order to effectively contest such claim and
(iv) permit NMG to participate in any proceedings relating to such claim; provided, however, that NMG shall bear
and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions of this Paragraph 16(b), NMG shall control all
proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as NMG shall determine;
provided, further, that if NMG directs the Executive to pay such claim and sue for a refund, NMG shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance;
provided, further, that if the Executive is required to extend the statute of limitations to enable NMG to contest such
claim, the Executive may limit this extension solely to such contested
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