Saks Fifth Avenue 2008 Annual Report Download - page 250

respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. The Executive will be entitled to a Gross-Up Payment in
accordance with this Section 11(a) only if the Executive’s “parachute payments” (as such term is defined in Section 280G of the
Code) exceed three hundred thirty percent (330%) of the Executive’s “base amount” (as determined under Section 280G(b) of
the Code) (such product, the “Threshold”). If the Payment does not exceed the Threshold, the Executive will not receive a
Gross-Up Payment and the amount of the Payment will be reduced to an amount that is one dollar less than the largest amount
that would not become subject to the excise tax imposed by Section 4999 of the Code and that the Company could pay to the
Executive without loss of deduction under Section 280G(a) of the Code.
The reduction of the amounts payable to the Executive, if applicable, shall be made in the following order: (1) by first
eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the then fair market value (and
if there is more than one option award so outstanding, then the acceleration of the vesting of the most “under water” option shall
be reduced first and so on); (2) second, by eliminating the acceleration of vesting of any stock appreciation rights that are subject
to time based vesting for which the exercise price exceeds the then fair market value (and if there is more than one such stock
appreciation right so outstanding, then the acceleration of the vesting of the most “under water” stock appreciation right shall be
reduced first and so on); (3) third, by reducing the payments of any stock appreciation rights, restricted stock, restricted stock
units, phantom shares, performance share units, performance shares or other similar equity based awards that have been awarded
to the Executive by the Company that are subject to performance based vesting (and if there be more than one such award held
by Executive, by reducing the awards in the reverse order of the date of their award, with the most recently awarded reduced
first and the oldest award reduced last); (4) fourth, by reducing any cash payments not subject to Code section 409A; (5) fifth,
by reducing any benefit continuation payments (and if there be more than one such payment, by reducing the payments in
reverse order, with the payments made the earliest being reduced first); (6) sixth, by reducing cash payments that are subject to
Code section 409A; (7) seventh, by reducing the payments of any restricted stock, restricted stock units, phantom shares or other
similar equity based awards that have been awarded to the Executive by the Company that are subject to time based vesting (and
if there be more than one such award held by Executive, by reducing the awards in the reverse order of the date of their award,
with the most recently awarded reduced first and the oldest award reduced last); (8) eighth, by reducing the acceleration of
vesting of any stock options that are not described in (1) above; and (9) ninth, by reducing the acceleration of vesting of any
stock appreciation rights that are not described in (2) or (3) above.”
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