Saks Fifth Avenue 2008 Annual Report Download - page 262

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.
(b) Calculations; When Paid. Subject to the provisions of Section 11(c) hereof, all determinations required to be made
under this Section 11, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized public accounting
firm retained by the Company (the “Accounting Firm”) that will provide detailed supporting calculations both to the Company
and the Executive as soon as practicable following the receipt of notice from the Executive that there has been a Payment. All
fees and expenses of the Accounting Firm will be borne solely by the Company. Such Gross-Up Payment, as determined
pursuant to this Section 11, shall be paid by the Company to the Executive promptly following the receipt of the Accounting
Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, the Accounting Firm
will furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive’s applicable federal
income tax return should not result in the imposition of a negligence or similar penalty or comparable opinion supporting such
determination in accordance with the practices and procedures of the Accounting Firm. Any determination by the Accounting
Firm shall be binding upon the Company and the Executive absent manifest error. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent
with the calculations required to be made in accordance with this Section 11. If the Company exhausts its remedies pursuant to
Section 11(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm will determine
the amount of the Underpayment that has occurred and any such Underpayment will be promptly paid by the Company to or for
the benefit of the Executive.
(c) IRS Claims. The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up Payment. The Executive will give the notice as soon as
practicable but no later than 10 business days after the Executive is informed in writing of the claim and will apprise the
Company of the nature of the claim and the date on which such claim is requested to be paid. The Executive will not pay the
claim prior to the expiration of the 30-day period following the date on which the Executive gives the notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to the claim is due). If the Company notifies the
Executive in writing prior to the expiration of the 30-day period that the Company desires to contest the claim, the Executive
shall (i) give the Company any information reasonably requested by the Company relating to the claim, (ii) take such action in
connection with contesting the claim as the Company reasonably requests in writing from time to time, including, without
limitation, accepting legal representation with respect to the claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to contest the claim, and (iv) permit the Company to
participate in any proceedings relating to such claim. The Company shall bear and pay directly all costs and
10