Common use of Tax Equalization Amounts Clause in Contracts

Tax Equalization Amounts. If in any calendar year (the "Exercise Year"), the Executive exercises one or more Options, the Employers shall make a payment to the Executive equal to the Tax Equalization Amount, computed in the manner set forth below. Except as provided in paragraph (d) below, the Tax Equalization Amount shall be paid no later than April 15 of the year following the Exercise year. (a) The Tax Equalization Amount shall equal the lesser of (i) the Employers' Tax Benefit Amount, or (ii) the Executive Tax Rate Differential Amount. (b) The Employers' Tax Benefit Amount shall equal the excess, if any, of (i) the amount of consolidated Federal income tax liabilities that the Employers would have had for the taxable year of the Employers that includes the last day of the Exercise Year (the "Applicable Employer Taxable Year"), without taking into account any deduction to which the Employers are entitled directly by reason of the exercise of such Options, over (ii) the amount of consolidated Federal income tax liability of the Employers for the Applicable Employer Taxable Year, taking into account any deduction to which the Employers are entitled directly by reason of the exercise of such Options. The amount of the Employers' Tax Benefit Amount shall be determined by the Accounting Firm (as defined in Section 3.9). (c) The Executive's Tax Rate Differential Amount shall equal the amount obtained by dividing "x" by "y", where "x" equals the excess, if any, of (i) the Executive's Federal income tax liability for the Exercise Year, over (ii) the amount of Federal income tax liability that the Executive would have had for the Exercise Year if income recognized directly by reason of the exercise of the Options exercised in the Exercise Year ("Option Income") had been treated as long-term capital gain, and "y" equals the number obtained by subtracting the Executive's marginal Federal income tax rate for ordinary compensation income under Subtitle A and Section 3101 of the Code (expressed by a decimal) (the "Income Tax Rate") from one; such that, by way of example, if the Executive's Option Income for the Exercise Year were $100,000 and the Income Tax Rate were 40% and the Federal tax rate applicable to long-term capital gains were 28%, the Tax Rate Differential Amount would equal $20,000, calculated as follows: The amount described in clause (i) above would, in such case, be $40,000 and the amount described in clause (ii) above would, in such case, be $28,000, and therefore the excess of the clause (i) amount over the clause (ii) amount would, in such case, be $12,000 --- $12,000 divided by 0.6 equals $20,000 ($12,000/1-0.4 = $20,000). The amount of the Executive's Tax Rate Differential Amount shall be determined by the Accounting Firm.

Tax Equalization Amounts. If in any calendar year (the "Exercise Year"), the Executive exercises one or more Options, the Employers shall make a payment to the Executive equal to the Tax Equalization Amount, computed in the manner set forth below. Except as provided in paragraph (d) below, the Tax Equalization Amount shall be paid no later than April 15 of the year following the Exercise year. (a) The Tax Equalization Amount shall equal the lesser of (i) the Employers' Tax Benefit Amount, or (ii) the Executive Tax Rate Differential Amount. (b) The Employers' Tax Benefit Amount shall equal the excess, if any, of (i) the amount of consolidated Federal income tax liabilities that the Employers would have had for the taxable year of the Employers that includes the last day of the Exercise Year (the "Applicable Employer Taxable Year"), without taking into account any deduction to which the Employers are entitled directly by reason of the exercise of such Options, over (ii) the amount of consolidated Federal income tax liability of the Employers for the Applicable Employer Taxable Year, taking into account any deduction to which the Employers are entitled directly by reason of the exercise of such Options. The amount of the Employers' Tax Benefit Amount shall be determined by the Accounting Firm (as defined in Section 3.9). (c) The Executive's Tax Rate Differential Amount shall equal the amount obtained by dividing "x" by "y", ," where "x" equals the excess, if any, of (i) the Executive's Federal income tax liability for the Exercise Year, over (ii) the amount of Federal income tax liability that the Executive would have had for the Exercise Year if income recognized directly by reason of the exercise of the Options exercised in the Exercise Year ("Option Income") had been treated as long-term capital gain, and "y" equals the number obtained by subtracting the Executive's marginal Federal income tax rate for ordinary compensation income under Subtitle A and Section 3101 of the Code (expressed by a decimal) (the "Income Tax Rate") from one; such that, by way of example, if the Executive's Option Income for the Exercise Year were $100,000 and the Income Tax Rate were 40% and the Federal tax rate applicable to long-term capital gains were 28%, the Tax Rate Differential Amount would equal $20,000, calculated as follows: The amount described in clause (i) above would, in such case, be $40,000 and the amount described in clause (ii) above would, in such case, be $28,000, and therefore the excess of the clause (i) amount over the clause (ii) amount would, in such case, be $12,000 --- $12,000 divided by 0.6 equals $20,000 ($12,000/1-0.4 = $20,000). The amount of the Executive's Tax Rate Differential Amount shall be determined by the Accounting Firm.

Tax Equalization Amounts. If in any calendar year (the "Exercise Year"), the Executive exercises one or more Options, the Employers A) The Purchaser shall make a payment pay to the Executive equal to Equity Seller, as additional consideration for the purchase of the Purchased Equity, the Tax Equalization AmountAmounts. For the sake of clarity, computed payments of the Tax Equalization Amounts are intended to cause the Shareholder Sellers and the Company to be in the manner set forth belowsame after-Tax economic position with respect to the sale of the Purchased Equity as they would be if (x) the Pre-Closing Reorganization does not occur and Equity Seller did not exist, and (y) the Shareholder Sellers instead directly owned, and had sold to the Purchaser, all of the Purchased Equity of the Company (taxed as an S corporation under Code sections 1361 and 1361) pursuant to this Agreement without any election under Code section 338 or comparable state or local Tax law. Except as provided in paragraph Section 5.9(g)(C), the Purchaser shall pay the amount of the Tax Equalization Amounts to the Equity Seller by wire transfer of immediately available funds within five (d5) belowdays of such the Tax Equalization Amounts becoming final pursuant to Section 5.9(g)(iii)(B). Any payment in respect of the Tax Equalization Amounts pursuant to this Section 5.9 shall be deemed to be an adjustment in the amount of the Purchase Price (exclusive of any imputed interest imposed pursuant to Code). (B) The Seller Representative shall prepare, or cause to be prepared, and deliver to the Purchaser a written computation of the Tax Equalization Amounts within ninety (90) calendar days after the Final WC Statement becomes final. The calculation of the Tax Equalization Amounts shall be prepared consistent with the Tax Equalization Amount Guidelines, calculated as of the Closing Date. Following receipt of Equity Seller’s Tax Equalization Amounts, Purchaser shall either accept Equity Seller’s Tax Equalization Amounts, which shall then be deemed final or certify to the Seller Representative its alternate calculation of the Tax Equalization Amounts. If Purchaser fails to accept the Equity Seller’s Tax Equalization Amounts or deliver to the Seller Representative Purchaser’s alternate calculation of the Tax Equalization Amounts within thirty (30) days of receipt of the Equity Seller’s Tax Equalization Amount, the Equity Seller’s Tax Equalization Amounts shall be paid no later than April 15 final and binding on the parties. If Purchaser timely delivers Purchaser’s alternate calculation of the year following the Exercise year. (a) The Tax Equalization Amount Amounts, then the Seller Representative and the Purchaser shall equal negotiate in good faith to resolve such dispute. If within thirty (30) days after receipt by the lesser Seller Representative of the Purchaser’s Tax Equalization Amounts, Purchaser and the Seller Representative have been unable to reach agreement, the parties shall engage the Accounting Firm to determine, to the extent possible based on the Tax Equalization Amounts Guidelines, which calculation of the Tax Equalization Amounts is more accurate, the Equity Seller’s Tax Equalization Amounts or the Purchaser’s Tax Equalization Amounts, and shall certify the Accounting Firm’s choice as the Final Adjustment Statement. The Accounting Firm shall certify this decision in writing to Purchaser and the Seller Representative; the Accounting Firm shall have no other choice but to select either the Equity Seller’s calculation of the Tax Equalization Amounts in its entirety or the Purchaser’s calculation of the Tax Equalization Amounts in its entirety. The Accounting Firm’s determination shall be final and binding on the parties. The fees, costs, and expenses of the Accounting Firm, including any attorneys’ fees related thereto, shall be borne by (i) the Employers' Seller Representative if the Purchaser’s calculation of the Tax Benefit AmountEqualization Amounts is selected by the Accounting Firm as more accurate, or (ii) the Executive Purchaser if the Equity Seller’s calculation of the Tax Rate Differential AmountEqualization Amounts is selected by the Accounting Firm as more accurate. (bC) The Employers' To the extent any Tax Benefit Amount shall equal Equalization Amounts increase or decrease for any reason after the excessTax Equalization Amounts are finalized pursuant to Section 5.9(g)(iii)(B), if anyincluding, without limitation, as a result of (i) the amount of consolidated Federal income tax liabilities that the Employers would have had for the taxable year of the Employers that includes the last day of the Exercise Year (the "Applicable Employer Taxable Year"), without taking into account any deduction to which the Employers are entitled directly by reason of the exercise of such Options, over changes in Tax rates and (ii) the amount of consolidated Federal income tax liability of the Employers for the Applicable Employer Taxable Yearaudits, taking into account any deduction to which the Employers are entitled directly by reason of the exercise of such Options. The amount of the Employers' Tax Benefit Amount shall be determined challenges, investigations or other proceedings by the Accounting Firm (as defined Internal Revenue Service or other governmental entity in Section 3.9). (c) The Executive's connection with or affecting the Tax Rate Differential Amount shall equal Equalization Amounts, then in the amount obtained by dividing "x" by "y", where "x" equals the excess, if any, event of (i) an increase, the Executive's Federal income tax liability Purchaser shall pay the amount of such increase to the Seller Representative (for the Exercise Year, over benefit of the Equity Seller) by wire transfer of immediately available funds within five (5) days of receipt of such written notice of the same (ii) a decrease, the Seller’s Representative (on behalf of the Equity Seller) shall pay the amount of Federal income tax liability that such increase to the Executive would have had for the Exercise Year if income recognized directly Purchaser by reason wire transfer of immediately available funds within five (5) days of receipt of such written notice of the exercise of the Options exercised in the Exercise Year ("Option Income") had been treated as long-term capital gain, and "y" equals the number obtained by subtracting the Executive's marginal Federal income tax rate for ordinary compensation income under Subtitle A and Section 3101 of the Code (expressed by a decimal) (the "Income Tax Rate") from one; such that, by way of example, if the Executive's Option Income for the Exercise Year were $100,000 and the Income Tax Rate were 40% and the Federal tax rate applicable to long-term capital gains were 28%, the Tax Rate Differential Amount would equal $20,000, calculated as follows: The amount described in clause (i) above would, in such case, be $40,000 and the amount described in clause (ii) above would, in such case, be $28,000, and therefore the excess of the clause (i) amount same. Any disputes over the clause (ii) amount would, in such case, be $12,000 --- $12,000 divided by 0.6 equals $20,000 ($12,000/1-0.4 = $20,000). The amount of the Executive's Tax Rate Differential Amount increase or decrease shall be determined by resolved consistent with the Accounting Firmprovisions of Section 5.9(g)(iii)(B).