Common use of Valuation of the Shares Clause in Contracts

Valuation of the Shares. (a) The Initial Shares have been valued by the Company, and the Company believes this valuation represents a fair attempt at reaching an accurate appraisal of their worth. The CEO understands, however, that the Company can give no assurances that such valuation is in fact the fair market value of the Initial Shares and that it is possible that with the benefit of hindsight, the Internal Revenue Service would successfully assert that the value of the Initial Shares on any relevant date is greater than so determined. (b) If the Internal Revenue Service were to succeed in a tax determination under the Code that the Initial Shares received have a value greater than that determined by the Company, the additional value would constitute ordinary income as of the date of the CEO’s realization of income. The additional taxes (and interest) due would be payable by the CEO, and there is no provision for the Company to reimburse him or her for that tax liability, and the CEO assumes all responsibility for such potential tax liability. Under present law, in the event such additional value would represent more than twenty-five (25%) of the CEO’s gross income for the year in which the value of the shares were taxable, the Internal Revenue Service would have six (6) years from the due date for filing the return (or the actual filing date of the return if filed thereafter) within which to assess the CEO the additional tax and interest which would then be due. The Company undertakes no obligation to inform the CEO of any change in the tax laws which may effect this Agreement or its consequences.

Valuation of the Shares. (a) The Initial Shares have been valued by the Company, and the Company believes this valuation represents a fair attempt at reaching an accurate appraisal of their worth. The CEO understands, however, that the Company can give no assurances that such valuation is in fact the fair market value of the Initial Shares and that it is possible that with the benefit of hindsight, the Internal Revenue Service would successfully assert that the value of the Initial Shares on any relevant date is greater than so determined. (b) If the Internal Revenue Service were to succeed in a tax determination under the Code that the Initial Shares received have a value greater than that determined by the Company, the additional value would constitute ordinary income as of the date of the CEO’s realization of income. The additional taxes (and interest) due would be payable by the CEO, and there is no provision for the Company to reimburse him or her for that tax liability, and the CEO assumes all responsibility for such potential tax liability. Under present law, in the event such additional value would represent more than twenty-five (25%) of the CEO’s gross income for the year in which the value of the shares were taxable, the Internal Revenue Service would have six (6) years from the due date for filing the return (or the actual filing date of the return if filed thereafter) within which to assess access the CEO the additional tax and interest which would then be due. The Company undertakes no obligation to inform the CEO of any change in the tax laws which may effect this Agreement or its consequences.