The Hartford 2008 Annual Report Download - page 537

(ii) Applicable Rules. For purposes of determining whether any of the Covered Payments will be
subject to the Excise Tax and the amount of such Excise Tax,
(A) such Covered Payments will be treated as “parachute payments” within the meaning of Section 280G of
the Code, and all “parachute payments” in excess of the “base amount” (as defined under
Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the
extent that, in the good faith judgment of the Company’s independent certified public accountants
appointed prior to the Effective Date or tax counsel selected by such accountants (the “Accountants”),
the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either
do not constitute “parachute payments” or represent reasonable compensation for personal services
actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the “base
amount,” or such “parachute payments” are otherwise not subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by
the Accountants in accordance with the principles of Section 280G of the Code.
(iii) Additional Rules. For purposes of determining the amount of the Tax Reimbursement Payment, the
Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal
income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any
applicable state and local income and other taxes at the highest applicable marginal rate of taxation for the
calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in
Federal incomes taxes which could be obtained from the deduction of such state or local taxes if paid in such
year.
(iv) Repayment or Additional Payment in Certain Circumstances.
(A) Repayment. In the event that the Excise Tax is subsequently determined by the Accountants or pursuant
to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken
into account hereunder in calculating the Tax Reimbursement Payment made, Executive shall repay to
the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the
portion of such prior Tax Reimbursement Payment that would not have been paid if such lesser Excise
Tax had been applied in initially calculating such Tax Reimbursement Payment. Notwithstanding the
foregoing, in the event any portion of the Tax Reimbursement Payment to be repaid to the Company has
been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual
refund or credit of such portion has been made to Executive by the applicable tax authority. Executive
and the Company shall mutually agree upon the course of action to be pursued (and the method of
allocating the expenses thereof) if Executive’s good faith claim for refund or credit is denied.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009