eTrade 2003 Annual Report Download - page 132

Whereas, Cotsakos has acknowledged that E*TRADE may, upon completion of a calculation of the fair market value of the cost of
Cotsakos’ personal flights on E*TRADE’
s company aircraft between 2000 and 2003, be required under Section 61 of the United States Internal
Revenue Code (the “ Code ”) and the Treasury Regulations promulgated thereunder to amend Cotsakos’ Form W-2 for each of the tax years
2000, 2001 and 2002 and file such amended Form W-2(s) with the Internal Revenue Service (“ IRS ”) and include the calculations made
pursuant to Section 1(b) below in Cotsakos’ Form W-2 for the 2003 tax year; and
Whereas, the Parties have agreed to settle these disputes on mutually agreeable terms as set forth in this Settlement Agreement;
Now, therefore, in consideration of the mutual promises herein contained, the Parties agree as follows:
1. Settlement of Company Aircraft Claims .
(a) Upon execution and delivery of this Settlement Agreement, Cotsakos will (i) reimburse E*TRADE $390,121.52 for non-business use
of corporate aircraft by Cotsakos as set forth on Schedule A and (ii) pay E*TRADE an excise tax of $29,259.11 on the amount paid for the use
of corporate aircraft, which tax is imposed pursuant to Section 4261(a) of the Code. E*TRADE agrees to remit promptly to the IRS the amount
of excise tax collected from Cotsakos pursuant to the previous sentence.
(b) E*TRADE agrees as promptly as reasonably practicable following the closing described in Section 3 hereof to: (i) complete its
calculation for U.S. income tax purposes of the fair market value of Cotsakos’ personal flights on company aircraft between 2000 and 2003, as
set forth on Schedule A, and (ii) cause a Form W-2 or an amended Form W-2 to be filed with the appropriate taxing authorities for each tax
year for which the filing of such a Form W
-2 is deemed to be required by E*TRADE; provided, however that no such Form W-2 will be filed
without prior consultation by E*TRADE with Cotsakos and his tax advisor, and the Parties will attempt in good faith to report the tax treatment
of the transactions described in this Settlement Agreement in a manner that is mutually satisfactory to the Parties. Cotsakos hereby
acknowledges that E*TRADE may cause such Form W-2(s) for any or all of the tax years 2000, 2001, 2002 and 2003 to be filed with the IRS
and any other appropriate taxing authorities, which Form W-2(s) will take account of heretofore unreported taxable income, if any, attributable
to Cotsakos for the difference between (x) the fair market value for U.S. income tax purposes of personal flights on company aircraft received
by him between 2000 and 2003, as reflected on the attached Schedule A, and (y) the amount that Cotsakos reimbursed E*TRADE pursuant to
Section 1(a)(i) hereof. Cotsakos agrees to promptly pay any additional federal, state and local taxes, together with any related penalties and
interest, which may be owed with respect to the heretofore unreported taxable income reflected on any such Form W-
2(s) and provide evidence
of such payment to E*TRADE. Cotsakos hereby indemnifies E*TRADE for any taxes payable by E*TRADE that would not be payable but for
Cotsakos’ failure to pay taxes, interest and penalties on the heretofore unreported taxable income reflected in any such Form W-2(s) or
amended Form W-2(s) or to provide evidence of such payment to E*TRADE.
2