Common use of Compensation Deductions Clause in Contracts

Compensation Deductions. Any compensation deduction arising after the Distribution Date by reason of the exercise of stock options or compensatory warrants or the vesting of restricted stock will be claimed solely by the Party (or one of its Subsidiaries) that employs the individual with respect to whom such compensation deduction arises at the time that it arises or, if such individual is not then employed by any Party or a Subsidiary of a Party, by the Party that most recently employed such individual. If a deduction claimed by a Party (the “Employing Party”) pursuant to the preceding sentence is disallowed by a Tax Authority for any reason, the other Party (or one of its Subsidiaries) will amend its applicable Tax Return to claim such deduction and pay to the Employing Party an amount equal to the Tax benefit actually realized by the other Party (or one of its Subsidiaries) as a result of such deduction; provided, however, that the Employing Party, upon the request of the other Party, will repay any amount paid to the Employing Party under this Section 2.06 (plus any penalties, interest or other charges imposed by the relevant Tax Authority) in the event the other Party (or one of its Subsidiaries) is required to surrender such Tax benefit. The rights and obligations of the Parties with respect to Tax withholding and reporting will be governed by Section 12.05 of the EMA.