IRS Uses in Excise Tax Indemnification Clause

Excise Tax Indemnification from Employment Agreement

THIS EMPLOYMENT AGREEMENT, dated as of December 12, 2002 (the Agreement), is made by and between United States Marine Repair, Inc., a Delaware corporation (the Company), and Alexander J. Krekich (the Executive).

Excise Tax Indemnification. With respect to any payment(s) made to the Executive under this Section 7 or otherwise and any accelerated vesting and/or exercise of stock options under any Company stock plan, and only in the event that any thereof result in the assertion by the Internal Revenue Service (IRS) that the Executive is liable under Section 280G and/or 4999 of the Internal Revenue Code of 1986, as amended (the Code) for the payment of an excise tax on so-called excess parachute payments under such Code sections, or for any other tax or imposition, however denominated, and whether federal, state, or local, in addition to or excess of ordinary income tax rates (any such tax being hereinafter referred to as an EPP Tax), then the Company shall indemnify and hold harmless the Executive from and against any such demand or assertion from the IRS or any other taxing authority, by (i) paying to the Executive an amount sufficient to cover both such asserted EPP Tax and any income or other tax payable by the Executive on or on account of receiving such indemnification payment, and/or (ii) at the Companys sole election, contesting, at the Companys expense and with counsel and/or other advisors of the Companys choosing, the applicability or amount of such EPP Tax with the IRS or other taxing authority, in which event the Executive shall cooperate as reasonably requested by the Company in any such proceeding.