280G Provisions Clause Samples
The 280G Provisions clause addresses the tax implications of so-called "golden parachute" payments made to executives in connection with a change in control of a company. It typically outlines how the company and the executive will handle any excise taxes imposed under Section 280G of the Internal Revenue Code, which can apply if severance or other payments exceed certain thresholds. For example, the clause may specify whether payments will be reduced to avoid triggering the tax or if the executive will receive a gross-up payment to cover the additional tax liability. Its core function is to allocate the financial risk and responsibility for potential excise taxes, ensuring both parties understand their obligations and minimizing unexpected tax burdens.
280G Provisions. Notwithstanding anything in this Agreement to the contrary, if any payment or distribution Executive would receive pursuant to this Agreement or otherwise (“Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (b) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall either be (i) delivered in full, or (ii) delivered as to such lesser extent which would result in no portion of such Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the largest payment, notwithstanding that all or some portion the Payment may be taxable under Section 4999 of the Code. The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. The accounting firm shall provide its calculations to the Company and Executive within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive. Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Executive. Any reduction in payments and/or benefits pursuant to this Section 4.2 will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits payable to Executive.
280G Provisions. Notwithstanding anything in this Agreement to the contrary, if any payment, benefit or distribution Executive would receive pursuant to this Agreement or otherwise from the Company or any of its affiliates (“Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (b) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall either be (i) delivered in full, or (ii) delivered as to such lesser extent which would result in no portion of such Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the largest payment, notwithstanding that all or some portion of the Payment may be taxable under Section 4999 of the Code. The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall perform the foregoing calculations. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. The accounting firm shall provide its calculations to the Company and Executive within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive. Any reasonable determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Executive. Any reduction in payments and/or benefits pursuant to this Section 4.2 will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits payable to Executive. Nothing in this Section 4.2 shall require the Company or any of its affiliates to be responsible for, or have any liability or obligation with respect to, Executive’s excise tax liabilities under Section 4999 of the Code.
280G Provisions. (a) Notwithstanding any other provision of this Agreement or any other plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company to the Participant or for the Participant’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code and would, but for this Section 21 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be payable either (i) in full or (ii) after reduction to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax, whichever of the foregoing (i) or (ii) results in the Participant’s receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax), notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax.
(b) Unless the Company and the Participant otherwise agree in writing, any determination required under this Section 21 shall be made in writing in good faith by a nationally recognized accounting firm (the “Accountants”). In the event of a reduction in Covered Payments hereunder, the reduction of the total payments shall apply as follows, unless otherwise agreed in writing and such agreement is in compliance with Section 409A of the Code: (i) first, any cash severance payments due shall be reduced and (ii) second, any acceleration of vesting of any equity shall be deferred with the tranche that would vest last (without any such acceleration) first deferred. For purposes of making the calculations required by this Section 23, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code, and other applicable legal authority. The Company and the Participant shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 21. The Company shall bear all costs the Accountants may reasonably incur in co...
280G Provisions. Notwithstanding any provision of this Agreement to the contrary, if all or any portion of the amount payable to the Executive pursuant to this Agreement, alone or together with other payments the Executive has the right to receive from the Company, constitute “excess parachute payments” within the meaning of Code Section 280G, as amended, that are subject to the excise tax imposed by Code Section 4999, such amounts payable hereunder will be reduced (in accordance with Code Section 409A) to the extent necessary, after first applying any similar reduction to payments to be received from any other plan or program sponsored by the Company from which the Executive has a right to receive payments subject to Code Sections 280G and 4999, so that the excise tax imposed by Code Section 4999 does not apply; provided, however, that this payment reduction will take place only if such reduction would provide to the Executive a greater net, after-tax benefit than he or she would receive if such amounts were not subject to such reduction.
280G Provisions. If it is determined that any payment or benefit provided to or for the benefit of Executive (a "Payment"), whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, would be subject to the excise tax imposed by Code section 4999 or any interest or penalties with respect to such excise tax (such excise tax together with any such interest and penalties, shall be referred to as the "Excise Tax"), then a calculation shall first be made under which such payments or benefits provided to Executive are reduced to the extent necessary so that no portion thereof shall be subject to the Excise Tax (the "4999 Limit"). The Company shall then compare (a) Executive's Net After-Tax Benefit (as defined below) assuming application of the 4999 Limit with (b) Executive's Net After-Tax Benefit without application of the 4999 Limit. "Net After-Tax Benefit" shall mean the sum of (i) all payments that Executive receives or is entitled to receive that are contingent on a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Code section 280G(b)(2), less (ii) the amount of federal, state, local, employment, and Excise Tax (if any) imposed with respect to such payments. In the event (a) is greater than (b), Executive shall receive Payments solely up to the 4999 Limit, with cash Payments reduced or eliminated first and in the order that such Payments would be made to Executive, such that cash Payments that would be paid furthest in time from the date of the event triggering the payments would be reduced or eliminated last. In the event (b) is greater than (a), then Executive shall be entitled to receive all such Payments, and shall be solely liable for any and all Excise Tax related thereto.
280G Provisions. If it is determined that any payment or benefit provided to or for the benefit of Key Employee (a “Payment”), whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties with respect to such excise tax (such excise tax together with any such interest and penalties, shall be referred to as the “Excise Tax”), then a calculation shall first be made under which such payments or benefits provided to Key Employee are reduced to the extent necessary so that no portion thereof shall be subject to the Excise Tax (the “4999 Limit”). The Company shall then compare (a) Key Employee’s Net After-Tax Benefit (as defined below) assuming application of the 4999 Limit with (b) Key Employee’s Net After-Tax Benefit without application of the 4999 Limit. “Net After-Tax Benefit” shall mean the sum of (i) all payments that Key Employee receives or is entitled to receive that are contingent on a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of Code Section 280G(b)(2), less (ii) the amount of federal, state, local, employment, and Excise Tax (if any) imposed with respect to such payments. In the event (a) is greater than (b), Key Employee shall receive Payments solely up to the 4999 Limit, with cash Payments reduced or eliminated first and in the order that such Payments would be made to Key Employee, such that cash Payments that would be paid furthest in time from the date of the event triggering the payments would be reduced or eliminated last. In the event (b) is greater than (a), then Key Employee shall be entitled to receive all such Payments, and shall be solely liable for any and all Excise Tax related thereto.
280G Provisions. In the event that (a) a portion of the benefits provided to Executive pursuant to this Agreement could result in Executive’s receipt of an “excess parachute payment” under Section 280G of the Code (which would subject Executive to an excise tax under Code Section 4999), (b) the Company’s stock is not publicly traded prior to the Change in Control, and (c) Executive notifies the Company that he is willing to waive his right to receive or retain certain benefits provided pursuant to this Agreement, subject to the approval of the Company’s stockholders, so that the subsequent receipt of such benefits will not cause him to be subject to an excise tax under Code Section 4999, the Company agrees that it will use commercially reasonable efforts to present a proposal to its stockholders, in accordance with the stockholder approval requirements set forth in Code Section 280G(b)(5)(B), to approve the payment of such benefits to Executive.
280G Provisions