Common use of Application of Code Section 280G Clause in Contracts

Application of Code Section 280G. In the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would constitute an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the aggregate present value of the Payments under the Agreement shall be reduced (but not below zero) to the Reduced Amount (defined below), provided that the Payments shall be reduced only if the Accounting Firm (described below) determines that the reduction will provide the Executive with a greater net after-tax benefit than would no reduction. The “Reduced Amount” shall be an amount expressed in the present value which maximizes the aggregate present value of Payments under this Agreement without causing any Payment under this Agreement to be subject to the excise tax imposed under Code Section 4999, determined in accordance with Code Section 280G(d)(4). Payments under this Agreement shall be reduced on a nondiscretionary basis in such a way as to minimize the reduction in the economic value deliverable to the Executive. Any such reduction shall be implemented in a manner consistent with the requirements of Code Section 409A, and if more than one payment has the same value for this purpose and they are payable at different times, they will be reduced on a pro rata basis. The determination of whether any Payments constitute an “excess parachute payment” within the meaning of Code Section 280G and, if so, the amount to be delivered to the Executive pursuant to this Section of the Agreement shall be determined by an independent accounting firm (the “Accounting Firm”) selected by the Executive and the Company. The Accounting Firm shall be a nationally recognized United States public accounting firm. If the Executive and the Company cannot agree on the Accounting Firm, the Executive and the Company shall each designate one (1) accounting firm and those two firms shall jointly select the accounting firm to serve as the Accounting Firm. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

Application of Code Section 280G. In Notwithstanding anything to the event contrary set forth herein, if it shall be is determined that the amounts payable to Executive under this Agreement, when considered together with any payment or distribution by other amounts payable to Executive as a result of a Change of Control (collectively, the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would (i) constitute an a “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the aggregate present value excise tax imposed by Section 4999 of the Payments under Code (the Agreement “Excise Tax”), then such Payment shall be reduced (but not below zero) equal to the Reduced Amount (defined below), provided that the Payments shall be reduced only if the Accounting Firm (described below) determines that the reduction will provide the Executive with a greater net after-tax benefit than would no reductionAmount. The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greater amount expressed in of the present value which maximizes Payment notwithstanding that all or some portion of the aggregate present value of Payments under this Agreement without causing any Payment under this Agreement to may be subject to the excise tax imposed under Code Section 4999Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, determined reduction shall occur in accordance with Code Section 280G(d)(4the following order: reduction of cash payments; reduction of accelerated vesting of stock options; reduction of employee benefits. In the event that acceleration of vesting of stock option compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Executive’s stock options (i.e., earliest granted stock option cancelled last). Payments under this Agreement The accounting firm engaged by The Company for general audit purposes as of the day prior to the effective date of the Change of Control shall perform the foregoing calculations. If the accounting firm so engaged by The Company is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, The Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to Executive and The Company within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by Executive or The Company) or such other time as requested by Executive or The Company. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish Executive and The Company with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made hereunder shall be reduced final, binding and conclusive upon Executive and The Company, except as set forth below. 9. If, notwithstanding any reduction described in this Section 5.11, the IRS determines that Executive is liable for the Excise Tax as a result of the receipt of the payment of benefits as described above, then Executive shall be obligated to pay back to The Company, within thirty (30) days after a final IRS determination or in the event that Executive challenges the final IRS determination, a final judicial determination, a portion of the payment equal to the “Repayment Amount.” The Repayment Amount with respect to the payment of benefits shall be the smallest such amount, if any, as shall be required to be paid to The Company so that Executive’s net after-tax proceeds with respect to any payment of benefits (after taking into account the payment of the Excise Tax and all other applicable taxes imposed on such payment) shall be maximized. The Repayment Amount with respect to the payment of benefits shall be zero if a nondiscretionary basis Repayment Amount of more than zero would not result in Executive’s net after-tax proceeds with respect to the payment of such benefits being maximized. If the Excise Tax is not eliminated pursuant to this paragraph, Executive shall pay the Excise Tax. Notwithstanding any either provision of this Section 5.11, if (i) there is a way as to minimize the reduction in the economic value deliverable to payment of benefits as described in this section, (ii) the IRS later determines that Executive is liable for the Excise Tax, the payment of which would result in the maximization of Executive. Any such reduction shall be implemented in a manner consistent with the requirements of Code Section 409A’s net after-tax proceeds (calculated as if Executive’s benefits had not previously been reduced), and if more than one payment has (iii) Executive pays the same value for this purpose and they are payable at different timesExcise Tax, they will be then The Company shall pay to Executive those benefits which were reduced on a pro rata basis. The determination of whether any Payments constitute an “excess parachute payment” within the meaning of Code Section 280G and, if so, the amount to be delivered to the Executive pursuant to this Section section contemporaneously or as soon as administratively possible after Executive pays the Excise Tax so that Executive’s net after-tax proceeds with respect to the payment of the Agreement shall be determined by an independent accounting firm (the “Accounting Firm”) selected by the Executive and the Company. The Accounting Firm shall be a nationally recognized United States public accounting firm. If the Executive and the Company cannot agree on the Accounting Firm, the Executive and the Company shall each designate one (1) accounting firm and those two firms shall jointly select the accounting firm to serve as the Accounting Firm. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executivebenefits is maximized.